futurish_0006 ❤ Investing in the market; The Egg Short Story
Time flies by
It’s April and I’m scared. Seriously this year is flying by, isn’t it? It’s so true how the older you get, the quicker things seem to go.
But this year seems to already be a much better start than 2020 was…. Well slightly, as we still have the pandemic and parts of Australia have just been affected by floods (last year it was fires - hello global warming). For me, it’s been a busy and exciting period. I’ve started a new role at an exciting startup and also have moved into my first purchased home. I really feel like a true adult haha.
One thing that I have noticed, and I don’t know if it’s because we’ve all got our eyes locked on the news, but there seems to be a lot more separation of unity amongst us all. So much more protests, so much more shootings and so much more hate all around. The internet while it brings us closer together seems to also push us all apart.
I don’t know what can change but all I know is I’m going to try to be a bit more open to understanding and try to be less judgemental on someones differing opinions. I’m also going to try to find more positivity in the everyday. Whether it’s upbeat news stories or being more appreciative in general, good thoughts bring good change.
→ [Discussion] My journey into the world of investing
Pete: Over the past couple of years I’ve started to get a bit of a fascination with saving and investing. I’ve failed a lot, learnt even more and at the same time I try to be more conservative, know when to apply more risk and when to simply just wait and see. I figure some might find my journey interesting, so would love to share it with you all. Just know my knowledge and experience in this space is still quite young but I’m having fun along the way. Additionally, take this advice with a grain of salt as I’m not a registered financial practitioner.
Additionally, a lot of the services I use are primarily Australian based but there should be alternatives locally to you that you can use.
After a disastrous "investing" attempt with Bitcoin at the peak of 2017, I ended up losing 12k and started researching safer routes. (Yes, I'm a bit annoyed I didn't just 'set and forget' now that it's at an all-time high. No, I would never invest in Bitcoins or altcoins ever again.)
My safer route took me to services like Spaceship and Raiz where I started dollar cost averaging every week. I eventually left Raiz as I preferred the experience with Spaceship, it was a personal preference really.
I found out after the fact that you don't own any actual stocks in Spaceship or Raiz, so I decided to move to ETFs.
I then opened a Vanguard Personal Investor account and started moving more of the larger sums of investments into that. My preference is the Vanguard Diversified High Growth Index ETF or VDHG. It's set up as a 'set and forget' diversified ETF where if you had to choose only one then that ETF is probably the best 'managed' ETF to go-to for beginners (again my personal take - I’m not licensed)
I found out - again after the fact - about CHESS sponsorship. With Vanguard Personal Investor accounts, Vanguard owns your stock in a "trust" type of relationship with you. That means if Vanguard ever goes away (extremely unlikely given their gold standard), your stock would be sold and your money cashed out. Not really what I'm looking for for a long term investment. You also can't transfer the stock to another brokerage, which is extremely unfortunate as it means I'm going to have to sell what I have and pay Capital Gains Tax (CGT). A broker being CHESS sponsored means the stock is in your name and you can transfer to other CHESS sponsored brokers.
So my 2021 strategy is to have a double prong attack.
One prong is to continue Dollar-Cost Averaging (DCA) every week into Spaceship and at the end of the year sell it all and invest that again into VDHG (and maybe DHHF) but this time through SelfWealth who are CHESS sponsored. The reason I'm going with yearly is to avoid the 100% CGT "tax" if you sell stock prior to holding it for 12 months.
The second prong is to additionally invest monthly directly into SelfWealth, still a form of DCA but larger amounts this time. That way I’m getting the benefits buying in through the year and don’t have to worry about CGT since I will be holding these SelfWeath funds long term.
I also currently just reinvest all my dividend returns so I get some nice compound action going on.
I'll reassess next year and rejig my strategy too along the way. I’m always constantly learning the best way to do things. Btw Reddit has some extremely helpful subreddits and some are even specific to local countries (like r/ausfinance for me). A good all-round one is r/financialindependence if your goal is to become Financially Independent and Retire Early (FI/RE).
I should also note I always invest 'disposable' money, that way if I ever lost it all (or large amounts like the bitcoin fiasco) I'm not screwed or too distraught. Alongside all of this, I saved for a house deposit and now that I have bought a place I put more in our offset than I do in this. I don't know what I'll use this investment money for but my hopes are to get it high enough that I can live off the 4% rule and become FI/RE.
Lastly, this old adage always rings true; “Time in the market beats timing the market.”
I hope you all get something out of this. For me, this journey has been extremely valuable as it’s forced me to consider my spendings and how I save for those big-ticket items I want to buy.
Would love to hear your strategies.
Gerhard: It was actually thanks to Pete that I got into investing myself. I never even thought of the FI/RE concept and that it is a possibility for me to create my own financial safety net, which allows me to live off the 4%, so I can be financially free and do what I want.
My investing journey towards FI/RE started last year when I opened an account at DAD.AT (https://www.dad.at/). This bank/service was recommended to me by my good friend Tobi, who has been investing for quite a while now.
I try to keep my investing strategy very simple. I like to follow the 80/20 Principle by Richard Koch, which reinterpreted the Pareto Rule, which states that most results come from a small minority of causes. Rich Koch’s investments have grown at 22 per cent compounded annually over 37 years.
Based on this principle I have a 2-way investment strategy.
I invest a fixed amount of money monthly into ETF funds.
Then I invest in companies which I really like and think that they will grow at least 5x over the next 5 years. Companies that I think will change the world for the better with technology and help battling climate change. Obviously, I won’t name these companies as I don’t want to get into any legal troubles by giving recommendations, because I am not a certified investment broker.
My strategy for buying stocks is also very simple:
Buy stocks periodically, e.g. every three months to average the price and reduce losses in a steep drop but also maximise gains.
Buy dips and don’t freak out when a share drops heavily. On average, the stock market recovers after just 3-6 months! Even after a recession.
Hold. Stick to your long-term goal and stay calm when there is a storm. Don't panic sell or buy.
So far I have really enjoyed investing and learning more about it. At this point, I just want to give a special thanks to my wonderful friends Pete, Tobi and Arto who have taught me a lot :)
→ The Egg - A Short Story
Gerhard: This short story reminded me of a previous discussion initiated by Pete that when we die, our atoms will dissolve and merge again with nature - a closed system. I honestly don’t want to say much more, because I don’t want to shape/influence your expectations before you watch this beautiful short story.
All I can say is, enjoy :)
Pete: I actually had never seen this before. It took me a bit to get my little mind wrapped around it but I actually quite like this take on the concept. It’s obviously very much fictionalised (it was written by the author of The Martian) and less rooted in science but there are some key takeaways;
time - I never thought to think this could actually play a part in the process and it’s quite novel thinking that parts of ourselves could be sent to different times and spaces whilst other parts are the building blocks of the future.
knowledge retention - This one is a bit of a stretch since I like to think of the brain as a battery and when your battery depletes there’s no data retention. But it's very cool to think that if it didn’t and we retained our knowledge over time slowly forming a great consciousness. Even though we actually do parts of this through passing down genes via offspring.
All in all a very neat sci-fi way of seeing things and another great video by Kurzgesagt. Thanks for the link!
It is a paradoxical but profoundly true and important principle of life that the most likely way to reach a goal is to be aiming not at that goal itself but at some more ambitious goal beyond it.
Around the web
→ Instagram has topped a 'most invasive apps' list - Seriously delete the app. I only access directly through Safari now but more and more contemplating removing myself off the service - Pete
→ GameStop surges 40% then wipes out gain completely - A great example of being careful when buying into hype - Pete
→ Atomic Habits: How to Get 1% Better Every Day
→ The science-backed ‘Future Self’ strategy can pave the way to greater success - This article supports the previously mentioned book Atomic: Habits which also talks about building your identity in order to become your own hero - Gerhard
→ The Most Famous Paradox in Physics Nears Its End
→ Physicist creates AI algorithm that may prove reality is a simulation - Very clickbaity title! Please note that the actual research paper doesn’t quite support this piece of news. However, the experiment itself is still amazing and this guy deserves to be written about :)
→ Mark Zuckerberg's phone number appeared among the leaked data of Facebook users, according to a researcher
♥ Pete & Gerhard