Loose Change is a series of blogposts by members of the UK Money Blogger community where they let loose on a financial issue important to them.
This week Josh at Everyday Investor shares why he started investing and how he’s continued to learn.
Why I started investing
Discovering the world of investing
Let me take you back in time several years. I had finished university and had got myself a job. Finally, I had some income that didn’t have to immediately leave my bank account. I began to become more interested in money and set-up a savings account to work on building up a little pot.
As my interest in money grew, I started to notice just how much finance featured in the news. “The market’s up today”. “The FTSE indexes have made gains this week”. I kept hearing and reading headlines like these everywhere.
I became increasingly curious. What was this world that existed beyond my knowledge? How could I get involved?
I began to read more and more. I wanted to learn how to start investing in the stock market. The more I learned, the more excited I became about the opportunity to become an investor. I discovered legendary investors such as the billionaire Warren Buffett and Ray Dalio.
My financial education at school wasn’t great. I’d always assumed I’d pay into a pension and that would provide me with my income in retirement. Now my eyes were open. What if I started investing? Could I build a sizeable pot to enjoy later in life?
Starting to invest was a learning experience
So, I had learned enough to work out how to open an online account with a share-dealing platform. I discovered it was incredibly easy. Opening an account took minutes and then it was all there in front of me. I started searching through what seemed an endless list of companies whose shares I could buy. I was pleased to see lots of familiar names – some of my favourite brands.
Buoyed by my new found enthusiasm, I gathered together several hundred pounds and snapped up shares in some companies. This included some small businesses on the Alternative Investment Market. My research was fairly limited and a few months later it turned out that some of my investments weren’t the smartest. A couple of the companies had seen their share price plummet and my portfolio was in the red.
Now, everyone has to start somewhere and I’ll be eternally grateful I started to invest when I did. However, I didn’t really understand what I was doing at the start. There are certainly better ways to start investing. For example, many beginners like to start out with investing in a fund rather than trying to pick individual stocks.
I resolved to get educated and learn about all the different options, styles and best practices such as diversifying your portfolio. I learned that investing is a long-term strategy, fuelled by the power of compounding (which Albert Einstein reportedly proclaimed as “the 8th wonder of the world”).
Putting myself in control
I began to study long-term investing more and more. I wanted to learn how to start investing the right way. I read about the long-run returns that major markets have provided over time. History has shown us that over the long-term, the economy grows.
Investing in the stock market provides the opportunity to take a stake in this long-term growth. This is what I find so powerful about investing. I can make my money work for me, compounding over the decades to come. I decided that Einstein was right (he was a celebrated genius after all). Compounding really is a miracle. I know that I will thank myself one day for taking control of my future and becoming an investor.
Keep on learning everyday
You might be wondering, what happened to those original shares I piled into? Well, some of them I sold to allow me to invest in other shares and funds. However, I still own one of them to this day and do you know what? It’s by far the biggest riser in my entire portfolio. Investing can be a bit of a rollercoaster but every time I check in on this particular share, I am reminded of the power of the long-term.
Since the early days I have continued to learn more. My motto is to keep learning everyday. There is always something else you can know that will be valuable to you.
With my long-term strategy sorted out, I now take great enjoyment in watching the market, learning about new companies and how they are doing. Yes, there are risks involved in any type of investing. However, I like to see the ups and downs as part of the journey, as I strive to reach my ultimate destination in the future.
Recent times have provided yet another learning experience. The market has seen a lot of volatility during the coronavirus pandemic. Some parts of my portfolio experienced quick declines whilst other parts held firm and even gained ground. Whilst the immediate future still looks uncertain, with more volatility likely to follow as a result, it has re-affirmed my belief in taking a long-term view.
What motivated me to start investing
If I had to point to one single desire that motivated me to start to invest it would be the desire to take control of my future.
I aspire to be financially independent in future as I’m sure many of us do. True, I can’t control what the stock market will do and there will likely be more challenges along the way but I understand what it is likely to do based on long-term history. What I can control is taking action that will put me in a better position to achieve my goal of financial independence. For me, that action is investing.
This post is not personalised advice and should not be considered an invitation, inducement or recommendation to engage in any particular investment activity.
Articles in the Loose Change series are written by members of our community. The views do not necessarily represent those of UK Money Bloggers or other members.