From $600 to $250,000: My 5-Year Investment Journey

The Power of Starting Early

When it comes to investing, many people fall into the trap of waiting. They wait until they have more money, more knowledge, or feel more ready. But what if I told you that waiting could be the biggest financial mistake you ever make?

At 18, I was broke and knew nothing about investing. My parents, immigrants from the Philippines, instilled in me the belief that money was the root of all evil. For years, I saw money as taboo, something merely used for survival. But a chance encounter with a book while thrifting for clothes changed everything.

The Concept That Changed Everything

One page in that book about financial freedom stopped me in my tracks. It said, "Time isn't just money; it's the most powerful investment multiplier you have." This simple statement shattered my preconceptions about wealth-building.

I had always thought that to make money or build wealth, I needed:

• A lot of money
• More knowledge
• A high-paying job
• The perfect timing and circumstances

But in reality, time was the most valuable asset I possessed. It became clear that it's not necessarily how much you invest, but when you invest that matters, thanks to the power of compound interest.

Taking the Plunge: My First Investments

Instead of waiting until I felt ready or had enough money, I decided to start investing with whatever little I had. Here's what I did:

1. Cut back on expenses
2. Started new side hustles
3. Saved as much as possible
4. Prioritized investing

I put my back against the wall and forced myself to find money by any means possible. Some methods I'm proud of, like starting my first business and budgeting carefully. Others, not so much (like "borrowing" eggs from my dorm lounge).

In my first month, I managed to invest $600 into the stock market. It wasn't much, but it was a start.

Facing the First Major Setback

Almost immediately after investing, I faced my first major challenge. The stock market plummeted due to global events. Seeing my hard-earned $600 shrink was gut-wrenching. I questioned everything:

• Was this a mistake?
• Am I missing something?
• Maybe I'm not smart enough for this?
• Should I just take out what's left and save it?

This is when most people panic and give up. I almost did too. But then I noticed something interesting: experienced investors were talking about buying stocks "on sale."

Staying the Course

Remembering the book that started it all, I decided to stay the course. I knew that if I wanted to change my financial future, I couldn't give up at the first sign of trouble.

But I also knew that watching my portfolio fluctuate daily would drive me crazy. So, I made a crucial decision: I automated my investments.

The Power of Automation

Automating my investments was a game-changer. It allowed me to:

1. Remove emotion from the equation
2. Stay consistent with my investing
3. Reduce stress and anxiety
4. Focus on other aspects of my life and career

This automation continued to run in the background for years, ensuring I was consistently investing even when I wasn't actively thinking about it.

The Snowball Effect

As time went on, something incredible started to happen. The side hustles I had started to fund my investments began to take off. One of them even turned into a six-figure business, allowing me to invest even more than I had initially thought possible.

Here's how my portfolio grew over the years:

• Year 1-2: Still in the negative
• Year 3: Up over $20,000
• Year 5: Over $250,000, with $70,000 from investment returns

The power of compound interest had kicked in, and the results were mind-blowing.

Lessons Learned and Mistakes Made

While my journey has been successful overall, it wasn't without its share of mistakes. Here are some key lessons I learned:

1. Avoid the Get-Rich-Quick Mentality

In the beginning, alongside my long-term investments, I tried day trading options and picking individual stocks, hoping to become a millionaire overnight. This cost me thousands of dollars and caused significant stress.

Lesson: For beginners, it's best to stick with dollar-cost averaging into index funds. It's less stressful and often more profitable in the long run.

2. Don't Overinvest

In my enthusiasm, I often invested too much without considering my other financial needs. This led to a situation where I had to sell $19,000 worth of stocks to pay taxes, potentially triggering a tax event and missing out on future gains.

Lesson: Focus on investing a sustainable percentage of your income rather than trying to invest as much as possible. Balance is key.

3. Talk About Investing with Others

For a long time, I felt alone in my investing journey. I wish I had been more open about it with friends and family.

Lesson: Building wealth is a long-term game, and it's helpful to have a support network. Talking with others can provide new insights, help you avoid mistakes, and make the journey more enjoyable.

Key Takeaways for New Investors

If you're just starting your investing journey, here are some crucial points to remember:

1. You don't need to be rich to start investing: Even small amounts can grow significantly over time.

2. Start now: The power of compound interest means that starting early can have a massive impact on your wealth over time.

3. Consistency is key: Regular, automated investments can help you build wealth steadily over time.

4. Learn from mistakes: Both your own and others'. Don't be afraid to seek advice and learn from more experienced investors.

5. Balance is important: Invest consistently, but make sure you're not neglecting other financial responsibilities.

6. Stay the course: Market fluctuations are normal. Don't panic sell when the market dips.

7. Educate yourself: Continuously learn about investing and personal finance to make better decisions over time.

Getting Started with Investing

If you're inspired to start your own investing journey, here are some steps you can take:

1. Set financial goals: Determine what you're investing for (retirement, a house, etc.) and your time horizon.

2. Create a budget: Understand your income and expenses to determine how much you can invest regularly.

3. Build an emergency fund: Before investing heavily, make sure you have 3-6 months of expenses saved.

4. Research investment options: Look into index funds, ETFs, and other low-cost investment vehicles.

5. Open an investment account: Choose a reputable broker with low fees and user-friendly tools.

6. Start small: Begin with whatever you can afford, even if it's just $5 or $10 a week.

7. Automate your investments: Set up regular, automatic transfers to your investment account.

8. Diversify: Don't put all your eggs in one basket. Spread your investments across different asset classes.

9. Stay informed: Keep learning about investing, but avoid making rash decisions based on short-term market movements.

10. Be patient: Remember, investing is a long-term game. Don't expect to get rich overnight.

The Impact of Long-Term Investing

Looking back on my five-year journey, I'm amazed at how far I've come. Starting with just $600 and growing it to over $250,000 is a testament to the power of consistent investing and compound interest.

But the impact goes beyond just the numbers in my portfolio. This journey has:

1. Improved my financial literacy: I've learned so much about personal finance, economics, and business.

2. Developed my discipline: Consistently investing, even when it's tough, has strengthened my self-control in other areas of life.

3. Opened up new opportunities: The knowledge and experience I've gained have led to new business and career opportunities.

4. Changed my relationship with money: I no longer see money as taboo or evil, but as a tool for creating freedom and opportunity.

5. Given me hope for the future: Knowing that I'm actively building wealth has reduced financial stress and given me more confidence about my future.

Final Thoughts

Investing isn't just about making money; it's about creating opportunities and securing your future. Whether you're 18 or 80, the best time to start investing is now.

Remember, you don't need to be perfect to start. You'll make mistakes along the way, and that's okay. What matters most is that you begin, learn from your experiences, and keep going.

Five years from now, you'll either look back with amazement at how far you've come or regret that you didn't start sooner. The choice is yours.

So, take that first step. Put your money to work. If you work hard for your money, make sure your money works hard for you. It's the path to financial freedom and a future where you're not just trading time for money.

Your future self will thank you for the decisions you make today. Start small, stay consistent, and watch your wealth grow over time. The journey of a thousand miles begins with a single step – take that step today.

Resources for Further Learning

To continue your investing education, consider exploring these resources:

1. Books:

   • "The Simple Path to Wealth" by JL Collins
   • "The Intelligent Investor" by Benjamin Graham
   • "A Random Walk Down Wall Street" by Burton Malkiel

2. Websites:

   • Investopedia - for learning financial terms and concepts
   • Bogleheads.org - a forum dedicated to low-cost, long-term investing
   • Mr. Money Mustache - for frugality and investing advice

3. Podcasts:

   • "Choose FI" - for financial independence strategies
   • "BiggerPockets Money" - for real estate and general investing
   • "The Investor's Podcast" - for stock market and bitcoin discussions

4. YouTube Channels:

   • Graham Stephan
   • The Plain Bagel
   • Two Cents

5. Online Courses:

   • Coursera's "Financial Markets" by Yale University
   • edX's "Finance for Everyone" by University of Michigan

Remember, the key to successful investing is continuous learning and adaptation. Stay curious, stay informed, and most importantly, stay invested. Your future financial freedom depends on the actions you take today. Start your investing journey now, and watch as your small, consistent efforts compound into significant wealth over time.

Article created from: https://www.youtube.com/watch?v=Cbtoxr0R_7I