Investing well is not hard, it just takes patience and discipline
Absolute numbers vs percentages
I have been investing consciously since about a year or ten, of which the first 5 were the hardest. Not because of bad returns, but because of the investment vehicles I was using. I lacked the patience and discipline I have now. And that is totally normal. I looked at the absolute numbers of my returns and found them too small, instead of looking at the percentages my returns were bringing. So I took huge risks to try to make bigger absolute numbers. I see myself dropping money into CFD's, which are leveraged Contracts For Difference, in which you daytrade the market. It all went very well, until it didn't and I lost it all. Hard learning money I am calling it now. Because, without that kind of mistakes, I wouldn't be were I am right now. But what is right now?
Patience and discipline
Right now, and the last few years, I have been consistently investing monthly into a wide variety of funds and cryptocurrencies. I haven't skipped a month in the last 5 years. Because the discipline of being consistent in your investment strategy is key. No matter if you are in a bear or a bull market. With DCA it all is irrelevant, because the long term is the goal. Which brings us to patience.
People can get very frustrated these days because of the horrible year 2022 has been on just about all the financial markets. And crypto in particular. So, the ones that keep their strategy of DCA going this year will be the big winners of the future. It is now that the foundations of future big gains are made. Buying low in bear markets is one of the biggest upsides of DCA. That means, don't stop investing now. To the contrary, if you can, invest even more right now.
A last but not least factor in all of this is the diversification. Because I invest in funds, and there multiple of them, I have a very diversified portfolio.
Which is also very important for the future. If one of the stocks I am invested in through one of those funds, I won't get wrecked. I probably won't even feel it in the returns. And that gives peace and quiet. If you are invested too big in one partical stock or crypto, you are exposed to much bigger risk, and therefor bring a lot of stress on yourself that isn't necessary. And even more, stress takes away common sense you need in decision making. It blurs your vision. So, diversify and stay calm because of it.
I am pretty confident about my investment strategy in the long run. And hopefully you learned a thing or two by reading this.
Have a great day!
Posted Using LeoFinance Beta
Bill Gates famously said that we overestimate what we can do in one year and underestimate what we can do in ten years. Investing is really a long process, at the beginning the small numbers can look quite disheartening, making it seem like we're not moving forward.
I agree with consistency, a bear market is a great occasion to buy from the dip. Interesting article (and also a good reminder...it's easy to get caught in the flow and forget :-))
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