An Investing Journey Begins
Thinking in terms of years, rather than days, we get the right perspective
Recently I’ve broken 12,000 followers on Twitter and this Substack community is now in the thousands. What I’ve come to know is that we all have a common interest that circles one questions. “How do we grow and protect our wealth over time?”
See, the thing is that many of us don’t always think in terms of years or decades but end up thinking in terms of days/weeks/quarters. This way of thinking is exactly why I felt inspired to write this publication today, an investing mindset for the generations.
Let me start by telling you briefly about me. I begin my investing journey in 2017/2018 time frame where I shifted my focus to long term wealth creation. At this time, I was 27 and today I am now 30 almost 31. The morale of the story, I am still new and learning every day.
I admire the investors who have made their millions because it’s not easy. They’re typically older than me in their 40’s, 50’s and 60’s with the exception of a few unicorns who began their journey’s in their early 20’s and are now millionaires in their 30’s. Regardless of the present age or when they started, there’s one universal characteristic I have noticed with every one of them. They started, they never quit and they never stopped getting better.
The hardest part is getting started
Investing isn’t a game of instant gratification and on day 1 when, maybe, all you have is $1,000 to your name the thought of millionaire is a distant (very distant) thought. I believe this is precisely why a large majority of investors find themselves chasing stocks that could double (GME & AMC) and investing into wildly volatile crypto tokens. Beginning investors may only have a few $1,000 and they want more because the end goal is the same, everyone wants to be a multi-millionaire and financially free.
Quickly, many investors may lose their few thousand dollars and then give up only to realize this isn’t that easy. Maybe, it’s quickly understood that there is no easy path to millions. Let me assure you, there’s not and there’s a way to do this thing. This is a game of delayed gratification, long term discipline, cash flow, and working with your greatest asset of them all: time.
I am not a multi-millionaire yet but I’ve successfully scaled my portfolio from $500 to six figures+ over the course of a few years. This tells me that I’m on my way, especially at 30/31. Looking back, I can confidently telling you that breaking $10,000 may have been the hardest step to take because it does require a certain level of newly acquired commitment and dedication. More importantly, it took patience and a long term way of thinking rather than throwing my money on something that “just went up”.
If you find yourself in the beginning and you’re looking to take control of your financial destiny, you should first understand that this is a journey. This is not a get-rich-quick scheme that many Tik-Tok and social media influencers may lead you to believe. There isn’t a “winning formula” or looking at charts a certain way, ForEx, Crypto, or anything. It’s time, patience, discipline, and knowledge.
The long term mindset
The beautiful part about investing is how many different types of asset classes you can choose from. We have stocks (which I mostly focus on), real estate (shifting focus here), crypto, bonds, and businesses. What’s important to know is that every one of them require a similar approach with the first step being acquiring new knowledge to learn about the asset class and how it behaves. You must first become a student of something to learn how to control it otherwise it controls you. You must first learn that money, and debt, is a tool to acquire freedom but if you don’t understand it, it will control you for the rest of your life.
When you learn HOW to invest and you become good at it, it does act a lot like a Snowball rolling down the hill. At first, your portfolio makes very small moves both up and down. Over time, it begins to feed in on itself. For example, let’s say you start with $500 in your account, here’s an example trajectory of what it looks like over time when you begin:
After Year 1: $10,000 - $12,000
Year 2: $40,000 - $60,000
Year 3: $100,000 - $150,000
Year 4: $220,000
Year 5: $375,000
At this point, you really begin to see what years of discipline, saving money, and allocating to your portfolio begins to do. If your portfolio returned 20% and you have $100k in it, your liquid net-worth will increase $20,000. If your portfolio is $500k and it increases 20% annually, it will increase by $100,000 (more than what the average American makes).
The only way to get to a point your portfolio begins to out perform your salary is by staying focused, allocating capital to it, maintaining a growth mindset, and learning HOW to invest. Short cuts are rarely rewarded and rarely brings the rewards investors would be looking for. Once you learn the “how” behind investing, capital begins to gravitate toward you like the law of attraction.
Never stop getting better
You’ll be amazed how much wealth you accumulate by focusing on your skills first and your portfolio second. Your portfolio eventually becomes a reflection of your ability to manage it, generate cash-flow, and pick the right “deals” the various markets offer you at any given time. More importantly, your ability to identify and manage risk in the inevitable draw downs the markets will produce.
What you begin to realize is that it takes risk to produce returns. The higher the returns you’re seeking, the higher amount of risk you’re taking. Eventually, seeing your portfolio decline is as natural as seeing it increase. It becomes more important focusing on what you did wrong that created that decline and what you could have done better to prevent a large draw down. For example:
In real estate, you may have structured a bad deal for a flip/rental property
In stock picking, you may have bought a stock too high or thought too emotionally
In crypto, you may have bought a coin too high based on hype
In business, you could have been drowned out by competition or had a flawed business plan
In any case, an investor/entrepreneur must take accountability for any potential set back. More importantly, do not be discouraged by set backs but begin to plan a way to recover and learn from your mistake(s). It is the persistence and long term outlook that creates success in investing. Don’t be discouraged by seeing your portfolio off its highs but think of a new way to get back to the highs and create new ones.
If you’re looking to become better, try to read an investing book or join a community of investors better than you. You are who you expose yourself to and investors who are more experienced typically offer a wealth of knowledge and experience. I have found that it’s not necessarily the amount that is an indication of whether an investor has mastered an asset class but it’s the exposure and survival to various market cycles.
In the stock market, you could do well by simply buying index funds or the S&P 500 over time. However, doing well while picking stocks over time is a mastery of the asset class all in itself and it is rare. The market cycle will test many stock pickers.
Looking ahead to 2022 and beyond
An investor must commit themselves to longer term goals, not only for 2022 but for the years to come. If we come back to my age (remember I am 30, turning 31) this is where the greatest asset is that any one of us has. If you think about where you are today, where would you like to be in 1 year from now? What account value would you like to see and what will you do to get there?
In relation to the stock market, it’s fair to remember that these are businesses and that an individual stock is a piece of equity within that business. As an investor, your goal is to buy/pick the best businesses and invest into the businesses long term performance. That performance is measured by revenue and earnings growth over time and the market rewards businesses that produce the best numbers.
This SubStack is dedicated to sharing my research findings over this year as well as discuss the various market cycles we will find ourselves in. My portfolio performed moderately well but the growth stock sell off did hamper my returns that I had while my portfolio was at its highs. Regardless, I am convinced that now is the time to accumulate and buy growth stocks. The market has decided that growth stocks suck because the federal funds rate may temporarily go up a few points in the short run (sounds silly because it is). I intend on taking advantage of this.
What are your goals in 2022? Do you want to start a business? Grow your portfolio to a certain amount? Become a new type of investor?
Share your thoughts:
I’ve got a lot of content planned for you guys especially as I’ve almost fully recovered from COVID. To get an idea, here’s what I’ve planned:
Year in rewind, next year and the expected market cycle(s)
A guide to Fundamental analysis
Monday.Com, leading SaaS company
Until next time! Stay tuned, & stay classy.
Dillon
Awesome write-up and perspective. Being only 6 months into the journey of individual stocks, I've come along way and learned a ton in the process. The recent sell-off did rattle my conviction in whether or not my approach is anything remotely sensible, but it's through this community and others that I find support. Transitioning to mostly growth in November probably wasn't awesome timing either 😏 Looking forward to 2022 and more excellent content!
Have requested your recent portfolio, still didn’t hear back. This is paid service and would be good to atleast know where / how you are invested