When I first became interested in stock investing I couldn’t wait to make my first investment. As odd as it may initially sound, the hardest part of getting into investing for me was resisting the urge to invest! I couldn’t wait to get started yet I knew that I needed to learn so much more. Sitting on my hands when I had already found companies I wanted to invest in was tough. I didn’t want to miss out on potential profits if the share price went up whilst I waited. Looking back I can see that my focus at the time was more on speculating that investing. For someone asking the question “How should I invest £100?” my first reaction would be against a financial investment and instead to think of an educational investment.
Whilst scrolling through Twitter a while back I saw a response to this query which has always stuck with me since. The response was from Preston Pysh, who runs The Investors Podcast with his co-host Stig Brodersen. I have been listening to the podcast since around June 2016 and really couldn’t recommend it highly enough. Not only can I credit Preston with giving me the inspiration for this post but seeing what Preston and Stig have achieved with their podcast actually inspired me to start this blog. In response to the question “Where should I invest $100?” from a Twitter follower, Preston simply responded “Books”. It’s probably not the response the person was after but it’s the best advice they could have received.
Like with anything, the more you educate yourself on investing the more success you are likely to have. There are many different types of investing strategies and before you start you should find one which works for you. With the amount of free content available on the internet you may not even have to spend much but it’s well worth investing in some good books too. Preston and Stig provide executive summaries of every book they cover on the podcast if you need help choosing a book. Put the time in to learn as much as you can and you will reap the rewards. If you try to take shortcuts then the lessons you learn could cost a lot more than £100. Successful investing is very much about patience, so take your time. As well as trying to find good content you should also seek out good role models.
Since I first learnt about him I’ve been a big Warren Buffet fan and I think one of the main reasons is because his view on investing just makes sense to me. I understand value investing and I’m comfortable with it – which is very important if you are going to be investing your hard earned money. It also helps that I believe him to be a genuine person with good intentions. He has lived a fascinating life and I thoroughly enjoy reading about it. When I think of business role models Warren Buffet is definitely at the top of my list.
If you are wondering where to invest £100 then it’s likely that you don’t have a huge amount of investing knowledge. That shouldn’t put you off though, it was the same for every investor at some stage. I probably should have waited longer than I did before I made my first investment. Luckily for me I became involved during a bull market (and therefore thought I was a natural) but had the timing been different I could have easily started on the back foot. If you have a genuine interest in investing then you should start consuming as much educational material as you can. Try to determine which approach you favour and which people have been the most successful with it and just study like crazy.
When it comes to the point of making an investment you need to ensure you are comfortable with the amount you are investing. If you are worrying about it whilst laying in bed at night then you have probably invested too much (at least for now). Start small and build it up as you go. Good investments will constantly come around so don’t worry about “missing out”. You should know how you will react to certain events before they occur. If the stock drops 20% what will your reaction be? Will you still be comfortable holding it or will you panic and sell? If you don’t already know what you would do then you need to spend more time working this out. For the average investor reacting to the markets will cause you more harm than good. Matthew McConaughey’s character in The Wolf of Wall Street sums it up rather well:
“Number one rule of Wall Street. Nobody, I don’t care if you’re Warren Buffet or if you’re Jimmy Buffet, nobody knows if a stock is gonna go up, down, sideways or in fucking circles, least of all stock brokers, right?”
Before you start investing your hard earned money it’s important that you first invest in yourself. Educate yourself and you will get better results. This goes for anything you want to be better at. Look for people who are already successful at what it is you want to do and study them as much as you can. There are reasons they have been successful so find out what they are. When you reach the point of making an investment be prepared for what could go wrong. Just because a stock pick might look great on paper doesn’t mean the price won’t go down (or WAY down). Be prepared and know how you will react, whether the stock goes up, down, sideways or in effing circles!
Looking to invest in the stock market? Learn how to value a stock first.