Aaaahhh… the largest investment struggle is definitely suffering from paralysis by analysis. You know the feeling that if you wait a little bit longer, you will have a chance to pick-up the right stock at the right price? The market drops by 10%? Wait a little longer; the big crash is only starting. The market is up by 10%? Just wait for the next correction, it will be worth the wait. Then, 3 years later, you are still on the bench wondering where everybody goes…
Here are my tricks to get in action
If you wonder what this picture is about; it’s my RV where I lived for 12 months between 2016 and 2017. I decided to make a bold move, retire at 35 and travel the world with my family. I decided to jump and take action. That was the best decision of my life. If you want to feel like that after investing your money today instead of waiting for another decade, I’ve prepared a list of tricks to help you get out of this paralysis. If you are looking for a more in-depth approach, I have something for you at the end of this post…
01 Write down a potential buy list. There is nothing better than thinking about the future without committing completely. By screening the market and identifying 10 stocks that would make a good fit in your portfolio, you imagine the future, but you don’t invest just yet. This is the first step to getting out of your investing rut.
02 Write down an investing thesis on each stock. After selecting interesting picks, start writing down all the good reasons why this company should be in your portfolio. What are their competitive advantages? What are their growth vectors? What will make this company great in 10 years? The more detailed you get on this step, the closest you will become to being convinced to invest.
03 Establish the worst case scenario. The reason why you don’t invest isn’t because you want to make sure you pick the stock at a perfect price. Let’s be honest. The real reason is that you fear of buying right before a market drop. You know Microsoft (MSFT) is an amazing pick, but you would hate yourself to buy it at $95 and see it drop down to $78 two months later. Take your list, go back in time and look at how each company reacted to 2008. Then, add another 3 years to see how fast the stock price recuperated. Don’t forget to add the dividend into your calculation. You will be amazed how fast a company can bounce back.
04 Start small, but start. I can appreciate that you are terrified to invest, let’s say, $100K in the stock market next month. You have worked hard to amass this amount, and you don’t want to see it melt away like cheese in a poutine. How about you start this month by making your first investment with 10% of your cash? I did take two months to invest 100K in the market, but you can definitely take twelve and it won’t be the end of the world. It’s like putting your feet in to test to the water. Once you get used to it, you will want to jump in.
05 Focus on the dividend growth. To best honest, nobody knows when the next crash will come. We all know it will happen, especially after 9 amazing years. However, if you complete step 01 and 02 correctly, you will have a bunch of solid companies in your portfolio. Those very same companies will increase their payouts while their stock price drops. The market value is just an indication of what your stock’s worth today. It’s a fictional value unless you sell. However, the dividend paid is real hard cash being deposited in your account. Focus on what’s real.
06 Think about how long you will be invested. You have read that many times, but it is darn right: market timing is nothing compared to time in the market. If you invest for more than 10 years (meaning that your account will show a $0 balance in more than 10 years), then you should not be worried about the next market crash; you will get it anyway! Hahaha! Investing is like driving; you don’t get to focus two feet in front of your car, you need to look further. If you don’t, you will definitely crash your vehicle.
You want more in-depth tricks to buy stocks and build your portfolio?
Six months ago, when the market was trading at its highest level since 2008, I invested the sum of $108,760 in the market. Do you want to know how I invested 100K without blinking? Here’s your chance to take a peek at my investment process. This Thursday, I’ll be hosting a free webinar on portfolio creation. I will show you how I built my portfolio while tossing away the eternal buy & sell struggle. You can register here for free:
You can claim your free spot here
Topic: Portfolio Creation – Addressing the Buy/Sell Struggle
Date: Thursday, March 15th at 1 PM EDT
Description: Many investors struggle with the right timing of buying or selling their positions. We will explore various tools to help you make your investment decisions. We are going to discuss how to build a portfolio from scratch and how to adjust it over time.
A few notes about the webinar:
- While I address a common topic to all investors, this webinar has a Canadian spin.
- You must register with Webinar Ninja to attend. This is completely free and the webinar is free also.
- The presentation is about 25-30 minutes.
- There will be a Q&A session of about 25-30 minutes.
- The webinar works on Google Chrome or Safari from a laptop or computer. (Not compatible with smartphones or tablets)
- You will get the presentation and stock reports to download for free.
- If you can’t make it on time, there will be a full replay available, but you must register to the webinar to access the replay.
I’m a small investor. The most I’ve invested at one time is $5000. So when you talk about investing $100 K all at once, that has no meaning to me.
But I do understand the method of diversity, for safety. And I have never fallen in love with a stock
Maybe one day, you will get a lump sum of money to invest. The key point is to have an investment strategy in place. Even if you start with a smaller amount of money, this is a step that should not be neglected.
Thx for stopping by!
I have around $225,000 that is basically doing nothing. Alright, I very recently put about half of it in Ultra Short Duration ETFs yielding around 1.8%, and around $15,000 in some high yield (but mostly safe) ETFs, but that is about it. I am American, but have lived the last 27 years in Asia and Europe, so I missed out mostly on the investment euphoria in North America. I am 54, and although I did not lose a lot of money in the 2008-9 stock market debacle, it still does weigh on my mind.
I don’t have a lot of regrets about not being involved in the latest bull market. I know there were special circumstances that cause the previous stock market bust, but when I look at the present valuation of stocks, I can’t help thinking I would be crazy to put money into anything now.
Basically, my strategy in the future is to slowly put my money into bonds and bond etfs, and try to get a average yield of around 5%. I know I will be hit when we finally enter a bull market, but it will be nothing like the possible losses that are likely with an investment in stocks. For me, the stock market is almost pure speculation. I am even caught up in it a bit I suppose by thinking that somehow I can achieve 5% return.
You can definitely achieve your goal buy building a bond ladder where a part will renew each year and give you a higher interest rate.
A similar strategy that may be ideal for such an individual is to invest in rate reset preferred shares, especially if you don’t need the principal immediately and are looking more for ongoing yield. Doing this is a bit of an art and science as far as the technicalities of these investments go. It is important to buy these at an appropriate price (the issuing company can redeem these at their discretion at base value) , but the yield is generally a bit better than bonds. The yield is in the form of dividends as opposed to interest and may be taxed more advantageously. Again, it is possible that the higher yielding ones can be riskier, but there are exceptions. Some say these have the advantages of both bonds and stocks, others say they have the disadvantages of both.
I think it’s a great strategy for experience investors. As you mentioned, there are a few more technicalities one must understand before he buys rate reset preferred shares. Liquidity is another factor to consider.
Thanks for this