Investing: Avoiding Working Until You Die

The 2008 stock market crash scared the hell out of people. Mostly Millennials who avoid the stock market as a matter of course. This same group regularly complains about their lot in life. They truly believe there is no way to succeed in a world where all they know of investing and the stock market comes from anti-capitalist propaganda, and they believe they have to be millionaires to break in. This, in turn, creates a defeatist attitude toward money and finances in general. "Nothing is real, therefore nothing is worth risking" seems to be the operational guidelines to modern young Americans.

It does NOT have to be like that.

The internet has made investing easy with services and apps like Robinhood and ACORNS which are geared toward beginners. Robinhood does not have minimums so you can start with small amounts of money and increase slowly as money becomes available to you. I've used this service to great effect on my portfolio.

ACORNS automates the process for you. Investing very small amounts into IRAs, stocks, mutual funds, and other financial instruments. They literally help you invest your spare change over time to grow a substantial portfolio. Where Robinhood acts more as an individual brokerage ACORNS is more of a managed fund system similar to traditional mutual fund services, except it's done through an app.

For more in depth knowledge and understanding, I highly recommend Investopedia.com/dictionary This particular page on Investopedia is where you can find many terms clearly defined and how those instruments or terms are used. Knowing the language will help you understand some of the more intermediate and advanced concepts investors and traders use.

Investors Vs. Traders: What's the difference?

An investor is looking for growth over time. Generally, investors don't concern themselves with day to day market moves and price actions as they are invested for medium to long-term goals. The taking of profits (selling positions) is a periodic action taken based on market conditions, the investors tolerance for risk, or simply because they want to or need to.

Traders make money on their trades throughout the trading day. They are constantly doing research for the next days set of trades. They often buy and sell a single stock within hours or minutes of initial purchase and they take profits on a regular schedule. Day trading is ADVANCED and requires more than a basic or even intermediate understanding of trading and investment cycles. Day trading requires a decent knowledge of technical analysis. For this level of investing I would HIGHLY recommend you spend some time reading about this subject. Maybe pick up a book or two on the subject.

"I have downloaded the app (whichever one that is) but I don't know what stocks to pick, projectvxn!"

This part seems tricky at first. But it really isn't.

A company stock is price is based on a number of metrics. Some more important than others. If you find a company you like, but they haven't turned a profit in years and continue to raise capital from investor fundraising alone, then it's probably not a good company to invest in. There are exceptions to this, however.

Here's an example of what I'm taking about:

Capstone Turbine Corporation (CPST)

Capstone Turbine has been under-performing for years. Their stock has remained stagnant, and although they make excellent technology and are positioned correctly, their management sucks and they haven't turned a real profit in almost 18 years. They have service contracts and a few new installation contracts that have kept them afloat and paying the bills. A breakout was expected this year, but their earnings call (and actual conference call with investors) was dismal and triggered a sell-off. They lost 25% of their stock price within HOURS of their garbage performance announcement.

Relying on investment capital to operate isn't necessarily a bad thing. A company does not have to be initially profitable in order to be a good investment. Here's an example:

Eyenovia, Inc. (EYEN)

Eyenovia is a Phase 3 bio-pharmaceutical company that just had some amazing milestones. It relies solely on investment capital to operate and has negative earnings reports as a result. They are developing a micro-fluid smart delivery system for the drugs they are developing for the treatment of various ophthalmic ailment. Their phase 3 studies on some of their more promising drugs have all been completed using their microdosing technology and their results are promising. This is driving their stock price upward and have made them an awesome addition to a new investors portfolio.

Capstone shares are around 78 cents per right now. Eyenovia started last week at $2.70 and now sits at $6.30.

Looking at the histories and fundamental performance of individual companies is extremely important to investing. This is what is referred to as "fundamentals" of investing. Generally, if a company has good fundamentals then it is typically a good investment.

"But why do this at all"?

Because you will work the rest of your life for your 25-50k a year job and never be able to leave it because you will have nothing saved for retirement. Investments generally outperform savings accounts by SIGNIFICANT strides. My savings account with 10k in it earns a paltry .25% interest. luckily I don't care about the interest and I only use that account to store cash. Sometimes I will have a Certificate of Deposit if I need to lock away cash for a period of time. These are NOT growth investments and they certainly aren't profitable. Interest rates this low will not help you.

My portfolio of an initial $2000 has by far outperformed my savings account in the same amount of time. When the stock market is hemorrhaging and looking for a bottom, I am there looking for the good deals. The strong performers who were in a good position to weather storms others folded in. And I'm looking to get them cheap because, as a medium to long-term investor, I'm looking toward the next horizon.

DISCLAIMER:

I am not a financial advisor and I'm NOT giving you investment advice. What I AM doing is advising that YOU DO invest and not work until the day you die.

"If you do not find a way to make money while you sleep you will work until you are dead."
-Warren Buffet

Words to live by. I can't stand the dude, but he is 100% correct here. Investment is the biggest difference between the "haves" and "have-nots". Where do you want to be in this?

a reply to: projectvxn

We were the losers in 2008 and do you know what? we won't do that again.

originally posted by: projectvxn
The 2008 stock market crash scared the hell out of people. Mostly Millennials who avoid the stock market as a matter of course. This same group regularly complains about their lot in life. They truly believe there is no way to succeed in a world where all they know of investing and the stock market comes from anti-capitalist propaganda, and they believe they have to be millionaires to break in. This, in turn, creates a defeatist attitude toward money and finances in general. "Nothing is real, therefore nothing is worth risking" seems to be the operational guidelines to modern young Americans.

It does NOT have to be like that.


[...]

The key is starting early and investing consistently. You don't even have to pick unicorn stocks, but just buying an index fund or maxing out your 401k. The best decision wife and I made was maxing out 401ks from 22 years old.

I like Acorns. I've managed to save about $3000 over the past year just from rounding up my spare change and putting $100/mo in the account. Literally just set it up and forget about it.

originally posted by: InTheLight
a reply to: projectvxn

We were the losers in 2008 and do you know what? we won't do that again.

That was when you should have been buying even more....not selling.

originally posted by: Edumakated

originally posted by: InTheLight
a reply to: projectvxn

We were the losers in 2008 and do you know what? we won't do that again.

That was when you should have been buying even more....not selling.

We are not in control of the buying and selling...that was the problem. I should have taken charge and become a broker myself.

NM

a reply to: InTheLight

I agree.

You definitely want to be in control if you're the one picking stocks.

Wholly invested in mutual funds can be pretty bad when downturns show up.

I prefer sector-wide funds that I can buy and sell quickly.

That's why they invented the ETF:

What is an ETF?

www.investopedia.com...

originally posted by: InTheLight
a reply to: projectvxn

We were the losers in 2008 and do you know what? we won't do that again.

You know what? You will do it about every 11 years.

Of course, if you didn't move any stocks around you have made all that back and more.

Say "thank you Trump."

Of course, smart people made money off of the crash and it wasn't rocket science.

Buy on the dips, sell on the highs.

originally posted by: InTheLight
a reply to: projectvxn

We were the losers in 2008 and do you know what? we won't do that again.

This is the defeatism I described.

Thank you for showing it to others so vividly.

Obviously this thread isn't for you. Though I wish it would be.

originally posted by: projectvxn

originally posted by: InTheLight
a reply to: projectvxn

We were the losers in 2008 and do you know what? we won't do that again.

This is the defeatism I described.

Thank you for showing it to others so vividly.

Obviously this thread isn't for you. Though I wish it would be.

I've never understood why some people don't understand that.

But then again, that's why they are where they are...

~shrug~

a reply to: projectvxn

I have a simple strategy now, move money from stocks (S&P 500 only) to t-bills and bonds , wait for the crash, move money back to stocks until I think it has peaked, move back to bonds wait for crash repeat.

a reply to: projectvxn

I have to add a caveat to this, because it has personally worked VERY well for me.

Investing is fun and there is a certain science to it. I applaud the people that make it easier for the layman, and appreciate the OP.

HOWEVER.

Everyone needs to start by living under their means.

Period.

Because if you can't do that, you will be paycheck to paycheck and windfall to loss... forever.

If you can't just save 10% of your gross, start fixing it till you can.

Once you have 3 months of bills in the bank, start paying off ANY loans and credit cards you have.

Then put 2 years of bills in the bank.

Then start saving 50% of your gross.

THEN save and buy cash your home.

THEN go from there.

Financial advice on how to make money in the markets is all well and good...

If you are in the position to do so.

Just a thought by someone who has done it.

a reply to: Lumenari

AGREED!!!!!!


If you have debts, pay them off before you start investing.

NEVER use credit for investment purposes.

NEVER leverage your assets to buy any stock or financial instrument. This goes for anyone who mortgaged their house to buy bitcoin. DO NOT RISK YOUR LIFE OR LIVELIHOOD ON ANY STOCK OR INVESTMENT.

MANAGE your risks.

There's a reason I kept this OP to beginning level investments and emphasized the use of small amounts of money until you are more comfortable with stocks and investing in general.

a reply to: projectvxn

I think it all well and good for people to dip their toes in the water and figure it out... so I love your OP.

But if you can't do the REAL work towards financial independence then none of it will matter.

That starts at home.

a reply to: Lumenari

Yep.

Don't spend what you don't have.

Don't take on debts that you cannot manage.

Save your money. This is solid good financial sense.

No heavy investment should take place until the above has been done.

However, I will say that many of these apps and services allow for micro investment over time. ACORNS is one such app. These days technology has made investing much less risky, especially for people with small amounts of money, as Edumakated described.

a reply to: projectvxn

Bookmarking this because it'll be a good primer for my son who is thinking of investing.

Readers:

You will notice that I made no reference to Bitcoin or cryptocurrency investing or the use thereof.

Crypto is its own space that is unregulated and very risky. This OP is meant for beginners looking to dip a toe in. This isn't for experienced investors or for people who thrive on financial risk-taking.

I am invested in crypto and heavily so. But I have a bit of experience and it would be a disservice to those I am addressing to recommend risky markets.

I will write a separate thread on crypto, what it is, and why it's good (and bad) for investment. But this is NOT the thread for it.

a reply to: projectvxn

Other than 401K with match, I wouldn't invest s#it until you have a year's worth of food and all basic needs covered (that means physical possession of).

Food, water purification, security etc.

a reply to: infolurker

Well, that's not bad advice with regard to savings, but savings and investment aren't the same thing.

Let's focus on what the OP is about.

If we want to talk survival stuff, then survival forum is available. Though, to be fair, investment is a survival tool. Like any tool one has to learn how to wield it.

originally posted by: Lumenari
a reply to: projectvxn

I have to add a caveat to this, because it has personally worked VERY well for me.

Investing is fun and there is a certain science to it. I applaud the people that make it easier for the layman, and appreciate the OP.

HOWEVER.

Everyone needs to start by living under their means.

Period.

Because if you can't do that, you will be paycheck to paycheck and windfall to loss... forever.

If you can't just save 10% of your gross, start fixing it till you can.

Once you have 3 months of bills in the bank, start paying off ANY loans and credit cards you have.

Then put 2 years of bills in the bank.

Then start saving 50% of your gross.

THEN save and buy cash your home.

THEN go from there.

Financial advice on how to make money in the markets is all well and good...

If you are in the position to do so.

Just a thought by someone who has done it.

Unfortunately, too many people want to buy sh*t they can't afford to impress people they don't know...

A fat stock portfolio won't get you in a chick's pants at the night club, but a fancy car might...