Investing has always been a curiosity for me. For the longest time, before we started investing, I’ve been hearing two extremes about it—either it’s just glorified gambling where you could lose all your money in a blink of an eye, or it’s the ultimate secret to getting rich.
And if you’re hearing two extremes about one thing, it naturally leads to confusion. For me, it sure did. Of course I’d like to be rich and not worry about money anymore (who doesn’t?) but oh, the horror stories…
Fear of a thing, I find, mostly stems from lack of education. You simply fear what you don’t know.
How We Got Started Investing
So at 26 years old back then, I finally decided to do something about that fear. I researched as much as I could about investing, the stock market, and the different methods and platforms to invest. When I felt that web articles and YouTube videos are not giving me enough structure, I decided to get a book about investing.
After doing research on the best book to get for investing beginners, I decided to get The Only Investment Guide You’ll Ever Need by Andrew Tobias. It’s a life-changer—it’s the biggest push that finally got us to invest.
So at the beginning of 2020, we finally opened our Roth IRAs. We started the year with such high hopes because the stock market was doing so well at the time.
And then guess what, the big C happened…
We’ve only just started investing and everything came crashing down. For beginning investors, that’s incredibly shaking. I used to check the market everyday, watching the unbelievable growth in our accounts, only to experience the other side of investing, which is the incredible losses. So for my mental well-being, I stopped checking the market for most of 2020.
But we didn’t sell our stocks. We didn’t withdraw any money at all even if the market was tanking.
How did we manage to do that?
That’s because we have educated ourselves enough to know that that is the nature of the market. It goes up and it goes down quicker and with more intensity than a rollercoaster ride—heck, at least roller coasters are predictable!
As long as you don’t sell at a low—that means selling your stocks at a lower price than when you bought it—then you’re not really losing any money. Best thing you could do is to ride it out until the market is high again. That’s what we did in 2020. And that’s what we’re doing now.
The only regret I had back then was that we didn’t buy more when the market was really low. As total beginners at the height of everything that’s happening in 2020, we were wary of parting with our liquid cash because of so much uncertainty going around—the stock market was crashing, toilet paper was nowhere to be found, job losses were happening left and right, and the death toll was rising—and to add on top of all the craziness going on, we wanted to buy a house in the middle of it all. And we actually did!
Because of all those factors back then, we weren’t able to buy more stocks at their sale price. And that’s like the golden rule of investing—buy at the lowest that you can and sell at the highest that you can.
Investing in 2022
And now, the stock market has been performing poorly again. We are, after all, in a recession. But we are doing the same thing that we did in 2020: we’re not selling our stocks. The different thing that we’re going to do this time though, is to actually take advantage of the low prices and buy more stocks.
Have we gotten just less afraid to risk losing our money as our time exposed to investing grew? Possibly. Or it could just be time in general, giving you more wisdom and perspective on things.
I’ve realized that if ever we totally lose everything—most of our money is invested in low-cost index funds—then it probably means we’re at a total societal collapse. That means every business, from small to large, has totally tanked. And if so, I’d probably have bigger worries than losing money in the bank…
I’ve also fully accepted the fact that it’s totally possible that we’ll lose a large chunk of what we have put on the stock market. After all, no matter how smart-sounding or seasoned somebody is as an investor, no one and absolutely no one could totally predict the market. So yeah, when the time comes for us to sell our stocks, it might be at a lower price than when we bought it.
And you know what, that’s alright.
It’s not the end of the world if that happens. Going into this, we’ve already calculated that risk—we’re treating the money that we invest into the market essentially as disposable income, and have accepted that that money could be gone in a second.
Once you get to accept, truly accept that possibility, investing becomes a lot easier. It really depends on how much risk you’re willing to take. We are willing to risk losing it all for the possibility of growing our money at least 10% or at least enough to fight inflation. At least then, we have a fighting chance rather than just letting the money sit at the bank.
Building an Emergency Fund is the Secret
We’ve also built up an emergency fund—we did that first before starting to invest. At first, we started with six months of expenses, it has grown now to at least a year of expenses. We’d like to grow that even more to two years’ worth, but planning to do that simultaneously while growing our stock portfolio.
The point is, knowing that we have an emergency fund makes accepting the possible total loss of all our investments a lot easier. That’s just the kind of people that we are—we like our safety nets. And if you’re the same, build your emergency fund first to the level that you’re comfortable with, before you even start to invest.
So are we still going to invest in the middle of a recession?
As long as we have extra income each month after covering our needs. As long as we have an emergency fund that we’re comfortable with.
And because we still have faith in the market and I guess, society in general.
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The book that convinced us to start investing and being more proactive with our money and lives: The Only Investment Guide You’ll Ever Need by Andrew Tobias
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