Several years back, I started investing. Nothing major, really just learning the basics, like what a limit order is and what a short is. Even more shocking, when I think back, I didn’t even know what a dividend yield was. Oh, the shame I have in admitting that! (You can’t see it, but I have a paper bag over my head as I type this.)
I was using a company called ShareBuilder at the time. It was a pretty simple interface with some basic bells and whistles, and everything a new investor could want. I didn’t have much in the account, maybe $1000 or so.
This experience is a great reminder of one of the most import rules of life, one that I have learned over and over in my life, yet somehow sometimes still need to be reminded of.
The lesson – HAVE A PLAN
So there I am with $1000 or so in my hand and a username and password for my account. What more could I need? Move over Warren Buffet! This can’t be too hard. All I had to do was type in a stock symbol and and click purchase. Now what stock do I want? Um…ummm. I have no idea. I wound up purchasing shares from several different companies that were blue chips and several other companies that I had never heard of, but a guy on the Internet said they would do well. Why did I pick any of the companies? Your guess is as good as mine.
If you would have asked me what type of investor I was, my answer would have been “good!” The reality? Clueless. I bought and sold with every intention of making great profits, but absolutely zero plan.
Some months later, my daughter needed to have a minor surgery that didn’t have a minor price tag. Playtime was over, and I had to empty the account. Somehow, and to this day I can’t explain it, I managed to break close to even. The market gods must have had pity on me. I was extremely lucky. Extremely.
About a year ago, I decided it’s finally time for me to get back into investing. But I didn’t want to just blindly throw money at it for once. This time I would come back with a plan, so I hit the books (and by books I mean the Internet). I wanted to read everything I could about HOW others invest and WHY others invest. What is their goal?
That’s when I learned about passive income, and I was hooked. I am going to get paid to sleep. If ever there was a mission in life for me, this was it. My process of selecting a stock to purchase is now more of a treasure hunt and less a game of pin the tail on the donkey. The stress of worrying about what to do is gone. Now, all of my energy goes into making it happen.
My biggest lessons are to have a clear strategic vision AND to execute a plan to make it happen.
I don’t want to talk anyone into or out of any particular investment vehicle, just make sure that you have a solid roadmap in your head. If you think rental property is your game, great. If you think you can be a day trader, great. If you want to own your own business, great. Just have a solid, well-thought-out plan, because without it you are wasting your money and time. You can make your money back, but time lost is gone forever.