Like many others, I've only started seriously investing in the last year. I think I set up my self-directed trading account at my online brokerage at the end of April last year. Like I said above, a lot of it was just setting aside money here and there while I worked and not really paying attention to where it went. While I'm (unfortunately) in Canada, you see that my DPSP from work is exposing me to Canadian equities, while my self-directed stuff is mostly dealing with US equities, so that gets me a little bit of both markets.
Remember that inflation is about 2% per year on average, so any investment you make will lose money
if your parked money doesn't earn at least that much in a calendar year. This is why "cash is trash". A decent investment will hit 4-10% and a great one will be 12%+; but make sure the risk is in line with your returns.
>Good/bad investments that did/didn't pay off
This is actually a great question, since you only ever hear about success and never the failures. Remember that it's okay
to make bad decisions, it's how you learn, and it's important to identify toxic assets that you need to ditch, and how to navigate fuckups.
Any managed funds (mutual funds and ETFs) have a management fee that's built into the fund itself. This is so that the market maker is able to receive compensation for it. ETFs cost something like 0.40% per year at most
. Banks in Canada typically have a management fee of 2.00% per year at minimum
. I actually changed my mutual fund contributions because that 1 or 2% could be better sunk into basically any other investment. After one year of contributions, I was up maybe 1% after taxes, fees, and expenses and inflation costs. Not ideal.
A more exciting example is that when I started trading last year, I put $1200 into the market. This was at a time where everything was correcting itself and you would make money on literally anything
as long as you had a position in it. So in a month or two, I made $200, which is about 15%, pretty good return. So I put another $1200 into the market, did another 3, 4% on trades. At the time I figured that if I could earn 1% per week on $2000 in, I'd make $24,000 in 5 years.
I had a coworker who was looking at /r/pennystocks (I don't use Reddit myself) and GNUS was trending, so I made $100 on that too. He suggested another stock, in the same sector called Cinedigm (CIDM). So I thought that was free money, went all in at $6.00 a share and... it collapsed to about $2.20 in about 10 minutes. No joke, if I had bought it 15 minutes sooner or later, I would've avoided the peak and wouldn't have lost 80% of my money.
So what would you do in that situation? I didn't panic sell, I was too stubborn for that, I was okay to wait it out, but boy did that feel awful. I felt a little pensive for a good two hours. What I ended up doing was waiting. And waiting. And waiting. While I went "all in" I still had additional cash in my bank account. So about 2 months later, I bought more shares at $1.80; this diluted the average cost per share down to about $3.50. I waited another 6 months and bought even more shares at $1.20, and my average was about $1.80. It spiked again to like $2.00, $2.20 or around there, by carefully averaging down (at the risk of putting more money against it), I was able to navigate a bad entry point and turn it into a modest profit ($100 or so).
For the amount of risk I took and the amount of money I earned for the amount of time it took I would say it was not worth it; however, I was able to exit in the green, which is what mattered. If I was more prudent, I would have invested it elsewhere and had better returns, but that's part of the learning process.
After I exited that trade entirely, I ended up buying more shares of it when it dipped. After sticking with the stock for almost a full year, I had a good sense of it's ups and downs. For example, every time there was good news, it was heavily shorted and the price was suppressed, so I used "good news" as an indicator of an upcoming dip and used that to buy more shares cheaply. I have about 3800 shares at 1.34 average cost, and while I'd like to exit it at $1.80 - $2.50 on a swing trade, I legitimately do think in 2-3 years it has much better prospects if I hold onto it.