I started investing in 1997. Correction: I traded some stocks back in 1997 and 1998, and I made a tiny profit. I have nothing to show for it because I pretty much spent whatever profit I made from the handful of stocks I bought. I was single, working in a bank, and started to get into personal finance (thanks to “Personal Finance for Dummies” by Eric Tyson, which is a great book by the way). Then life happened.
I bought my first car, bought a franchise business, got married, had kids, and started a new business with my wife. We had money in the bank and made money in a subdivision lot we sold. And I started MoneySense in 2007 with my publisher, took the Registered Financial Planner (RFP®) course, and built our conference and seminar business around personal finance and investing. Yet all those years, I neglected to invest.
The only remnant of my early investing years was a mutual fund I invested in back in 1997. It was and remains the best-performing equity fund. I bought shares at 2.6423 Net Asset Value Per Share (NAVPS). Today, as of this writing, it’s at 36.9759. For the past 21 years, it has grown over 14 times or returned 1,300%. Compounded annually, that translates to 62% growth. I looked at the chart and it looked like a rampaging bull, leaving the PSEi to bite its dust. If I had placed P1 million back then, I probably could afford to retire today, at least partly. But I didn’t. I invested much, much less, which explains why I’m still working.
Of course, I didn’t have P1 million back then. But if I had invested the same measly amount once a year for 21 years, I would definitely be fully retired by now. In fact, if I had invested that amount every month for the next 21 years, I would have been a multi-millionaire many times over. But I didn’t.
So what lessons did I learn from this? First, I am thankful I never withdrew that investment; at least I have a very good investment that continues to grow. Second, even when there were years my investment lost money (remember, I invested right before the Asian financial crisis), over the long run, it made a lot of money. Third, stocks remain the superior asset class in the long term. Fourth, buy-and-hold investing (at least for pooled funds) really works. Fifth, I could have made more money by investing more. Sixth, I could have made more money, even if I didn’t much to invest, if I invested small amounts regularly. Seventh, it’s not too late.
And so, for the past few years, I have made it a point to invest consistently and regularly, using cost averaging practically every month instead of market timing and putting in a lump sum. I dabble in individual stocks for fun but the bulk of my portfolio is in equity funds. Of course, these days, I have no choice but to invest much larger amounts to meet my target retirement fund in 20 years. Time is not on my side. It was 21 years ago, and I envy 20-something Millennials who can invest small amounts regularly (and feel sorry for the majority who don’t).
If you are young, maybe in your 20s, I urge you to start investing now. Like me, if you’re not intentional and determined, 10 or 15 years will pass by and you would have missed the opportunity to achieve financial freedom at a much early age. Today, it’s so much easier to be an automatic investor. There are banks, investment companies, insurance firms, and stockbrokers that can automatically debit your bank account and transfer a regular amount (a very small amount really) every month or whatever to a fund of your choice. You wouldn’t even feel the pinch because your salary or income will just grow through the years. Before you know it, you would already be a multi-millionaire.
But if you’re in your 40s or 50s, don’t lose hope. You can still catch up. You just need to invest a lot more. But you can do it.
Do it, do it now. This investing issue is for you.
