THE BEST INVESTING STRATEGY: TIME
If there was a surefire bet with one stock, we’d all be in it.
The reality is, the best thing for most retail investors is TIME.
I get about 20 DMs a week from people saying, “I’m just starting and I’m 40! I need a stock with the most growth that costs the least!”
And this is how people stumble into high risk penny stocks. They read a post from some random guy, or worse, someone running a pump and dump scheme, saying this stock right here?! At 25 cents a share!! It’s going to $100!!! The Pump and Dump guy knows that stock isn’t getting close to $100 - it’s not even getting close to $1.00. But he tricks his subscribers into buying it, it rallies and he dumps his shares at 50 cents and then sends out an email telling people to lock in profits.
Then I’ll get a DM from someone asking what the next big stock is. They ask if they should subscribe to some discord or private group that’ll share the secret. Here’s the secret: You’re the next hot stock. They’re scamming you. They say a sucker is born every minute and there are ALWAYS gonna be people willing to prey on desperation.
The reason I’ve done so well for myself is because I’ve been investing for 20 years. I started when I was young. So people popping into my DMs at 40 asking what the secret is? They hate when I tell them the secret is time and diversity because in their eyes, they don't HAVE time. They’re 40! 20 years from now they’ll be 60! That’s too long to wait. They have goals, ambitions, vacations they want to take.
The hard truth is, it sucks. There is no easy answer. There is no secret formula to have more money in less time unless you want to take on insane risk. And that’s never a good idea.
Doesn’t stop them from asking what the next hot stock is, though. But here’s the other thing that sucks: I donno. Nobody does because if we ALL knew, we’d ALL be in it. That’s why you gotta be diversified.
Five years ago, a friend told me they couldn’t decide between investing in either Apple or Alibaba. Back then, EVERYONE thought Alibaba was the next Amazon. They figured Apple had already had lots of growth, so they put all of their eggs in one basket: BABA. But over the last five years, BABA is down 55% and Apple is up 316%.
The best solution when you don’t know what to buy is to diversify your holdings between a handful of heavily researched stocks. Here’s another problem with investing: if you OVER diversify, you might find that you’ve got 10 shares in 100 different companies. At that point, even if one takes off … so what?
All of this makes investing sound complicated: When is the best time to invest (now), should I wait to invest (no), what stock should I buy (couldn’t tell ya), are bonds and CDs better than dividend stocks (probably not but again, it depends). If you’re not sure what to do, start with a foundation.
Open two accounts: A Roth IRA (max it out every year) and an individual account (and shut up about not wanting to pay taxes - if you owe taxes, you made money - congrats!). Invest in one S&P 500 index fund, one tech fund, one dividend fund. Once you’ve got a habit of investing in them monthly (lump sum might be better for some, but it’s more expensive), then you can start thinking about branching out.
But in the meantime, focus on the future. Start early, stay consistent.
