#98 Investing (Without Emotion) Is A Must

Flashback to #99 of 100 Dollar a Day

I mentioned how I save money by packing half of my dinner, whether it's eating in or eating out. Last night, my wife wasn't feeling too happy, so I brought her out for Korean food to get her mind off of things.

I mentioned how I save money by packing half of my dinner, whether it's eating in or eating out. Last night, my wife wasn't feeling too happy, so I brought her out for Korean food to get her mind off of things.

This was my meat platter. It was more than enough for me to eat dinner and still have lunch left over for me and my wife.

On to today's topic

It was a miserable day in Toronto. The autumn rains poured down and a stock that I invest in and write research about on Seeking Alpha had a negative research report written about it. Shopify is the stock in question, it's share price tanked by over 10% today.

As one of the stronger and more consistent voices on this stock on Seeking Alpha, I decided to spend my rainy morning writing a response article picking apart the negative research report. My article is posted here.

Investing is a crucial part of saving money and retiring early. If you are not investing your money you are opting to let your money deteriorate over time. You can't buy a coke for 5 cents anymore you know.

Everyone that works wants to get paid more, the only way people can get paid more is if the businesses they work for raise the prices of their products, this means the stuff you buy will go up in price too. Then you will go ask your boss for more money and the cycle continues.

So if you save money between your mattress or even in a chequing account the things you can buy with that money becomes less and less the longer you keep it there. In a savings account, the interest you earn on your savings may help a bit, but it's not going to make you rich and, certainly, won't help you retire early.

I have a direct investing account where I can buy and sell stocks to invest my savings. My goal is to make at least 6% return on my money every year. Some years will be more, some years will be less, I'm not trying to do anything fancy, but on average I want to make 6% return.

So today, with the 10% drop in one of my investments, that's obviously not productive towards my goal. But having many years of experience investing, there are a few important lessons to remember on days like today.

Lesson About The Stock Market - Managing Your Emotions

To manage your emotions you need to have a clear idea of:

(1) Why you are invested in any particular investment (stock, bond, real estate, private business).

(2) How long you are willing to hold the investment.

(3) Know what would cause you to change your mind on the investment. 

WIth today's negative report, I'm not too concerned about their negative viewpoint, it doesn't make me believe any less in why I own Shopify, so that gives me comfort to remain invested, and in fact look to invest more at a lower price. I plan to hold my investment for 5 to 10 years, so a blip in the stock price today isn't going to change my beliefs. 

I've done my homework on Shopify, so I can live with my decision whether it ends up good or bad. Everyone needs their own conviction and understanding. If you have that then you should sleep ok. 

And my advice for those that don't have the capacity or time to learn about every investment they make, you should invest in ETFs (Exchange Traded Funds), these are the modern day mutual funds. ETFs are a combination of dozens if not hundreds of companies stocks. When you invest in these, you will get average returns, but even average is more than enough to retire early.

Some sites you may find useful in finding ETFs:

Blackrock

Vanguard

Save Money Retire Early is written by Jon Lo, a barely 30 something Chartered Financial Analyst. I believe anyone can be rich or poor, it's what you save that makes the difference.

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