How I made a 36% return my first year investing in stocks without knowing what I was doing
You hear stories about day traders making millions and living the dream with all their fancy cars.
Well I tried that. It ended with me losing $8,000 in one month on penny stocks. So if you want day trading advice, please stop reading this. I did however, figure a simple easy way to invest in really high paying dividend stocks like AXP, BAC, STM, KHC, ect. How did I find out these stocks were a good investment? None other than the great Warren Buffett. See Buffett publicly posts his portfolio here and his latest buys and sells here. I was able to invest in BAC and SYF almost the same time Buffett did.
I am still new to investing, and have learned a lot to make myself feel confident to make a few investments with my own research. While I am learning, I still want my money to grow for me, so why not follow the most successful investor who has ever lived?
Over the past 5 years, I have put $5,500 per year in my IRA Roth and contributed to my matching 401k for my job when it was available. I was still able to save quite a bit more money and I didn't know what else to do with it. I didn't know where to start. So I put 25% down on my Condo (which was a mistake) hoping that would be a good place for it. After doing some research and finding out that paying off the principle early on a home isnt always the best idea, I realized I had to do something. So I began watching Warren Buffett documentaries. I was fascinated with his story. From selling coke bottles individually for 5 cents a piece to buying stock at age 11, it was amazing to see how he got started.
So I took a quick look at his portfolio and latest buys and sells. I wrote down about 10-12 stocks and put them on my 'watchlist' on my Optionshouse app. Once I had done some light research such as 3 -9 month trends, listening to the past few earnings calls, and keeping up to date with the latest news of the company, in January of 2016 I bought my first stock, AXP. American Express was trading around $54 when I bought it. I have watched it soar to almost $100 now and the best part is every quarter they pay me dividends. I began putting more and more money in the market and the first year gains blew me away. Aside from my first debacle trying to day trade, I still managed a profit at the end of the year.
In 2017, I decided not to play around with day trading, and the gains have been incredible. Keep in mind that the economy is great right now, but here are my gains for 2017:
|36.2% YTD gains|
|12.33% gains in under 3 months|
I am posting these accounts on 12/5/2017, and both have lost money today. After some research, I found that most hedge fund managers sell their stock around the first week of December to show their clients more yearly gains. This may be why they have lost money. Regardless, I still have 36.2% growth on my Optionshouse account, and a 12.33% gain on my Robinhood account in under 3 months (which is on pace for 50% growth). Now I understand that every year isn't going to be like this, but the results are still way better than what I hoped for. So here are a few steps to follow:
Step 1: Get out of debt!
A lot of us are in debt. I was in over $10,000 worth of debt on my credit cards. With some debt incurring 17+% bad interest, it is best you get out of that situation first before you start investing. You can start by canceling credit card subscriptions that you don't need like magazine subscriptions, Netflix, anything that dings your card monthly.
Being in debt can also be stressful. Whether you have creditors calling you or your debt keeping you awake at night, it just isn't healthy.
Step 2: Just download your trading app
For some of us, just downloading the app and seeing how it works is what is stopping us. I know that was one big thing for me. Once I downloaded the app, I started following certain stocks, and once I was confident enough, I started to buy them.
Step 3: Surround yourself with smart savvy people who are already investing, whether it be real friends or simply following successful investors online
If you are reading this blog you are serious about your finances, so surround yourself with others that are like minded. We are in an amazing age right now where all we have to do is turn on the computer, and all the best information is at our fingertips. Use the internet as a resource.
Step 4: Be Patient
Money isnt going to come overnight, and some stocks might even go down, but over time you will see gains you never thought you would see.
Please let me know in the comments below what other financial topics you want me to write about.