Why I stick to my slow and steady investing strategy


  • I invested my first $ 3,000 in a single stock a few years ago on the advice of a family member.
  • Its value stayed the same and I got worried, but a family member advised me to stick with it.
  • I have continued to hold onto and grow my portfolio, and I know my slow and steady strategy is working.
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When I turned 40 just under six years ago, I was determined to finally get my financial life in order after declaring bankruptcy and owing $ 80,000 in debt. I wasn’t sure how to start investing in the stock market, but a family member who is very knowledgeable about investing helped me get started. They strongly encouraged me to invest even though I didn’t have much to begin with, as time is an important factor in creating wealth through the stock market over the long term.

The first year I put $ 3,000 into a traditional IRA. In retrospect, since I qualify, I should have chosen a Roth IRA. I don’t remember exactly why I chose a traditional IRA over a Roth, but when I can start contributing for 2022, I’ll open a Roth so my money isn’t taxed as heavily as with an IRA traditional.

That year, the maximum allowed contribution to an IRA was $ 5,500, but I didn’t have that much, and rather than wait any longer, I decided to start with the money I had. access.

I invested in a single stock recommended by a family member

Since I didn’t know how to choose which companies to invest in and felt overwhelmed whenever I looked at the companies I started following in an investing app, I chose the one recommended by a member of my family. They told me it was a solid communications company that had been around for decades and would likely see steady growth. Well, that year they didn’t; my $ 3,000 hasn’t gone down, but neither has it.

I was upset. I felt like I had been promised that investing was the key to retirement, when I could have essentially achieved the same result by keeping my money in the bank. I have considered withdrawing from my IRA entirely or no longer contributing to it.

But I spoke with a family member, who assured me that sometimes even a good stock can have a stagnant year, and that throughout the history of the stock market, overall returns have continued to rise. . Essentially, they said that even though my net worth remained the same as the year before, I was still ready to win if I stuck with my investment.

I tried to invest in another stock the following year

I asked for ideas for other actions to consider. He advised me to invest in a well-known technology company that pays dividends. So the following year, when I was able to contribute the maximum, I transferred my initial investment and the new addition to the tech company. Almost immediately I saw my total departure increase. The numbers were low at first, but at least they were heading in the right direction. Every time I received a dividend I felt like I was receiving magic free money. Rationally, I know it’s not magic and it’s not really “free”, but since I didn’t have to do any work beyond the initial investment, it always felt like that.

I’ve learned in those first two years that if I’m serious about investing in retirement, I need to be careful about what my money is doing, rather than relying on someone else – in reasonable limits. My initial impulse to check my total several times a day was not only extremely stressful, but counterproductive. I focused on the number and was either disappointed when it was low or delighted when it was high (to annoy me later if it went down).

I decided to check it daily or every other day, assured that if there was a major upheaval in the stock market and I had to sell, I would probably hear about it on the news or my family member , who also has shares in the same company, would let me know.

Seeing dividends being deposited and the stock’s value rising was the best encouragement to focus on the savings I could get. By the time the maximum contribution rose to $ 6,000 in 2019, I was ready; I have since been able to open a brokerage account to invest even more. I held onto the shares of this tech company, but over the next several years started investing additional money in index funds. I don’t have the temperament to face the ups and downs of individual stocks, so the two I have right now are the ones I’m pretty confident will continue on an upward trajectory.

I’m jealous of my friends’ big wins, but I keep my strategy slow and steady

Every now and then I hear from friends who have been murdered by owning a particular stock for a day or two – or less – and feel jealous, wondering if I should try to follow in their footsteps and speed up my savings. . But my tech stock is now worth several times that initial investment, and I’ve made over $ 20,000 in total gains on it, so I feel good about my investing prowess. It might not be the way to make the most money in the market, but it is the best approach for my individual needs.

What I take away from the ups and downs my retirement savings has had since that initial investment is that while I want to be in the know about what is going on so that if, say, an investment stalls for an entire quarter , I can make an informed decision as to whether to sell it or not, I don’t want to micromanage my money. I want to be able to go without checking my balance for a week and be as confident as possible that nothing catastrophic has happened.

Even though I invest in my 40s rather than 20s, I prefer to stick with slow, steady growth rather than chasing quick hits that may or may not be successful. I have also learned that a flat year, or even occasional losses, is not the end of my financial world. I can get over it as long as I keep my end goal in sight and act calmly, not out of fear.

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