- I tried to time the market when I started investing and I lost every time.
- My father advised me to invest and then rarely look at my portfolio to resist the temptation to sell.
- I followed his advice with my bitcoin portfolio and its value has increased fivefold over time.
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I’ve been interested in wealth creation for as long as I can remember. I mostly attribute this to my mom as she never gave me money for discretionary purchases. At the age of 10, I had already started my first rush of selling water and sodas in my local park during the summer. I started a dog outing company when I was 13, and by the time I got to high school I had customers all over my neighborhood.
By the time I got to college, I had saved a decent amount of money that was just lying around in my bank account. At the end of my sophomore year, my father encouraged me to Start investing some of my saved money. Knowing little about investing, I thought it best to create two portfolios.
One was a virtual portfolio that I called The share of the month, and the other one was my personal portfolio with Allied Bank. To the The share of the month, I would identify a basket of stocks with high growth potential each month and choose one to add to this virtual portfolio. I would then provide insights and arguments behind each selection on LinkedIn and compare my portfolio’s performance to that of the S&P at the end of the year.
I tried a completely different approach for my personal portfolio. I had heard so many stories about people swing trading who got rich quick. So I tried to do the same thing and get in and out of trades weekly. I bet you can imagine how that turned out.
The investment advice that changed my life
My personal portfolio had depreciated in my junior and senior years and never beat the S&P 500. However, my virtual portfolio beat the market every year.
After graduating from college, I shared this information with my father. I explained to him how strange it was that the portfolio I was constantly managing found a way to lose money every year. Still, the portfolio beat, which I only added once a month and hardly paid attention to beating the market. He didn’t seem shocked at all.
He went on to show me his portfolio and showed me the stocks that made most of his money. To my surprise, it was the stocks that he did invested and rarely looked at most valued.
He said that he also made the same mistakes I made when he started acting. He tried again and again Time the market, got in and out of stocks and realized he was losing a lot more money than he was making. Then he said to me, “If you want to make real money in the market, look at your portfolio as infrequently as possible.”
Entry into Bitcoin
By August 2019, Bitcoin had just seen a sizeable surge from $ 3,500 to around $ 10,000. I knew I wanted to get into Bitcoin and thought that there is no time like the present.
So I invested in Bitcoin the following month, doing something I’ve never done before. I turned off all notifications from my brokerage account and I haven’t looked at my account for the remainder of 2019.
At first I was very excited to see what was going on in my portfolio. However, after a month, I practically forgot that I owned Bitcoin. In early 2020 a friend and I were discussing our crypto holdings and I decided to look at my account.
I realized that I totally missed Bitcoin falling as low as $ 7,000 in December 2019. I know for sure that if I had been constantly monitoring my account I would have panicked, sold my bitcoin holdings and looked for other investments. If I had done that, I would have missed the huge bull run Bitcoin had for most of the year. Since investing in Bitcoin with my father’s advice, my portfolio has grown fivefold in value.
I’m sure we all have a history where we would have bought a stock and sold it at a marginal profit (if not a loss), if we had just bought it and held it, we would have gone up 10 times what we sold it for.
Even now after reading over a dozen Financial planning and banking books, I still refer to my father’s advice: check your portfolio as infrequently as possible. The biggest market gains come from careful research and long term hold.