It was the summer of 2017 when I first became interested in finance. I worked the previous few summers and saved money. I wanted to test the stock market. It’s an overwhelming thing if you don’t have any prior knowledge, so I started googling. I read articles about beginner investment strategies. My grandparents subscribed to Money magazine, so I would go to their house and read the backlog of issues. After a while, I decided it was time to get some skin in the game. I opened an Etrade account and deposited $250. Then I made my big investment: Jetblue Airlines. Some articles called them a great value airline stock. I sat back on the couch and watched the transaction go through. I could almost taste the sweet capital gains. A single thought crossed my mind: “I am an investing genuis.”
The Fallout
Turns out I was not the savvy investor I imagined myself as. In the weeks following my initial purchase, the stock dropped a few dollars. “Perfect,” I thought, “Now I can get some shares at a little discount and increase my gains when the price goes up.” But then a funny thing happened: the stock price dropped again. And then the price stayed steady for the next few years. Over the proceeding months, I became embarrassed at my purchase. While at first, I jokingly called JetBlue “my airline,” I soon realized that I made a poor decision. The first time I checked the status of my account in years was for this article. And the stock has a 44.75% DECREASE in value over that time. Sure, Covid didn’t help, but the price never exceeded that initial buying price.
My Investing Lesson
A few years after my purchase, I starting reading Mr. Money Mustache’s blog. That sent me down the path of financial independence. Later, I was gifted a copy of The Simple Path to Wealth by J.L. Collins. This amazing book explains the tenants of index fund investing, which I took to quickly. Most of what was in the book can be found in J.L. Collins’ Stock Series on his blog. I can’t recommend it enough. Ever since, I have been primarily invested in index funds. I rode the Covid-19 induced downturn and bought into the market both on the way down and on the way back up. Unfortunately I was not able to reap all of the benefits since I was still in grad school at the time. Without the knowledge of index fund investing, I would not have been able to weather the storm at all.
Investing: My Final Word
There’s so much writing about hot stocks, penny stocks, stock gurus, and actively managed funds out on the internet. For the common investor, all of this is frivolous. Barring a complete meltdown of the United States, investing in an S&P 500 or total stock market index fund provides consistent, reliable growth over an investing lifetime. I am no expert, and I am not giving expert advice here, but if index funds are good enough for Warren Buffett, they’re good enough for me.
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