Here is the second edition of our new interview series about Do-It-Yourself Investing from Adam from Minafi.com. This series will document successes and failures of DIY Investing, straight from the investors’ perspective.
Over the years I have learned a tremendous amount from others. Especially those with far more investing experience. I hope this series provides perspective on how people got started investing and the positive and negative lessons learned.
Please contact me if you are interested in participating in this survey.
Without further ado, here is a success story. Adam has done a tremendous job managing money at a very young age during an extremely difficult time. The lessons he shares below go beyond his years.
DIY Investor Interview
Name: Adam from Minafi.com
Age (or Age Range within 5 years): 35
Marital Status: Married
Highest Education: B.S. in Information Technology
Occupation: Programmer turned Product Manager
Household Income Range today:
- $100,000 – $250,000
Were you raised frugal or did you learn it?
Growing up, my parents were divorced and both sides were very deliberate with money. We rarely ate out, instead making every meal at home. Gifts were something that only came around at holidays. But I did get an allowance every week, and I always had everything we needed. Excess was reserved for special occasions
If married, is your spouse frugal?
She’s even more frugal than me!
What was your investing turning point, when did you start investing for your future?
3 months after I graduated college (at age 23) my mom passed away. She left me $100k and the house I grew up in – which had a rental unit out back. The next year I tried my best to learn how to invest with the help of a financial advisor from Bank Of America. With everything going on in my life, I didn’t realize I was paying a 1% financial advisor fee, investing in funds that had fees OVER 1%, and some of the funds he choose were load funds – one that you need to pay a percentage to get into when you start investing. When I eventually learned enough to understand these fees, I felt like I had been scammed, and was determined to take control of my investments and learn everything on my own so it wouldn’t happen again.
What is the size of your investment portfolio?
- $1,000,000 – $2,000,000
How many individual stocks do you hold?
2 – Apple and Tesla. I reserve 5% of my portfolio for long shots – individual stocks I think are worth investing in.
What is your largest individual stock holding?
$26,000 in Apple.
How many mutual funds or exchange traded funds do you hold?
7. There would be less, but this is spread out over 3 accounts – and some I hold on to because I don’t want to sell and pay taxes on them
Which fund is the largest?
VTSAX – Vanguard Total Stock Market Invest Fund Admiral Shares
Do you hold individual bonds, if so how many? What is your portfolio allocation to bonds?
I hold about 13% of my portfolio in total market bond funds – entirely in a 401k and Roth. My target allocation is around 18% (half my age), but I’m slightly out of whack right now due to the recent market growth. All new investments go into bonds.
Have you ever purchased options, futures, precious metals or sold a stock short? Please explain.
I bought a short option once. I really thought I knew more than everyone else and thought for sure salesforce.com ($CRM) was wildly overpriced (this is at least 5 years ago). I bought the minimal short position possible, and 6 months later it was completely worthless. I decided never to try buying options again.
What are your long-term goals for your investments?
I want to slowly build enough investments to provide an early retirement.
What was the biggest hurdle to overcome to start investing?
Taking the risk that I might be wrong in choosing which investments.
How often do you contribute money to your investments?
401ks for each paycheck. Roth IRA on the first of the year. Brokerage was every paycheck as well, up until we got married – now we’re saving up a bunch to open a joint brokerage account.
What is your favorite investing story or lesson learned?
Check out the turning point story!
What steps did you take to learn about investing?
I learned everything I could by asking my financial advisor questions, then read The BogleHeads Guide to Investing. I started switching small amounts to a Vanguard account I setup and learned by investing.
When you started investing, did you have a known plan?
Not at all, just that it was a better alternative to a financial advisor.
Do you read blogs or websites about investing, what is your favorite?
Not really overall, but I recently read JL Collins The Simple Path to Wealth, and thought it offered a bunch of advice I wish I had 15 years ago.
How much does it cost per year to research your investments, what are your favorite things to read?
$0, I don’t actively invest so new research is more about reading blogs and staying the course with a diversified investment allocation.
How much time do you spend on investments?
An hour or two a month. It’s usually spent updating spreadsheets and verifying my asset allocation isn’t too far out of whack.
How frequently do you buy investments and how long do you typically hold?
For 95% of my portfolio, I only buy things I plan to hold forever.
What was the worst investing mistake you ever made?
Shorting a fund because I thought I knew more than the average person.
What is or was your best performing stock(s) or investment?
I bought $100 in Bitcoin a year ago, that’s now worth $600. On a bigger scale, my TSLA investment is up 50%
What is or was your worst performing stock(s) or investment?
For some reason I decided to buy an Energy ETF at the worst time. It ended up going down almost immediately.
Describe your investment approach in a few words.
95% in well diversified, low fee portfolio – 5% in whatever keeps me interested.
Is possible for a Do-It-Yourself investor to beat the market consistently?
No, I don’t think so. I think it’s possible to be lucky a few times though
What holds people back from investing?
Lack of confidence in knowing they’re not getting ripped off and won’t lose their money. There’s so many people out to make a buck off people, it’s hard to know who to trust.
What is the best piece of investing advice you could give to individual investors?
Read The Bogleheads Guide to investing, open a Vanguard Roth IRA (or IRA if your income is above ~75k), and learn the basics of investing there.
Have you ever inherited money or is an inheritance part of your long-term plan?
I did inherit some funds right when I started investing, but there are no other funds involved in my long-term plans.
How do you factor in Social Security into your long-term plan?
No – if it happens it’d be an added bonus!