DIY Investor OurFinancialPath

DIY Investor Interview #4: XYZ at Our Financial Path

Welcome the the fourth interview of a series documenting the successes and failures of DIY Investing, straight from the investors’ perspective.  Today the DIY Investor sharing will be Mr. Xyz from OurFinancialPath.

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 at turningpointmoney01@gmail.com.

DIY Investor Interview #4

Name: Xyz at OurFinancialPath

Age (or Age Range within 5 years): 26

Location:  Canada

Marital Status: Married

Children: 0

Highest Education: DND

Occupation:  Finance

Household Income Range today:

  • $100,000 – $250,000

Were you raised frugal or did you learn it?

My mom was the frugal one and she always pushed me to think about purchases and make conscious decisions. It was a great way to learn how to save and life with less.

If married, is your spouse frugal?

Yes, when we first met, she was the frugal one. I got into a little spending spree once I started making good money but she brought me back to my roots. We are now pretty frugal and save over half our income.

What was your investing turning point, when did you start investing for your future?

I started investing a large part of my income simply because I wanted to buy stocks. I saw the appeal of owning companies I liked such as Apple, Tesla, Facebook but I did not have any long-term plan or vision. After a bit more than a year of that, I actually had a goal in mind and starting investing in index funds.

What is the size of your investment portfolio?  DND

How many individual stocks do you hold?

At the moment, one. I only hold my Employee stock option plan since it offers a math but all the rest goes into index funds.

What is your largest individual stock holding?

I hold a few thousand dollars in my ESOP before I sell it all and put it in index funds.

How many mutual funds or exchange traded funds do you hold?

Right now my portfolio is composed of 8 different Vanguard ETFs. We try to rebalance once a year to hold a portfolio of 40%US Market, 30% Canadian Market, 25%  International Market, and 5% Bonds.

Which fund is the largest?

VTI, the Vanguard Total Market ETF.

Do you hold individual bonds, if so how many?  What is your portfolio allocation to bonds?

We hold 5% of our total portfolio in BND, the Vanguard Total Bond Market ETF.

Have you ever purchased options, futures, precious metals or sold a stock short?  Please explain.

Yes, I used to play a lot with options, mainly covered-calls. I stopped all of it once I took an index fund approach to investing.

What are your long-term goals for your investments?

I wanted to retire by age 35.

What was the biggest hurdle to overcome to start investing?

It was hard to accept the fact that most active investors do not beat the index. I was picking stocks and making pretty good returns (over 30%) but I was using margin and options which was much too risky over the long run. I had to accept that I had very little chance to replicate those returns for the years ahead and that indexing was the better thing to do.

How often do you contribute money to your investments?

Every paycheck.

What is your favorite investing story or lesson learned?

I definitively learned my lesson when I blindly bought a call option on a company I barely knew just because the charts looked good. I lost $2,000 that week.

What steps did you take to learn about investing?

The best thing I can suggest is to read as much as you can. There is all the knowledge you need online available for free.

 

Do you read blogs or websites about investing, what is your favorite?

If you had only one thing to read, I would suggest JL Collins Stock Series. It is a true eye-opener and it explains the reasoning behind indexing.

How much does it cost per year to research your investments, what are your favorite things to read?

Zero. I read new things everyday online.

How much time do you spend on investments?

I used to check them up multiple times a day and look up stocks all the time but the beauty of indexing is that you do not need much research once you have picked your asset allocation. I check my portfolio about once a month.

 

What was the worst investing mistake you ever made?

I blindly bought a call option on a company I barely knew just because the charts looked good. I lost $2,000 that week

What is or was your best performing stock(s) or investment?

I was fortunate to capture a 48.6% gain on my Bank of Nova Scotia investment over the year I had been holding.

 

Describe your investment approach in a few words.

We invest for the long-term using index funds. We believe in market efficiency and are happy with the average returns index funds can offer.

Is possible for a Do-It-Yourself investor to beat the market consistently?

Highly improbable. I did it but I do not know how. I attribute my stock picking success to luck and therefore, have now switched to indexing.

What holds people back from investing?

Just start today, there is no investment too small if you are indexing. Find a commission-free broker and start buying simple, diversified, index funds to start building your future.

What is the best piece of investing advice you could give to individual investors?

DND

Have you ever inherited money or is an inheritance part of your long-term plan?

DND

How do you factor in Social Security into your long-term plan?

N/A

 

If you have any questions about Xyz’s investing strategy, please feel free to ask a question in the comments below.

For more DIY Investor interviews, please check out the rest of the series:

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