Greetings all, and welcome back to FindependenceCanada!
In our lives we’re always making transactions, every time we eat there’s a trade off of what we know is good for us and what our favourite foods are – there’s usually a common ground between what’s good and what’s enjoyable.
In the gym, we could follow that new program to the word and maybe see better progress, but if we’re not enjoying ourselves we’re less likely to stay the course than we would be if we showed up and did what we enjoyed.
The question we have today is this: do these same compromises make sense in the investing world? Even if you know you may not get the same kind of returns as another method of investing?
The reason for this question comes from an awareness that we aren’t Warren Buffett, nor are we somehow getting better information than the large hedge funds or other large investors. We can’t time the market nor do we even think we can really out perform the market.
Why do we invest for ourselves?
So why then, do we insist on stock picking and trying to do our own thing when it comes to our investments and why don’t we instead just simply invest “in the market” like so many professionals claim you should do?
The simple answer is this: we really really REALLY enjoy investing for ourselves.
Yup, that’s what it comes down to. We enjoy making lists of our favourite companies that we truly believe in and love, and we love to read through balance sheets, quarterly reports etc. to figure out what’s on sale and where our next deposits should go.
Admittedly, I don’t even know if we beat the market or not – and I don’t necessarily care!
I used to check my progress when I was with Scotia iTrade from time to time, just to compare vs. the S&P500 or another major index and I have seen enough to know that we’re not far off “market” returns one way or another.
There were months we would beat the market by 4-5% and there were months we’d lag the market 10%, at the end of the quarter or year, however, our accounts were typically right near that market number.
Are you investing for yourself?
Have you ever considered whether you are investing properly for yourself? For your own personality and risk tolerances?
Going through a market correction like we have recently should have revealed a lot to investors about their own confidence in their portfolios, their risk tolerances and how they maybe should proceed from here on.
Did you sell everything in a panic?
Did you feel fear because you weren’t confident in what you held?
Did you even know what you were holding?
Something to think about for all investors is that there isn’t one size fits all investment strategy.
If you know you are completely risk averse and these past weeks have been hard on your personal well being, then maybe you need to look into slowing down your portfolio through a higher allocation to bonds and slower moving equities.
If you have no interest in reading up on stocks and following along with single holdings then maybe you’re better off finding an index fund or something like the VTSAX for exposure to the entire stock market.
We have made a post previously here about how to passively create your own commission free, well diversified ETF portfolio.
Bottom line is, there is a different method for everyone and the trick is to find what’s right for you and how you get the most confidence and enjoyment out of your personal investing journey as it is just that, a personal investing journey and there’s a different path for us all to take through our journeys.
We will leave a disclaimer here that we are not investment professionals, nor do we offer anything to be taken as advice on this blog. We simply document our journey and experiences and hope others can find some useful information throughout.
Thanks for stopping by today, if you have questions or comments please leave them below or on Instagram @FindependenceCanada and we’ll be sure to get back to you.
FIC.