Emily’s Investing Story Part 1: Getting Started

Every investor has to get started. This is my story of the first time I set up an investment of my very own. I didn’t necessarily act wisely. I wasn’t knowledgeable. In retrospect, I picked mediocre investments for all the wrong reasons.

Despite those mistakes, I learned key financial behaviors that you have to learn to become a successful behavior.

This is my beginning investing story.

A Conversation

“You really need to start investing,” my boss told me. Jim was 6’9”, long haired, bearded, and burly. Since he had been building bookshelves, he was sweaty and covered in streaks of sawdust. He looked like an oversized Viking about to go plunder, not a mentor discussing long term wealth building.

“Um, okay.”  I was working a not-quite minimum wage job in a used bookstore, living at home with Mom and, while loving my job, not really sure it could be called a career.  I had left grad school with student loans and ill-advised credit card debt, but no degree and no desire to go back to academia. The lesson I’d learned was that compounding interest was not my friend.  Jim tried to change my mind.

He had been trying for months, and he was slowly making an impression.

I did have some stock, gifted from my grandmother. Someone had once told my grandfather to buy stock in a life insurance company instead of life insurance, and since he lived into his mid 80s it had turned out to be pretty good advice.  Mom told me in no uncertain terms I was to leave it alone and reinvest the dividends. And I wasn’t supposed to think of the stock as mine. That money was to take care of my single Mom if she needed it when she got older.

I had watched the balance on the quarterly statements increase far in excess of the dividends, so Jim’s lesson about the benefits of investing wasn’t entirely new. But I wasn’t an investor. I didn’t actively contribute or save. I was just someone who had some stock.

“Look, you’re still in your 20’s. If you start putting a little money away now, on a regular basis, you’ll have a lot more later. My stocks have been doing well, and all I do is put in a little money every week. Come with me next time and I’ll introduce you to my guy.”

“I don’t have a lot of money. Don’t you need a lot of money to invest?”

“There’s a $1000 minimum. Aren’t you getting more than that back on your tax refund?”

I was. On Jim’s advice, I had started withholding more from my paycheck as an enforced savings. (Yes, I know now that I gave the government an interest free loan.) The idea of having a big chunk of money after tax time sounded good, but I really hadn’t a clue what to do with the money.

Going to See the Guy

So when the check came in, I went with Jim to see his guy.

Jim’s guy was 50ish, white, dressed in a suit. He was no Gordon Gekko, but he fit the stereotype of who normal folks talked to about investments.

Jim talked to him a bit about his investments, and I listened. And then he talked to me. I don’t remember much, even the guy’s name, because it was 25 years ago. It must have been enough to convince me. I got 4 prospectuses, and went with an international fund because that was what Jim was doing. Before long, I set up the account and a small monthly draft to contribute.

The next year, I used my tax refund to start investing in a second fund and started saving more to reflect the higher pay I was earning.

I had seen the guy and become an investor. Not a great investor, but someone who contributed to an IRA and planned for their future.

Emily's Investing Story, Part 1: Getting started

The Lessons

In looking back at it now, I definitely did things I would never do again. I picked an advisor who was not necessarily the best for me, and investments that I didn’t understand, because my friend chose them. I didn’t read up on the investments, or do more than flip through the prospectuses looking for company names I recognized. Worst of all, I didn’t talk to my mom, who by that time was a sophisticated investor with a clear retirement and investment strategy.

I just winged it.

For all of these things I wouldn’t do again, however, overall the experience was still really important and a good one.

I got started.

I used windfalls to get my first investment going and to grow investments faster, set up an automatic monthly draft, and learned to live a little below my means. With those three things, I accidentally found three keys to successful financial planning.

Bank windfalls. Invest often. Live below your means. 

With those three fundamentals in play, I gave myself the space to become a better investor. I bought a few shares every month, and learned that I could save and invest.  I looked at monthly statements, and learned not to panic when the price of my investments went down, and not to get too excited when it went up.

Most of all, I learned that I could become an investor, and changed the way I thought about money and putting some of it to work for me.

How did you get started with your first investment? What would you do differently if you were starting over?

This article was first published July 24, 2015 and updated 8/10/16.

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and Racing Towards Retirement*

16 thoughts on “Emily’s Investing Story Part 1: Getting Started

  1. I started investing when I got my first teaching paycheck but had no idea what I was doing. High-fee mutual funds on auto-pilot for years (and years…) I am hoping to get my daughter started investing this year. It’s a fine balance between saving for college (and not taking out loans) and starting investing for compounding. I need to find some articles about that too…
    Vicki@Make Smarter Decisions recently posted…8 Thoughts and 8 Goals on 8/8My Profile

    • It’s great that you started to early, but it’s tough to realize how much better off you would have been to find low fee mutual funds. I hate to think how much I’ve wasted there (a lot!)

      I know that debt is keeping a lot of 20 somethings from investing. It is a real trade off, and while I don’t recommend accelerating debt payment before taking advantage of a 401K match (the pay off benefit’s no where near the match advantage if a match is offered) I can see not ramping up more until the debt’s paid off if a person is aggressively paying down debt.

  2. I love your story, Emily. The “getting started” part is the most important, for sure. I got started in a weird way. My parents had purchased a life insurance policy on me when I was in my teens and when the company went public (in my early 20s), I received 108 shares FREE! Outside of our 401k and IRAs, this is the only individual stock I own and I receive dividends each quarter.
    Amanda @ centsiblyrich recently posted…5 essential things to do to keep your debt payoff goal on trackMy Profile

    • Oh, wow. It’s pretty great that your insurance turned into insurance stock.
      My first stock was an insurance stock because someone told my grandfather “Don’t buy life insurance, buy stock in a life insurance company.” (Probably because he was in his mid 40s when the first of his 5 kids came along.) It’s done really well and shaped a lot of my investing decisions since, because it definitely outperformed any of the mutual funds I chose since. Owning it didn’t feel like “my first investment story” though because it was an entirely passive automatic thing I was given, not a choice I made.

  3. I got started simply through my 401k. I had heard of investments before, but at that time didn’t know that you could invest outside of a 401k. I did what they told me to do. Since I was young, I went with an aggressive risk strategy and I’ve seen quite a considerable return on it

    Now that I do know a little better about myself and investing, I would choose another hands off approach and leave it alone even when the market dips. Just like with the recent events with Brexit, I didn’t even look at my account and when the quarterly statement came out, I was still making gains (although I’m sure I probably had a dip somewhere in there).
    Latoya @ Femme Frugality recently posted…5 Signs You’re in for a Massive Auto Insurance SpikeMy Profile

    • Not looking and keeping steady on your investments is a great thing to have learned. I was watching the Jack Bogle talk on Prime the other day, and he was talking about the fact that our emotions make us want to sell when we should buy and buy more when we should sell and it’s so hard to get over that hurdle.

  4. Great story to share and learn from. Of course getting started is the most important part, but you managed to take away several other significant lessons in the process. Like Latoya, I got started with my company retirement plan. I wish I would have been able to contribute more when I was younger, but I think I was doing as much as I could reasonably afford at the time.
    Gary @ Super Saving Tips recently posted…Easy Tips to Save on an Apartment RentalMy Profile

    • It’s hard to contribute more when you are younger and earning less, especially if you have kids early. I feel like I have some advantages to being an older mom (I could invest more early though I probably could have done more than I did) and some disadvantages (I’ll be in my 60s when Little Bit leaves the nest.)

  5. Considering that 25 years ago, you had to go see someone’s “guy” to get started, I think it’s fantastic that you got started at all. Our first investing was in a target date fund with Fidelity. That wasn’t the smartest move but we got out of it fairly quickly and switched to index funds. But at least the target date fund got us in the game and accustomed to making monthly contributions.
    Mrs Groovy recently posted…The Five Most Disturbing Results from the Student Loan Borrower SurveyMy Profile

    • It does seem weird now that everything used to be oriented toward meeting someone in person, and now it’s very easy to set things up for yourself online. There were probably some advantages to meeting with someone and having them walk you through options (IRA vs Roth, etc), but my advisor pushed a lot of higher cost funds, and the internet makes that info very easy to find now.

  6. Good to see you got started early, even if it wasn’t well informed. My first investing was at 24 in a 401K. I only contributed the minimum. I didn’t know what I was doing, but felt good to know I was saving for the future. I wish I had saved more early on and was more involved. I remember feeling like I could earn more and save more later.
    Brian @ debt discipline recently posted…Purchasing a Car: Do your Homework FirstMy Profile

    • I think the internet has made it a lot easier to find information than it was a couple of decades ago. I’m not sure i would have made the same choices (though maybe so.)

      One thing I’m kinda proud of is that I started despite the fact that my job did not offer any retirement plan. So many of the comments about first investments have centered around 401(k)s, and I think for a lot of people that is the trigger for investing. But a lot of small businesses (like the one I worked for) don’t offer retirement plans, and it’s really important for their employees to find a way to save anyway, even if it’s just a little bit from each pay check.

  7. We started after getting a pitch from someone who wanted us to sign up to sell investments. We figured out that the company they were pushing wasn’t a good idea but we started reading Money magazine and before long we had a portfolio. Then kids came along and we didn’t have a lot to contribute but now that we are on the downhill portion of child rearing and seeing retirement getting closer.
    RAnn recently posted…Financially Savvy Saturdays: I’m Co-Hosting!My Profile

    • My dad said he got suspicious of everyone selling investments when he realized they all seemed to have yachts, and that they seemed to be making a lot more money than any of their investors. I’m glad you were able to recognize that the first investment opportunity wasn’t the best, but that investments were still a good idea.

  8. “I got started” is really the key one! There are so many excuses everyone finds to not take that first step. I remember how tough it was to save up $1,000 to open my IRA, but it was really one of the best financial decisions I’ve made.
    Mel @ brokeGIRLrich recently posted…Free Theater in NYCMy Profile

    • That’s how I feel too, Mel. I do think it’s easier to get started now. Like you, I started with having to accumulate some money for that initial IRA, but when I researched last year I noticed that there were a lot of IRA options that you could open with nothing down as long as you committed to an automatic transfer of at least $25-$50 a month. That makes the initial set up a lot easier to manage for most people.

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