The Investor Diary Entry #41: May 18, 2023
I cannot have a cliche diary entry that talks about the best way how to invest money. On my way to investing, I faced many hurdles trying to find out what could be the most suitable setup to start investing.
I have a very difficult financial situation, but I still want to find out the safest way to invest money that is logical for my situation.
In the early 2000s, I was still an employee and earning a salary. I got introduced at that time to the concept of trading. Since I didn’t educate myself well, and didn’t understand the difference between investing and trading.
Last year, I cannot remember what pulled the mental trigger, but the concept of long-term investment was brought up in front of me either by a website, I was reading or by some YouTube video that landed on my feed.
It was then that I had to set myself up for the most logical way to start investing. But how would I do that if I am not earning any money, and that I haven’t since mid-COVID-19?
How To Earn Money?
That was the first hurdle that I needed to overcome. I knew that the solution was starting an online business. The first concept that landed in front of me was the drop shipping concept, which only took a few days for me to finally decide that it is not for me.
One drop shipping review site took me to another review on the same site talking about an online platform that provides everything; website, hosting, domain, step-by-step training, support system, community, etc.
You as a reader now must be doing exactly what I was doing when I was reading the review. I was rolling my eyes, but the one who wrote the review was good. He started talking about the negative points of the platform. I studied those and went to other sites to start categorizing their weaknesses whether through the initial review site or other sites.
I know myself, I like experimentation a lot. Normally, the way I try things is by diving right into them. I do not have the patience to read what other people are saying. I want to know for myself. In this case, I didn’t do that. I read what other people said, then I went to the platform open-eyed.
I found something that I normally don’t find in other online money-making platforms. I found that they offer a free version with a website and a domain (Not my own), and the first part of the training. It wasn’t a trial period, which was strange to tell you the truth. I was free for as long as I wanted.
To cut a story short, I joined for free, then after a couple of weeks, I fully joined the platform. This same diary is written on a website by this platform that is called Wealthy Affiliate (WA). The first hurdle is not overcome.
The first hurdle of making money is not set. I am still in the training of WA, and I am taking my time with it, step by step. I am reading one lesson at a time, then take my time into applying it.
Yes, I am encouraging people to join WA, but if anyone is interested to join WA they can earn affiliate commissions from any product or service that they like in any niche of their own choice.
For anyone who is reading this diary, the first step that one needs to make sure of before starting to invest is to make sure to have enough investable money. One of the ways is to make sure that you have a stream of money coming in from which you can put aside investable money.
Therefore, if the reader is someone like me who does not have an income, one of the ways to earn an income is through having an online business with any model whether it was affiliate marketing or any other model. This online business with all its models is only one option that has multiple branches.
The important thing is to secure an income stream from which you can put aside investable money.
Savings And Investable Money
I found that there is a lot of confusion between understanding the concept of saving and which money to use for investment. In short, not all saved money is suitable for investing money.
Yes, I said to myself in another diary entry, that saving money in cash is a formula for losing money, but an investment to make sense needs to be long-term. Therefore, it is only common sense not to use money that one expects to use in less than five years for investment.
Many experts talk about considering a minimum of five years for a long-term investment to make sense. I found this to be very hard to apply. My interest is investing in the stock market. When I study a company and make an assumption of future cash flows of a company, I cannot make such an estimation for five years.
Of course, I can, but I feel making assumptions about the future cash flows of a company for the coming five years is considered to be a short period. On the other hand, when I used to make feasibility studies for new ideas I would make one for the coming three years.
Making a feasibility study for five years or more makes the study go off-tangent, and loses its sense of reality. I stopped typing here as I am thinking about the difference between both scenarios. I need to think more about this, but let us get back to my concept of investable money.
I have defined investable money for myself, as money that I will never need. It is not money for education, retirement, or anything else. The money that I use for investment is money that I consider has been spent on expenses. Therefore, the money that I use from saved money is money that I have spent on something and I don’t have any other purpose.
This is my definition. It does not have to be true to others. I know many people who invest for their children’s education and others who invest for their retirement. I am describing what I feel I am relaxed with when I talk about investing money.
Investing In Stocks
The actual process of opening a broker account and beginning to invest money has become extremely easy in many countries. This ease of the process should not fool us. We should never jump in into investment without knowing what we are doing.
Yes, I said that I consider invested money as money spent on an expense, but in the end, I am investing to increase my wealth.
Last year I was lucky to find a tool that allows me to do my company analysis, news research, stock analysis, and check analysts’ estimations all under one umbrella. I found a couple of value investors on YouTube, who were explaining the indicators that they use to scan a company of interest.
They would explain how to calculate each of those indicators in detail. Later on, they developed software that does all that calculation automatically, and then have the software calculate the price an investor is willing to pay for a particular company based on some future assumptions of different indicators.
Those who subscribed to the software, which is extremely cheap by the way, considering the many features that it offers, and compared to other investment tools and systems available in the market. I did not subscribe to the software right away. I kept on watching their videos and seeing how they are using the feature. After a couple of months, I subscribed monthly.
After a few months, I realized that this software is a crucial part of my investing routine, therefore, I decided to subscribe annually as it becomes cheaper for me this way.
Trading and Investing
I am a value investor, but I would like to learn stock trading at some point. Investment is a long-term process, while trading can bring in short-term income.
One of the two value investors has a trading system that he has been teaching for a while. On the same software, you can apply for the trading part (if you are interested) and learn their stock trading methodology.
As for me, I only use the software for the investment part.
Conclusion
This is how I understand the best way how to invest money; make sure that one has a streaming revenue from which one can save money. From the saved money, decide on a portion that one would spend on investment.
If I don’t have a job, then find a job. If I have a job but cannot save money, find another job, or find a way to create an extra income.
I will not use money that I will need in the foreseeable future, and I will never take a loan for investment. Those are two red lines in my investment methodology.
The Investor
Thursday 18 May 2023
About The Author
I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second, as a place where I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly, as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.
For more detailed information on my affiliate disclosure please refer to the Full Affiliate Disclosure page, and if you are interested in building your own online business you can check this post here.
Furthermore, this site is in no way or form giving any financial or investment advice, nor it is encouraging or discouraging people to buy or sell any financial instrument. This is a personal diary in which I track my progress and share it for informational, educational, and entertainment purposes.