Blog #2 - How to start investing - January 13th, 2024

Blog #2 - How to start investing - January 13th, 2024

I think the path to start investing begins with being in a place in your life where you want something better, something more. Being in a place where you are working your butt off and seem to be getting no where. Being in a place where you want to make some sort of change, but have no idea how.

That's where investing comes in, as a way to build wealth in the long term, and in the short term simply make your money work for you and even on a small scale, build something special.

For myself, my investment journey started extremely bad.

I have put money into RRSP's for years and they were okay, but it was never as exciting because I couldn't pick what stocks I was buying or how to shape my portfolio. Basically, some money came out of one bank account and into another on payday. I barely even noticed it and I should point out that despite how boring that is, I do still to this day have money go into my RRSP's once a month. It's another form of saving and investing that I still do.

But in my life, my business goals weren't happening nearly as fast as I wanted and the career path I got into was starting to do well, but I was still left wanting more, dreaming bigger and unsatisfied with where I was in life.

So, I had finally gotten to that place and thought: it's time to make a change and do something. When the time came to actually start buying stocks and investing, I was maybe a bit over excited because it was so different from RRSP's and the potential upside was limitless.

I had been thinking about it for years, working for an automotive dealership in sales. In my spare time, I would work on business plans. At the time I was doing an automotive blog for the dealership and just trying to figure out the best ways to workout my own business goals. However, some of the other sales consultants would tell me stories about how their friends were making thousands of dollars with stocks.

I never even questioned why they weren't into stocks themselves, but stupidly I went along with it. 

I researched how to buy stocks and in Canada, that starts with opening a TFSA (Tax Free Savings Account). This can be done on apps in Canada like Wealthsimple, in the United States there is Robinhood and a few others, or you can simply go to your bank and make an account in person.

Personally, I have both, I use my bank for stocks and WealthSimple for a bit of Crypto. For now I'll stick to explaining just stocks.

I started out by going to my bank and opening a TFSA and a US TFSA. I had to be pretty strict with the people at the bank because the banks first option is always to have them invest for you. Which I didn't want. I wanted to do it myself, because I wanted to actually learn how to do it. If I failed it was on me, but if I succeeded, it was on me.

I had been told multiple times that pot stocks were skyrocketing and such a great investment. So I went against my better judgement and put some money into a few pot companies by purchasing stocks in them that had been recommended by my co workers. I should also point out that now when I buy stocks, I will buy stocks in companies that have products I typically use. Pot is not one of those products.

I believe in about a week, my portfolio was down about $4000 and I got it in my head that I was never going to purchase stocks again, as it's "Too much of a risk".

I still own those stocks and hopefully one day they will turn into something, or at the very least over the next 10-20 years, I'm hoping to get at least some of my money back.

So, almost a year had gone by and I barely even looked at stocks other than tracking the ones I owned. Then... BOOM!

Covid hit.

In March of 2020, despite being told that we were essential and would continue to work, I got sent home for two weeks to "flatten the curve". Turns out that two weeks would turn into 6 months. In that moment, I decided that if I was going to get into stocks, I should do it properly. I did a ton of research, watched thousands of videos and decided how I wanted to shape my portfolio.

I purchased my first stock that I discovered and researched myself, no "my friends made this" or recommendations from anyone. It was all me and my research.

That stock was an oil company called Ovintiv (Stock code OVV.TO). The companies' financials were encouraging: it pays a quarterly dividend, their market is huge, oil is the worlds economic driver and will be for long after I'm gone. I purchased it at massive discount of $6.46 per share (for perspective to buy this share in January 2024 it would cost roughly $54.68 per share). In just a couple years, it not only paid me a quarterly dividend, but it went up over 1200% by the time I sold it. I made all my losses back and more in one stock. My only regret ...  is not buying more. 

I still own a bit of that company, and it still contributes to my dividend earnings. Overall, after that experience I was hooked on investing and  it was all I needed to motivate me to continue researching, building, buying and shaping my portfolio.

So what does that short story about how I got started in investing have to do with how to start investing in general?

Well, the story of how I started investing lays out the ground work to start any investing journey, and gives a few clues on how to get started.  I'm hoping anyone reading this will use it as both a cautionary tale and  a road map of sort on what to do and more importantly, what not to do.

Since 2020, I have purchased several more stocks.  Overall, I have discovered that when I do my own research, I'm quite good at picking stocks that go up in the long term.

The first 4 steps I can recommend to anyone looking to get started: 

First, open an account through one of the credited apps or through your bank.

Second, do the work yourself. Never purchase stocks based on recommendations. I learned this the hard way. At least this way if it goes bad you have no one to blame but yourself and if it goes good then you get all the credit. If you are confident in your research and the companies you have chosen, even if it goes down a little, don't panic. Hold on until you earn enough that you are comfortable. 

Third, do your own research learn about a companies market cap, P/E Ratios, product sales, etc ( we will get much more into research in the next blog). 

 Finally,  purchase stocks in companies that you know and use yourself. I own and will continue to own gas powered vehicles, so oil companies make sense. I eat food and drink drinks from time to time so I purchased CocaCola stock. Buy what you and your family use, make sure they are good companies and will stick around for the long term.

From there, you can get into different types of investments and more specifically shaping your portfolio. (I will get into that a bit more in the next blog). 

The overall goal of investing: become more financially stable and have your money work for you.

By continuing to write this blog I hope to share my own experiences and examples to help you lay your own ground work for investing. Overall, I hope we can, together, continue to grow our wealth and businesses and help shape the future moving forward.

I hope all is well,

Brett Rae