How I Made $20,000 in the Stock Market at the Age of 23
Learning how to invest, is without a doubt, the greatest skill I have learned in my life. There is nothing that compares to the freedom and financial success it has brought me at such a young age.
My first year investing, I made $49.55. This year, with 3 months still remaining, I have made over $20,000.
When I started investing, I didn’t have a goal of what I wanted my portfolio to look like, or how much money I wanted to make, but, I am grateful that I stuck with it and created a strategy.
After losses, the net unrealized gain of my stock portfolio this year is $17,848.
I suppose you’re here because you want to see how I did it…better get comfortable!
Before I start…As you read through this post, some thoughts and questions might arise in your mind. See below for some answers:
My family is not wealthy and no, they did not give me any money
I have worked since 2015 and invested a good chunk of my income
It is not all fun and games! I have lost over $10,000 in the stock market
How it all began
To understand how my portfolio has grown to the level it has, you must first understand all the events that led up to now and how they prepared me to make smart investment decisions.
I made my first investment in February of 2015, when I was a senior in high-school. At the time, I had dreams of going into wealth management and wanted to get a head start by getting some experience in the stock market and seeing what all the hype was about. I was excited and somewhat nervous (I am sure you remember how you felt the moment before you made your first investment).
Just a month prior, I had opened my first brokerage account shortly after my 18th birthday. After seeking out some advice from a friend’s dad, I ended up investing $150 in the Schwab Total Stock Market Index (SWTSX). After fees, my investment came out to $114 and some change (if you haven’t head of front-end load fees, please do your research).
Just like that, my investing journey began!
Dabbling in IPO’s
In the beginning, my portfolio was not growing at a rapid pace so I started researching ways to make money in the stock market. That is how I stumbled upon IPO’s.
An initial public offering (IPO) occurs when a company is going public on the stock market. Sometimes, when companies go public, their newly issued stock increases rapidly and in rare situations, the stock might double in a matter of days, or weeks. Naturally, investing in IPO’s carries tons of risk and is generally, not the best strategy for new investors with little cash.
In 2016, I invested in my first IPO along with a friend. It was in a pharmaceutical company called Patheon and we ended up making about $550. It was the quickest and easiest money I’d ever made and we became hooked.
Click here if you’d like to watch a short video where I talk about my first investment.
We were soon joined by another friend of mine and we went on to invest/trade biotech IPO’s for the next 3 years. When I think back on IPO’s, there is no shortage of stories and lessons when it comes to investing in and trading IPO’s (yes, there is a difference between the two). Whether it was the time I made $600 trading a company called Stitch Fix during class, or when I lost $3,000 in two days, or even the time I missed out on $100,000 because I got blocked from making a trade in a company that sells a product that starts with a “w” and rhymes with feed. Here are the greatest lessons I learned from investing in IPO’s:
There is a huge difference between investing and trading, make sure you know what you’re doing
Create an investment strategy and keep your emotions at the door. The only thing emotions did for me was LOSE ME MONEY.
Over the long term, it pays to be patient and invest in companies for years, not hours.
We’ll talk more about IPO’s another time.
From 2016- 2019, I focused largely on trading IPO’s until midway through 2018 when I started an internship at Merrill Lynch, a global wealth management firm.
It was during my time at Merrill Lynch that I learned the most crucial lessons that have helped me and several friends of mine.
It’s Hard to Beat the Market, but it is Possible
I will tell you right now, I would not be where I am without the advice and guidance from the wealth advisors at Merrill Lynch in Everett, WA where I interned for a year. When I started, I was still passionate about IPO’s and was always looking for the next big idea. The only drawback from my strategy was 1) I didn’t really have one and 2) I was not thinking long term.
Not sure what a wealth manager does? Read What Is a Wealth Manager? by smartAsset
After learning about my affinity for IPO’s and speculative investments, the advisors in the office worked hard to inform me about the risks with focusing entirely on IPO’s. The largest risk being that, a strategy of investing in speculative investments is not scalable. Meaning that one year, you could make 50% and the next, be down 20%. Also, you could have one great year, then never do well again.
During my internship, I learned about the difference between growth and value stocks, and the difference between active and passive investors. They informed me it makes more sense to have a diversified approach where you invest in a range of securities depending on your risk tolerance and goals and stick to a strategy so that when things get tough, you do not freak out.
If you don’t remember anything else from this blog post, remember the following:
Create an investment strategy based on your goals and how much risk your willing to take on
Don’t let emotions influence your investment decisions
The stock market doesn’t care about you
Here is the most important lesson I learned. I first heard it the year I started investing, the again during my internship.
When the market goes down, people get scared, and they respond by pulling their money out of the market, this is a signal for you to jump in to the market
With that, let’s jump to 2020.
Investing During Coronavirus
If you’ve made it this far, thanks for reading my blog post! We’re almost done here.
In March, when Coronavirus was starting to heat up, global panic was spreading and there was uncertainty on what the future would like, my investment portfolio took a pretty big hit.
At the time, I had three investment accounts: an employer sponsored 401k, a self-directed Roth IRA, and a self-directed brokerage account. When I checked my balances, I was down over $7,000 collectively across all of them. This represented over 30% of my portfolio and in a manner of weeks, it had vanished. Even worse, weeks prior, I had made several new investments.
To say I was stressed would have been an understatement. The market was plummeting, unemployment was increasing, and people were selling off their investments and pulling money out the market…
Remember what I said earlier?? Let me remind you. “When the market goes down, people get scared, and they respond by pulling their money out of the market, this is a signal for you to jump in to the market”.
Can you guess what I did? From March to August, I invested almost every penny I’ve made (be careful about doing this when the market is volatile. Invest incrementally and not all at once). I focused on large companies like Microsoft, companies I knew that were large enough to withstand even the worst of times. I also focused on ETF’s and leveraged ETF’s.
Because people were going to be working from home, I invested in software companies that would likely see increased revenue as people shifted towards video-conferencing and ordering things online. Lastly, I invested in airlines. Travel won’t cease to exist and eventually, whether it is months, or years from now, travel will pick up and airline stocks will return to normal levels (presumably).
Here are some of the best investments I’ve made in the past few months:
Docusign
Amazon
Microsoft
Apple
Twilio
Tesla
QQQ
TQQQ
SPXL
There are several others but these are some of the heavy-hitters.
Due to the rapid growth of my portfolio, I am on track to earn more from investments, than I earned in the entire year of 2018 working two part-time jobs and investing.
The Takeaways
I did not write this post to brag about the money I’ve made or how much my portfolio is grown. This post is to serve as a story about the importance of consistency and keeping a level-head when it comes to investing.
I am no stock guru or investing wizard! I am blessed to have remained employed at a job that provides me with a level of stability that even allows me to invest the way I have. Furthermore, I still live at home. This has helped me save and invest money that would otherwise be going towards rent and other expenses.
One of my close friends, the same one who invested in that first IPO with me, also jumped into the market when things were uncertain and months later, he is reaping the benefits.
Not too long ago, I read an article that talked about how during times like this, people pull their money out of the market at exactly the wrong time and then decide to put their money back in when the market is up. In the end, they miss the entire period when they could have been increasing the value of their assets.
Many people are scared to invest because they’re afraid they don’t have enough, they’re scared of losing money, or they want to wait for the “right time”. Sure, investing can be scary, but, if you do the research, speak to a professional (or someone with plenty of experience), and develop a strategy before jumping in, that can take off a lot of the pressure.
If you keep waiting for the right time, you’re going to end up waiting too long and missing plenty of opportunity.
Remember, it’s never too early to start investing but it is possible to be too late.
If you would be interested in learning more about investing, tips, and lessons I’ve learned, feel free to go the Courses page, and enter your email. For the past month, I have been building an investment course and hope to publish it within the next month. It will cover investment strategies, tax-efficient strategies, picking a broker, and much more information.
Whether you’d like to sign up early for the course, or want to receive a copy of the flyer containing the course contents, signing up on the Courses page let’s me know you’re interested!
Want to start investing but don’t know where to start? Check out the “Investing” portion of the website, shoot an email to learn@collegemoneyhabits.com, or DM @collegemoneyhabits on Instagram.
