6 Things I Learned In My First Year Investing — SHE-WISE (2024)

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It’s been one year since I made my first investment in the stock market on my own.

It’s incredible how much I’ve learned in the last year. I was so scared and excited all at once when I was about to click that ‘buy’ button. Suddenly, fear-based ideas started racing through my head; it’s a scam, you’re going to lose all of your money, this is a terrible purchase, you don’t know enough yet, you’re an imposter. On and on they went.

But then I got out of my head and returned to a place that is logical and grounded. I had spent months reading, learning, and even trading paper money to prepare for this moment. I had looked at the financials of the company I wanted to buy, ran the numbers (too many times), and I knew I needed to make this jump in order to continue learning, otherwise I would plateau and lose interest.

I had already decided on the amount I would invest. I wanted it to be enough that I had some skin in the game but not so much that I wouldn’t be able to sleep for a week. I invested a few hundred dollars to start. Later that day, I learned about some big changes going on in the industry of the company I now had shares in and I decided to double my investment the next day. Talk about jumping right in!

It’s been a year since then. In that time, I have invested money every month. I have learned so much about growing my money through the markets and also about my own personal investing preferences. There is certainly no one size fits all when it comes to investing and it’s important to learn what works best for you.

I encourage you to learn what you can about investing and remember that most of what you learn will come when you actually start doing it. I know it can be intimidating, especially if this isn’t something you have seen first-hand, but remember that you can learn and do anything you want!

Here are 6 valuable lessons I’ve learned about investing in my first year.

1. There is a limit on how many trades you can make in a week unless you’ve invested over $25,000

I learned this after getting a warning that I would need to invest $25,000 to make my next trade. There is a limit to how many trades you can make unless you have a minimum of $25,000 invested. That means true day-traders have invested this amount, otherwise you’ll be told you have to wait (I believe it’s 5 business days) to make your next trade.

Thankfully, I was only buying and selling a few dollars’ worth of shares, so I didn’t lose out on anything when I had to wait another 5 days to finish my most recent transaction.

Ultimately, this rule is in place to protect the companies whose shares are being traded. From the stand point of a business owner, I understand how important this rule is. They don’t want someone who is unsure of what they’re doing to buy and sell like crazy.

2. No amount of money is too small to invest

Now that it’s been a year, I’ve been reflecting on my experience and the consistency of investing every month, no matter how much it was. It feels so good to see how much my account has grown. Every dollar counts.

So often we don’t start something because we think we need to have, do, or know more. None of that is true. You just need to start.

3. I prefer investing in Index Funds rather than stocks

An index fund is a type of mutual fund. It’s made up of a portion of the best stocks in the market. Let’s say one index fund was made up of 100 shares from 100 public companies. This would mean that each companies’ share held 1% of one index fund. 100 companies at 1% equals 100%.

Most mutual funds try to beat the market. Index funds however, match the market. This means that your index fund will be doing as well as the best stocks in the market. Because it matches the market rather than attempts to beat it, the risk is lower.

Below are a few more reasons why index funds are my favorite way to invest.

4. You can invest in index funds based on a dollar amount rather than number of shares

This has proven to be incredibly beneficial in those months when I only had $25 to invest. I was still able to invest in the index fund I wanted by trading based on the dollar value. Many other forms of investing require you to buy based on share volume. If the share I wanted to buy was $50, I wouldn’t be able to buy with only $25, I would have to wait until I had a full $50 to buy exactly one share.

With an index fund, I’m able to buy as much of a share as my money can afford. This has helped grow my account much faster than I would have been able to otherwise.

5. The steadiest investment in my portfolio during 2020’s volatile market was my index fund

I think it’s pretty clear by now that index funds are my favorite way to invest. I paid a lot of attention to my investments during 2020 and had moments when I really wanted to buy or sell with the volatility of the market.

During this year, my front runner was my index fund. Sure, it dropped with the market, so I bought more, but it dropped less than anything else and it also increased in value before anything else in my portfolio.

It also remains steady because any stocks that are included will be removed if they aren’t performing well. This always keeps your index fund doing as well as the best stocks in the market.

6. I don’t like having to manage my investment account on a daily basis

This is personal preference and something that I am so glad I know about my own investing style. I enjoy following the market and experiencing exciting moments with my investments. But I don’t want to have to follow and make decisions on a regular basis when it comes to my money.

Index funds are a great way to invest without having to be active with your account. Another great option for investing in a more passive way is by investing in company’s shares by following the value investing approach. This is when you look at the financials, run numbers, know what the shares are actually worth, and purchase at a sale price. The only reason you’d need to make changes to this type of investment would be if something unexpected happens in their industry or company. Otherwise, you would hold on to these shares.

I’ve learned so much this last year and no matter how much I share with you, you’ll learn the most by doing it yourself.

The market can be volatile, no matter what’s going on in the world. Stock prices are based on emotions.

When Covid was becoming more well known in early 2020 for example, I remember waking up and wondering why the entire market value was dropping at an alarming rate. After just a few minutes on google, I learned that it was due to shareholder’s fear of Covid. When we learned about stimulus checks, the market began to go back up because investors were hopeful.

It’s important to understand the finances, culture, and industry of the companies you invest in. This knowledge will give you more insight on when to buy and when to sell.

If investing feels overwhelming to you, invest in an index fund or through the assistance of an on-line platform. Below are a few of my favorites on-line investing platforms:

• Acorns

• Bloom

• Stash

• Personal Capital

Here are two additional resources to help you feel more comfortable investing:

• 5 steps to get started investing in the stock market on your own.

• Understanding compound interest and using it to grow your money

Don’t let old ideas or the opinions of others stop you. You are capable and worthy of investing in yourself and your future.

Still have questions?
Send me a message: hello@she-wise.com