Addicted to the stock market
As a high school student, I envisioned entering the world of finance. I enjoyed watching the market movements, and loved reading Jim Cramer’s Confessions of a Street Addict. After I matriculated to college, I made a sudden switch to psychology and never looked back until I began writing, firsthand, about becoming more frugal.
Investing held a special place in my heart and I had amassed about $4,000 in a Roth IRA prior to graduating college. The funds were invested in a diverse array of stocks and exchange-traded funds (ETFs). Unfortunately, financial demands grew every day as a graduate student and I opted to liquidate much of my portfolio for tuition payments and living expenses.
Graduate school and my sinking portfolio
In capitulating to serious financial demands and poor budgeting, I lost something I loved. I know it sounds funny, but investing wasn’t about the money for me. The money was the medium necessary to engage in a mental game I enjoyed. If I could research, understand, and time an investment well, I could profit greatly from it. This spoke to me on an intellectual level.
But by selling off my stocks and ETFs to pay for the present, I no longer had the impetus nor motivation to research and select stocks. With a measly $1,000 left in my Roth IRA, no investment could be diverse or well-balanced across sectors. Investor fees would eat up any gains I saw. Even as I try to become financially fit and solvent, there are parts of me that feel this incredible pressure because I don’t have enough to invest smartly.
The final $1,000 and failing at investing
With my final $1,000 in a Vanguard account, I’ve made some interesting investment decisions. I was invested in Tesla (TSLA) for years and years, it doubled to $55 a share and I decided to take the profits and sell the position. Honestly, I didn’t want to sell the whole position – I just wanted to conserve some gains and let the profits run.
But when you have next to no money for investment purposes and really small positions in different stocks, you can’t smartly buy and sell stocks. I still believed in Tesla’s business model and future, but wanted to prevent from losing all the gains. This Catch-22 of investing is dangerous and subverts your ability to realize significant financial gains. Over the next month or so, Tesla would go on to about $150 per share – tripling from my sale point and increasing about 500% from my original investment. I had missed the largest gains.
In high school, I invested in Apple when they were around $20-30 a share. Unfortunately, I only had a few hundred dollars in my name. To conserve the profits, I sold the position after the market madly invested in Apple’s iPhone release and catapulted it to $80-90 per share. While I appreciated the 300% gain, I wanted to see the investment continue – I needed more money to defend the profits and position.
It takes money to make money
This trite cliche is entirely true when it comes to investment decisions. Sure, you could get lucky, have an individual stock run up big and take the profits at the perfect time, but you could also miss out on ever-increasing gains and opportunities. The reality is that investing takes a certain amount of funds – $1,000 is hardly enough. While my student loans loom, I’ll be focusing my energy on paying those off first.
There’s still a part of me that misses being involved actively in investing and dedicating a portion of my week to researching and studying up on the market’s developments. This is a very clear consequence to the financial situation I find myself in nowadays. Until then, I am stuck kicking around $1,000 in a Roth IRA, waiting for small gains here and there. This is not a recipe for success.