Tesla Archives - Frugaling

Every week I like to feature a few frugal articles that caught my eyes. Curl up in your favorite reading nook and enjoy. Hopefully these encourage you to live frugal lives!

Most millionaires say they’re middle class by Robert Frank
There’s something strange about money. No matter how much people have, it never seems to be enough. Take this recent article from CNBC highlighting millionaires who say they’re middle class. It’s possible, but only if you compare them to the richest in Manhattan. Middle class on a global scale is an income in the tens of thousands of dollars per year. With a million or two, you’d be sitting pretty in most of the world.

Your stock picks say a lot about your age by Barbara Kollmeyer
As a shareholder of Tesla (TSLA) stock, this article spoke to me. Tremendous variations in stock ownership by age groups are present. Younger people tend to own technology companies and older adults choose stalwarts such as General Electric. From an investment perspective, it says a lot about future wealth and generational changes in stock market valuation.

Is Frugality Sustainable Without A Goal? by Mrs. Frugalwoods
Oh, I love this one! Mrs. Frugalwoods highlights the importance of goals and planning for frugality. She notes that there was a time before frugality where she was adrift and spending more than she should, but then there was an awakening.

I secretly lived in my office for 500 days by Terry K.
This story either represents the ultimate simple life/minimalist or someone in intense desperation. With skyrocketing housing prices in Los Angeles, one person took to living in their office for 500 days. He explains how this “financial fix” became a “lifestyle.”

Wall Street Bull Money — *Photo: thenails*

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.