This one’s for you, Telly 😉
So, a lot of the time when I’m a guest speaker and tell my story about my own foibles with money, what I HOPE people will grab onto are the little habits and changes-of-thinking that got me turned around. What most people DO seem to get all excited about is that I learned how to do my own investing via a group of about 12 women who taught ourselves how to invest. (we called ourselves Twanda, for anyone who’s seen ‘fried green tomatoes’).
The world of investing seems to be an area of confusion, intimidation, and yes, boredom for most of us. We know it’s important, but our eyes glaze over, and the thought of reading financial pages is right up there with listening to MPs in parliament.
Here is an Extremely Brief explanation of how we did it.
1. There were about 12 of us, who committed to stick together for 5 years. This long Is NEEDED, trust me on this, to make it worth it. None of us had any
financial background at all. No financial planners. No book-keepers. No econ majors in the group (we were a lot of film types and health care, and educators).
2. We formed a limited partnership and got set up with a bank account at our local credit union, with the Chair and Treasurer as signing officers. We got a self-serve brokerage account too.
3. We each paid $30 per month into the kitty. Every 6 months or so, we had $1500 (about the minimum you’d want to aim for) with which to invest.
4. How did we choose what to invest in?
Note: These days, these are all still good starting resources, but there is a rich mine of DoItYourself information available from your fellow Canadians who blog about their personal investing. It takes a while to develop the vocabulary and get the significance of their posts, but over time, it will become easier. Money Relations is a great place to start – my favourite, and uses layperson’s language. More technical/advanced blogs include CanadianCapitalist , FinancialJungle and GuerillaInvestor (very manly, that one!). There are lots out there – poke around.
Anyway, we taught ourselves some of the basics: how to evaluate a company. Key ratios like P/E, Margins etc. It sounds complicated, but honest, once you get it, it’s sooooo easy. Kinda like learning to ride a bike.
b. We kept our eyes open for companies we used in our regular lives, that we liked, and believed had a future.
made us a ton of money. did even better. would have done well, but the currency fluctuation held us back (oops! hadn’t thought of that. Live and learn!). also did us very proud. Each person would take a turn presenting a company including the financials.
c. Every 6 months we’d review the companies presented and debate which one to buy this time ’round. These debates got intense! I wanted starbucks, but other people didn’t like their ethics. Another member wanted Weightwatchers, but we only liked companies that had been public at least 5 years. As it turned out, we could have made a chunk of change, and the member didn’t let us forget it!
Mostly, we used a lot of common sense. Has the company been around a while? Is it a fad, or here for the long term? Do they have a good enough cash flow to keep going for the forseeable future? Do we like the people managing it? All of this took research of course, but isn’t too much different than simply checking into an individual’s personal finances – do they overspend? Do they have savings? Do they have debt? Is their networth growing or diminishing – are they making something of themselves? And are they good citizens?
5. If I recall correctly (I think I do) we never made less than 18% in any given year. This included the 2000 disaster. But more importantly than the money, we each developed a sense of competence and enthusiasm for investing.
Please, oh please – none of the companies above are my recommendations (we bought – and sold – them years ag0) and none of the above should be in any way construed as advice. I’m a money coach, not an investment advisor. It’s simply the experience I had that taught me how to make my own investing choice.