Stop Waiting, Reader

Hi Reader,

Welcome to The Money Series and if you are new here, thank you for signing up. Personal Finance can feel ambiguous and overwhelming, but I am here to help simplify the journey.

You have probably read countless times about the importance of investing and how starting early sets you up for long-term success. But if you’ve found yourself overwhelmed by all the options, markets, and advice, you’re not alone. 

I’d like you to know that Investing is like a muscle. Just like in fitness, investing requires consistency, perseverance, and constant learning. While it might seem intimidating at first, it will get easier with time. As you start seeing results, investing will become something you look forward to—a way to secure your future.

If I were to start investing in 2025, here’s exactly what I’d do:

• Build an Emergency Fund: You don’t necessarily need the recommended 6-12 months of emergency savings immediately, but you need a plan to get there. Why? Some investments may lock your funds for a period, and if that’s your only savings, you could find yourself in a bind during an emergency.

  Plus, markets can be unpredictable. If your investments temporarily lose value, you want the flexibility to wait for recovery instead of selling at a loss to cover unexpected expenses. Think of it as your financial safety net - better to have it and not need it than to need it and not have it.

• Only Invest Money You Won’t Need for 3–5 Years: Invest for a short period, you increase the risk of selling your investments at a loss when the market is down. Also, markets have historically delivered positive returns over longer periods, so a 3–5-year timeframe smooths out the ups and downs. Investing for a long period allows you to focus on the big picture of long-term growth as opposed to being fixated on the daily price swings.

  If you’re planning to spend the money in the near term, consider safer options like high-yield savings accounts or fixed deposits. These guarantee a fixed return and won’t keep you up at night worrying about market fluctuations.

• Diversify - Don’t Put All Your Eggs in One Basket: The less you know about stock picking, the more diversified your portfolio should be. What do I mean? If you don’t understand stock picking, you are better off investing in diversified funds that hold many stocks. Diversification is protection against ignorance*. 

  In my opinion, you should start with index funds or ETFs. If you must invest actively in individual stocks, focus on a few companies with solid, well-researched businesses. Avoid over-allocating into any one stock.

• Start small and be consistent: If I were to start investing now, I would test the waters with a small amount and automate my investments regularly. This strategy, known as dollar-cost averaging, helps reduce the impact of market volatility by spreading your investment over time.

  Passive investments, like index funds or ETFs, work particularly well with this approach. You can gradually increase your contributions as your confidence and knowledge grow.

• Expect Volatility: Markets go up and down—it’s normal. As a long-term investor, I’ve learned to embrace these swings without panicking. Remember, losses on paper aren’t real until you sell. The key is to stay focused on the bigger picture: long-term growth. Don’t let short-term price movements derail your plans.

• Embrace mistakes: Everyone makes mistakes when they start something new—investing is no exception. Don’t let early missteps discourage you. Instead, use them as opportunities to learn and refine your strategy. That’s why starting small is so important - it allows you to gain experience without risking too much.

Remember, the most important thing with investing is to start. The earlier you begin, the sooner you’ll benefit from the 8th wonder of the world: compound interest. Time is your best friend when it comes to growing wealth.

Invest consistently, choose wisely, and stay in it for the long haul

Let me know which tip resonates with you and which one you will apply going forward.

Reflect on This:

• When will you start investing?

Till next week, I am rooting for you, money-ly!

Dee

*A quote from Warren Buffet

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