She Strengthens

A Year of Investing on a Shoestring Budget: Lessons Learned

The Journey Begins

Exactly one year ago, I took the plunge and invested in my first stock, marking a significant milestone in my financial journey. It wasn’t an easy decision, especially considering my modest salary of $37,000 while living in Manhattan. However, I’ve since learned that investing is a crucial step towards securing my financial future.

Overcoming Fear and Doubt

My risk-averse upbringing made it challenging for me to part with my hard-earned cash for uncertain investments. The 2008 stock market downturn and its devastating effects only added to my apprehensions. But, after a year of investing, I’ve come to realize that it’s essential to separate my political opinions from my investment decisions.

The Power of Laziness

Ironically, my natural laziness has turned out to be a blessing in disguise. With minimal effort, my investments have continued to grow, and I’ve received dividends without actively monitoring my portfolio. This experience has taught me that sometimes, doing nothing can be the best strategy.

Tax Lessons Learned

One crucial lesson I’ve learned is the importance of reporting even small dividends on my taxes. Failing to do so can lead to an audit, which is a costly and time-consuming ordeal. Additionally, selling stocks within a short period of buying them can result in higher taxes.

Emergency Funds vs. Investments

While my investments have grown, I’ve realized that they shouldn’t replace my emergency fund. Having a readily accessible fund for unexpected expenses is vital, as liquidating investments can come with fees, taxes, and penalties.

Embracing Failure

Losing money is an inevitable part of investing, but it’s also an opportunity to learn. My early investment in Fitbit, which plummeted in value, was a hard lesson to swallow. However, it taught me the importance of diversification and avoiding overvalued stocks.

Moving Forward

As I continue on my investing journey, I’m focused on rebuilding my emergency fund and adopting a long-term approach to investing. By doing so, I’m confident that I’ll be better equipped to navigate the ups and downs of the market and secure a brighter financial future.