When I graduated from college in May, my parents started to transfer more “adult” responsibilities to me. Read: I’m paying my own bills and handling my own money. Part of the handoff included giving me access to an investment account that was set up for me when I was in high school.
In 2015, my dad took half of what I had in my personal savings account (about $5,000) and dumped the money into a mutual fund. If you don’t know what a mutual fund is — I didn’t at the time — it’s “a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt,” according to investor.gov. (Here’s a rundown of other investing definitions that are good to know.)
All of this meant absolutely nothing to me at the time. Why would I care about stocks? I was a high school senior, and mostly I was annoyed that a big chunk of my savings was no longer mine to spend — it was invested in the stock market, and, I was told, it would grow over time.
And that was that.
A pleasant surprise
After I graduated from college it was time to take over the account. I followed the steps to take ownership of the account and transferred it into my name. Then I logged into my online portfolio for the first time, and, let me tell you… my jaw dropped.
My money had more than doubled in just four years. Seriously, it was like magic. I had done absolutely nothing— just let my money sit in the mutual fund — and my $5,000 grew to $10,608.
You know that thing every personal finance expert says about letting your money make money for you? Yeah, it’s true. And it’s a must.
Lucky for me, I had my own personal finance expert sitting at the same table as me. That’s right — I immediately shared my shock with the one and only Jean Chatzky. Her response? “Write a story about that.” And this is it.
Investing is the new black
Jean knows the value in investing — of starting young and letting your investment ride — and she loved how organically I came to the same conclusion on my own. She wanted me to share that honest surprise and triumph with our community because I was living proof that this was a proven path to building long-term wealth.
That said, being an investor isn’t always easy. I know it will cause me anxiety at some point. The stock market will do what the stock market always does: It will rise and eventually drop. I’ll watch as my account balance dips and will probably want to pull out my money when it hits a low. It’s unreliable (in the short term) and scary when you see your savings cut in half overnight.
Which leads me to what I have learned through my short-lived but ultra-important investing journey…
It’s all about the long game
Let’s take a trip down market-memory lane. Investors who lived through the stock market crash of 1929, which ultimately led to the Great Depression, did eventually recover their money — even if it took 30 years. More recently, when the housing market collapsed in 2008, leading to the “Great Recession,” it didn’t ruin the markets forever. In fact, just 11 years later, the economy is booming.
Think about it: if you panicked and pulled your money out of stocks in 2008, there’s no doubt you would have ended up with less than you put in. But if you held on and trusted the economy to eventually rebound — which is tough to do, but an essential part of any long-term investment strategy — you not only would have recovered all the money you lost, but you would have actually made money on your investments, too. And those who continued to save during those down years, adding money to their investment accounts, ended up in the best shape of all: They literally followed the first part of that investing nugget, “Buy low, sell high.”
What it really means to be an “investor”
I always assumed I’d become an investor eventually. I pictured it a lot differently though.
Instead of having to closely analyze the markets every single day and constantly check my portfolio, I’ve learned that being an investor can be as simple as putting your money into a mutual fund — money you won’t need for anything in the near future — and watching it grow as someone else does all the work. (Goodbye, investing confidence gap!
I know it’s easy to feel confident as an investor when things are looking up. Like right now, for example. I also know there will be times when my confidence will waver and I’ll feel like the only solution is to pull my money out of the stock market. But even this newbie knows that that’s the last thing I should do.
My long-term plan is to channel the confidence I feel right now when things are great, and use it to push myself through periods of short-term stock market anxiety. Because now I know firsthand that the key to coming out on top is to play the long game.
More on HerMoney:
- How to Invest $1,000 or Less
- Invest For — and With — Your Daughters. Here’s How to Get Her Started
- How to raise financially educated kids and teens
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