My Portfolio: Part 2 – A journey around the Islands

Journey around IslandsIn the last post I shared with you my goals, my ‘why’, and a little bit about my investing approach.

So now it’s time to introduce you to my portfolio – the ‘Million Dollar Islands!’ (at least that’s what it’s aspiring to be one day!)

In Peter Lynch’s excellent investing book ‘One up on Wall St’, he talks about looking at stocks in different groupings, according to their characteristics. I’ve done something similar, but here we invest on different Islands, which each have different characteristics. Here’s a summary, including the latest balances at of Friday 12 December: [Read more...]

My Portfolio: Part 1 – Goals, my investment approach, and Why?

Goals

I mentioned a couple of weeks ago that I’d just bought a new house, which you could say has radically changed my financial situation. So my portfolio has now become an even more important part of my financial plans, specifically, growing it as quickly as I can.

I also admitted I wanted a little help. Accountability. Support. I’m prone to making mistakes like most people, and letting bad behaviours creep up on me, so by baring all to the world, I’m hoping this will help me become an even better investor, and avoid some of those big, emotional mistakes I’ve made before.

So before I get into the nitty gritty details of my portfolio, I want to first share my goal, my ‘why’, and a brief summary of my approach. [Read more...]

Accountability – here I come!

Accountability

About six weeks ago, I shared my biggest investment mistake with you. It definitely wasn’t easy, but I’m hoping some of you took away some really important lessons from it.

One major reflection I’ve had on this post is that if all my investment decisions were made public real time, I’m pretty sure it never would have happened. It went against some of my fundamental rules, and it was driven by emotions and overconfidence. I’m certain that the thought of telling others how much of my portfolio went into this one investment would have made me think twice about what I was doing.

And of course, this isn’t the only mistake I’ve made. And despite everything I’ve learnt from all these mistakes, I still occasionally have an urge to be impatient and take big risks, go for the huge wins, with big $$ filling up my eyes like a cartoon character. [Read more...]

Take advantage of stock market ‘hangovers’ to improve your investing performance

Investing hangover

Many people know that horrible feeling of a hangover. “I’m never drinking again!” is often once of the first things you proclaim, especially if it’s after a particularly enthusiastic night of consumption. There’s nothing worse than the thought of another drink, and you just wish there were no such things as hangovers.

But rather than wish they didn’t exist, you could actually use them to your advantage.

Think of a good friend of yours who had just been out hitting the cocktails pretty hard, and woke up with an awful hangover. This friend also happens to own a nice stash of wine. He swears to you he’s never drinking again after this terrible experience. You offer to buy his wine for half the price he paid, and he jumps at the opportunity to sell to you. “Great deal for me – I just never want to see that stuff again!”. Whether he changes his tune in the future doesn’t matter – he acted by simply thinking very short term, and assuming that how he was feeling now would be similar to his feelings in the future. [Read more...]

Is a barrier of complexity preventing you from taking your first investing steps?

Barrier to investing

There are some big barriers that stop people from dipping their toes in the investing waters – even the beautiful warm water here on the Islands of Investing if you can believe it. One of the most common barriers is feeling like you don’t know enough.

That’s totally understandable, and actually pretty sensible. So before you go diving in head first and risk breaking you neck, get a handle on the landscape and learn some of the basics. But after this point, you should be well and truly ready to go. Most of the learning happens once you make a start, like many things in life. You can only learn so much from books and wise investors like myself ;)

[Read more...]

Have I just ruined my chances of Financial Independence?

Ruined chance of Financial IndependenceThere are some golden rules when it comes to managing your personal finances. One of the big ones is living within your means.

This is something we’ve always done pretty well. Nothing like the amazing savings rates some other financial bloggers out there are achieving, but enough to put a little something away each month, while trying to live and spend in line with our values.

But as of January, our family will be living beyond our means.

We’ve bought a new home. A family home that is just perfect for us. But on the day we move in, it will cost us more than we can currently afford.

This might start setting off alarm bells, especially for all the savvy financial bloggers out there – I’m sure Mr Money Moustache would tell me that I’ve just had a serious financial meltdown, and created a debt emergency equivalent to setting my whole body on fire. [Read more...]

Become a ‘Value Trap’ escape artist

Value trapThe investing world is a wonderful place filled with opportunity, potential and adventure. But along with these wonderful qualities, it’s also filled with all sorts of traps to navigate, like scam artists, behavioural traps and dodgy businesses with creative accounting.

But one of the investing traps that’s easiest to be seduced by is the ‘Value Trap’.

Evan over at My Journey To Millions recently asked the question ‘What is a Value Trap?’, and given I’ve been tangled up in my fair share of them, I thought I’d try and give my own perspective on this – but more importantly, how to avoid or escape them. [Read more...]

The Islands of Investing library

Reading

Gaining a broader perspective on the world, investing and otherwise, is a hugely valuable way to become a better investor. And one of the best ways to do this is through good old fashion, classic books that have stood the test of time due to their wisdom and relevance.

I’ve read hundreds of books on investing and finance, but wanted to share with you those that I’ve found most valuable. These are not books about ‘special techniques’, tricks, shortcuts or hot tips. They are all fantastic additions to a solid foundation you can build for yourself.

Most of these books bring a slightly different perspective to the investment world. But as you browse this list, my advice would be to try not to be too dismissive of certain titles. I’ve found in the past I’ve ignored some great books that I thought ‘I don’t agree with that concept’, or ‘I already know about that’, but when I finally decided to reading them I always learnt something new, whether I agreed with it or not. [Read more...]

One of the saddest investing tragedies I’ve seen

Investment tragedy

Having just read a fascinating performance update post from Mr 1500 at 1500 Days to Freedom, he shared a great example of one of his stock investments in a company called GT Advanced Technologies (GTAT). Being a supplier of sapphire glass for Apple’s iPhone, it sounded like a sure bet. What could possibly go wrong? (Don’t worry Mr 1500, the ‘sad investment tragedy’ has nothing at all to do with you!)

Unfortunately, the unthinkable for most investors happened – the company went bankrupt. Investors lost almost the full value of their investment.

Fortunately, Mr 1500 is a smart investor, and is well diversified, so this proved to be just a small blip on his unrelenting march towards financial independence. [Read more...]

Relishing ‘The Game’ (and it’s all just a game, isn’t it?)

Games

The worlds of investing, golf, and many of the bigger things in my life all have a great deal in common to me.

It’s all a game, but what matters most isn’t whether you win big – it’s you attitude, day in, day out that defines your success.

When it comes to investing in the stock market, there is a pretty easy way to win – invest in index funds, invest as much as you can, as often as you can, and hold on tight (and maybe do some rebalancing, depending on what else you own).

But for me, investing is a game I just love to play. It tests you in so many ways that you’ve probably heard me talk about before. Patience, resilience, confidence, dealing with uncertainty. Sometimes I know that I’m trading a little too much, or taking on more risk than I probably should. But I do it knowing that I’m testing myself, learning, and hopefully becoming a little better in the process. [Read more...]