My investment history goes back to age 8. I started with a savings product. My parents were giving me weekly money for school. I didn’t use it all and once I had saved around €1 (in current currency), I was able to buy a toy I really wanted. Back then what seems like a small amount now took me months to save. So I got a taste for fulfilling my goals by putting something aside and I learned my first lesson – pay yourself first.
This also helped me to develop a habit to continue putting some money aside and I continued doing it until I went to university. With time it became less about gathering to buy some stuff but more about building reserves.
There was also a one time during elementary school where I had to loan some money back to my parents at the end of the month (they left their wallet at home) and got paid back in the beginning of the month. What I didn’t know at that time is that it could be called a loan and I should have also asked for interest on it.
It took me some time to learn that you can also get your money working for you and that there are products that earn you more than 0% annually.
By the time I went to university, I had saved up quite a decent amount and also received some extra from my parents (which was put aside by them for my university fees). So I was able to buy a laptop and still had some spare reserves.
Luckily at this point, I got my hands on a book about money (the book was literally called “Money”). I realised that there was something smarter than saving that I could be doing with my money – so I opened up my first deposit and increased my earnings substantially – I started to earn a 1% returns on my investments!
It took a couple more years before I finally made my first stock investment. It was when I got my first real job as a clerk in a bank. As I was earning €550 gross at that time I was somehow able to put aside €50 per month. So it took me around 10 months to gather €500. Only then did it make sense to buy my first stock.
As my earnings started to grow I was also able to start growing my portfolio as well. My principal then and now is that you should start as early as possible in order to build a positive habit. Losing €50 early on could be the same as €500 or €5000 in later stages (when you earn more or have more money to invest). The only difference is that you could make your mistakes and learn from them much earlier and once you have bigger amounts to invest you are already a smarter investor.
I didn’t take long after my first stock purchase before I bought my first rental apartment. Luckily, I already had an apartment and I was able to take out my first mortgage loan with that as security. I continued reading and learning about different investment methods. During this time I also decided to aim for membership in the 50% club -> that is to put aside and invest 50% of your income.
After 8 years I diversified my portfolio further and added one more goal – to have my passive income covering my monthly basic expenses (communalities and etc). Now it is diversified between real estate in the form of rental apartments), loans through several platforms (mainly Estateguru but I also have investments in other bigger platforms to diversify the products), equity and a smaller portfolio of stocks.
So we reach my final principle – diversification. As I’m actively involved in managing a business I don’t have time to constantly work on my portfolio and maximise the returns. I consider myself more as a passive investor. As my daily job is at Estateguru, with my investments, I also try to automate as much as possible. Digital investment products make it easier. I know if I should work on it actively, I could probably earn higher returns. However, currently, I have set a target of 10% returns on my whole portfolio.
To execute this more passive strategy I also follow simple diversification principles: diversify between everything. As stated before, I simply diversify between different asset classes and I also diversify inside the asset classes (like if I invest in crowdfunding, I invest in different platforms and asset classes). I’m probably missing out on maximum returns but can sleep happily without having big fluctuations. Even if one asset class is in trouble, others help to balance it hopefully.
There have been times when I also ask myself why I bother with rentals and owning real estate? Especially if automation and passiveness are the goals. They are also not as liquid as stocks or other asset classes. It also needs my physical time and returns are also usually lower. But what I like about it is the monthly cash flow it generates and at the same time the potential increase in asset value. Playing the long game, as one might say.
That’s why I also have real estate-backed loans as the main part of my portfolio – to have monthly cash and at the same time have the security that, if something happens to the project, there is at least collateral that you can sell. Someone might still say that I have too much real estate exposure, and it might be true but then again, this is something I have the most knowledge of. As I’m part of the management team at EstateGuru, I know that I can have a big influence on making things right on the platform and for the other investors.
I will end with this idea: it is always too late to start investing. you should have already started yesterday.