My first foray into investing began when I was 19 years old. I went into my bank and was sold a global science and technology fund…the year was 1998. I remember receiving quarterly statements and being totally blown away by my returns. In one quarter the fund was up 70 percent! Of course I was oblivious to the fact that I was in the middle of the tech bubble. Then the bubble burst! By the time I sold the fund I had lost over 70 percent of my money and I vowed to never again make the same mistake.
That experience taught me two things. First, I learned that there is no such thing as easy money and that achieving outsized returns usually involves taking outsized risks. The second thing that experience taught me was that I needed to educate myself about investing.
I scoured the Web and bookstores for as much information on investing as I could find. Along the way I picked up the classics – The Wealthy Barber, Rich Dad Poor Dad, The Richest Man in Babylon, The Intelligent Investor etc. Those books formed the cornerstone of my financial education and they continue to serve me well.
Since graduating from university and landing my first real job, I have continued to learn about personal finance and investing in the hopes of one day enjoying financial independence.
Early on in my working life, I came to realize the importance of saving and investing through my experiences of working with people who were nearing retirement. While they were, in general, very happy to be leaving the daily grind, that happiness was tempered by their concerns of not having saved enough throughout their working lives. Time and time again they would tell me: “I wish I had started saving at your age.”
I must admit that I was slightly alarmed at what I was hearing. As part of the baby boomer generation, these people had steady full-time employment where they earned decent wages, had great benefits and an employer sponsored defined benefit pension plan. Yet they were worried they hadn’t saved enough for retirement…what happened to their life’s earnings, I wondered?
One man reflected on how he had always bought motorcycles and fancy new cars with his work bonuses over the years. “Where are they all now,” he asked rhetorically, “they have long since rotted away in the junk yard.” Hearing those stories only strengthened my resolve to avoid those mistakes and to take charge of my financial affairs.
My first order of business was to analyze my debt situation. Admittedly my situation wasn’t all that bad, because I had always held a tight rein on debt. I stayed at home all through university so I managed to graduate with no student loans. I also had a used car that was paid for but not much else.
Through a combination of hard work and careful saving I managed to buy a home upon graduation. After moving in, that’s when the reality of it all hit me. It seemed that between the endless stream of bills and mortgage payments coming out of my bank account I was just squeaking by on my average annual salary of approximately 50k a year. I certainly was not getting ahead or any closer to leaving the daily grind behind me.
That’s when I began to read more extensively about personal finance and investing. I learned the little tips and tricks to reduce unnecessary and wasteful spending, to start paying myself first and to begin investing my savings. After nearly 10 years of saving, investing and living below my means, I have managed to accumulate over 800k in net worth and still growing!
But having a high net worth doesn’t mean that someone is financially free. What’s even more important than net worth is growing alternate sources of income that increases a person’s monthly cash flow. Cash flow is King! I don’t want my finances to be overly dependent on just 1 source of income from my job. No way. I want to have income from stocks in the form of dividends and income from rental properties etc. I hope to grow these sources so that, over time, I am less and less dependent on my paycheque for financial survival.
If you’re interested in learning more about growing your net worth or if you want to follow my progress check out my net worth updates. You can also keep track of my progress on growing the monthly income by visiting my investment income page.
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