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How I Slowly Crawled My Way Into Investing

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Investing is scary. Many of us don’t have the stomach to see market fluctuations, corrections, and worst of all…crashes. The 2008 Financial Crisis looms heavily in our minds. In 2008, I had just entered college, and I didn’t know a lick about investing. I didn’t even hear my parents talk about it much in relation to their retirement accounts. All I could see were frenzied headlines about banks going bankrupt, people not being able to take out their money, and new grads from my university unable to find jobs. All the while, the stock market was at an all time low since the Great Depression.

But being a new college student with no money, all of these were beyond me. In a way, it was a blessing because I was saved from the emotional scarring of hearing about people losing tons of money from investing. No doubt that would have scared me off completely from investing.

The idea of investing was introduced in tiny, unnoticeable steps. That was a blessing too. I didn’t have 10 different people telling me the best way to invest my money and how. No doubt that would have felt overwhelming to feel I had to know everything before even getting started or feeling comfortable.

My Slow Drip Journey

Pre-College

I knew nothing about investing. I didn’t know what the stock market was, only that it could make a person “rich” (according to my parents’ excitement).

Up until college, the only experience I had with investing was my dad playing around with stocks before the dot com crash. He worked at a community college at the time, and he would constantly check out books from the library about stock investing. We would always have the markets up on the TV. All I heard was “Dow Jones” constantly without any idea what any of it meant, other than knowing it was pretty important for adults to know.

I vaguely remember all my parents’ friends at the time saying we had to get stocks because we could make a lot of money. It was in my subconscious for a long time afterwards that stocks were a way for people who wanted to get rich quick. My parents never did become “rich”, they said many years later that they just about broke even.

College

I knew nothing about investing. I thought it was only for privileged friends who had cash to burn. I thought it was for people who wanted to circumvent the system and “get rich quick”.

My sophomore year of college, I had a friend who was interning as an analyst at Wikinvest, which is now SigFig, a robo-advisor. I remember talking to him about what his job entailed, and I had no idea what the value of it was. Was it just for rich people who wanted to get richer? His dad had also given him a relatively large investment portfolio for him to manage, and I thought, well wouldn’t it be great if I was just handed wealth too?

Similarly, my boyfriend at the time had stumbled upon some investment portfolio he had started years earlier with money his parents gave him specifically for the purpose of learning how to invest. The portfolio had grown a significant amount. Again, I was fixated on the starting amount he “inherited”. I didn’t even begin to question how the money had magically grown. Once he started working, he started investing immediately. In what, I have no recollection, but at the time I probably assumed it was in stocks because I had no knowledge of other products you could invest in. I just remember him monitoring investments constantly and feeling this was just another guy-wants-to-get-rich-quick thing.

Post-College

All my positively influential friends were setting up their 401ks, investing, and talking about saving for retirement. I finally felt the peer pressure to save for retirement. What investing had to do with retirement, I still had no idea.

When I saw all of my friends starting their 401ks and talking about company matches, I believed company matching was the only way I could retire on time. I had no clue that 401ks were accounts with investment options, nor did I understand that the compounding growth of the investments was how most people expected to get over the retirement finish line.

All I knew was I needed a 401k ASAP to help me retire. I didn’t know about other non-company sponsored retirement accounts at the time. The first company I worked for wouldn’t give me a 401k until I had been there a year. I left after 8 months. By this time, many of my friends were talking about investing, too.

One friend had used an entire summer internships’ money and put it in Tesla. Another friend was advised by her boyfriend to open a Vanguard brokerage account and invest in an index fund tracking the S&P 500, VFINX.

My second job also didn’t offer a 401k until the second year. That left me anxiously counting down the days until I could start getting my retirement in order. As far as I knew, contributing to a 401k and investing were completely separate. I still thought investing fell into the “only do it if you have money to play with” bucket. I planned to start investing right after I could get my 401k started when I had money to spare.

I spent the waiting period for my 401k doing idle research. I wanted to have a solid plan for things I planned on investing in even though it was still a pretty big scary unknown. The research was on and off. A lot of my research was anchored around reading about the S&P 500 after hearing my friend talk about it. I gathered cloudy ideas of the importance of avoiding fees, diversification, age + risk tolerance, expense ratios, and long term returns. I learned attempts to beat the market as an average investor was ill advised. As far as 401k research went, I did a lot looking at Roth vs. Traditional and that was about it.

When it came time to open my 401k, I put the majority of my contribution towards the S&P 500 equivalent index fund, as well as some bonds and other funds. I based this solely on the 10 year return number. I forgot a lot of the optimizations I had learned during my research, which goes to show how different learning and planning are to actually executing. I still didn’t really consider my 401k contributions investments. It didn’t seem like real investing since I couldn’t touch it until I was a ripe old age.

After starting my 401k contributions, I bought 1 share of Apple because I was curious how buying stocks differed. That’s as far as my outside investing went.

Today

Starting my job in SF with a new 401k gave me some more experience and knowledge about investing. I started a brokerage account this year. The process of learning to optimize it has made the picture clearer too.

Practice makes perfect. It allows for refinement. Once I settled into a secure job after moving to SF, I got to start a second 401k. I felt way more confident selecting the funds this time, and I was able to factor for expense ratios this time and a little more diversification on top of my old strategy.

Even for a passive investing strategy, there are plenty of things to learn. It’s an evolving process of tweaking and optimizing. I felt even more confident by the time I started my brokerage account half a year later especially because I’d done even more reading (books and blog posts) by then.

Sometimes it feels like when it comes to investing, you need to do everything perfectly. One wrong move and you’ve lost your life’s fortune. While investing does require some upfront research, it doesn’t require the Perfect strategy in order to begin executing. It’s not required to put everything you have down like a huge gamble. Like all things, you can start small while committing to slowly improving.

How did you get started investing? Was it scary? Did you jump in with the knowledge you would be fine or did you tip toe in like me?

Jing is currently a software engineer based in Oakland, CA. She left her job in New York, moved to San Francisco unemployed, and more than doubled her salary in 4 months.

13 thoughts on “How I Slowly Crawled My Way Into Investing

  1. My parents started a couple small investments in my name, and so when I took over control of my own money, my first step into investing personally was to buy into a few funds offered by the financial institution where I had my high interest online savings account . (And now, a decade later it is getting out of the funds business, luckily now there are so many more options to invest in NZ!)

    1. That’s awesome! I feel now that I know how investing works (roughly…there’s always more to learn!), I want to get my sisters who are still in high school started with some practice!

  2. I took a pretty similar path into investing as you did. Looking back I wish I had started earlier to take advantage of compounding for longer. It always seemed so complicated though!
    Even after I started saving money consistently, it still took me awhile to make the jump to actually getting that money into the market. I wish that there was better education available for high school students to learn about investing.

    1. I think we all wish we could have started earlier for sure, but I’m totally happy with being able to take control now! My friend’s would talk about high interest savings accounts in college, and I would think “Who cares?” I definitely wish I had perked up my ears a little more back then to at least take advantage of 3% interest rates if nothing else!

  3. Great to read your story Jing. Curious how as kids we take a fair bit of our attitude to investing from our parents. I’ve always had an interest and would read my Dad’s books on investing when I was younger. At some point he set up a meeting for me with his financial advisor (we were middle middle class at best but he had one to help with his retirement account). I had saved $1000 by working before and after class while at Uni which I invested in a managed fund by Colonial First State called “Global Resources”. It made a decent return until 2008 when most of the return got taken back by the crash. It wasn’t until 2013 that I started investing directly in stocks, learned a lot and enjoy it too. After a bit of a break, due to studies and things I’m finally back into it and very happy to be learning again. That’s the condensed version although the long version and my more recent adventures investing are on my blog!

    1. That is so cool your dad had you meet with his financial advisor! I wish my parents had sat down more to talk with me about it deliberately even if I wouldn’t have absorbed much of it–it was a little seed that grew and grew. I still haven’t gotten into stock investing, but definitely wouldn’t say it’s off the table in the future! I definitely plan on teaching my sisters the value of investing when I come home for Christmas. Even if they have no idea what I’m talking about, at least they’ll hear trigger words that hopefully will make something stick!

  4. I remember when I first signed up for the 401K account at my company, I didn’t know what to do because I had no knowledge of how to select which funds would be good. So I gave it to my mom and she checked mark funds at random and agreed to contribute 5% and I forgot about it for a few years. Man talk about lack of knowledge. If I were to go back to that day from what I know now, I would have more in that 401K account with all that compounding and a higher contribution.

    1. The 401K is a pretty complex financial product when you have no idea how investing works, or how retirement funds work. It’s so complicated now without pensions where things are more on autopilot (though I don’t know for sure, I have no experience with pensions…). At the same time, I really don’t believe we can understand these things until our minds are ready to. I think for me, it was seeing my friends all investing and building wealth (they were very educated on the topic), and that made me wonder, will I ever be free if I don’t do this? That definitely lit a fire in me.

  5. My story is very similar! I was playing on neopets and trying to make as much money a day for years before I learned neopets had a stock market. It was so easy! Then I started raking in the cash. Otherwise, it was just collecting interest. Oh Neopets…

    1. Oh myyy, I remember Neopets! I was so into it! I was terrible at making money. I just sold my soul to play Meerca Chase and that potato counting game. I wish I had known about the stock market! That’s such a cool way to get kids exposed. It’s genius!

  6. I came to this country at the age of 27 and knew nothing about anything. I started working in 2008 and knew that I would be offered a 401(k) but that was the end of it. I was saving like crazy which was good but I could have done way better in terms of checking my asset allocation inside my 401(k). It wasn’t until 2015 … 6 years later that I discovered the PF community and the concept of FI and that’s when I started investing in taxable and other tax deferred vehicles via passive low-cost indexing. It took me a hell of a long time to get started but better late than never.

    1. I agree, better late than never! And you were definitely not too late to the game. Doing a great job saving is the first step too. It was funny, I randomly stumbled on the PF community around the same time I was thinking about starting my brokerage, and all the financial things I was reading about just came together by coincidence. That really gave me the momentum to set my sights even higher 🙂

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