Please note, that everything written below is just my way of investing and thus it shouldn’t be considered as financial advice. For educational purposes only. Always do your due diligence.
A brief introduction to my investing history
Investing is something that everyone should do, and I mean everyone! Putting money aside towards investments in a monthly basis should be as routine-like as brushing your teeth twice a day. I got into investing early 2020. Kinda late, I know. But better late than never. Common phrase to be heard is that the best day to start investing is yesterday. And the 2nd best is today.
When it comes to my investing background, I’ve tried everything. At first, I started off by buying couple shares of some company and a few index funds following the S&P500 index. If I remember correctly, my first deposit to my brokerage account was a whopping 50€. So yeah, not much. Once I had accumulated some knowledge about…stuff… I started to buy more index funds and more shares from some random companies. At that point I had no idea what a personal investment plan is. I just wanted to be part of everything and get rich quick. Oh boy was I in for a wild ride.
I quickly discovered the art of day-trading. Following candle charts, drawing resistance lines and taking leverage to make my capital 10X in a day. I skipped the part where people usually study trading, and went straight to the deep end. Within the first half an hour I had lost approx. 250€ and that was the end of that story.
After my worlds-shortest-day-trading-record picking individual stocks and holding onto them came naturally. I wanted to find the next big companies like Apple and Microsoft from different start-up pools. The only problem with this was that my patience was low. And my knowledge. If I bought a stock at 100€, and the next day it went to 99€, I sold my position immediately. I had absolutely no idea what to look for when buying stocks. So the interest in picking individual stocks ran out quickly, even though I knew what potential they might have.
So when it comes to investing (especially with stocks), I’ve tried it all. For a few days I did pretend to be a stock picking genius, the next week I was a full on dividend investor and the week after that I traded options. Ridiculous, I know.
Nowadays I’m much smarter when it comes to finding profit. I guess one of the lessons I had to learn the hard way was that money comes slow and steady. There is no such thing as “get-rich-quick” unless you a) win the lottery b) inherit money c) build a successful start-up and make an exit.
I only invest in three (I guess you could call them instruments) instruments.
1. High yield savings account
2. Global low cost index fund
3. Bitcoin
I’ve opened my strategies, reasons and everything else below to corresponding chapters. Hopefully you find something for yourself, and avoid the mistakes I’ve made.
1. High yield savings account
A high yield savings account is not usually considered to be your typical investment. And you are right. Even with todays rates, you wont get anything near from any savings account you would otherwise get from the stock market. However, I don’t invest into a high yield savings account for profits. I invest in one so that I don’t lose money. Even with my 3,25% savings account I’m not going to make any “profits” for my capital. The interest rates at a savings account battle against inflation. If my money were to sit on a normal checking account, I would lose money due to rising prices of goods and services.
A high yield savings account also acts as a financial buffer for my family. My goal is to reach at least 2 months salary saved, and then later I can pump that number to 6 months salary. That is because in case of an emergency like broken appliances or sudden unemployment I would still be able to take care of my financial responsibilities for a few months until I find another source of income.
My high yield savings account is at Bank Norwegian. I was surprised to learn that a company (Norwegian) which is mostly known for aviation related business also does banking. And they are surprisingly good. Everything has worked without any issues so far. With their current savings account, I get a yearly interest of 3,25% with a 100 000€ bank deposit guarantee. Opening the account was easy and free, and depositing/withdrawing money has worked great. I also have my one and only credit card from Bank Norwegian, due to them offering a 0,5% cashback from most purchases. The thing to note here is that earning cashback is not as common in Europe as it is in the United States.
So yeah, while a high yield savings account is not meant for profit, it serves a much bigger purpose. It keeps my family and I financially safe for a few months in case of an emergency. Also it quite well holds its purchasing power with rising cost of living.
2. Global low cost index fund
Now as you probably read from the beginning, I have tried a lot of styles of investing. Having a global low cost index fund is much more important for my financial future than any other investment instrument. With my investments to market, I go by the “one fund rule”. As it says, I only own one single fund that holds anything from 1800-2300 companies all around the world. With this fund I consider my portfolio to be well diversified, not only geographically, but timely as well since I contribute to this fund monthly. The “one fund rule” is the same rule I’ve implemented for my daughters as well.
The fund in question is Storebrand Global All Countries A EUR (ISIN: SE0013801453). This fund follows the MSCI All Countries World Index, with focus on companies that meet the funds criteria. It leaves out companies who violate human rights, worker rights, is associated with corruption, has done harm to the environment or whose business consists of manufacturing and/or distributing firearms and other military equipment. There are other criteria as well which I have not listed here, since otherwise this chapter would be a mile long. However, you can read all about this fund from here.
Why did I choose a one fund strategy? During my learning period (which is still ongoing by the way) I stumbled upon a quote. KISS = Keep it Simple, Stupid. At first I didn’t quite really understand this, although arguably it’s not that hard to understand. For me, having one single fund is as simple as it gets. Now I could of course mess around with stocks and bonds and options and stuff as I have before, but the big revelation at some point was that money comes slow and steady. Also having learn the importance of a well diversified portfolio, having only one single that fund that owns companies all around the world made the choice quite easy.
Why this fund and not the infamous VWCE ETF as many would otherwise pick? I just don’t like ETFs. That’s it. I’m well aware that VWCE ETF has better diversification than my index fund and also lower monthly fees (0,22% compared to my 0,31%). I just don’t need the extra complexity that ETFs have when compared against regular funds. So while different options of ETFs might be the best option for others, they just are not a good fit into my portfolio. Also one of the reasons I don’t invest in ETFs is the brokerage Nordnet I use. While I think they are one of the best options for Nordic investors to use, investing into ETFs via their services is extremely costly. Buying a single share of some ETF might cost 15€/purchase and the same applies for selling your shares. That fee can be lowered to 2,50€/purchase if you choose to invest in ETFs in a monthly basis.
So yeah, having a global low cost index fund is the cornerstone of my investment portfolio, and the majority of my investments are in this category. I don’t think I’ll ever own anything else like single company stocks or other funds, since I like to keep my portfolio neat, clean, simple and long-term effective. Like I wrote in the beginning, having the hassle for reading through balance statements of different companies, doing other fundamental analysis and other stuff just isn’t for me. But to each of their own!
3. Bitcoin
Now this is sort of a personal bet and interest of mine. I bought my first parts of bitcoin (if I recall correctly) in the late 2020s. And I was really keen on the idea that bitcoin would be the future of finance. And I guess I still am. At first I didn’t know much about it other than it was the biggest cryptocurrency there is. But come to find out that bitcoin is bitcoin and all the other coins are cryptos.
The idea of blockchain technology was something I’ve never heard before. I was really familiar how modern day banks work (since I work in one) and I know that things can be shady from time to time. And not always to the customers best interest. After all, banks and their greediness were the reason of 2008 financial crisis. Having the knowledge of what happened, the fear of that happening again is scary. Having an open source – type of financial instrument that gets audited approx. every 10 minutes by all the other users does sound quite intriguing.
I buy my satoshis (one bitcoin is divided into 100 million parts called satoshi) nowadays from a Finnish based company Kvarn X. And for my bitcoin wallet I use TrustWallet. Now even though most of my money is in a global low cost index fund, due to the recent bull run bitcoin has been taking more and more % shares from my portfolio.
I invest in bitcoin because I believe in it. I know that there are many people who think it is a scam, but I like to think myself as one of the forerunners of finance as well with other people who own bitcoin. But we never know what future brings. I could write a whole blog-post (and I probably will in the future) only about bitcoin where I would get into much greater detail about how it works and what the deal is.
Conclusion
So now you know how I invest my money. Like I wrote in the beginning, always do your due dilligance. Never copy someone else’s strategy until you know what you are doing. Only invest in what you understand.
My strategy over the years has changed quite a bit, but now I think I’ve found the one that suits me the best. I’ve made many mistakes during my journey, and without them I wouldn’t be where I am today. Let’s see how my strategy works when it comes to achieving financial freedom!
If you’d like to read about 6 easy habit to help you get rich, click here!
And for more information about my history with money, click here!
Thank you for taking the time to read this.
-Valtteri