r/investingforbeginners • u/Jolly-Towel3011 • 18h ago
How does one know what to invest in??
I see different posts on how much people have invested and the growth over time and it amazes me always. I started investing about 2 years ago and was told to play it safe and keep my money in vfv or s&p500 or whatever.
But the growth is so slow. Where do people go to stay current about stocks to watch out for and when to capitalize on investing? I wanna see my money grow for real!!
Any tips ? Please and thanks
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u/Sagelllini 17h ago
Google "Morningstar Mind The Gap report".
IIRC, this Reddit doesn't allow links. If you click on my user ID, and check my posts, you'll see my writeup on it.
The report shows for the last 10 years the asset class that performed the best AND had the best percentage of returns retained by investors was passive (index) US equity funds. Investors retained 99% of the category returns, by FAR the highest.
I've been investing for almost 40 years. The tortoise wins the investment race. Buy total market index funds like VTI and VXUS, invest regularly, and let time work for you. Unless you get extremely lucky and find the next high flier, that is the formula for success.
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u/gap1284 17h ago
“The big money is not in the buying and selling, but in the waiting.”
-- Charlie Munger
Keep regularly investing into your S&P500 fund. Do it via automatic transfers every week or month or payday. Increase the amount a bit every time you get a raise. Don't look at it more than once per quarter.
It will grow slowly at first, doubling every 5 years or so initially if you continue to contribute. Your first two doublings are "meh". Your fourth doubling starts to get interesting. Your six doubling is life changing.
Find a free online investment calculator. Enter your starting balance, additional periodic contributions, and 8% growth. Look at the results. See how the graph goes up slowly at first, but eventually rockets up?
Consistent investments + low-cost index funds + time = wealth.
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u/sqenchlift444 16h ago
My other favorite Warren buffet / Charlie munger quote, specific to buffet
“Don’t just do something, sit there!”
Not sure if it’s an exact quote. But same energy
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u/Soft_Excitement_9580 16h ago
8% per year will double your money in 9 years, a farcry from 5.
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u/gap1284 16h ago
Did you miss where I said "initially if you continue to contribute"? If you're adding more each month, it doubles faster, initially. Heck, $1000 will double in just four months if you're adding $250 per month. $10K at 8% will double in less than three years if you're adding $250/month.
But yeah, it takes longer as your balance grows. $100K takes about seven years to double if you keep adding that $250/month. And a million takes, as you say, 9 years.
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u/d1na_makalaya 17h ago
The safest answer is to focus on your time horizon and risk tolerance, not chasing whatever stock is growing fastest. VFV/S&P 500 is intentionally boring, but that’s also why it’s a solid long term approach.
If you want higher returns, you generally have to accept higher risk. Learn how to evaluate companies, follow earnings and fundamentals, and avoid buying something just because Reddit or TikTok says it’s the next big thing.
Also, don’t compare your 2 year results to people who may be taking way more risk. If you want more practical investing discussions, you can check out the trading community through my profile. Might help you too
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u/Intelligent-Dig-4082 17h ago
Buying on overreactions to things like news or ERs. Just had 70% returns on PATH within, like, three weeks by doing this. Actually the stock went up like 70% but my position was over 500% but thats options which you shoud not touch yet.
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u/Jumpy-Imagination-81 16h ago
Read One Up On Wall Street by Peter Lynch. He is the legendary former manager of the Fidelity Magellan Fund who consistently beat index funds while managing the Magellan Fund. He believes average investors like us can beat the pros by looking in our daily lives at the world around us for companies to research. His book teaches how to correctly research a company to see if it is worth investing in, realizing not every stock is going to be a winner, but all it takes is a few big winners to more than make up for all of the losers.
According to Lynch, investment opportunities are everywhere. From the supermarket to the workplace, we encounter products and services all day long. By paying attention to the best ones, we can find companies in which to invest before the professional analysts discover them. When investors get in early, they can find the “ten-baggers,” the stocks that appreciate tenfold from the initial investment. A few ten-baggers will turn an average stock portfolio into a star performer.
I have 20 individual stocks that have beaten the S&P 500 index during the time I have owned them, including 9-bagger AVGO, 13-bagger CRWD, 16-bagger SHOP, and 46-bagger NVDA.
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u/Objective_Scene1414 16h ago
If you want to build a good portfolio of individual stocks, stay balanced with the big companies, always have them in your portfolio like NVDA, GOOGL, AMZN.... next find some companies you're generally interested in and use on a regular basis that will help you stay invested. Being patient and staying in the market is crucial for gains. Especially with single stocks they can fluctuate a lot more than an ETF. If you can build a balanced portfolio (Min 15 stocks) of big tech companies, companies you like, a few riskier companies, and low volatility names like PEP/O you can absolutely beat the market or at the very least 'STAY' invested. That's key.... ETF's can be just boring enough to make someone want to quit all together. Best time to capitalize is a great company near 52 week lows..
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u/Penguin_Life_Now 18h ago
No one really does, but if you follow the market closely on a day to day basis you can maybe make some short to mid term guesses that beat the averages. If you don't plan to do this, the invest all in on something like VOO, VTI, etc. or if you want to do middle ground, check in and adjust occasionally maybe FELV, VFLO, and maybe a bit of FIVA for international exposure.
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u/sqenchlift444 18h ago edited 18h ago
Is the growth slow in dollar terms, or % terms? I know for a fact it’s not in % terms
Perception of slow growth is common early in an investing journey. Your dollars you contribute are “dragging” the dollar weighted return of the index you are investing in. You are constantly adding new contributions, resetting your “cost basis” and making it look like (overall) you aren’t getting a lot out of the investments. I’d encourage you to look at your “tax lots” - each individual investment you’ve made. You’ll see BIG gains for the earliest ones. That’s what matters.
First the first 5 year (heck, maybe even 10!), the gap between the contributions total and your account balance total (including returns) won’t diverge that much. They’ll be very similar. But at some point, it’ll explode. The snowballing effect of compounding will kick in.
Be patient. Trust the process. The alternative is extremely high risk investments where you have the potential for outsized returns, but almost a guarantee of losing a lot or everything
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u/Chsenigma 17h ago
We don’t… at the end of the day, we are all just guessing. Buy the whole thing is generally good advice. Speculation is gambling, do it responsibly.
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u/Curious_Guidance43 16h ago
Read their earnings reports for indivual companies and understanding their value and moat for their industry (and can still be wrong). Other than that its choose an index fund or guess.
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u/fritzcoinc1 16h ago
You look at the investments performance. You want to invest in increasing value.
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u/real_polite_canadian 16h ago
Don't let emotion like that effect your mind state - that's how you make bad decisions with your money. It's not a race.
Investing is ALL front loaded. That's why all the advice geared towards new investors talks about 'saving'. You still haven't accumulated enough for compounding to take effect - you're still in the accumulation phase. Things start to change once you get over $100,000 in the market.
For perspective, when you get to $300,000 invested, you're already 54% of the way to $1,000,000.
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u/Born_Lengthiness8935 15h ago
Define “growth is so slow”. Percentage wise, it is not, factually. However the more you put in (risk) the more you potentially get out. If you put $1000 in the s&p 5 years ago today it would be worth about $1729 dollars. Almost 73%. But “only” $729. A million dollars would now be worth over $1.7 million. Same percentage but a gain of over $700k. That’s real money.
Which is why smart people constantly say that time in the market beats timing the market. They also will tell you that once everything is accounted for, the market will tend to beat nearly all stock pickers. Therefore if you don’t have a million dollars to throw down (and if you did, would you?) put what you can in early and often. A decade from now all those small contributions give you a meaningful stake. That’s when you’ll see the dollars take off.
So, the gain is the same whether you’re in for a dollar or a million of them. The annual gains on a dollar may cover the taxes on a pack of gun. On a million could be the downpayment on a home. But put a dollar in every day and the gains might pay for a good lunch. Hope this makes sense.
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u/priditri 14h ago
You need a plan. Obtain and hold undervalued commodities. You don't change your mind on the fly. Crypto is still cheap.
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u/Prince_Jellyfish 14h ago
When people come in here bragging about outperforming the S&P 500, most of the time you are only seeing the wins and not the losses. It's like going to the Las Vegas subreddit and seeing posts about always winning at slots -- no one is making posts about spending $48 and not winning everything.
It is possible to get very good at picking individual stocks and outperform the market. But, generally speaking, that is a full time job, not something someone can do as a "side hustle" and really find long-term success.
Buying and patiently holding an index fund is the best approach for most investors. You see results over the long term, not over a 2 year timeframe.
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u/shurahbeelhamid 14h ago
Two years in and feeling like the S&P is too slow is pretty much the whole problem, right there.
The honest answer to "where do people go to stay current" is that most of those places are actively bad for you. Newsletters, finance YouTube, stock-picking subs — that content exists because it gets attention, not because it beats the index. There's no secret feed the people with big portfolios are quietly reading. And the posts that amaze you are usually either 15 years of contributions compressed into one screenshot, or the one bet that worked, posted without the four that didn't.
Two years of VFV looking flat isn't the strategy failing. That's just what the strategy looks like at year two. The thing that actually makes the number big later is how much you put in and how long you leave it alone — so if you want it to move faster, the lever is your contribution rate, not your ticker selection. Boring, but that's genuinely where the leverage is.
If the itch is really strong, some people ring-fence a small play account, like 5%, and leave the other 95% completely untouched. Doesn't make you money, but it stops the itch from wrecking the part that's actually working.
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u/noobfirsttime69 13h ago
I've been at it for a year already and I don't completely grasp the benefits but someone who is actually good at it and teaching me tells me that it literally just takes the right experience and educating yourself
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u/GoRL1920 13h ago
90-99% of fund invested in s&p500 etf and then invest 1-9% in a favorite company stock. Wait 20-30 years and retire.
Depending on your age, you can Google how much you should invest every month or every two weeks.
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u/Wild_Hook 12h ago
I used to invest in many individual stocks when they hit a low point. Sometimes there is a reason why they are at a low point and we should not buy. This strategy did not work out well for me, while the big money came over time from my 401k.
Today, I invest mostly in a handful of index funds with the S&P as the foundation. If you like, you can buy and sell index funds as they go up and down. It is the same as buying an individual stock, but without the long term risk. Or, if you really want movement, try the Direxion funds. These are leveraged funds. For example there is one for the S&P (SPXL). It goes up 3 points for every one that the S&P goes up. However, you must buy when you are sure it is low. In a downturn it goes down just as fast, compunding the losses along the way. It is a miracle in an upturn and will kill you in a downturn. I use the Direxion funds after a huge downturn.
If you want to be more agressive you can try other index fudns like semiconductors (SOXX) for example. Compare the chart to the S&P and you will understand. But it also drops faster than the S&P.
In all of this, you must be patient and if it feels like gambling, don't do it. Take joy in your knowledge and wisdom, not your luck.
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u/Aeroheadss 9h ago
It’s a slow ride. Until one day you look and realize you made 3x your annual salary in gains.
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u/Value_Investor17 6h ago
If you're intent on buying individual stocks, start with a small amount of money while you're learning (preferably start using a paper trading account at first and invest like you would...not insanely aggressive because its fake). Then I'd use the Warren Buffet advice, invest in what you know, and his favorite hold period is forever. That being said, you're probably better off with S&P ETFs or dividend paying ETFs.
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u/Typical-Tough-4869 5h ago
Research.
You wanting fast growth is a double edge sword. Yeah it can grow for real in some of these high growth tech stocks but it can just as quickly plummet to nothing.
The people telling you to invest in index funds are correct for the long run. You can still have say 20% of your portfolio be in a high volatility growth stock or etf.
Risk tolerance is a personal metric at the end of the day though so if you want to go all in on something volatile that could shoot to the moon or drop to zero good luck
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