Working part-time left me with so many unplanned hours of freedom, that when I was not using my time off to do yoga or drink on summer patios, I did what any good little PF blogger would do: read about finance.
I decided I really wanted to learn about the stock market, and read anything I could find. By the end of my binge, not only had I devoured a view books and visited endless websites and blogs about investing, I took to my natural route and made gorgeously detailed spreadsheets of P/E values and EPS for the next 5 years for nearly 30 companies. I think this all appears extra-beautiful to me, because I never knew what these terms were before, and now I peruse Yahoo! Finance with appreciative understanding. I’ve been eyeing the stock market for awhile. I wanted to get in on the game, but 1) I didn’t know how and 2) I didn’t have the money to do it. I went ahead and tackled both those problems at the same time:
First, I created an account on Morningstar.com last year. I built a mock portfolio, pretending to buy stocks in a variety of companies. I chose 7 different ones, ranging from businesses I liked and understood, to ones I had never heard of recommended by stock analysts. I fake-invested in Victoria’s Secret, Apple, and some chemical companies I don’t really even remember the name of. Then I watched and waited. For a whole year. This is what happened:
Do I feel good about my stock picks? Yes. So good I’m a little pissed I didn’t invest real money! I don’t think my real portfolio will actually approach anything near this, fall 2010 was just a really good time to buy in. Nevertheless, I still learned some valuable lessons and gained experience, even though I was only playing make believe. Maybe most people eager to invest in stocks aren’t willing to create and monitor a mock portfolio for 12 months, but at least do it for 6 or even 3 before you start putting real cash in. I’m really happy I did this because it was basically a “test drive” before investing my own money.
Secondly, while I was watching and waiting my mock profits and pitfalls, I started saving. I contributed to my TFSA and mutual funds every month, even when it was painful (ie. summer 2010 when I was making a whopping $1400/mo as a research student, and paying 90% of that to essential expenses and consumer debt). Nevertheless, a year later I had some liquid cash in my TFSA.
I used Fabulously Broke‘s referral code for Questrade, and opened an account (though I’m still waiting for my $50 bonus…). Success! I had a brokerage account! Not sure if anyone remembers, but right before I left for France, I met with a representative from TD Canada Trust about opening a brokerage account with them. While the woman was exceptionally helpful, I was horrified by their fees. $30/trade? Not for me, thanks. At Questrade is $5-$10 per trade, and with a small portfolio like what I’m starting with, keeping the costs low is essential to ensure they don’t eat up my returns. Likewise, I opened a TFSA trading account, so my returns go un-taxed.
Anyway, I feel so authentic about personal finance now. I’m so excited to add stocks to my personal finance repetoire. More blog entries to come once I get the hang of this…