While some people believe that the youth lack the ability to properly manage their own finances, the truth is actually the opposite. Learning to invest at a young age undoubtedly brings a lot of benefits. The stories of Dickson Go and Aaron Lay, two third-year college students at the Ateneo de Manila University, certainly prove that there is a lot more to investing than the financial freedom that it can potentially provide.
Both beginning their journey at the ripe age of 16, Go (now 20 years old) and Lay (now 21 years old) have become experienced stock market investors and traders in their own right. In the beginning, both Go and Lay were certainly not as knowledgeable as they are today. However, as time passed by, their growing experiences with fluctuating market conditions have certainly taught them more about the stock market.
Go’s investment journey started out by managing his parents’ brokerage accounts. Before he invested in stocks, he would gain a substantial amount from Bitcoin and found that investing in the stock market was a similar endeavor. However, when he was starting out, he made an “expensive” mistake when he put all his money into the wrong company. Nevertheless, this mishap encouraged him to learn more about stock investing. He was driven to learn more about it when he was invited by Robbi Samson, a Business Development Officer at First Metro Securities, to attend stock market seminars held at the company. Samson would later become one of Go’s mentors as he continued investing in stocks. At the time, even if he knew about investing concepts theoretically, he didn’t know how to apply it because he was afraid he would create the same mistakes as before and he didn’t know how he would earn back the money he lost previously. Eventually, his mentor told him that fear comes from lack of knowledge and experience. With these wise words, Go took action and decided to decrease his portfolio while learning the ins and outs of the stock market.
On the other hand, Lay was someone who was always encouraged by his parents to practice financial literacy and make smart financial choices. Back then, his parents would teach him to keep the money he received as gifts from friends and family into a bank account. As he grew older, his father encouraged him to invest his own money into the stock market, sparking his interest in trading. In fact, the first stock he invested in increased in value by 60-70% in just a few months, strengthening his enthusiasm towards stock trading. his passion eventually grew more apparent when his college roommate also happened to be a stock trader. However, despite having multiple mentors in the form of friends and family, he would still encounter risks as his portfolio grew. For Lay, the risk in investing was not about losing money because he encountered more risk while he was growing his portfolio. He would encounter greater losses as his money grew. Even if he would experience a net gain in his trade, it would still come with many losses.
Additionally, Lay and Go were not only dealing with the impacts of market volatility on their respective investments. Aside from dealing with the impact of market volatility on their investments, both Lay and Go also had to balance the time they spent between their academic life and the stock market. Since a large part of Go’s portfolio was put into long-term stocks, he was a little more relaxed. However, he still had to regularly check on his long-term investments and spend a lot of time deciding which stocks to invest in. On the other hand, it was significantly more difficult for Lay to manage his priorities. Since Lay focused more on day trading, he had to find ways to constantly check his phone for updates on the constantly-changing values of his stocks. Aside from studying for their academic assessments and working on school projects, Lay and Go also had to allocate a lot of time to learn more about stock investing and trading. They had to deal with such large learning curves as they took courses for their college majors and their interests.
Although both Lay and Go have experienced the brutality of the stock market at such a young age, they certainly do not regret starting their investment journey early. In fact, they would even recommend that other people do the same. “Trading and investing is a process that you learn over time,” says Lay.
While investing at a young age proves to be beneficial, they both agree that investing is a financial activity that requires maturity and independence. “One thing that young investors should understand is that every time the value of their stocks decrease and every time they put money into the wrong companies, they lose money,” says Lay. Because of this, it is incredibly important to exercise due diligence when getting into stocks. Go even asserts one of the most important key concepts in investing, “Only invest money that you are willing to lose.”
High Risk, High Returns
While Lay and Go’s experiences certainly make investing sound particularly intimidating, the challenges brought about by investing have certainly made a huge impact on the ideas, values, and lifestyles that they lead on a daily basis.
Indeed, Go’s rash investing decisions during his earlier years have hurt his financial portfolio. Because he was a student and had no stream of income, it was difficult to earn back the money he had lost. However, instead of letting this challenge get the best of him, he used it as inspiration to exercise more caution and diligence during his later investments. He decided to spend more time learning more about the stock market through virtual trading or paper trading platforms. He also learned the basic investing concepts that would allow him to profit from the stock market before increasing his portfolio. In the end, learning these investing concepts allowed him to become more disciplined and develop a greater sense of self control amidst the instability of the stock market. Because capital is needed to keep pursuing stock investing, Go is constantly motivated to save more money while budgeting his capital to maximize his financial portfolio. These habits eventually brought him a step closer towards achieving his financial goals.
Similarly, Lay was also able to develop financial literacy skills through his love for stock trading. His investing activities allowed him to value money more and adapt a more frugal lifestyle. He would even use his earnings to average down on investment instead of buying an expensive pair of shoes. More importantly, even if Lay agrees that investing at a young age can be risky, he believes that these challenging experiences would help develop every young investors’ risk management skills which would go a long way in the future. To Lay, risk is directly proportional to age. Younger people are bound to experience less risk primarily because they have a smaller portfolio, especially since they have fewer streams of income. Contrarily, industry professionals are likely to encounter more risk because of their large financial portfolios.
As a result, it is better for people to start investing young so that they can gain more insight on the market and prevent higher losses in the future. In the end, no matter how careful a person is with stocks, there is still a statistical likelihood that he will lose money. How much a person loses would depend on his financial portfolio. Therefore, since younger people have smaller amounts, they might as well lose while there is not much to lose.
Practice Makes Perfect
As Lay and Go became more well-versed in investing and trading, they have slowly developed their abilities to analyze companies and their stocks. In fact, they both have already learned techniques that they apply when discerning which stocks to invest in.
In Go’s case, he would constantly follow one practical lesson that he learned from his mentors—check whether the company’s officers were buying shares in their company. For Go, if they buy shares, it’s a bullish sign because it means that the owners trust the company enough to buy the stocks. Later in his investing career, he would eventually use this concept to buy a stock that would give him a 75% return three days after his purchase. Similarly, upon following other technical tips, Lay would also generate returns for his stock trades even if it was a fundamentally bad time to buy.
Indeed, these small achievements would allow Lay and Go to see the fruits of their hard work and constant study. It would also allow them to gain the confidence they need to further increase their respective portfolios.
After pursuing stock market investments for 5 years, both Lay and Go have gained vast experiences and insights that have allowed them to understand the complexities of the stock market while developing life-changing values and skills.
Aside from becoming more frugal and practicing financial literacy, both of them gained a lot of new friends and found a community which shared in their passion for the stock market. Through these valuable connections, they are not only able to meet new mentors and develop their craft at a greater capacity.
Additionally, Go and Lay also became more business-minded and forward-thinking through their experiences in investing and trading. They understood that the whole point of investing is to grow money and to achieve financial stability in the future. In fact, investing in itself is a million-dollar skill that can eventually bring them financial freedom.
Consequently, the two of them got into the habit of thinking about tomorrow instead of focusing on short-term gratification. Even if they were already profiting from stock investing and trading, they still use their time to learn meaningful skills and increase their knowledge of the stock market. Despite their lack of interest in reading, they would indulge in countless books about the stock market and investing, even delving into books about philosophy and psychology in an attempt to better themselves.
Although investing has certainly made a positive change in the lives of Go and Lay, their experience was certainly not a perfect one. Here are some of the success strategies they wish they knew early on.
1. Don’t take leverage.
While receiving monetary support from parents is certainly prevalent in the Filipino community, Lay recommends that young investors use their own money instead. Remember, a low financial portfolio reduces risk and hones the decision-making skills needed to make it big as a stock market investor.
2. Open an account with the most convenient broker.
If a student wishes to begin his investing journey at a young age, he should go to a brokerage company which does not require a TIN number to open an account. Once this investor has decided to invest and trade more regularly, he should then discern if it is worth it to switch to another broker.
3. Consider your lifestyle when choosing between stock investing and stock trading.
In general, it is really easier to invest in stocks long-term because investors do not really have to check your investments as often as day traders. However, it is significantly easier to gain more liquidity from stock trading because day traders do not need to have high capitals. At the same time, it takes long-term investors more time to decide on which stock to invest in.
At the end of the day, when choosing between investing and day trading, an investor should take his lifestyle into account. If he is too busy with work or school, he should invest long-term or trade in the US market at night. However, if he believes that he can balance stock trading with his other responsibilities, then he can pursue day trading. “It’s either you change your play style or change your playground,” says Lay.
4. Surround yourself with supportive friends and mentors.
Although many financial advisors advertise investing as a way to earn “easy money,” this is simply not the case. It takes long hours of learning and trial-and-error before a young investor can profit from his work. Because of this, it would be extremely beneficial to have a group of friends who would support you when you start feeling discouraged or being overconfident.
5. Get into stocks with the right mindset.
Instead of focusing on generating the most profits, investors should focus on reducing the amount of losses that they incur. “Your goal should have the least amount of risk… When you start investing, you should put risk management above everything else,” says Lay. Furthermore, it is also crucial for investors to view investing as a way to learn a life-long skill that would eventually help them achieve financial freedom rather than an easy way to make a million dollars. “The real goal should be learning a skill that you can use five to ten years from now–when you actually have the income and capital to keep pursuing investing,” says Go.
Nowadays, due to the poor market conditions brought about by the recent COVID-19 pandemic, both Go and Lay have stopped trading stocks. However, because stocks are being sold at a relatively lower price, they both agree that it is a good time to invest some money into stocks. Amid market volatility, Lay and Go are still honing their investing skills by reading economic, philosophical, and psychological books. Furthermore, both Go and Lay have also begun sharing their knowledge to others by launching their own respective mentorship programs. Those interested check out Go’s Mentorship Program at the Go Trading with Dj Go Facebook Page, where he holds classes on investing in partnership with First Metro Securities. Lay also welcomes on his Facebook account to learn more about the mentorship classes that he hosts.
In the end, while many people agree that investing brings about financial stability, the stories of Lay and Go certainly show us that investing also provides people with countless opportunities for self development, improving other important aspects of life. “While the stock market certainly helps us control our finances, reduce the impact of inflation, and develop financial literacy, it also makes our lives more fun and easy,” says Go. “You’ll even learn a lot of life-long skills along the way.”