The Power of Compounding

By: EBS Invests 

When you start investing and you’re a novice in this investing journey, it is likely that you will be consumed by checking your investments every waking moment. One may always wonder if they’re up or down. Eventually, as you progress in your journey, you will be less consumed by the day-to-day cycles of investing. As investing should be a buy-and-forget cycle, that way you can do the things you enjoy. Furthermore, I have been encouraging my peers for the past year to invest in high-quality funds like the S&P 500 and high-quality stocks that have wide moats, big margins, and good book value**. That's how one can guarantee success.

I have been traveling around Europe on a semester-long study abroad opportunity, and although my monthly contributions have fallen considerably, I haven't looked at my investment accounts that closely. I always have enough to buy some SCHX and SCHG every month, then forget about it.

I recently looked at my Roth IRA, which hit an all-time high (ATH) of $4,000 with an unrealized gain of $700 (21.52%). Which was awesome to see. Further, my broker account also hit a new value of $8,250 with an unrealized gain of $1400 (20.5%). With just these two combined, my collective individual investments are worth ~$12,250, with an unrealized gain of ~$2,100, which is awesome. A rate of return of ~41% since inception, slightly beating the S&P 500.

I say this not to flaunt how well my stock investments are doing; I tell you this to remind you to be humble and forget the day-to-day cycle of investing. If you have auto-invest, I encourage you to use it. Every month, just buy the S&P 500 and your favorite stocks, then forget about them. The value of not worrying about your money and having your money work for you is the real gem.

As I travel across Europe and enjoy the rich history this world has to offer, I enjoy not checking my portfolios. It's awesome to buy some high-quality funds, forget about them, check back a month later, and see a new ATH. The value of that is precious. It is something all of us investors should chase. Take a break from the market, and if you fear you need to be glued to your phone to check a stock, then you shouldn't own that stock. That's why boring companies win. As an example, one of my stocks is American Express Co. (AXP), I'm not worried about what they’re doing day to day or how the stock is doing. I know Americans love debt, and their business grows automatically. That's just an example. However, if you own a stock that makes you worried, then why bother with the hassle? If you own high-quality securities, you get high-quality results.

Is the S&P 500 overvalued?

By: EBS Invests 

Recently, the Standard and Poor’s 500 (S&P 500) hit an all-time high; actually, all of the major markets did as well. I know of a person I won't name who recently liquidated all their assets when the S&P 500 was at $4500, waiting for a correction. The poor chap missed out on the ~14% run-up in value.

In investing, there will always be people who try to time the market. They believe that this time they will be right, or that this time the market will crash. I encourage you to stare at the graph above and notice how, after every crash, the market has recovered and bounced back higher. It is evident that those who make foolish mistakes and sell out high-quality funds are the real losers in this stock market.

This also ties into what I wrote about above: when you buy the S&P 500, you have nothing to worry about. Even in 2008, when the market plunged 50%, notice how the market has recovered since then.

As investors, we must never try to time the market. Sure, short-term gains can be made if trades are placed perfectly. However, in the long run of 20–30 years, the 5% change in price will be irrelevant. Keep buying the S&P 500 and high-quality stocks and holding them forever. If you have people in your life like I do who try to time the market, they will lose. Either now or in the future, they will be jealous of your gains and try to tell you their next move. Just remember this is an investing journey, and for that it’s a marathon, not a sprint.

Europe Study Abroad Photos

By: EBS Invests 

*All photos are my own; reproduction, distribution, alteration, or any other change without the written consent of EBS Investments (EBS Invests) is prohibited. All rights are reserved for this content. © 2023-2024 EBS Investments Newsletter

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EBS Invests 2024//

est 2023

NOT A FINANCIAL ADVISOR.

**The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on our site constitutes a solicitation, recommendation, endorsement, or offer by EBS Invests (Investments) or any third party provided to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such an offer would be unlawful under the securities laws or such jurisdiction.

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