I made my first investment when I was 14 years old. My friend’s mom was a financial planner and advised I put my hard-earned cash into a thing called a “money market fund”. Apparently, it was very low risk, and I needed to save for university.
But that was boring, and I wanted to make some money, so I opened up an online stockbroker account at my bank, too. I read the business section of the newspaper every day, what could go wrong?
This was the late 90s, so my stocks did well. When I turned 16, I cashed them in to buy a car. To my disappointment, after including the commissions to buy the stocks, and the commissions to sell them, I was sitting on a grand profit of a few dollars. My money market fund had done better (my friend’s mom didn’t charge me a fee). Seems the only party that made money was my bank. Not cool.
Everyone is an investor. We invest our most important currency, our time, every day without thinking about it. The returns might be learning a new skill, or a stronger relationship with someone we care about.
We also invest our money every day. Unfortunately, most people do it without thinking, too.
For someone that wants to save and invest for the long term, the stock market is the way to do it. The US markets have returned, on average, 9.8% per year from 1928 to 2016. In the UK, the London's main market returned 7% annually over the 100 years between 1917 and 2016.
Had I been smart and left my $1,000 in the markets, it would have been worth close to $3,000 today. Minus commissions, that is.
The problem is the fees that old school brokers and banks charge. They capture the returns that should be accruing to their customers. So, I decided to do something about it.
Almost everything in modern life is made or provided by companies. And companies are the main way wealth is created in the world.
I remember in university when Facebook first came out as a trending website. Now it’s worth $500 billion, only about a decade later. Profiting from that kind of wealth creation should not be for an elite group only.
By investing in companies that you believe in, you profit when they do well, plus you support their mission. For example, buying shares in Tesla is more than a transaction. You buy into Elon Musk’s vision of an electric future, and will own a piece of a company making change in the world. I love owning a piece of Tesla (and it’s proved quite profitable so far).
Everyone can invest. All you need is a platform, like Freetrade, where you can buy shares of companies without paying fees. £100 of shares for £100 invested. That’s how it works. Are you interested to try the app when we launch? Get your invite over here.
WRITTEN BY
Adam Dodds
