I invested every month in S&P500 and this is what I got in 2 years
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officialhogi
I started investing in 2022 after I read the book “7 Strategies for wealth & happiness”. The book taught me many valuable lessons but one stuck with me for years. It’s called the 70/30 rule.
Basically, the 70/30 rule states that you have to save 30 percent of your net monthly income and spend only 70 percent on your daily expenses. Out of the 30 percent that you save, 10 percent should go to the charity of your choice and 20 percent should be saved.
And, this sounds really bad and greedy because I haven’t donated 10% of my current monthly income to the charity….
However, I do like this rule because I have no problem living on 70 percent of my income. And instead of saving 20 percent I invest 20 percent of my income and save 10 percent for emergency cases.
So with a little calculation, it ended up with 304,70 euro to invest per month.
(Monthly income / 100)*20
It’s also known as dollar cost averaging which is the process of investing a fixed dollar amount on a regular basis, regardless of the share price. This method fits me perfectly because I don’t want to spend a lot of time in stocks.
So this method is a low effort and stable way to invest. It cost me less than 10 minutes to do and it helps me be consistent and it became a small frictionless habit.
I am pretty clueless when it comes to trading and investing. So, I did some research on platforms where I can invest and which stocks I should invest in.
I created some criterias to ensure myself that I would make the best choice.
The Investing Platform
The way that I searched for a broker platform was through searching key elements that met my needs. The platform has to be simplistic.
No complexity.
Just easy. Easy to navigate. Easy to use. Easy to understand.
And it has to be suitable for in The Netherlands.
As a beginner investor I reached out to some of my friends for some recommendations. The first platform that I used was interactive broker. I tried it for a couple of weeks however I didn’t like that platform. There were many frictions and I didnt understand how it works.
So, I switched over to another broker platform called Degiro. It’s a dutch broker platform and to be honest, it’s fine. It’s easy to use, has many options, and overall it’s easy to deposit, invest and withdraw.
What I Invested In
For me, it all came down to investing in SP500 because SP500 is all about investing in the 500 biggest companies in America. It’s the safest option however the actual stock was at that point 4.431 euros and I didn’t have that… So, I invested in ETFs of SP500.
And funny thing, just when I started writing this blog post (13 April 2024), I was curious about SP500 ETFs and came across an interesting dutch article.
Basically the article stated that there are many types of SP500 ETFs that you can invest in and not every ETFs is the same.
I didn’t know -.-
So, oops. This proved that I didn’t do a lot of research beforehands.
The way that I invested in an ETF was based on a youtube video about trading. I saw that the person was investing in the UBS ETF (IE) S&P 500 UCITS ETF (hedged to Euro) A-acc. ISIN: IE00BD34DK07
So as a good boy I did the same.
For your sake, I would recommend you do more research than me because I could have ended worse.
I see this more as a learning experience. So, no ragrets.
If I did more research I would gain more from the investment. However, I cannot complain because this has been a valuable lesson and I still made profit from it.
My Investment Overview
On 28th of February, I made my first investment. The stock price was at that moment 21,330 so I bought around 14 of these stocks. I wanted to keep track of my progress with this method. So, I created an excel document with all the useful information which consist of:
A. | Date
B. | Name
C. | Exchange
D. | Purchase price
E. | Amount
F. | Total Value of the amount purchased > The formula =D*E
G. | Overall/Total Invested > The Formula =Sum(F:F)
H. | Transferred
I. | Total Transferred > The Formula =Sum(H:H)
J. | Transaction costs
K. | Total investment costs > The Formula =J+F
L. | Current market Price
M. | Value of investment > The Formula =E3*$L$3
N. | Value increase/decrease> The Formula =M3-F3
O. | Consideration (Total -/+) > The Formula =SOM(N3:N)
P. | Total Transaction costs > The Formula =Sum(J:J)
Q. | Realized profit > The Formula =O-P)
I created these small formulas that automatically change every time I invested in that one particular stock. These formulas gave me some insights on how well the stock did per month.
I also used highlight conditions to see if the value has increased or decreased over time. With this spreadsheet, I have a clear view on all my investments. How much I have invested. How well it performs. And it gives me an overview of how consistent I am with investing.
The Result
It has been two years since I made my first investment. And here is the outcome.
I consistently invested 304,70 euro on S&P500 for 29 months.
I Transferred in total 8.022,- euro and invested 7.923,-
The market price is currently at 24,56.
And I made a 1.432,- profit.
This doesn’t look like much at the moment. And I know, It is a boring way to make money, it isn’t fast, and it requires patience. However, I strongly believe in compounded interest. So, if this slow and boring but easy to do long-term strategy works. I will keep doing this for many years and hope that by being consistent will work out.
Maybe in 10 years or 20 years, I will cash out. Depending on how much I have earned but for now, it’s a surefire way to help me become financially free in the future.
Also, this strategy is empowering me to keep up with this small habit. Every time I look at the spreadsheet, it reminds me that every small habit matters.
There were times that I didn’t want to invest or I was tight on money. There were moments where I had to live on instant noodles because I couldn’t afford a decent meal. All because I kept my promise to never interrupt.
That is my only rule that I follow with this investment strategy.
It came from Charlie Munger;
“The first rule of compounding; never interrupt it unnecessarily.”
So, I never interrupt.
And strange enough, when withdrawing money from your investment isn’t an option, you become incredibly aware of your financial circumstances. And, for me I tried my hardest to survive the awful months. I was looking for ways to decrease my expenses. Living only on the bare minimum.