The COVID pandemic has given myself (and I imagine I’m not alone here) the chance to do a lot of reflecting. Reflecting on what’s important in life, my career, how I spend my time, and even how I invest my money. March 2020 when the stock market plummeted was a pretty gut-wrenching time. I remember how I felt during that time watching my hard earned money disappear before my eyes. However, I stuck to my ideals about not timing the market and not panicking, and I knew that 2020 was not the year I’d retire so I kept it all in. Thankfully it all came back, and came back with a vengeance! I also was super thankful for my emergency fund and although it was never in doubt, I for sure will never think twice about not having one or decreasing the amount I keep there.

One area that I’ve been reflecting on especially with investments is the idea of ‘betting the farm’ vs. slow and steady growth. I feel like our generation (as has every other one) has seen plenty of examples of getting rich quickly, and I will say it can be tempting sometimes. Stories of people putting life savings into dogecoin and coming out millionaires, or perhaps Gamestop ($GME) or even buying a lot of houses and hoping that the rent checks keep coming in and that the houses appreciate super quickly in value. I think that during this time I’ve learned that I’m not a ‘bet the farm’, i.e. take huge risks type of a guy, and instead I’m a slow and steady growth kind of an investor. There are definitely implications to this and times that I need to remind myself of it!

Why I’m not a big risk taker

I’ve never been a gambler, and never one for taking on big risks. I’m not sure if it’s my personality or just how I was brought up but I don’t enjoy it. I’ve been to a casino no more than 5 times in my life and with great responsibility have stopped gambling when I lost the money I was willing to play with, and even one time stopped playing when I was up $5 as I wanted to keep that money! I don’t play the lottery, I don’t have more than 5% or so of my stock investing money in individual stocks. Even with crypto, which I talk about all the time (just ask my friends), I only have a few hundred bucks in it.

I think for me I’m very loss averse and hate the idea of losing my money. However, I do take risks and don’t shy away from them, I’ve just figured out my risk tolerance and as best I can, try to stay in my swim lane for risk. Taking on a whole new mortgage and deciding we’d rent our old house out was a risk. Investing 15% of my income in my company’s stock is quite a risk. Getting lower and lower on cash and more and more into index funds is a risk.

I like to say that I’m a risk mitigator, and don’t necessarily love the idea of risk, but have made peace with it being a necessary part of life!

Why I prefer slow and steady

Being that I’m not a big risk taker, I normally gravitate towards the safer, lower risk investments. With this often comes lower returns, but more consistent returns. I’m not going to get rich quick overnight, but I do expect to see compounding growth that continues over time until hopefully when I retire, I’ll have enough to last me through my golden years.

I’ll admit that slow and steady can be boring, it doesn’t happen overnight, and sometimes can be frustrating with how slow it’s happening. However I always remember that I’m within my risk tolerance and that I am confident that things will work out in the long run, without taking on so much risk that my life could be majorly disrupted. I’m going to stick to my strategy of dollar cost averaging index funds, which means I buy consistently each month.

Why I need to remind myself of this

As I mentioned, the slow and steady route can be boring and it can be frustrating sometimes. I’m certainly not immune to feeling jealous of those stories of folks that haven gotten rich quick, and it pains me seeing some of my investments pay much more and wishing I had put much more into it vs. playing it safe, i.e. the slow and steady approach. Sometimes I do give into the hype and get out of my swim lane, and it normally doesn’t end up well. I’ve twice tried to call a market drop by buying into an inverse ETF (so when the market goes down it goes up), and I did buy 1 share of GME (Gamestop, and what a ride that was).

Perhaps it takes the occasional poor decision for me to remember why I’m on the slow and steady approach, as I do need a reminder from time to time. The grass always tends to be greener on whatever pasture you may be on, including investment strategies. However I attempt to remind myself of why I’ve chosen this investment route and I try to celebrate small wins more often. I do a monthly net worth check with the goal of a) seeing my slow but steady progress and b) celebrating that progress.

How I think it’ll play out

No one knows the future but I feel confident in my approach. I’ve identified my comfort level with risk and have found an investment strategy that suits me. I don’t expect to get rich overnight but I also don’t worry about losing my shirt which helps me sleep better at night. In my 10 years of working I’ve seen my net worth increase year over year which of course has a lot to do with how much I’m saving but also because I’m making good investing decisions and they are paying off!

In the long run I expect this trend to continue and for me to look back and pat my current self on the back for not risking it all but taking smart risks that paid off over time!