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3 Super Easy Investing Rules To Live And Die By

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3 Super Easy Investing Rules To Live And Die By

The Juice strives to help you be better with money and be a better investor with our straightforward, matter-of-fact daily newsletter. Because, while managing your personal finance and investing can be intimidating, if not hard, it’s also not rocket science. It’s key to take your finances – and yourself – seriously, but not too seriously

To help you get to this optimal state, today we kick off a two-part series on the money tenets we live by. 

In this installment, we focus on three investing tenets we live by. 

Tomorrow, we shift to the three personal finance tenets we live by. 

Investing falls under the more broad personal finance umbrella. So what we discuss today complements what you’ll see tomorrow – and vice versa. 

#1 – Be Open To Multiple Styles Of Investing

We covered several components of this tenet in recent editions of The Juice:

Stocks To Buy: Dividend Payers Or High-Growth Tech

The Biggest Thing To Remember About Making Money In Stocks

Today, we tie it all together. 

Spread your money around. Yes, across different stocks, ETFs and whatever else you’re into. But – just as important – across different styles of investing. 

Believe it or not, there are some investors who will only buy a stock if it pays a dividend. In theory, this can make sense for some people. In practice, it does make sense for some of the people some of the time, but not all of the people all of the time

However, as much as we love dividend growth investing, if that’s all you do, you run the risk of leaving serious money on the table. 

Just because a stock pays a huge or growing dividend, or both, doesn’t mean it will generate a higher total return than one that doesn’t pay a dividend. 

We analyzed this earlier in the month by comparing a tech company that pays a growing dividend, Apple (AAPL), to one that doesn’t pay a dividend, Uber (UBER). Which just so happens to be one of our top stock picks for 2023

Year to date, AAPL is up roughly 56%, while UBER has increased by about 90%. Even when you factor in Apple’s dividend, Uber has produced superior returns in 2023. However, this speaks to our point… twice.  

On one hand, if you only buy dividend stocks, you ruled out UBER. For no reason other than principle, in many cases. On the other hand, over the long-term, Uber might not sustain this level of return, meaning relatively slow and steady Apple might win the race – or marathon – for long-term investors. 

As to say, be open to a mix of maybe: 

  • Regularly investing in AAPL for the long haul. 
  • Throwing some more near-term, speculative cash in a stock like UBER to ride this type of upside. 
  • If you believe in the long-term viability of a stock like UBER as a core holding, invest a portion of your long-term cash in it for the long haul.

We have come up with three styles here: traditional long-term investing; speculative, though hardly crazy, near-term investing and on the more speculative side, conviction-based long-term investing.  

#2 – Don’t Fall Hard For The Flavor Of The Day

Take cryptocurrency as the prime example. There was – and still is – money to be made in crypto, for traders as well as near- and long-term investors. Don’t look now, but Bitcoin is actually up approximately 76% YTD. 

There’s a difference between taking your every last dime during the pandemic and pouring it into crypto or a meme stock and responsibly exposing yourself to both the short-term opportunities and long-term potential. For every person who got in and out of a coin or meme stock at the right time, your neighborhood is littered with folks who got greedy by not taking profits or, even worse, doubling down only to lose some or all of their initial investment. 

It can be tricky. So only consider these types of scenarios if you’re nimble, if not well-skilled. And, in most cases, only do it with a small portion of your portfolio. But there’s room for speculation on these types of assets as long as you don’t get carried away. 

For goodness sake, everybody wrote Carvana (CVNA) off. The Juice covered the story. Around that time, CVNA was at its low point, getting as low as $3.55 over the last year. Don’t look now, but CVNA is actually up about 850% YTD

Doesn’t mean we’re long-term bullish. But making money is making money, as long as you’re not hurting somebody else, except, of course, the person on the other side of the trade. 

#3 – Stay The Course, But Don’t Get Emotionally Attached

It’s not only speculative investors who populate Reddit forums who get emotionally attached to stocks. It can also be old school – and just plain old – investors. 

For every person screaming HODL on crypto or a meme stock, there’s a relative old geezer who refused to sell AT&T (T) before the stock tanked and its dividend situation got thrown into disarray. For the record, T stock is down around 41% over the last five years and 23% over the last year and YTD. Yet, there are people who rode this thing into the ground simply because they got emotionally attached. 

Whether it’s an old school, once-reliable dividend stock or flashy, social media-pumped meme ticker, don’t treat trading or investing like sports. This isn’t about taking sides, fighting for your side and being loyal or devoted. It’s about making money. 

The Bottom Line: You see what we did here, right? We tied it all together. While different, our three investing tenets are not disparate. 

The uniting theme is to be open minded. And don’t keep a narrow view of diversification. Diversification is more than plugging your investments into a calculator and smiling at the subsequent pie chart of percentages. It’s about having a well-rounded approach to investing that focuses on capital preservation, income generation, long-term needs and wants and making money now when the opportunity presents itself.

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