My First Investment
I recently needed to make a copy of my Social Security card and had to go into my safe to get it. While looking for it, I can across a plastic cylinder with silver coins inside of it. These coins were my first “investment” I ever made and I had completely forgotten I had them.
I originally purchase these coins with the money I saved during a summer job as a server in-between my Freshman and Sophomore year of college. This was before I began any of my Finance course work, and had no idea about investing or the stock market.
Also, I didn’t know anyone in my family who invested outside of their 401(k) plan and had little guidance to turn to. I was certain my meager initial investment would not meet the minimums of a Financial Advisor, and I had no idea how to get into “the market”. The whole process seemed very intimidating and out of reach for someone in my position.
The idea was brought up of investing in physical silver coins since my uncle was familiar with doing that. So over the summer, I set an arbitrary goal for myself of saving $500 to purchase as much silver as I could get. Throughout the summer I gradually saved up the money and gave it to my uncle.
I am still not sure where he purchased the coins or how much each coin cost, but the result was my $500 was exchanged for a stack of coins that have sat in my safe ever since.
“Start where you are. Use what you have. Do what you can.”Arthur Ashe
The Results of My First Investment
I decided to back-test my investment using $SLV ETF in place of my silver coins and compared it to the $SPY ETF which tracks the S&P 500. The chart below shows that the $500 I initially invest has lost money when adjusted for inflation, while the same $500 invested in a broad US-Stock market index almost doubled in value, even when adjusting for inflation. This analysis also ignores any transaction costs I would have paid when buying the silver coins.
At first glance, you would think I made a poor choice since my investment did not beat the market or even keep pace with inflation. However, I view this as a learning experience that certainly provided more value than the $500 I could have made If I were invested 100% in stocks. I view this as a form of tuition to the “school of investing” and I glad I was able to pay this fee early on in my investing career when stakes were much lower.
I also know I could have put it towards college expenses so that I would have less student loan debt after graduating, but younger Gage would have probably used that money on Pizza or Proteins shakes instead of tuition.
I have no intention of selling my silver anytime soon, partly because I am not entirely sure how, but I will not look to purchase any more precious metals in the near future. These coins serve as a reminder to me that you are influenced by your surroundings, and education is needed to help make the most of someone’s positive intentions.
I too often take for granted that investing can be intimidating to some people. Everyone has to start somewhere, and there should not be any judgment placed on that person for not knowing “better.” They are likely doing the best they can with the resources they were given.
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