Why I’m Sticking to My Slow-and-Steady Investment Strategy

• I invested my first $3,000 in a single stock a few years ago on the advice of a family member.
• Its value stayed the same and I got worried, but my family member advised me to stick with it.
• I’ve continued holding on and expanded my portfolio, and I know my slow-and-steady strategy works.
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When I turned 40 a little under six years ago, I was determined to finally get my financial life in order after declaring bankruptcy and owing $80,000 in debt. I wasn’t sure how to start investing in the stock market, but a family member who’s very well versed in investing helped me get going. They strongly encouraged me to invest even if I didn’t have a lot to start with, since time is such an important factor in creating wealth via the stock market over the long term.

The first year, I put $3,000 into a traditional IRA. In retrospect, since I qualify, I should have chosen a Roth IRA. I don’t remember exactly why I chose a traditional IRA over a Roth, but when I can start contributing for 2022, I will be opening a Roth so that my money won’t be taxed as heavily as with a traditional IRA.

That year, the maximum allowable contribution to an IRA was $5,500, but I didn’t have that much, and rather than wait any longer, I decided to start with the cash I had access to.

I invested in a single stock that was recommended by my family member

Since I didn’t know how to pick companies to invest in, and felt overwhelmed every time I looked at the companies I started tracking in an investing app, I went with one my family member recommended. They told me it was a solid communications company that had been around for decades and was likely to see steady growth. Well, that year, they didn’t; my $3,000 didn’t decrease, but it didn’t grow, either.

I was distraught. I felt I’d been promised that investing was the key to retirement, when I could have essentially achieved the same result by keeping my money in the bank. I considered pulling out of my IRA entirely, or not contributing to it again.

But I spoke with my family member, who assured me that sometimes even a good stock may have a stagnant year, and that over the history of the stock market, overall returns had continued to increase. Essentially, they said that even though my net worth remained the same as it had been the year before, I was still poised to gain if I stuck with my investment. 

I tried investing in a different stock the following year

I asked for ideas for other stocks to consider. He advised me to invest in a well-known technology company that pays dividends, so the next year, when I was able to contribute the maximum, I moved my original investment and the new addition to the tech…