Aside from a couple of brief forays into non-bank type accounts in the eighties and one family investment club, my investing experience dates to the early 1990’s. We finally had enough income left over after paying expenses and saving for kids to attend college to start investing it.

I’ve learned a lot of things since I started investing, here are 6 of them.

AIP is effective.

One very effective activity that I did early on was to have money taken automatically out of my paycheck and used to buy shares of a mutual fund. My financial institution (Vanguard) called it an Automatic Investment Program (AIP). I set it up so that I had a certain dollar amount moved from my bank (where my check was automatically deposited) to my Vanguard account. Then Vanguard automatically used that money each month to buy shares in my chosen mutual fund. Before long, I had accumulated over $100,000 worth of shares. I never touched the money, yet each month, without me lifting a finger, I was accumulating wealth. It seemed like magic. I still have those shares, and more – as I also reinvested any dividends or capital gains.

Brokers may not have your best interest in mind.

For years, I used the same full service broker that my parents had used, figuring that he did ok for them. However, over time, I noticed that he never came forward (except once) with recommendations for me to buy or sell. I always had to call him to initiate any action. Even when I did, sometimes the things he recommended were better for him than for me. He did, however, at least attempt to educate me on some of the terms and concepts used in the financial industry. In fact, at times he was somewhat annoying, going over details that he had covered time and time again.

Options can be profitable.

Although I am more tolerant of risk than my spouse, I haven’t yet been inclined to actually purchase options to buy or sell in the future. However, my employer granted company stock options to me (along with others at my level). At the time, I didn’t know what they were so I had to dig in and learn about them. Every year, for 10 years, the company granted a number of option shares, which could be exercised at the strike price after such and such a period. As the company stock kept going up, the strike price (the price at which I could buy the shares) was much lower than the market price. Because of that, I could buy at the strike price, selling in the same day at the market price and pocket the difference between the two- never having to actually ante up any money. I could also buy at the strike price and hold the shares, but in that case, I had to come up with money to buy the shares at the exercise (same as strike) price.

Record keeping is tedious.

When we just had a checking and a savings account, a simple monthly balancing and filing of the statements sufficed as record keeping for my spouse and I. Once we had stocks, bonds and mutual funds at several institutions, it became more tedious to track our networth. We had multiple financial institutions (as we still do) as one method to spread out our risk. I consolidated statements from all institutions into one Quicken account (and still do). Most investment accounts come with money market checking accounts to sweep money coming in (such as dividends or interest). Suddenly we went from one checking account to balance to multiples. It got even worse when we set up our trust accounts back in the late 1990’s. We essentially doubled the number of accounts to split up our assets between the two trusts.  I also learned that my spouse doesn’t do record keeping.

The market goes up and down.

And sometimes goes down and down. At times, it can be stressful to watch the paper value of your holdings disappear (such as in 2008 and 2009), but when the market is soaring, it gets really fun to watch your networth go up!  I learned that my spouse and I could handle the swings, mainly because we weren’t investing money we needed for day to day life or for emergency situations.

You pay taxes on money you don’t really keep.

We reinvested our dividends, capital gains and interest to grow our money.  There were times when we received income (taxable) that was used to buy shares at all time highs, and then the share price fell.

It sure felt like we were paying taxes on income that we actually didn’t ever get!  Some years that hurt!

Are you an investor? What did you learn when you first became one?