CREATING MY INVESTMENT STRATEGY

"Every journey starts with a small step".

Since I changed my mind about investing, I've always thought that investing in good companies that pay good dividends was the best investment strategy, but unfortunately I haven't focused on that since the beginning of my journey.

I confess that I didn't know exactly what I was doing when I started investing for the long term. At the beginning of my journey, I had three types of companies: good dividend payers, growth and value companies.

And as I didn't want to lose money, I diversified my capital into different companies. In less than a year, I bought more than fifteen companies, with half of my portfolio made up of good dividend-paying companies.

My strategy at the time was to buy shares in good companies (dividends, growth and value) and hold them for the long term. I basically bought the shares at a lower price than I had paid before, but always buying the one with the most discount in my portfolio.

I did this for practically the first year and a half, until I realized I should focus on good dividend-paying companies. Why? Because by the middle of the second year, I had already received practically the same amount of dividends that I had earned in the first year.

So, I practically started investing in companies that were considered good dividend payers. As a result, at the end of the second year I received 60% more dividends compared to the first year.

However, I continued with the same strategy: buying shares in the company that had the biggest discount in my portfolio, which was a big mistake, as I'll mention next week.

See you there.

BRAZIL'S INDEPENDENCE

Today Brazil celebrates its 199th Independence Day.

On this holiday, while many Brazilians celebrate Brazil's independence from Portugal, some celebrate their financial independence, which basically consists of having enough income to support the rest of your life without having to work or be dependent on others.

There are many ways to achieve financial independence and here I’ll tell you how I have been doing it in Brazil. So far, my plan is perfectly on track and I should be able to reach my independence on my 38th birthday.

HOW IT ALL BEGAN

Since 2006, I have been thinking about being financially independent, but my plan has never been the same as it is now.

When I was 20 years old, I started investing in a private pension. It was a banking product and had a terrible return, especially because my bank charged a high percentage of fee (4%). I was not satisfied. I wanted to get a higher return than traditional banking products, so I started taking more risks in the stock market.

It was 2009, when I bought my frirst share, I had just turned 23 years old. I was very excited and it didn't take me long to imagine myself as a trader, but I was very wrong. After some losses, I got discouraged and abandoned the plan three years later, in 2012, selling almost my entire stock portfolio, keeping only the stocks that were at a loss.

Despite having stopped investing, I started making more money than before. My professional career was growing, so I decided to come back with the goal of being financially independent. I returned to the stock market at the end of 2017 much more confident than the first time.

AHA MOMENT

It had been five years since I last accessed my brokerage account. Before accessing, I was sure that I would be the best trader in Brazil, but I changed my mind instantly.

As soon as I opened my account, I was shocked by what I saw. The shares I kept in the account had incredible profitability. I really didn't expect this, because up until that point I was thinking about making money in the stock market by buying a stock and selling it at a higher price after a few days or weeks.

So I realized that the key to investing was not in the short term, but in the long term. That's how I started my journey, but honestly, I wish I had started this path many years ago.

TIMES IS MORE VALUE THAN MONEY

There's a popular Chinese proverb that says:

“The best time to plant a tree was 20 years ago. The second best time is now.”

Basically this means that the sooner you start, the better off you will be. Looking back, I regret that it took me a long time to develop a long-term vision, I think I would have reached my goal by now, especially knowing the power of compound interest.

I can't make up for lost time, but thinking I'm getting closer and closer to my goal is something that motivates me more to keep going and even write about it.

So come on, follow with me to FI!