youngsters walking

Investing – Why it is Important to Start Early

Becoming old is one of the worst fears people have. I know that first hand, having passed the age of 60 a few years ago. The main fear that people have is that they are unable to achieve the goals they set out to achieve by the time they retire or sooner.

A good strategy that I’ve been implementing for decades is long term investing. It will help you make the aging part a bit less daunting, as the older you get, the richer you will become.

When it comes to investing for the long term, the amount of wealth that you accumulate will increase the most in your later years. That makes sense, because if you are making 10% per year, that amount to 1000$ off of your 10K$ portfolio and 50K$ off of a 500K$ portfolio.

The more time you allow for the portfolio to grow, the bigger it will get and the more it will generate. Another example of a the advantages of starting early is that if we assume you are able to make roughly 10% per year, which is the stock market average return for the past 100 years, you would have to invest the following amounts depending on your starting age in order to reach 1.000.000$ by the age of 60:

  • 2413$ per month if you’re starting at 45 years old
  • 754$ per month if you’re starting at 35 years old,
  • 264$ per month if you’re starting at 25 years old.

Now provided that you are retiring at the age of 65, which gives you five years extra, compared to the previous numbers, your portfolio would have grown to the following amounts, compared to 1M$, in the previous example:

  • 1.832.000$ if starting at 45 and investing 2413$ per month
  • 1.704.408$ if starting at 35 and investing 754$ per month
  • 1.669.557$ if starting at 25 and investing 265$ per month.

As you can see here, only 5 years can make a huge difference. You would need to invest almost 3 times less when starting at 25 or 35. It is also natural that your ability to invest depends on your income, which will grow with age, in most cases. For that it is also reasonable to invest a set % of your income.

A lot depends on the amount of return you are able to get. When saving for retirement, it would be reasonable to look into less risky strategies to make sure you won’t lose your account. Riskier strategies (such as the Etoro strategy, outlined in my previous article), are good for shorter time capital accumulation, while long term goals should be addressed differently.

If you’re interested in the subject, check out this investment calculator to calculate this based on your own circumstances.


If there is one thing that you should take home from this article, it should be that you have to start early when it comes to saving for retirement. 5 years can make a life altering difference as you saw from the calculations above.


How to Beat the Herd by Being a Contrarian Investor

Ok so most of you already know that the average investor makes about the market average or below returns per year. If this is something that you are satisfied with, that’s fine! If you want more (I sure do), then read along.

In this article I’m going to introduce to you a concept called contrarian investing and how I personally do it to reach market beating average returns (quick hint: I use Etoro).

People  tend to act like sheep, they subconsciously follow everybody else. If everyone is buying a stock, then so should I, they think. A great contributor to this is the fear of missing out emotion.

Doing things in a herd is a primal survival instinct that has helped us stay alive back in the stone age. Nowadays being in a group of people still feels more secure and I get it, but when it comes to investing or trading, you really need to separate yourself from the crowd to yield above average returns.

Contrarian investing

The simplest way to explain the concept is that it means buying the stocks/currencies etc that everybody else is selling and selling the ones that everybody else is buying.

Why does it work? 

It works, because according to theory, if majority of the traders are long a stock, there is no one left to go long. All that traders could do is hold on to it or sell it. So the upside potential is slim and has diminished.

It works vice versa as well, if you know that the majority of traders are short a currency pair or a stock, you should do the opposite and buy it, because there is no one left to short it. Most people are already short and if the price won’t fall further, they will start exiting their trades, which will rather often yield a rise in the price.

How to put it into action

The only way you can use it if you somehow are able to realistically know what the majority of the traders are doing. It doesn’t work if you only know what the majority is thinking, you also need to know how they have invested. This is really important, as people often don’t practice what they preach.

One simple way to know the overall sentiment of the market is to check Yahoo Finance’s “short interest”. This is a number that tells you how many people are short the instrument. If you see that the number is high, you could initiate a long position.

Yahoo finance indicator is a neat tool, but it won’t actually help you too much. It is updated not too often and you will only know the short interest, while having no idea how many people are long the stock.

A much better tool for this is the Etoro social sentiment indicator. What it does is show you how many of their users are long or short the currency pair, stock or commodity. This is vital information. If you know that 90% of people are long, you could take a short position and expect the price to fall, as there aren’t too many people left to buy it.

Etoro has over 5 million users so their user based sentiment is rather indicative of the sentiment of the overall market.

I will post a more thorough article on how to do this step-by-step.

But for now, I encourage you to look into the concept of contrarian investing and recognise the power of separating yourself from the herd.

investment pillars

The Three Pillars of Becoming a Millionaire

If you are able to look past the cunning headline, I am actually going to give you some timeless and foolproof advice here.

Main part of becoming a millionaire or retiring early lies on 3 strong pillars. They are the ethos that one must follow and stick to:

  1. Save as much money as you can. There is always room to cut your costs and have more money left over at the end of the month. It is almost miraculous how people tend to be able to save about the same percentage of their income despite how much they make. This shows that most of the money is flowing to all sorts of expenses that you make to upgrade your life quality.

    I know this, because I used to be the same way. Until when I turned 40, I realized that I do not want to work until I die. From that stemmed a decision to do something about it. After a painful introspective research I discovered that the main thing stopping me from piling up money is my personal inability to cut my spending.

    With bigger salary I bought a bigger home, a second car, a motorcycle, went travelling more often, started travelling further (those two I never regret, but still).

    Had I kept this behaviour, I would never have reached the millionaire status or the ability to quit my day job and become free of the 8-5 debacle.

    So my desire to get rid of this compulsory routine finally had become greater than my desire to just sit on the couch and do nothing reasonable.

    This all lead to me starting to keep track of my spending and trying to save more money every month. This became a challenge and I love challenges. I ended up with being able to save 30% of my salary, which was a huge thing for me.

    So the first pillar is to actually be able to save a significant portion of your income. I would say that 20% is the bare minimum that you should aim for.

  2. Second pillar is investing that money. I know that you may feel better to just save it up without risking anything. That is cowardish and will not take you to your goal. Instead, it will hurt you, as inflation will decay your wealth.

    A big part of the formula is knowing how to invest and luckily we live in a world where investing has become very easy. Everyone can open up a brokerage account or use their checking account to buy some securities. It’s easy. The hard part is knowing what to buy.

    Research shows that most money managers are performing worse than the overall market in a longer time period. The statistics are horrible, it shows that 80-90% of actively managed funds fair worse than the market.

    What this tells us is that you are more likely to lose more money with a fund manager than by buying a passive index fund that follows the market and returns about the same yield as the market in aggregate.

    Check this article in the Financial Times to read more about the underperformance of active fund managers –

  3. Keep at it. That’s right. Most people get excited about long term investing and start doing it with sufficient motivation. Sooner or later the motivation will dry out and they will quit.

    Quitting is a sure way to not reach early retirement. You are almost guaranteed to work until the official retirement age or even further.

    On the other hand, if you are able to keep at it, you will reap the benefits and drink the coolaid when you get to your goal. The feeling of true freedom is well worth the effort. I didn’t quit, but I reduced my working hours by more than 50% and only deal with customers that I want to deal with.