Nowadays, many well-earning developers wonder whether or not investing in stocks is worth all the hassle.
Unfortunately, at the same time, most so...
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"Investing is very interesting, despite the capital growth, that gives you something intelligent to learn rather than playing video games or watching TV shows."
Oh come on!
My opinion: one can play games and watch TV shows however much they want WHEN they have become financially independent. One day, maybe I’ll also spend a lot of time playing games 😅 But that time isn’t now.
My opinion: life is not about earning money and goods at all price. I do play video games and I do watch TV shows more than I invest in stocks.
I don't believe you if you say you're playing the investors 100% of your free time. The judgment about video games & TV shows is unnecessary.
Your article is good, and well done. You did a great job.
The average investor will get better returns on a total-market index fund than betting on individual stocks. The returns of many individual stocks are tempting, but timing the market to get those returns is very unlikely. "Time in the market beats timing the market", as they say.
For the average person who doesn't intend to make trading their vocation, I would always encourage them to look at a total market index, and maybe some smaller indexes, like high-growth tech or emerging markets. If you're getting part of your paycheck in company stock, that's plenty of risk you're assuming already.
What do you think about value investors?
(i.e., Investing in stable dividend stocks (e.g, IBM, Coca-Cola, etc.) and holding them for long periods of time like 3-5 years, and protecting your principal from big losses with a STOP order)
It sounds like a lower-risk strategy to me! If you have the knowledge and experience (and excellent luck), I think investing in individual stocks can be lucrative. However for most people (including a lot of career traders) you see better, more stable returns on an index!
It makes sense to have a certain small % of your portfolio as more high-risk and high-reward investments. And this % depends on your risk profile. You can get one here using my quiz.
I really do like this initiative to get people to start invest their money. However, it can be sketchy to believe that stocks always increase in value over time, for example the Japanese stock market that has been in a drawdown for almost 30 years which can be longer than some people intended to be invested :)
I just invest into a high dividend yield ETF biweekly (symbol SPHD, if anyone's curious). It's been a bit rough since everything crashed in March but it's slowly working its way back up. And my monthly dividend earnings have been going up about $7 every month as my shares increase (I also DRIP invest so that any dividend earnings just go right back into buying more shares). As was pointed out, compound interest is your friend - invest early when able!
This is a really good comment on how the compound interest, dividends, and ETFs work in practice! Thank you 👍
I agree with you, trading stocks is a great thing to do next to developing. When I learned stock trading I took a lot of notes and some years later I published a beginners book for trading. Thomas Ehmann - "Trading Stocks The Easy Way"
I'd be more interested in seeing developers join unions. Profits should go to the workers rather than randos who bought stocks. Thanks for the article, interesting read!
That woukd be a fantastic idea.....if you want to lower developer salaries
"Union workers continue to receive higher wages than nonunion workers and have greater access to most employer-sponsored employee benefits; during the 2001–2011 period, the differences between union and non-union benefit cost levels appear to have widened"
bls.gov/opub/mlr/2013/04/art2full.pdf
1) that document doesn't have technology jobs broken out in it
2) it doesn't talk about the relationship between demand and wage. developers very high in demand tou would be foolish to let a union negotiate your wages
Unions raise the income level and benefits of workers in their industry across the board. Even non-union jobs—if their field has a large enough representation of unionized workers—end up offering higher wages and benefits to compete. It's foolish to claim they would lower wages for devs for some magical reason. Thanks for the chat tho, have a nice day!
theguardian.com/commentisfree/2018...
unions bring up median salaries but would hurt top performers
Also those links have flawed data as none of those industries have the demand software engineers have. Look up the natural rate of unemployment and compare to our industry.
Also it would make it harder to get into the industry. Good developers would avoid at all costs and it would probably drive up the salaries of non unionized developers. So maybe this is a good thing....by all means start a union :)
Well I don't think Developers earn enough to invest in Stocks to get any lucrative returns on long run. The reason being, developers are overloaded with deadlines and are paid poorly due to the fact that there are too many of them. In country like India, developer's 50% salary goes straight to the mortgages for home and car or a rental.
Stocks grow by investing in a new Idea, if developer has money and time, shouldn't they invest in a new idea to make next big product that can climb stocks?
I agree for the passive income (savings) for disaster. But one should invest in her/his own area of expertise instead of someone else's.
Thanks Ilona for this very educational article! Property tends to be a reliable investment aswell. Either shares in the property market or actually buying property/land with planning permission is often a safe bet 💷💷💷 Considering the interest rates on cash savings accounts are so low, I think it's a great time for more people to consider investing in different ways!
I totally agree that developers should trade stocks and options.
Add options to stock you can almost always win. There is two ways to get your feet wet with options:
Selling PUT options to buy stock cheap. For example, a few months ago I sold a contract to buy AAL (American Airline) which is a commitment to buy AAL at $12.00. For that commitment, I was paid $2.90 per share. If the option expires with the over $12, then I keep the $2.90 and the agreement is over. However, if it is below $12, then I have to buy it for $12, but I still keep the $2.90. So I have really only paid $9.10 per share.
Now you own AAL at $12 per share, I can either hang on to it or sell a call option where I commented to sell my contracted shares for $12. For this, I will be paid $2.25 per share. I made a profit of about nearly 43% in a few months.
Options have a lot of strategies, but this is fairly easy.
Option strategies are kind of like programming. A lot of what-ifs, with lots of ways to fix broken trades.
Nice post, I have been investing since I started working, and I don't regret it for a moment.
The best decision ever!
And still happily investing :) Mostly index funds, some new tech funds and now I also discovered bots.io :D Nothing beats the idea of having an army of algorithms trade for me while I'm asleep.
When trading stocks one should create a manageable portfolio. Some say you should diversify and some say you should only select a few stocks you believe in, either way, your portfolio should be manageable.
Interesting article. I think developers shouldn't actually invest in stocks. Developing a trading bot will get the job done (Selenium + Python = greatness)
There’s a huge difference between investment and trading. Trading is speculative and basically a bet. Investment is a long-term and lower risk (if you do the math).
What you’re proposing is sound for speculative trading. In fact, there are whole platforms that allow developers to sell their bots to non-developer investors.
This doesn’t work for long-term investments, though, because there you have to read financial statements of the companies, understand the real value of the company and hold stock for a long time while it makes sense to do that.
Uh, makes sense 😌
Interesting read! thanks for clarifying a few things for me!
Glad you liked it! What have you found helpful in the post specifically? 🙂
The part about dividends!
It's always crucial to know, that stocks are one of the areas you don't want to dive in headfirst.
Study a lot of literature, methods that have proven themselves, learn from the best people in the field, analyze the graphs of stocks in the field of your interest, etc.
Also, learn from stories like these and stay conscious at all times, as everything stocks are rapidly changing environment.
Yes, financial intelligence is quite important so that you can manage the risks of investing.
It seems to me that money needs to be invested all the time to bring in more money. It makes no sense to keep money in the bank at a very low-interest rate. What's more, inflation totally eats up that interest. Every month I save money for a trip. I don't keep the money set aside at home; I found a company that helped me build a great stock portfolio that brings me Sure Dividend . When I want to withdraw the money, I have enough for 2 vacations. It makes me happy when the money works for me.
Rather than stocks, what is your opinion on property investment?
No doubt that property investment is a good investment too! The advantage is that you can create passive income and grow your assets much quicker than with stock investment.
The disadvantage is that investing in real estate is more complicated; also, the money will lose liquidity for a few years comparing to stock investment.
After seeing what's happening with Tesla, I guess everyone might be interested in stocks!
Financial independence is achieved when you save money and invest them because money makes money. This is a principle learned from many articles that I have read so far from radicalfire.com/money-affirmations... I have created a concrete financial plan, and I stick to it every time I receive my money on my card. I am not a fan of keeping my money in the bank because it is devalued. Already what you invest in depends on your degree of risk.
I think diversifying is wrong because you are watering down your gains