At Voleo we have big ambitions. The stock market is a place of opportunity, but because of events like the 2008 market crash, trading activity amongst the generally risk-averse millennial generation is low, like, scary low. While this is bad for existing retail (individuals) and institutional (banks or funds) investors because it has a drying effect on liquidity (what makes it easy to buy and sell), it’s worse for millennials who don’t get involved and miss out on earning opportunities. So, we want to shake up the game.
No more operating solo having to figure it out on your own and suffering frustrations in darkness. Everything’s more fun with your friends, from enjoying margaritas, to playing sports, to travelling. Why should making investment decisions be any different?
However, we’re not just looking to make the experience social, although please do go ahead and share (humble brag) about your smart stock picks and returns, we’re making it a collaborative experience where friends vote together on where the money goes. Money and democracy, fun!
Here are the 7 reasons why investing with your friends is better:
1. You’re Not Going It Alone
A.k.a., you don’t need to know everything.
Dealing with a complex subject is stressful and can be really frustrating when making significant decisions on your own. We know what happens when we’re frustrated and without support, we’re far more likely to give up and walk away.
Investing should not be an experience that is intimidating, confusing, or makes you feel bad. Quite the opposite, it should be exciting! Having a supportive group around you as you navigate the investing process and evaluate which companies are worth your hard-earned investment dollars will make the experience one you enjoy, and ultimately are grateful for.
2. Motivation
Do you know that feeling when you’re sitting on the couch at 7:15pm and you’re meant to be somewhere by 8:00pm, but you secretly hope that your friends will text to cancel so that you can stay in your pajamas binge-watching your favourite show? But then your friends insist you come out and finally, after throwing yourself together, you get to the restaurant and find you’re actually really pleased with yourself for going out? Of course you do, we all do.
Friends provide real motivation and it’s one of the key reasons we need them in our lives. Our friends push us to achieve more, live happier, and take better instagram photos. Friends push us to keep going, and that is the beauty of investing in a team.
3. Making Wiser Investment Moves
Collective knowledge makes for far better and far easier investment decisions, that’s why we’re supporting the creation of investment clubs; learning from people you trust is the absolute best way to develop as an investor. Acting as a collective allows you to make more informed decisions and provides the confidence and empowerment to continue investing and growing your club’s portfolio.
Sourcing insight also makes it easier, not to mention more fun, to reach the objective: to invest strategically and with purpose.
4. Diversity of Interest
The interests and passions of our friend groups are typically diversified across a variety of different activities, hobbies, and industries. If you’re keen to better understand artificial intelligence there’s likely a high-tech friend for that, or if you’re interested in becoming better read on American classics, there’s likely a book aficionado friend for that. Same goes for investing; friends who are well-versed on particular brands or industries can be tapped for their expertise, thus expanding the group’s knowledge of public companies and investing opportunities.
5. Sharing the Risk
By investing together, you have a much greater opportunity to diversify your positions simply because there is more capital to be distributed amongst investments. Portfolio diversification is the best way to minimize risk and help you reach long-term financial goals. Diversification mitigates concentration risk by providing a safety net; if there is volatility in the market, it will definitely affect your portfolio but you are exposed to less extreme moves than if very few stocks are held.
6. Sharing the Returns
More people means more money which translates into bigger opportunity for returns. Having more capital available to invest allows you exposure to trade with the authority of a large portfolio and gives you access to a greater mix of stocks, a.k.a., greater potential for upside.
And let’s not forget, working to make a successful decision and reaping a financial reward together will be nothing less than a bonding experience, it’s what the corporate world affectionately refers to as “team bonding.”
Worst case you bomb out and make some mistakes. You will have learned a lot about the market (and something about yourself), so you make better decisions going forward, and as the saying goes, “misery loves company.” Whatever you do, keep going!
7. Holding Each Other to Commitment for the Long Haul
While the first rule of investing is simply to get started (the sooner the better!), the second rule is to stay in the game. Ever heard investors who purchased Apple in the early days moan about how much they’d have made if only they’d held the stock? Certainly hindsight is twenty-twenty, but when you look at the overall performance of the market, over one, five, or ten years, the trend is an upward line; performance has grown year over year.
What about the market corrections you say? Corrections within the market are inevitable, but can serve as an excellent opportunity for young investors who are able to take advantage of the decline. Unless you are in the lucky position of having a ton of dough to play with, there is this magic thing called “dollar cost averaging” which means you end up with more stock if you buy consistently rather than trying to pick a single entry point.
Market corrections have always been followed by recoveries (yes, always) as economic cycles shift and earnings grow. In another post, we’ll talk about the two main drivers of stock prices, but fill your boots when everyone else is afraid, and be cautious when everyone else is greedy, or in other words, buy when they’re cryin’ and sell when they’re yellin’!
Just like how you ask your friends for referrals for restaurants, real estate agents, and good Netflix shows, stock market investing deserves the knowledge of your friend group because truly, nobody has all the answers, but we all have a vested interest in succeeding.
By Olivia Lovenmark | Voleo
Read Next
