The focus of my story here on this blog is how I needed to setup and grow taxable savings and investment from nothing. I had no cash savings. I had no stock investments that I could sell immediately and use in an emergency if I needed to.

Everything was locked up in retirement accounts…401k’s and IRA’s.

I had no cash savings and a good bit of debt. For me…that was no way to live.

So I had to start building up those accounts from somewhere…which was zero.

There are some advantages of starting small though!

Here are just a few…

Dollar-Cost-Averaging

My only option was to dollar-cost-average…$240 every two weeks. That is how I started – small. By investing the same amount on a consistent basis, you create several advantages:

• Lower average cost – You buy more shares when the price is lower and less shares when the price is higher.
• Learning as you go – Instead of plunking, let’s say, $5,000 (everything you might have) in your first investment, you have committed only that first small purchase, that will be one of many. There will be more purchases afterwards. What if you plunked that $5k in a stock that wasn’t ideal and it was a huge mistake? By starting small and dollar-cost-averaging, you can learn as you go, adjust and adapt. If you find that you made a mistake, it won’t be that costly. Just shift to another investment for your next purchase.
• Less worry – In our example above, plunking everything you have into one investment and you are just starting out, you will tend worry…monitoring each tick as your entire investment swings up and down.

Focus on the process, not the money

To me, this was huge. When you start small, the dollar amounts aren’t going to “wow” you. When you have a few hundred, or a few thousand dollars invested, the gains (or losses) you start to experience are not going to drastically alter your life.

If your investment is up 50%, it’s not time to quit your job and retire when your $1,000 invested is now worth $1,500.

What you should focus on then is your process! Focus on your methods, take the time to do the research on companies.

• Refine when to buy
• Refine when to sell
• Refine the filters that you use to find stocks
• Refine the stock chart patterns that you consider to be ideal

You should also focus on the percentages. Percentage gains on a small amount aren’t that meaningful…but it shows you are doing well. It shows you made the right choice in an investment.

So re-double your efforts. Research and fine tune what works and what didn’t.

When you focus on your process and not the money, the money will take care of itself. Then, when your account does become meaningful, you will have built up enough of a process that it will hopefully support you mentally when the emotions of having a larger account can start to influence your decision-making (for the worse).

Emotions: Less money = Less emotion

Let’s face it, money is wrapped with emotion. We all want more of it. We all want more of it than we have.

Just about every bad move that I have made financially has been because of the negative influence that emotions have caused. We all have heard of FOMO…”fear of missing out” on a trade that is doing well, so we jump onboard and sure enough, that was near the top. I’ve done that.

When you have made some great trades or investments, then overconfidence sets in. You become a genius. You have everything figured out. This is easy. And then you break your rules, stop doing what got you to that point and blow it all. I’ve done that too.

When your account get’s bigger, you start to notice that small percentage gains in a stock that used to be not so significant before, become much more significant. You start to say to thinks to yourself like, “I lost $2,000 today”. The percentage fluctuations were the same as before, but now the money equation starts to influence your thought process. If you do that because of the money, it is likely going to be the wrong move.

Starting small allows for you to “steel” yourself from these emotions when you hopefully have grown your account to a size that is meaningful to you.

Don’t try to do too much, too soon

I get it…you want to get to your goal, whatever that is. And you want to get there, like….yesterday!

I know the feeling well.

I can look back on several instances when I was trading (not investing like I advocate here), where I had grown my account up to a decent size and then made a risky move that I knew was dangerous and I should likely not make, but did it anyway. Because I wanted to get to my goal faster.

That usually never ended well for me. I stopped doing what got me to that point and made choices that were influenced by wanting to quickly accelerate my account to a level that might have taken many months. I felt that this one single trade that could get me there in an instant.

Resist that urge.

Have you ever thought about what you and your life would be like in the future as it relates to some goal…say 5 years down the road?

Then, have you also looked back into the past and say, look at myself…look at how I was back then? Often, I have found that when I look back, I notice that I had not really progressed at all towards my goal.

There I was back then… thinking the same thoughts, trying to get to the same place and I had “wasted” those 5 years by trying to make shortcuts.

Slow down, come up with a plan and follow it.

Don’t try to do too much too soon.

A small account is precious, grow it the right way.

Learn as you go, follow the plan.

Glenn