Why I Sold All Of My Stocks (I Only Invest In ETFs)

Summary

In this video, the creators share their decision to move away from investing in individual stocks and focus entirely on passive ETFs. They discuss their personal investment journey, starting in 2021, and reflect on the challenges of stock picking, such as emotional decision-making and market volatility. Despite some initial excitement, they realized that passive investing through ETFs generally provides better long-term returns with less risk. While they're not against single stock investing, they emphasize that ETFs align better with their long-term financial goals, offering simplicity and stability.

Takeaways

• 💰 Dennis and Steph have started selling off their individual stock investments and plan to switch entirely to passive ETFs.
• 📈 They initially invested in single stocks alongside ETFs, but after research, they've shifted towards a long-term, passive ETF strategy.
• 📊 Dennis spent considerable time researching individual stocks, but they found that stock picking often doesn't guarantee better returns.
• 📉 Investing in single stocks can be emotionally challenging, especially when their value fluctuates, affecting decision-making.
• 🧠 Their early investments in 2021 saw gains due to favorable market conditions, but these short-term gains were not sustainable.
• 🎯 They learned that passive investing typically outperforms active stock picking over the long term, with fewer risks.
• 🛑 Both of them decided to sell off most of their single stocks after realizing that it didn't align with their long-term financial goals.
• 📆 They are focused on maximizing long-term returns through passive ETFs, even if it means forgoing short-term potential gains.
• 🤝 They emphasize that their strategy may not suit everyone, but they believe in creating a solid foundation with passive ETFs.
• 🌱 Simplifying their investment strategy has given them a sense of confidence, security, and alignment with their financial goals.

Q & A

Why did the speakers decide to sell all of their individual stocks?

The speakers decided to sell their individual stocks because they have shifted their investment strategy towards passive ETFs. They realized that stock picking involved more risk and uncertainty compared to the more stable, long-term returns offered by passive investments.

What is the main reason the speakers are transitioning to passive ETFs?

The main reason for the transition to passive ETFs is the belief that passive investments typically outperform active investments (like stock picking) over the long term. They aim to maximize long-term returns while minimizing risk.

How did the speakers initially start investing?

Both speakers started investing in 2021. They were initially focused on a mix of passive ETFs and individual stocks, with a goal of reducing fees and having a more hands-on approach to managing their money.

What factors influenced the decision to invest in individual stocks at first?

The speakers were influenced by the idea of investing in companies they knew or had researched. They were also motivated by the hands-on nature of stock picking and the general excitement around it, particularly in 2021 when markets were doing well.

Why did Dennis and the other speaker feel confident in investing in individual stocks initially?

They felt confident because they believed they were investing in companies with strong financials and solid long-term prospects. They also felt that investing in companies they used or were familiar with would lead to good investment outcomes.

What psychological effects do the speakers mention in relation to investing in individual stocks?

The speakers mention that investing in individual stocks can create emotional highs and lows. When stocks go up, it creates excitement and a sense of control, but when stocks go down, it can lead to stress and impulsive decision-making, like selling at a loss.

What lessons did the speakers learn from their experience with individual stocks?

They learned that picking individual stocks is risky and unpredictable, and that despite research, it is difficult to consistently outperform the market. They also realized that passive investing offers better long-term stability and returns.

Why do the speakers believe that passive ETFs are better for long-term investing?

The speakers believe passive ETFs are better for long-term investing because they provide diversified exposure to the market, reducing the risk of losing money on individual companies. Over time, passive ETFs tend to offer higher returns compared to actively managed portfolios.

What are the key differences between investing in individual stocks and investing in ETFs, according to the speakers?

Investing in individual stocks involves higher risk because success depends on the performance of specific companies. In contrast, investing in ETFs provides broad exposure to many companies, reducing risk and offering more consistent, long-term returns.

What advice do the speakers give to those considering investing in individual stocks?

The speakers suggest that while it’s okay to invest in individual stocks if it aligns with your goals, it’s important to recognize the risks. They recommend focusing on long-term, stable investments, like passive ETFs, to build a solid foundation.