¡Hola, I’m back! Didja miss me? So sorry for being MIA for the past couple of weeks – I was vacationing in Spain, and after I got back I had to prepare for an unexpected interview (for an internal rotation – I’m not quitting my job!). But it’s all good now, and I can finally get back to some awesome dorky personal finance blogging.
So Spain was friggin’ awesome. Other than the Dali museum and the Sagrada Familia, I noticed a couple of other things that the Spanish have gotten right:
- Siesta
- Lunch at 3pm and dinner at 10pm
- Pre-meal beers
- Cafes that serve alcohol and bars that serve coffee
- Churros con chocolate…mmmmm
- Dogs (there were dogs like literally everywhere. Huge impressive ones, not the wussy puny ones we have in Singapore)
- Reading real books (remember those?) on the subway instead of playing Candy Crush
- And of course… tapas
The joy of tapas
Cool story about tapas: Back in the day, Spanish laborers had beer for lunch because they couldn’t afford a full meal. The trouble was, they couldn’t do any work after that because they kept getting drunk from drinking on an empty stomach. (I totally need to test this theory out in the office). So King Alfonso the Wise decreed that inns could only serve alcohol if it was accompanied by something to eat. And so the concept of tapas was born.
In Granada (a city in the south of Spain) – they still practice the tradition of giving you a free plate of tapas with every drink you order. If you go there, you literally never have to pay for lunch, as long as you keep drinking. Awesome.
Tapas totally rock because you never, ever, have to worry about getting a bad meal. Not just because they’re delicious, but also because each meal is made up of several mini-dishes. There’s a very low probability that your entire meal will suck, and a pretty high chance that at least one dish will turn out to be amazing.
So while I was wolfing down a delicious meal of croquetas de jamón, chorizo, and patatas bravas and washing it all down with a glass of vino blanco (white wine), I had a revelation: investing should be just like tapas.
Why investing ISN’T like a full meal
Many stock markets around the world are at or near all-time highs, and everyone is getting excited about investing all over again. Plenty of people are asking, “Should I invest now?” and “What should I invest in?” However, some people are getting pretty jittery: “Is the market too high? Is it due for a correction? What if I invest right now and it suddenly tanks and I lose all my money? Zomg there are too many decisions I’m just gonna crawl back in my hole and play Candy Crush.”
Most people think of investing like it’s a full, giant, expensive, meal. They think that they have to choose from a menu of two entrees:
- Invest everything now
- Don’t invest anything now
They believe that depending on what they choose, they’ll either get deliciously wealthy, or live a tasteless life clipping supermarket coupons.
Wrong, wrong, wrong.
Who says that you have to go all-in and throw a couple of hundred thousand grand into your huge investment entree all at once? Instead, why don’t you invest like you’re eating a leisurely meal of… tapas?
How to invest like you’re ordering tapas
When you order tapas, you go slow. You only order one or two dishes at a time. If it sucks, you simply order a different one. Each dish is a risk, but it’s such a small risk that it almost doesn’t matter to your overall meal.
Similarly, you don’t have to devour your entire investment meal all at once. Instead, try investing a fixed, small amount – maybe a couple of hundred dollars – every month.
That way, you never have to worry about whether this is the “right time” to invest. You don’t have to worry about whether the market is going up, down, sideways, diagonally, or into a corkscrew. What’s the worst that could happen? That you lose 20% of your $300 investment? That’s like, 60 bucks, which is cheaper than the pair of shoes I bought last week.
Because in the grand scheme of things, it doesn’t matter what the stock market does in the short run. If you invest in little bits every month, you’d be buying when the market is high, and buying when the market is low. Over time, this smoothes out your purchase price, while letting you accumulate a large stash of stocks. This is going to pay off in the long-term.
History has shown us that over the very long run (think 20 – 30 years), being invested in the market has always, always, paid off. As the old personal finance adage goes: it’s not about timing the market, it’s time IN the market.
Ooching into investing
If you haven’t made your first investment, then tapas-style investing is a great, low-risk way to get started. Instead of staying up all night worrying about when the “right time” is, you can slowly ooch into investing while accumulating small blocks of shares at a time. What’s the hurry? You’ve got like 30 years of investing ahead of you.
I started this tapas-style of investing a couple of years ago – and it’s one of the best financial decisions I’ve made. I invested when everyone was panicking in August 2011, and I’m still investing when everyone is scrambling towards stocks today.
Don’t spend your time worrying about what the market will do tomorrow. Instead, try to enjoy investing like a delicious, homemade, tapas meal. Between investments, drink copious amounts of wine, enjoy leisurely conversations, and have a good night’s sleep.
Now if you’ll excuse me, it’s time for my siesta…zzzzzzzz
Tapas-style investment reminds me of our company’s fuel hedging policy.
Hahahaah nice 😉