My $100,000 Mistake and Your $100,000 Gain - Why Short Term Investment Cost Me Dearly!

Back in the ancient times of early 2020, I fancied myself a day trading wizard. Little did I know, I was just a market jester, dancing with danger and missing out on those sweet future gains.

The Tale of a Foolish Investor

Join me on a journey through my misadventures in the realm of finance, where day trading dreams quickly turned into nightmares.

Long-Term vs. Short-Term: The Battle of the Investments

Long-term investments, the slow and steady tortoise of the financial world, versus short-term investments, the hare. Guess which one I thought I was?

My fatal flaw? I couldn't see past the tip of my own nose when it came to investing. I was too busy chasing quick wins instead of letting my money marinate and grow like a fine wine.

The $2500 Nvidia Blunder

Ah, Nvidia, my old friend. I dumped $2500 into this stock, thinking I was on the highway to riches. Little did I know, I was just taking a detour through the land of financial regret. But hey... At least you can learn from my tail. Secure those long-term investments and forget playing the market jester.

The Specifics of Investment

I bought 16 shares of Nvidia in August of 2020. The shares were around $155CAD/share. Since 2020 Nvidia has underwent 2 stock splits, being a 4:1 ratio and then a 10:1 ratio meaning from the 16 shares I would have 640 shares today at an exact value of $82,713.60CAD. All of this happened within a 4 year period! I sold the stock at around $170CAD/share and made a 9.6% return on investment in less than a month at the time of investment.

Lesson Learned...

So, after dipping my toes into the world of short-term asset purchases, I've come to realize that playing it safe is like wearing socks with sandals – not the most exciting choice, but it gets the job done! I've decided to park my money in a Guaranteed Investment Certificate (GIC) because, let's face it, who doesn't love a little guaranteed interest, am I right? Along with guaranteed interest the principle investment is also guaranteed!

It's all about building that financial cushion, aka the "nest egg," which is like having a backup plan for when life throws lemons at you. And just like a good omelette needs a variety of ingredients, diversifying into riskier assets with the interest from your safe investments is like adding some spice to your investment portfolio – it keeps things interesting and hopefully more rewarding with less risk on your principle amount!

Benefits of Investing in a GIC Currently

The image on the left illustrates the greater interest in long-term investments, while the image on the right depicts a higher interest in short-term investments. This is the inverted bond yield curve, where safe investments can offer higher interest rates compared to other periods.

With the bond yield curve doing the limbo dance these days, it's like the financial world is trying to breakdance – things are getting funky! So, why not consider those "risky" bonds for some short-term gains! Just remember, when life gives you an inverted bond yield curve, make some short-term lemonade with those safe investments.

Have any questions? Email me!