DGI – Is It Really For Me?
This week I have read a lot about index investing as well as other Financial Independence bloggers. It has made me start thinking that DGI might not be my strategy after all.
One guy said: Hi, I am switching from being a DGI to Indexing. I figured I do not have time to keep track of all my stocks and found indexing to be a much better match for me. I have been selling my individual stocks and buying and index funds through Fidelity.
The thing is, I value Time more than anything, and the DGI strategy takes T I M E. The question is if I’m wasting time on something that an index fund could do just as easily, like a DGI ETF with brokerage at 0.06%.
At least that’s how I see it now. As a DGI, you need to buy stocks at the right prices. Yes I know, some people say you shouldn’t care that much about prices, but the lower price you pay the higher possible return, so it’s a factor worth thinking about. You also need to be updated on the companies somehow at least: debt, Trump’s tweets, earnings, CEO changes and so on.
Diversification plays a big part in the DGI strategy, so that means a lot of companies, 10 or more. Keeping track of them will take time, and I will not get easier as time goes by. A more important job, more traveling, family, a dog, did I say more important job?
Another part of my current view is that I might just be stupid. Too damn proud. I consider myself a smart guy, not a genius by any measure at all, but my ego is taking a beating. It’s hard to invest time and effort in education in finance and engineering, and then invest in the exact same way as my grandmother would do. It’s just painful…
So, the question is if my ego is playing my mind, and that”s why I do DGI. Well, I like dividends. I also like the fact that you can control the money, and how you spend it. I like the fact that when the market crashes at one point, I will still get paid and can buy stocks at cheaper prices. With an index fund, I would just ride the train from A to B. Of course, if I have a lot of cash at hand I could take advantage of the crash, but let’s say I don”t, then I’m screwed riding the index.
But again, how in hell should I expect to beat the index? Or is that even what I”m expecting? No, not really. I”m hoping for something between 6% to 8% annual increase. Then an index fund or index portfolio would do just fine. To add an argument, when W. Buffet keeps saying to his family and everyone that they should just save in a low-cost index fund, why shouldn’t I? Again, the ego….
Another aspect of the strategy that I’m not comfortable with, is that it makes you use the internet and the computer more because stocks are so damn fun. I like to travel, and when I travel I go for several months, my record was 1 year. How am I supposed to be able to keep track of my investments if I’m on a volcano in Central Indonesia? In January of 2016, I was in that exact situation. The market fell, but since I was in Indonesia or Vietnam or Cambodia (can’t remember), I just shut my phone off and logged into my account several months later.
I think that deep down, that’s the life I want. Free. No worries and just being happy at the current state. The “problem” is that stocks and investing have become a part of me. A major hobby. I am just not sure if I am happy doing it or just stimulating the mind, in the same way, solving puzzles.