How to make your money grow faster


At the 2000 Sydney Olympics, Britain's Men's Eight Rowing team, for the first time achieved something no British team had done since 1912:

They won gold.

It wasn’t easy for them… How did they do it?

British rowers surprising win during the 2000 Sydney Olympics

You see, after a depressing 3rd place finish in Cologne in 1998, the British team asked themselves how they could improve?

During each training, whenever they had to make a decision, they asked one question:

“Will it make the boat go faster?”

This is one of the most powerful questions you can ask. Even in investing.

I learnt a painful lesson once like this

Years ago, I bought shares in Brighthouse Financial, which was spun-off from Metlife. Metlife was one of the world's largest US life insurers.

Now, a spin-off happens when a parent company, like Metlife, takes one of its businesses and separates it by forming an entirely independent company, called Brighthouse Financial.

When Brighthouse Financial spun-off, it was also restructuring its entire business. But it didn't work out.

Yet, I stubbornly held on while its shares kept falling.

Brighthouse Financial forced me to lock bad money up

I could have sold its shares and quickly invested into shares of stronger businesses. Yet I didn’t.

Holding on to Brighthouse Financial was a huge opportunity cost. I held its shares for ~1.5 years before selling at a painful 23.4% loss (ouch). It took another seven years for Brighthouse Financial shares to trade back to its IPO price.

Here’s the problem. I told myself:

“As long as I don't sell Brighthouse, I'm not losing any money.”

After months, I admit. I was wrong. Finally, I sold off its shares.

Just like the British rowers, the "boat" is your portfolio and your stocks are the army of rowers in your portfolio. Along the way, you'll realize some of the stocks you picked will go wrong. There will be some stocks that won’t be driving your “boat” forward.

This is normal.

How to grow our money faster

But if we don't pay attention to the "boat" we are working on, and constantly asking ourselves how to make our money work faster, we're finished from the start.

To grow our money faster, sometimes you need to overcome the voices in our heads:

"It's okay, It'll bounce back up soon."

"As long as I don't sell it, I'm not losing any money."

And cut the stocks that are pulling your portfolio back.

If you want to make your portfolio grow faster, ask this question on each stock you own:

Will this make my portfolio go faster?

If the answer is no, cut it and move on.

Sometimes, investing can be simple.

Willie Keng, CFA

Founder, dividendtitan.com

P.S. Like this issue? Click HERE to join other dividend investors reading my DT Compound Letter. I send my regular letters to your inbox.

Dividend Titan

Read more from Dividend Titan

Yesterday, I took the morning off from my usual writing routine to join Lance Alexander on MoneyFM89.3. We discussed one interesting question: If you had S$30,000 to invest today, would you buy the S&P 500 ETF or shares of just one company? Well, I shared why I’ve stopped buying the S&P 500 ETF for my boys and started buying this instead... Berkshire Hathaway. Here me out. Hear me out. Here's what I found fascination: Since 1965, Warren Buffett's Berkshire Hathaway has compounded at 19.7%...

When my first son was born, I started putting his savings into the stock market. I wanted a hassle-free way for him. And the natural thing to do was buy the S&P 500 ETF. Today, I’ve stopped buying the index. What was once a simple and lazy way to invest has become dangerously expensive. And when the S&P 500 ETF stops behaving like an investment tool, it becomes a momentum machine. You might disagree… For long-term value, I prefer buying this instead. Since Warren Buffett took over the old...

“Your ready?” I texted my mom to ask if she and Pa were ready, right after I loaded up the baby’s stroller in the car. My parents lived just a few blocks away from us. It was 6.15am. The morning was still dressed in the night, waiting for the sun to rise. That was exactly one month ago. All eight of us, including my parents, packed up into two cars and we drove up to Kulai - a quiet town in Johor, Malaysia with a strong Hakka community. If you’ve had Lei Cha, you know that’s what the town is...