My Investment Journey

I know what you are thinking, "Dude, you're like 19! What 'journey' are you talking about?" It might seem crazy, but I have quite a few stories I'd like to share regarding what investments I've made, and in the end, I'll share my strategy for the future.

You see, I started this journey when I was 16. Back then, I really didn't understand how most of the money at my bank came through. I had several Rupiah here and there lying around, probably accumulating from my previous lunch money, Eid money, and so forth. So, for a long time, it kind of just stayed there.

Until one day, my Dad took me to a friend of his to learn to invest. I didn't pay attention that much, even though I was interested in the prospect of making money. I don't remember much about what I learned from my dad's friend. All I knew was that he used a lot of charts, patterns, and of course, "cocokologi" to perform technical analysis. Since this was my first exposure to the stock market, I immediately thought, why don't I automate all of this work? I mean, why go through a gazillion steps manually just to make 0.01 alpha?

But first, I needed an account. As a 16-year-old, you aren't really supposed to have an investment account open for you. So, I plotted with my mom to use her name so I could invest on her behalf. Though, in practice, I used my own money and my mom probably didn't know what I was doing 95% of the time.

And so a pirate was born. I bought a pirated copy of AmiBroker, bought a real-time data subscription, and started writing the algorithm. Free money, here we go! Or so I thought. I learned how to write the code in AmiBroker Formula Language (AFL) in just a few days to get the basic syntaxes out of the way. Surprisingly, It's quite similar to C, which is the first-ever language that I learned using my phone (true story).

The strategy that I was going to automate would involve some Moving Averages (MA) and Moving Average Convergence Divergence (MACD). I really don't quite understand the fundamentals of these indicators. All I know is that if the current price of the stock is below some MA line and is above the MACD or something like that, then it is time to buy and vice-versa.

As you might expect, it went horribly in the end. I made some unrealized gains using this method for a few days until I lost a huge chunk of my money and decided to quit. From that day forward, I realize that technical analysis is not for me, and I imagine not for the majority of people, as you can't really predict the price using any patterns. I mean, take an arbitrary chart, and you can use technical analysis to prove that it's gonna be both going up and down. It depends on the indicator/pattern you want to see.

Moving on, I was then introduced to value investing. It was at this stage that my interest in investment skyrocketed. I started reading books about investing, how to make money as an investor, and, more importantly, how to manage money. I even have The Intelligent Investor right here on my shelf. And yes, I have read it. Several times.

I'm not quite sure how old I was at this point, perhaps 17 or 18. I think, for whatever reason, a year of technical analysis matured me and made me 30 years older financially. Anyways, I wanted to put a huge chunk of my money into mutual funds now since everyone keeps telling me to diversify. And so I did, but I realized that things were moving a little too slowly. I mean, in some of my portfolios, I was making a steady profit, but for some, I was making either too little or losing money. And so because of that, I frequently bought/sold and switched mutual funds. Not knowing that the fees associated with that are immense and add up.

This strategy played out for maybe a year or two until I got where I am today. Until recently, I invested a huge majority of my net worth in Indonesian mutual funds. I didn't realize that the expense ratio of these funds is CRAZY high. I mean, I knew the figures, but I really didn't sit to think about what other alternatives there might be. So, I just kept putting more and more money there.

But recently, I had a wake-up call. In my humble opinion, investing in Indonesian mutual funds is a big waste of money. The expense ratio is high, and the performance is subpar compared to S&P 500. I decided to move the majority of my net worth now to a US-based ETF instead. I'm sure you can guess what it is. It tracks the top 500 largest US companies.

You might ask, investing in US-based ETFs, won't the currency conversion fees eat your money up? I've done the math, and I can proudly say that it is untrue. The currency conversion fees are ~1%, and that's a one-time thing. Not to mention that the expense ratio of such ETFs is so minuscule that you might as well ignore it. In short, it makes much more financial sense to invest outside and pay the 1% conversion fee compared to 2-3% annual management fees from Indonesian funds.

I'm 19 now, and I'm happy where I am at today. I think if I don't do anything rash and keep at my current goal, I can make enough money to live a decent life in the future. Cheers!