This month I have done something I wouldn’t normally have dared to do even a year ago. Instead of investing in my trusty ETFs with low expense ratios and great return potential, I invested in individual stocks instead. *gasp*
While this is certainly not something earth-shattering as a bazillion investors have done so before me, it is unusual at best for someone who has always walked on the “careful investor” side of things. So why would I become such a hypocrite?
Related: Investing Series
I am cheating on my ETFs with Tesla!
I have strayed from my ETFs because I believe in the company and its mission. In this particular venture of mine into individual stock
risk investing, I have chosen to back Tesla – the electric car company which (in my humble opinion) is changing the car industry.
I have a strong conviction that the future of the car industry will not include gas guzzling cars. And Tesla has been a strong driver in not only bringing electric cars to market but also in “forcing” established car makers such as GM and Ford to ramp up their electric car development as well.
Enough with the rambling. After all, I am not trying to sell you on the stock. Instead, I am sharing this recent purchase of mine to show that sometimes straying from the beaten path is fine and can even be exciting if you are backing a company whose mission and future you believe in.
After cheating on my ETFs with Tesla … how much am I on the hook for?
I might be cheating on my ETFs with Tesla, but I certainly won’t let this adventure move me into the poor house. Quite to the contrary, I thought long and hard about how much money I am comfortable investing in Tesla. The golden question was “How much am I willing to lose?”
As it turns out, $5,000 was the answer to the question. It was high enough to justify the investment and return a decent profit if the company heads into the profitable direction I think it will. At the same time though, I am ok with and prepared to lose it all should Tesla fail in its quest.
There it is. $5,000 of my hard earned cash tied to one single company. And I am – surprisingly – calm about it. Is it risky? Of course. Could it be worth it? Most definitely. I had researched the company extensively before investing and didn’t push the purchase button until I was sure I wouldn’t regret the decision.
I by no means want to encourage people to all of the sudden jump into investing in individual stocks. ETFs will continue to be my investment of choice for the majority of my portfolio. They continue to be the best game in town based on their spread, proven returns, and low expense ratios.
This post is not meant to serve as financial advice. You can find Financial Muse’s disclosures here!