After many years of trial and error, we at Infinite Value have come to the conclusion that the most effective means of investing for people in a similar position to us (young investors with an extremely long time horizon before needing money) is value investing, with a particular emphasis on the following things:
We aim to mostly invest in micro- to small-cap companies
2. We invest in companies with a strong competitive advantage.
3. We have a heavy focus on the structure of executive pay and insider ownership.
4. We shy away from distressed investments and cigar-butt style stocks.
5. Mathematics informs, rather than dictates our investing decisions.
Of course, as value investors whose primary requirement is to purchase a stock below its intrinsic value, in the rare cases where a company does not follow all of our guidelines and yet presents an incredibly attractive margin of safety, we will be open to covering it after applying a higher discount rate to it.
Now, you might ask why should young people invest?
The answer is simple: because you have the most valuable asset on earth, time.
We, at Infinite Value, believe that traditional investment service providers fail to recognize the importance of time, mostly because they all focus on trying to attract the customers with the biggest bank accounts, trying to win their trust and consequently their money.
We strongly disagree with this, and believe that the people best suited to investing are not those with enormous bank accounts, but those with tremendous amounts of time in front of them, Millenials and Gen Z.
Many studies have been done on the importance and benefits of starting investing as soon as possible; here we show you some of them:
Time allows you to take risks: Investors, who have the time to recover if something were to go wrong, have the opportunity to make riskier moves;
Compound interest really makes a difference: Savvy investors understand the benefits of investing early and taking advantage of the potential gains from compound interest;
Your spending habits will improve: Investing early allows you to develop disciplined spending habits by focusing on your budget and cutting expenses when needed. The goal here is to earn money by saving money, which is impossible with poor spending habits and a life full of impulse buying;
Your Expenses Are Low: Let’s be honest, when you’re young, life is inexpensive. And, as you get older, it’s only natural that your living expenses will go up.
When you choose to invest at a young age, you are making one of the wisest, and smartest decisions of your life. Not only will you be providing yourself with the means to retire, but you will be creating a life of security and freedom. At the very least, you will be forming the kind of financial habits that lead to wealth.
Here below we leave you a practical example of the advantages of starting investing at young ages.
WHY YOU SHOULD START INVESTING EARLY
When you graduate you'll still probably be in your early twenties, so you might think that saving and investing can wait. You have plenty of time and now is the time to enjoy yourself... right?WRONG! - at least from a financial standpoint.