There is no better time to talk about investing than right now. The Dow dropped nearly 1200 points on Thursday and more than any time since the recession of 2008 amidst fears of the continuing spread of the coronavirus. Drops like this might lead you to rethink about investing in the stock market. Perfect!!! Let’s rethink how we invest in the stock market using what I call “The Starbucks Method” of investing.
What is “The Starbucks Method”?
I know there are a lot of people out there who LOVE Starbucks. Clearly. There are Starbucks on just about every corner with more going up every month. Many people have Starbucks as part of their daily routine. If you love it, there is nothing wrong with doing that. This is not a plea to kick your Starbucks habit. In fact, it’s the opposite. Keep doing it! If you love Starbucks, keep on loving it!
Here is where the method of investing comes in. For every dollar you spend at Starbucks, I want you to put the same amount toward buying stock in the company. I know I just doubled the cost of that mocha latte and I want you to keep buying that mocha latte. But here is the thing, you love the company and you want the company to continue to thrive. If that changed, you probably would stop buying their coffee. Then, you might also consider selling the shares you’ve accumulated over the years. But as long as you love the company, why not own part of it and benefit from its successes?
Imagine you spend $15/week at Starbucks which is $60/month. At the current price of $78/share, you would own 9 shares of Starbucks by the end of the first year. Starbucks would then give you dividends for owning their stocks which you could either use to buy more stock in the company or maybe even some more coffee.
Buy What You Love
The method of investing I’m really encouraging here is to buy stock in companies that you love and hold those stocks for the long-term. If you believe in the company, chances are it is doing something right. This doesn’t mean don’t do any research, but do go with your gut because it is probably right.
I would never encourage someone to buy stock in only 1 company, you need to diversify, but I would encourage to search out companies you believe in and consider investing in those. You will want to follow the company and root for their success. Chances are you understand something about the industry they are in and what sets them apart. Better yet, as they win, you win!
Listen Up!
It pays to listen closely to what others are raving about. If you keep hearing people talk about the same companies over and over again, chances are they are doing quite well. A great example of this is Costco. People LOVE Costco. People tell others how much they love Costco. Even if you don’t go to Costco because you have a small family or you don’t live near one, you could consider investing in Costco on the same principles as the Starbucks example above.
When a recession in the markets hit, it is a great opportunity to buy stocks in your favorite companies when they are cheaper. Is it Starbucks, Apple, Disney, Target, or Netflix? Or another personal favorite? What could you do to set aside money to invest in a company you love? Maybe it’s doubling the cost of your coffee or maybe it’s something unique to you, but this really is a great time to take your shot at investing in individual stocks.