At the beginning of July, just after Corona restriction were lifted, happened one of the most significant events this summer for me – Investing festival (InvesteerimisFestival in Estonian).
It was a unique event. Hundreds of investing enthusiasts gathered together to listen to entrepreneurs, financial experts, professional investors, and successful personal investors. The varied background of speakers provided inspiration, motivation, and beneficial knowledge. And in the evening, saunas were heated up to create intimate networking possibilities.
Although I have some years of investing experience, it was the first time for me to visit the festival.
It might be odd to talk about investing in the middle of the pandemic, at the time where thousands of people have lost their jobs. For sure, the majority of attendees were the lucky ones who were not hit that hard. But then again, what’s the primary outcome we hope to achieve with investing? Secure future – insurance to a sudden loss of income.
In 2018, I wrote a long article about my dream of financial freedom and personal reasons why I pursue it. In the Investing festival, speakers pointed out many pros that financial freedom provides. For example, fewer conflicts in relationships – money problems are often a cause for divorce. Financial independence also permits us to make more ethical decisions and generally live a more stress-free life.
Side note, in my Financial Freedom article, I also set myself goals with exact dates. The first goal was 40 €/day passive income at the end of 2020. To achieve it solely on investments returning (optimistically) 10% in a year, my investment portfolio at the end of this year should be around 150k (revenue 1200 €/month x 12 months / 10% annual return rate). Needless to say, it was a too ambitious goal and a good material for the next post to analyse why it didn’t work out.
Most people invest in pursuit of a better future. One of the headliners was a successful Finnish entrepreneur Joakim Hellenius, who pointed out a very uncomfortable truth. When he was young, his babyboomer generation expected the future always to get better. But for new generations, it’s not the case anymore. Environmental issues, an ageing population in Western countries, a rise of authoritarian leaders, and unprecedented stimulus packages are presenting quite worrisome future. Young generations need to carry a massive burden of all wrong decisions made before us. Generational differences in the US are well summarized in this free Financial Times article, and these issues are mostly apparent in other Western countries as well.
The one thing young people can personally do to create a more secure future is to invest.
Surprisingly many speakers spoke about income generations and gave career advice for young professionals like myself. There are some success stories of low-income earners achieving financial freedom with a minimalistic lifestyle. But from my experience, it’s a lot easier to save and invest with higher monthly income. That’s why I found the money-making advice most useful in Investment festival.
Relatively young CEO of LHV bank Madis Toomsalu shared his career advice:
- Find employers with the right values.
- Bet on your strengths, weakness shouldn’t be trained over a medium level.
- Practice – theory combo is the best way to learn.
- Keep work-life balance, f.e. he has never skipped the lunch.
- Greed is not necessarily a sin; it is also an ambition for a better future
- Be patient; the outcomes are usually coming later than you expect
Another career roadmap was offered by previously mentioned Joakim Helenius:
- The biggest question for young – How to convert your education to a job?
- Identify the job that suits you. Preserve your job, be patient. Don’t follow jobs where you are not good at, even if these pay more.
- To get rich, you should invest in yourself, to sell your skills as services.
- If you are very good at the job, then money will follow.
- Success comes from sectors you know inside out.
- At some point, people value you so much that you might become a shareholder of the (new) business.
- New generations mustn’t assume to get a pension for retirement.
Besides, start-up marketplace Funderbeam founder Kaidi Ruusalepp praised the entrepreneurship and pointed out the incredible network she has grown because of that. Also, entrepreneur Indrek Naur told that your own company should be the first place where to invest.
Investing festival provided a fair share of investing advice as well. As every investor is in his/her journey, it’s not possible to give the best strategy that fits for everyone. Speakers focused their talks around different investing methods and asset classes but very seldom gave specific investment advice.
One of the organizers Tõnis-Denis Merkuljev encouraged us first to define our dreams, visualize them, write them down and only after this – we can start taking action. Investing can get very emotional in turbulent times when fear and greed start fighting inside us. In those hectic times, it’s good to have a helicopter view and possibility to remind yourself real motivation of earlier investment decisions. One way to do this is by writing down all investment decisions and analyses, as recommended Investor Toomas, a fictional investor created by financial newspaper Äripäev.
An interesting debate was between Tõnu Peek, who represented Tuleva passive funds, and Vahur Vallistu from LHV active funds. Active fund advantages: possibility to cherry-pick the best stocks and to invest in private companies. In contrast, passive funds have low maintenance costs and do enjoy returns from the entire stock market. I recently read Vanguard founder John C. Bogle book “The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns”. After reading it, I am convinced of passive fund advantages, as only 10% of active funds has historically beaten the stock market in the long term.
I was also encouraged to move forward with a plan to purchase a new apartment to Tallinn with rental purpose. Joakim Helenius recommended in his speech to buy properties in a big city with an increasing population, as these won’t lose total worth at any time. Some tips that active real estate investors shared:
- The rental property should be close to your home.
- For cost-revenue calculations expect the property to be vacant at least one month a year.
- More expensive and higher quality properties attract higher quality tenants.
Nasdaq Tallinn CEO Kaarel Ots introduced ESG – Environmental, social, and governance – concept in investing. He quoted BlackRock CEO Larry Fink who says that within the next five years all investors will measure a company’s ESG impact to determine it’s worth. It’s already a real investment trend among millennials. Sustainable factors are also in my mind while considering investment decisions, as I wouldn’t like to support unethical businesses with my precious savings.
To sum up, for the beginner investor, like me, the Investing festival was a super useful event. The speakers reminded the importance of investing and provided many concepts, tools, and ideas to support our investing journey. I am super thankful for the organizers and encourage everyone to visit the next one in 2021 summer.