What a pair of Jordans taught me about investing

When I first became interested in investing, I was drawn to the excitement of it.

The charts, candlesticks and stories of companies whose share prices suddenly soared made the market look like a competitive battlefield. Pick the right investment at the right moment, I thought, and you could transform your financial future.

Choose badly, of course, and you could lose a lot of money.

That combination of risk and reward fascinated me. It still does. But the more I have learned, the more I have realised that successful investing is probably less about finding one spectacular winner and more about patience, discipline and understanding what you are buying.

My first lesson came from a pair of Nike Jordans.

When I was about 14 or 15, I bought the trainers hoping they would rise in value. Limited-edition shoes can sometimes sell for far more than their original price, and I thought I had spotted an opportunity.

Instead, their value fell.

It is easy to see someone boasting about a successful trade and assume that copying them will produce the same result

It was disappointing, but it taught me something important. I had bought them because I hoped somebody else would eventually pay more, not because I had properly researched the market or understood why their value should increase.

In other words, I was speculating.

That is probably a familiar experience for many young people becoming interested in money. Social media is full of people discussing the next big stock, cryptocurrency or collectable. It is easy to see someone boasting about a successful trade and assume that copying them will produce the same result.

What we rarely see is the full picture. We do not know how much research they carried out, how many unsuccessful investments they made or whether their apparent success was anything more than good timing.

This is why I do not believe investing is simply a matter of luck. Luck can certainly influence what happens in the short term, but serious investing should involve research, judgement and an acceptance that things will not always go as planned.

There is still a difference between taking a considered risk and blindly following a trend

Professionals build careers around analysing companies, industries and economies, yet even they make mistakes. Markets are unpredictable and a convincing investment case can be undermined by events nobody saw coming.

There is still, however, a difference between taking a considered risk and blindly following a trend.

The second option is often more exciting.

It is easier to become enthusiastic about a company whose share price is rising rapidly than about regularly putting money into a diversified portfolio and leaving it there for decades. One offers the possibility of an immediate success story. The other requires patience and rarely produces anything worth boasting about online.

At 17, though, patience may be my greatest financial advantage.

When money is invested for decades, time can matter as much as the amount contributed

Starting early gives investments longer to grow and allows more time for returns to generate further returns. Someone who begins with a relatively modest monthly contribution may eventually build more than a person investing larger amounts later in life.

The precise outcome will always depend on investment performance, charges and how long the money remains invested. But the basic principle is powerful: when money is invested for decades, time can matter as much as the amount contributed.

That has changed how I think about where my first pay cheque might go.

My original instinct would probably have been to choose a fashionable company with exciting growth prospects and hope its share price continued rising. I understand why businesses linked to major trends attract so much attention. Investors want to find the companies that will shape the future before everyone else does.

Undergraduate student loans and the cost of university

But even a successful company is not automatically a good investment at any price. High expectations may already be reflected in its valuation, while a business that appears unstoppable can still face competition, regulation or changing demand.

Rather than trying to identify one guaranteed winner, my first priority should be to build good habits. That means investing regularly, spreading risk and accepting that short-term falls are part of investing rather than necessarily a reason to panic.

It also means recognising what I do not yet understand.

Young people are often assumed to be able to take greater investment risk because they are unlikely to need the money for many years. That can be true, but having a long investment horizon is not an excuse to make careless decisions.

There is a difference between accepting market volatility as part of a long-term plan and risking money without understanding the possible consequences.

This may be where financial advisers have an important role to play with my generation.

At my age, the more important risk may be becoming discouraged by an early mistake and giving up altogether

Much of our first exposure to investing comes through social media, headlines and stories of sudden wealth. Simply warning us that investing is risky may not be enough. The possibility of making money is precisely what captures our attention.

The challenge is to turn that curiosity into something more sustainable.

Advisers can help young people understand that investing does not have to mean constantly trading or trying to predict the next market winner. They can explain diversification, compound growth and why the right level of risk depends on a person’s goals and circumstances.

Someone approaching retirement may have less scope to recover from a severe market fall because they could need the money soon. At my age, the more important risk may be becoming discouraged by an early mistake and giving up altogether.

Starting young gives me an advantage, but time alone will not make me a successful investor

Losing money on a pair of Jordans was a relatively inexpensive lesson. It showed me how easily confidence can run ahead of knowledge and how tempting it is to mistake hope for a strategy.

I still find markets exciting. I still want to understand companies, follow trends and learn why prices rise and fall. But I no longer think investing is about winning a battle against everybody else.

It is about making decisions that suit your circumstances, accepting that mistakes are inevitable and developing the discipline to think beyond the next exciting opportunity.

Starting young gives me an advantage, but time alone will not make me a successful investor. What matters is how I use it.

Lucas O’Neill is a Year 12 work experience student