A Mother’s Day Guide to Investing

How my Mom more than doubled our family's savings

There is no shortage of personal heroes to learn from when it comes to investing. We recently lost two stars - Berkshire’s second in command, Charlie Munger, and the father of quantitative finance, Jim Simons.

But there are also more ordinary heroes I look up to, like my mother, Yanping. 

She was a physicist turned software engineer, but forced into retirement in her forties because of poor health, and taught herself to invest for our family’s sake. 

My mother never spent a single hour in a finance or economics class, and had to raise two kids as a Chinese immigrant in America. 

Yet, over the past two decades, she’d actively invested our family’s savings to generate several million dollars in post-tax returns. 

At 64 years old, she continues to generate impressive returns (more than I make in a year at my startup), even though my parents are set for a comfortable retirement in the Bay Area.

Though she cannot claim the stellar IRRs, or the gargantuan AUMs of high finance titans, my mother has likely had a greater impact on my personal finance journey, than all of them combined.

I’ve previously written about how she made me the investor I am today.

Here’s the story of how she made it, what her portfolio looks like, and the lessons I learned from her journey.

Me (Left), Mama Jiang (Middle), and My Brother (Right)

How She Did It

My parents discovered investing from a family friend of ours called Mr. Gu. His son, Andy was best friends with my brother growing up. Mr. Gu made some money in the markets, but his fortunes took off during the dot.com era. 

My Mom had her hands full with the kids, so she let my father try his hand at investing about $60K of their savings for starters. He made some wins trading some oil counters. But he couldn’t stomach the volatile swings in the market, losing about half their fund during the dot.com crash.

Quite admirably, my Dad decided to wave the white flag, and let my Mom take over investing for our family instead. She became the defacto CIO/CFO of the household and started investing all of my dad’s retirement savings.

At the time, a bout of ill health coupled with my family moving from Chicago to California, forced her into an early retirement. With more time on her hands, she started voraciously consuming content on investing like CNBC, talking to tech industry people in the Bay Area to learn more about the companies leading the rally in the markets.

With the remaining funds from my father’s trading account, plus a bit more capital, she deployed about $50K into tech stocks like Tesla, Amazon, and Snap. At first, she made a decent profit on short-term trades (bought Amazon at 270, sold at 360 for a profit). Eventually, she realized that going long was a far better strategy if her thesis remained unchanged.

She switched to a thesis-driven strategy, using a core-satellite portfolio consisting mostly of ETFs, with a portion reserved for opportunistic bets into individual stocks like NVIDIA. 

Over about a decade, my mother’s ETF portfolio did a little more than double her initial capital, and her tech stock portfolio tripled in the same period. 

What She Owns

Despite being in her 60s, she defies conventional wisdom to play it safe. She maintains a more aggressive portfolio to continue getting exposure to high-growth sectors, with the capital she and my father don’t immediately need.

Her portfolio right now is:

• 50% stocks - w/ ~80% in ETFs, the rest in individual stocks

• 35% house (primary residence in the Bay Area)

• 13% US T-bills

• 2% cash / cash-equivalents (like money market funds)

Individual stock holdings include (but not limited to): 

• Google

• Facebook

• Amazon

• Qualcomm

• Costco

• Nvidia

• Apple

• Snap

Four Investing Lessons From My Mother

1) Understand yourself

Know who you are, and making sure your portfolio reflects that. Most people don’t spend enough time developing their “investor self-awareness” around risk tolerance, involvement, interest, time horizon, financial situation and behavioral tendencies. 

My father had the self-awareness to know that he couldn’t trade profitably. My mother had the self-awareness to realize that she could buy dips, and go long on leaders in high-growth industries.

Whether in investing or life, my mother believes that understanding yourself is a process of constant self-discovery through trying, and reflecting.

2) Think for yourself

My mother warns against the two biggest ways people fail to think for themselves.

The first is religiously parroting “conventional wisdom”. Blindly following “truisms” like dollar-cost averaging, or passive indexing doesn’t just lead to “average” outcomes. For most people, it can be harmful. She points out that the average dress size for an Asian lady likely fits no one in Europe.

The second danger is wanting to leave it to “experts” like financial advisors. She believes that information asymmetries make you dependent on people whom you lack the knowledge to hold accountable - a dangerous mix. 

For instance, a financial advisor may normally tell someone like her in her 60s to switch to a more defensive 60/40 portfolio. Instead, my Mom approaches our family’s investments like a corporate treasurer. She estimates our cashflow needs, and plans them into different tiers of maturity and liquidity.

She keeps the money we need for utilities, and other monthly expenses in cash, and cash equivalents. Slightly longer-term expenses like saving for the downpayment on a house, are invested into cash management instruments like T-bills and money market funds. 

Any leftover savings that we won’t need to tap into for 5-10 years are constantly swept into long positions in equities and other risk-on assets. 

This approach has allowed her to tolerate wild swings in her portfolio value during periods of market volatility - like the 2008 and 2022 market crashes. 

Because she never invested the cash we needed in the short term, she never had to panic sell at a loss - and sometimes even doubled down on high growth opportunities while everyone else was selling.

In 2022, she bought the dip, and made a cool $100K on roughly $500k of deployed capital. 

3) Curate your information diet

To think for yourself, you first need to curate a daily “information diet” on which you can form opinions. As a self-taught investor, my mother is guided only by her sense of curiosity and consistency. She watches CNBC religiously, tuning into segments like Squawk Box, Mad Money, and Fast Money. 

Peer social networks are also an important aspect of her information diet. She has an alpha group on WeChat with a few friends around the Bay Area where they chat about investing regularly. Being immersed in the tech scene, and people connected to it, allows her to get deep insights into an industry or trend that she can’t get from the news headlines.

But just like diet is no good without exercise, she constantly translates what she learns into investing theses, and puts it to the test in the markets.

4) How to take concentrated bets 

My mother also thinks people misunderstand passive investing to mean mindlessly dollar-cost averaging a fixed sum each month into a single index like the S&P500. She uses different index funds to gain broad exposure to different investing themes like emerging markets, or volatility indices like VIX to inform positions, or hedge other portfolios.

For individuals willing to dedicate more time and effort to researching specific strategies, and studying market timing techniques, my mother believes that pursuing a more active approach to investing can yield superior returns.

Her bets on individual tech stocks proved very lucrative. When making individual concentrated bets, she recommends: a) buying stocks within high-growth sectors or markets, and b) allocating more to category/market leaders. 

5) Investing favors the optimists

Market crashes, and the inevitable fear-mongering and hand-wringing that follow are no strangers to my mother. She simply looks at history and sees that over decades, most things work out in the end - the S&P 500 from 1975 until 2020 still grew by 9% every single year.

Despite being in her 60s, she retains an immigrant’s optimism about the future. She still eagerly scans the horizons of various industries for new opportunities to tap into the high-growth industries of tomorrow - like the Teslas, Nvidias, and Facebooks that delivered huge returns over the past decade.

After all, investing is about identifying future cash flows - which fundamentally requires the belief that the future will be better, not worse than it is today.

How I’m Productizing My Mom

It can be hard for everyone else to implement the things we learn from investing role models like my Mom. I know I struggled to develop those habits - even with her in my life.

Few people have the time, or mental capacity that my Mom could devote to becoming a better investor. She effortlessly recounts buy-sell price points in her head, key dates like FOMC meetings, and can tell you the returns on her different positions. 

She also spent years honing her ability to understand both the markets, and herself as an investor.

I’m using the lessons I learned from her, and other investors to build Peek, an AI-powered personal CFO. With the new AI tools we’re developing, I believe that I can do for millions of users what my mother did for me!