Interview: "from $100K to $1M"

We delve with Yegor on how he grew his own fund from $100k to $290k in three years and how he plans to grow it further to $1M.

Recently, I had the opportunity to interview an investment success story. Thank you Yegor for sharing your story with us. 

Yegor Zaye, author of Substack From $100K to $1M, managed to transform his own $100,000 fund into an impressive $290,000 after three years. He is on his way to grow his investments to $1 million within the next 10 to 15 years. Let's dive right into his inspiring investment journey.

Photo by Michal Czyz on Unsplash / Edited by IntVestor

IntVestor: To begin, could you provide us with some background on how you first entered the world of investing? 

Yegor: It might be to most of your readers surprise, but I did not buy my first stock when I was 10 years old, until about 18 I didn’t even really know what the stock market was. I did (by a bit of random luck and willingness to try new things) get to trade on wall street circa 2011, but I did not last there for too long and looking back now it makes sense, trading was just not for me. 

From there I skipped individual stocks and nibbled into investing app Acorns and that was my real first introduction to investing and to compounding (although at that time I did not know that or still was not really aware of stocks as individual businesses). From there to about 2017 I would try around all the different apps that help you invest (such as M1 Finance, Wealthfront, Betterment, etc. you name it I probably tried it) I would just work and invest every penny that I could, no amount was small. 

Around 2017-18 is when I started to take individual stock investing more seriously and start educating myself mostly via internet websites and YouTube, since I do not have Bachelor's or Master's Degree, mostly everything that I know is self-taught, and 2018-2019 is when I decided to give it all and start devouring every book, audiobook, article, and video that I could find on investing trying to learn and find what works for me. 

In August of 2019, I took a seminar from Phil Town and he introduced me to Warren Buffet and what the real value investing is and from that day on that’s the road I've been walking.

IntVestor: How was the journey to get to that first capital of $100k?

Yegor: As you can read from above the road has been long and without a real clear path forward (If you asked me in 2018 where I would be by 2023, the current place would definitely not be it), just taking one step forward and moving… same was with the first capital of $100K. I didn’t know that by 27-28, I would have $100,000 but perseverance, compounding, and a couple of audacious moves can work magic, it helps to have good people by your side. I was (and still am) very lucky.

IntVestor: After growing from $100K to now $290K, how would you describe your investment methodology? 

Yegor: There are many ways to play the game of investing and finding what works for you (or me in this case) is very important. From Day 1 I had (and to some extent still have) imposter syndrome, but with every year and with observing markets and its participants I become more comfortable with the way I do things and sharing my investment methodology. The caveat to this is that I’m still evolving and although the foundation has been laid everything else is still (and I hope it will continue) evolving.

The price that you pay really matters, you can buy a great asset but if you overpaid for it, the time it will take to get your money back plus profit might just not be sufficient if you are managing other people’s money (if it's your own money, it's not as bad as long as you have long enough horizon).

This means you must buy an asset that is currently undervalued and over some time period (for me it's either 1-3 years or 3+ years) will appreciate and you will be rewarded for it.

Being “undervalued” can be different to different investors, for some it's cheap because of metrics (P/E, PEG, P/B etc), for others, undervalued is based on the cash flow it can generate in the future, or based on something that is currently “locked in” in the company that management or activist can unlock and create value, or some kind of temporary event that makes company’s stock drop but in reality, not really affecting the core business, etc etc etc.

IntVestor: Do you have a set investment timeline/horizon for every investment that you make?

Yegor: I mentioned that I have two buckets for investments:

1.  First is “short term” there could be a temporary catalyst/event that made the stock price “cheap” based on what I think the intrinsic value should be vs what the stock price currently trades (examples are Chipotle with E. coli 2015-2018 or when stamps.com and USPS ended their partnership in 2019, I did took the opportunity in $STMP)

2. Second, is called never sells / compounders / wonderful companies .. pick your label. These are harder to come by and most of the time they are either fairly valued or are overvalued. One great way to invest in them is via the first bucket, there is a temporary problem that you believe they can get out of, and you get them at great prices and do not sell (examples: Berkshire, Apple, Google, Chipotle, etc etc) usually there is a great capital allocator at the top or a wonderful product that consumers can't live without.

IntVestor: Were there any specific investments or strategies that significantly contributed to the growth of your portfolio?

Yegor: I think a significant contributor to the growth of my portfolio has been a very small percentage of losing investments. A combination of buying companies with a Margin of Safety + Dollar Cost (Down) Averaging + giving time for things to play out has been the winning combo.

IntVestor: Risk management is crucial in investing. How did you approach it while growing your portfolio?

Yegor: As I mentioned in a previous question, I’m not big on losing money which means I have to properly allocate capital (doesn’t mean I always do so). The major risk in investments, I see, is permanent loss of allocated capital. Sometimes things take longer to play out, the real world is messy and things don’t always go according to the plan in the short term (helps with IRR - Internal Rate of Return, when things are going “lower” to keep buying more), on the longer time frame I think things play out as they should as long as the companies you invest in have some sort of edge.

It also helps in investing in companies that have little to no debt, a lot easier to sleep at night when you know the chances of your company going bankrupt are slim to none, this one is the one I’m currently trying to really focus on moving forward on my investments in public equities.

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IntVestor: Moving forward towards the $1M goal, what are your plans to reach it? Will there be any changes in strategies?

Yegor: This may or may not be surprising, but I’m not planning to change anything. The core pillars have been placed (but they do get tested from time to time) and now building up on top of them is the new wisdom that I (hopefully) will be gaining as time passes and as I observe more of the stock market and psychology that comes with it.

A quick observation is that if what you are doing is profitable and you are making money, keep on doing it … the caveat is you will need to add more tools to your investing belt to keep evolving with the markets (that works for value investors, grow investors, day traders, etc)

IntVestor: What guidance would you give to aspiring investors looking to grow their own portfolios?

Yegor: If you are starting from zero or close to zero, I would focus more on growing the amount of money you have, be it via picking up another job (or extra hours), cutting down on your expenses, saving and investing more into a vehicle like VOO or similar or tax exampled like Roth IRA (Individual Retirement Account) or similar.

I feel like a lot of new investors are too focused on trying to beat the S&P 500 with a small amount of money via picking individual stocks (or just straight up gamble and hoping to get lucky) which takes a lot of time and energy (I’m not saying it's impossible to do, but I think most of are not Joel Greenblatt to compound our money at 50% annually). But starting with apps like Acorns or Wealthfront or Betterment (automated investing account or Robo-advisory) or something similar and letting that app work on investing your money for you while you keep putting more money into it and let the compounding work until you learn more about how the stock market works and the psychology of investing in multiple cycle’s

Most professional investors do not beat the S&P 500, which means most retail investors probably have a similar or lower chance, again I’m not saying it's impossible (As you can see I’m crazy or ignorant enough to try it myself) but you need to know what you are doing and investing into ETFs while learning (I think) is a good starting point. That’s the way I started.

Thank you very much Yegor for taking the time to answer our questions. Your investing journey has been a great inspiration. This shows that with tenacity and smart investing, it is possible to reach one's investment goals.

Hope you enjoyed this insightful interview with Yegor Zaye of From $100K to $1M. May his experiences and advice serve as inspiration as we navigate our own investment journey.

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