Ever since I made my way to my mid-20s and decided to become a big boy, I’ve had one main thought regarding investing–keep adding to my portfolios. As I’ve continued into my 30s, that principle still holds. Many people like to give financial advice and lie about the amount of money they have or what they’re invested in. I have a lot of interest in the former, and no use for the latter. Today, I figured I’d put my money where my mouth is by writing about where our household’s precious investing dollars are working and growing.
*Note: I am not recommending the buying or selling of any securities. I am only highlighting my returns and what I’ve purchased for illustration.
Individual Stocks
I’ve been interested in stock trading ever since my 8th-grade math teacher gave us $1,000 fictional dollars and told us to buy up shares of companies over the span of a semester. I won that competition. While it was ‘fun money’, it still taught me the intended lesson–investing is good.
Since that time I have owned as little as one share in dozens of companies. Most of them I’ve held for years, some I’ve recently purchased, and a few I sell at a loss purposely throughout the year to improve my tax positions. To learn more about tax loss harvesting, I encourage you to read this Investopedia article.
In my main brokerage account, I currently own 113 shares of 41 different companies ranging from those everyone has heard of like Apple, Amazon, and Walmart, to more obscure businesses including Intuitive Surgical Inc, Fortinet, and EQT Corp. Maybe one day I’ll get into the thought process behind each share, but suffice it to say that my strategy is to invest the bulk of my purchases individual stock to the most well-known and stable companies.
However, I should note that individual stock purchases account for less than 9% of my total investing/retirement portfolio. Men and women far more intelligent than me have attempted to be day traders and lost it all. I am in the middle of a 40ish year plan that leads directly to retirement. So while I have more flexibility to fu*k up and recover than most people because I still have around 30 years of compound interest in my future, I (thankfully) don’t need to take any drastic steps to retire comfortably.
S&P 500 Index Funds
I LOVE S&P 500 Index Funds. Since the 1950s, these funds have returned a yearly average of 10%.
I recommend this article about investing in the S&P 500. But to make a relatively simple concept even simpler, S&P 500 index funds essentially track the growth of the largest 500 companies in the United States. If you’re invested in these funds and the economy is soaring, your return on investment is through the roof. Conversely, if the market is poor, then your portfolio is taking a beating. However, putting aside the highs and lows allows you to get that aforementioned 10% average return each year.
It’s not the sexy or dangerous investing you’ve seen in either of the Wall Street movies or The Wolf of Wall Street, but it gets the job done. I am invested almost equally in SWPPX, FXAIX, and SPY. The investments added up account for just under 20% of my total portfolio. I also find myself adding about 75% of my new investment dollars to these funds.
Pension Plans
My wife and I have worked or are still working for the government. They take 10% off the top of the paycheck and if you accrue enough service time, you’ll have a pension for life. I got out after about six years, so I will soon be taking my money and investing in more S&P 500-like funds within a traditional IRA. You can read about traditional and Roth IRAs here.
We don’t quite know what will happen with my wife. There is a world where she stays in the government until retirement and is rewarded with a very nice pension. Or she could duck out for a much higher-paying private sector job. If she leaves the government, I will invest that money in a different IRA.
Altogether, that money accounts for two-thirds of our investing portfolio.
Cryptocurrency
Let me preface this by saying I am not a believer of the idea that cryptocurrency is somehow going to replace traditional currency. That being said, I am not going to shy away from the opportunity to make money.
Just over 1% of the total money we have invested is comprised of crypto. And not bullsh*t crypto either. All of that money is either in Bitcoin or Etherum.
Precious Metal Shares
We do own several shares of precious metal funds. That includes DBB, PICK, REMX, and XME.
It’s just my effort to make sure we have a diversified portfolio. Like crypto, there is a relatively small amount of money put towards this, but it is part of the overall plan. This accounts for under 1% of the total portfolio.
Just Get Started
This article is about what I’ve done to help secure the future of myself and my wife. You may be more comfortable taking greater risks like opening a restaurant or robbing a bank. But as I mentioned earlier, we are well on our way to having multiple millions of dollars in the bank once we hit retirement age, so we don’t have to get cute.
If you haven’t started investing, I encourage you to start now. Don’t wait until you hit some benchmark like having $500 or $1000. In the simplest terms, if you have 30 years until retirement and you invest in something (like an S&P 500 fund) that will return 10% per year, each dollar you invest now will turn into $20 later. If you waited an additional decade, every dollar you invest will only be worth $7.33 later. And if you cared so little about your future that you waited until you only had 10 years left until you wanted to retire, then you better get used to working for the rest of your life. 10 years at 10% interest will only yield $2.71 for every dollar invested.
Play around with the calculator here. Put in different numbers using different scenarios. That’s the best way to see how you’ll fare in the future.
But for the love of God, just get started.
