I'm Building A $100,000 Stock Portfolio From SCRATCH (Ep. 1) #Best Education Page #Online Earning

- How's it goin' today guys?

Welcome back to the channel, hope you're having

a great day so far.

So in this video today, I'm introducing a brand new series

I am doing starting out in 2020, really excited about it,

I've been planning on doing this for the last couple

of months or so.

And what I'm going to be doing is documenting the process

of building up a $100,000 stock portfolio.

Now as far as my actual investments go,

in the past, if you guys have watched my channel,

you've seen me invest in a lot of stocks like Facebook,

or Apple, or JD, or Alibaba, a lot of these, you know,

growth tech stocks.

But what I'm actually going to be doing

in this series, is shifting my focus away from

some of these growth stocks,

and investing instead in more blue chip dividend stocks

as a means of producing income, primarily through dividends.

And so my idea behind this is that I'm going to be

earing dividends from these stocks, reinvesting

those dividends, and then I'll be regularly contributing

to this account as well, which will allow me to build

this up to a $100,000 stock portfolio.

Now the first thing you're probably wondering

is, where am I going to be investing?

Well, as I'm sure you guys know, over on my blog,

Investing Simple, I spend a lot of time

reviewing different brokerage accounts.

And as far as my investing strategy,

which is going to be dividend investing,

the best brokerage in my opinion, and the one I'm going

to be using, is M1 Finance.

And that is going to be for a couple of different reasons.

First of all, M1 Finance allows you to invest

with fractional shares, which means you don't have to have

enough money to buy an entire share of any stock

or ETF that trades on the platform.

So the advantage here, is that when I'm reinvesting

my dividends across my portfolio,

I don't have to worry about the share price,

and I can remain fully invested.

The second reason why I'm going to be using M1 Finance

is because they do have a form of dividend reinvestment.

And that's gonna make more sense when we actually earn

some dividends in this portfolio.

I'll show you guys exactly what that looks like

in an update video.

But essentially, when you earn dividends,

they can be reinvested across your entire portfolio,

and also, they will be reallocating your portfolio.

And so what that means, essentially, is that you set your

target allocations in terms of how much money

you want in each stock or ETF, and then as more money

goes into that portfolio, they're going to try to keep you

as close as possible to that target allocation.

And then the third reason why I'm using M1 Finance,

of course, is the fact that it's completely free.

They do not charge any trading commissions,

and the minimum balance is just 100 bucks to get started,

so it's a really easy way to begin investing

in the stock market, and I think it's a great platform

for long term and dividend investors.

Now that being said guys, I just wanna be transparent here,

and let you know that I am affiliated with M1 Finance,

but that does not in any way influence my thoughts

and feelings on this brokerage.

Now I also have a completely free training

that I put together

that outlines the entire process of getting started

with M1 Finance.

I'm gonna go ahead and link that up

down in the description below.

So if you decide that you wanna check out M1 Finance

and you want me to give you guys a step by step tutorial

on how to set it up and how to use it,

that's in the description below, or you can also click

the link and sign up for M1 Finance, if you decide

you want to support me

for putting this video together today.

Now before we jump into my actual portfolio here,

what I want to talk about first

is my financial recap for 2019, as far as where I'm at

financially, what have I been doing with my money.

So let's get into that right now.

So for me, 2019 has actually been a lot of major life

purchases that have been going on.

And I did very minimal investing into the stock market.

For those of you that have followed

my channel pretty closely,

you know that I bought my first property this year,

which was a three family property,

which I did a down payment of about $22,000 on.

I also paid off my daily driver,

which is just a Chevy Cruze.

I think I paid $12,000 down on that car,

just to get it completely paid off.

And then I also took on a very large remodel project

on my property here at the end of 2019,

and it's actually still underway.

And essentially what it is, is this property

that I purchased has a main house, two apartments,

but it also had a guest house, which I could remodel,

and then I'm able to rent that out as well,

which can make me some money.

So I also invested about $40,000 remodeling that property,

which was another sizable investment,

and then finally, as I'm sure a lot of you guys know,

in 2019 I bought my dream car, which is a 2009 Nissan GTR,

and that car ended up costing me $53,500.

I initially put about $15,000 down,

but at the end of this year I paid that car off.

So going into 2020, I am completely debt free,

car payment free, my only major expense is my mortgage,

and this puts me in a great position to begin investing

more money into the stock market.

And not to mention guys, in addition to that,

I also have a $50,000 liquid emergency fund in place

that can cover any random, unexpected expenses

that come up associated with me, or my vehicles,

or the property that I own.

So I'm in a pretty good position here

as far as investing in the stock market,

with my emergency fund in place.

And so while I didn't do a ton of investing in 2019,

I'm definitely ready to ramp that up in 2020.

Now, in order to actually cover the remodel cost

for that cottage on my property, I ended up selling

the majority of the stocks that I own,

because I was up in pretty much every single one of them.

The only stock that I did not sell is General Electric,

which I still hold within my portfolio, but the rest

of the stocks that I own I ended up selling

to free up some cash to invest in that project.

Now, before you guys jump into the comment section

and say, wait a second, I thought you were a long-term

investor, what are you doing selling stocks?

The only reason why I sold them is because I could

get a better return on my investment

by investing that money in my own property,

allowing me to have, potentially, a fourth rental.

There was literally no other reason

for selling those stocks,

and I would not have sold them if I didn't have

this big project.

And at the time, when I sold them, I had no idea

how much money I would need to complete that remodel.

So that is the only reason why I sold those stocks,

it has nothing to do with the market, or anything like that.

I simply needed the money, and I had decent returns

that I decided to lock in.

So just to be as transparent as possible here guys,

let's jump into my portfolio, and I'll show you

exactly what I sold, and what my return was

on each investment.

All that I ask in return guys, is that you drop a like

on this video if you enjoy this level of transparency,

because there's no reason that I have to show my portfolio.

I simply do this because I like being as honest

with you guys as possible, and show you my real,

actual investments and returns.

And I will say this, the majority of these sales

took place in October and November, and had I held

on to these stocks, obviously they would have been

more valuable now than what I sold them for,

but at the time, I needed to free up some cash,

and I had decent returns.

So I said, "You know what, I'm gonna pull out

"and use that money towards my investment property."

So first of all, like I said, I still own General Electric,

and I'll be holding on to those shares

until they are in the green.

That's one I've been bag holding for a while

that I bought back in 2017.

Next up on the list here, I have Alibaba

which I sold for a 17.75% return.

I also sold my Apple stock for a 24.31% return,

and I had an additional lot of Apple stock

I purchased that I sold for a 15.33% return.

I sold my Facebook shares for a 10.88% return.

I sold JD for a 19.93% return.

I sold my National Grid shares for about an 11% return.

And that also does not factor in the fact that I've been

earning dividends from that stock

for the last couple of years.

So that is just purely the return on the actual share price

and the capital gain, nothing to do with the dividends.

And then I also sold an additional lot of National Grid

shares for a 24.11% return.

I had some miscellaneous Vanguard Index funds

in that portfolio that I sold

for around an eight to 10% return.

The only thing I sold at break even

was VXUS, which is an international ETF.

Like I said guys, I was just freeing up money

from this portfolio to invest elsewhere.

There's really no reason to ever sell an ETF

unless you actually need that money for something.

Otherwise, you just let it sit there

and reinvest those dividends.

The only stock I sold at a loss was Wabtec.

But I actually got these shares for free,

because of my GE investment.

All GE investors got a small portion of Wabtec,

because they divested one of their businesses,

and it was a share-based purchase,

so you ended up with some shares

of this random conglomerate company.

Since I didn't know anything about it,

and it was such a small position,

I just decided to sell it.

So all in all guys, on this small investment portfolio

that I had here, it was a 14.97% return or $4,053.

And I took that amount of money and invested it

right into this project on my property,

remodeling that guest house that I had,

which will allow me to earn more rental income.

So now I wanna explain to you guys

exactly why I decided to do that.

Now, before I renovated that guest house

on my property guys,

it was making me exactly $0 per month.

It was essentially a shell, and it was doing nothing.

So one of the best investments I could make,

looking at the numbers, was actually fixing that up,

and getting it into a condition where I can rent it out,

and then have some rental income form that guest house

on my property.

Now I've estimated that I can get about $750 to $850

per month if I rent out that property.

And that means that my $40,000 investment that I pulled

out of my stocks and invested in that property

is going to make me about $9,000 to $10,200 per year,

which is a 22.5 to 25.5% return.

So it was honestly a pretty commonsense decision here

to take some money out of the market

and put it into this other investment

that was going to give me a greater ROI.

But now, at this point, I have invested that money,

that project is just about complete.

It's completely paid for.

The work is just continuing to be done.

I have my emergency fund in place.

All of my vehicles are paid off, and I'm ready to begin

easing back into the market.

So this is what I'm going to be doing.

I plan on investing $500 per week into this portfolio

based on the current market conditions.

Now that being said, if we begin to see a correction

taking place, I will absolutely accelerate my investments

and begin putting more money into the market.

Beyond that, I am doing a couple of other investments

as well, and if you guys want me to document these

investments too, let me know

down in the comment section below.

But I'm also investing $2,000 per month into Fundrise,

which is a online, crowd-funded,

real estate investing platform,

and I'm also investing $500 per week into Bitcoin,

which is probably a crazy one because a lot of people

who have watched my older videos know that in the past

I wasn't a huge fan of Cryptocurrency,

but my opinions have changed.

That's a conversation for another video,

so let me know if you guys want me to do

a dedicated video on my Cryptocurrency investments.

But that being said guys, that's a wrap up on my 2019

financial life, let's jump into

my M1 Finance dividend portfolio.

All right guys, so here we are inside

of my M1 Finance portfolio.

Now first of all, you're gonna kinda wanna ignore

this return over here, because this is actually not based

on the investments I just recently made in this portfolio.

So I initially had a $100 portfolio set up, which held

Microsoft, Apple, Amazon, and Vanguard,

and to be honest with you guys, my timing with these

investments was impeccable.

Now it was only a $100 investment I made

for demonstration purposes of this brokerage,

but as you can see, I did pretty well here.

So if you look at Microsoft here, I ended up buying

$10 worth of this stock at an average share price

of $103.70, and since then it has returned 55.16%.

So obviously guys, hindsight is 20/20.

I wish I had bought more than $10 worth.

Apple, even more substantial here.

I bought at an average share price of $168.49,

and I know have seen a 79.17% return

since February 1st of 2019, so not even one year,

80% return on Apple stock, absolutely unbelievable.

The other stock I still hold here is a fractional share

of Amazon, and this demonstrates perfectly

what I mean by fractional shares, because Amazon stock

trades for around $2,000 per share.

As you can see, I have $34 worth of this stock,

because I own just 0.01817 of a share.

So I bought 30 bucks worth of this stock at 16.50 a share,

it's up 13.6%, which is still a really good return

for less than one year.

And then finally, if we look at VOO here

that gives us an indicator of how the market has done,

we're up 21.47%.

So 2019 actually turned out to be one of the best years

in terms of investing over the last few that we have had.

So the new additions to my portfolio guys,

that's where we're focusing in this video here, is the

two new stocks, the dividend payers in my portfolio.

That is going to be IBM and 3M.

So basically what I've done here, because I already

had VOO, Amazon, Apple, and Microsoft in my portfolio,

there's really no reason to sell them.

So what I did, is I dropped those allocations

down to 1% of my portfolio, and right now,

because I'm just investing in two dividend payers,

I have 48% of my money going into IBM,

and the other 48% going into 3M.

And, in a little bit here guys, I'll explain to you

exactly why I've chosen these two investments.

But basically guys, rather than selling these stocks

for no reason, I dropped the allocation down to 1%.

I'll probably leave it as 1% of this portfolio,

because even if I invested $100,000 that means that would

be just $1,000 invested in each one of these things here.

So it's not a huge amount of my portfolio.

But I just wanted to show you guys why that number up here

might be a little bit misleading.

And to be honest with you guys, I'm not buying these stocks

because of the growth potential, I'm buying them primarily

because of the fact that they pay very stable

and consistent dividends

based on their track record and history.

So first of all, let's click on IBM here

and get a little bit more information about this company,

as far as what we're going to be earning as far

as dividends go, and right now IBM's paying a dividend

yield of 4.82%, which is one of the primary reasons

why I bought the stock, and it has a relatively low

price to earnings ratio here of 15.5.

And then second of all guys, let's take a look at 3M here

as far as the dividend yield.

You will see here that the current yield on this stock

is 3.23%, with a P/E Ratio of 20.4.

So now let's go ahead and dive into each one of these stocks

a little bit more, look at the share price history,

and then I'm gonna talk to you guys about why I've

decided to begin investing in these two particular stocks.

And I'm sure this goes without saying, but you always

wanna make sure that you're doing your own due diligence

when you're investing in the stock market,

and understand here that this video

is for entertainment purposes only.

This is what I choose to do with my money,

but it's up to you to decide what you want to do

with your money, in terms of your investments.

So first of all guys, lets take a look at 3M

and talk about the performance of this stock

over the last couple of years.

If you look at the last three months,

it actually has been doing pretty well

over the last three months.

Open it up to one year and you will see why I actually

began investing in this stock, and that is because

if we open it up to three years, you'll see that we're

actually trading at a pretty low share price.

This is a stock that used to trade for as much as almost

$260 per share in January of 2018,

and now it has slid all the way down to

somewhere around 150 a share,

now has recovered to 178 per share.

So there's honestly a lot of stocks

that I would love to invest in before I invest in 3M.

The only issue is they're all trading at or near

all time highs, and that's just one of my core investing

principles for myself is that I just don't feel comfortable

investing in certain stocks near or at all time highs.

And if we open it up to the last five years,

you'll see that we're trading kind of near by

what was a five year low for this company,

somewhere around 140 per share.

So based on the share performance here

this is one of the reasons why I decided to jump in

and take advantage of some of the pessimism surrounding 3M.

So now for those of you guys who are not familiar with 3M,

if you have no idea what this company is,

let's go ahead and talk about that now.

And if you don't know exactly what 3M does,

I don't blame you guys, because it's kinda one of those

things where you've probably seen this logo on different

products, but you might have a hard time explaining

just what it is that this company does,

and that is because this is a conglomerate,

or a combination of multiple business entities

under one name.

So 3M has all of these different products

that serve different industries,

and they are all under the main name of 3M.

So just to show you guys the wide range of products

that 3M offers, let's go ahead and jump over

to their website here.

And right off the bat they have many products here

for consumers and products for business.

So first of all let's start with that.

We're just gonna go through the dropdown here,

and I just wanna show you guys just the array

of different products that 3M offers,

and all the different industries that they serve,

commercial, they have electronics, they have government

related products, health care, manufacturing.

They offer a lot of auto products, safety products,

and this is just on the business side,

as far as the products they are offering.

If we look at consumers, you're gonna see

a lot of names and brands that you've recognized

and probably used for years.

A lot of this includes Post-its,

that's one of their biggest brands.

They also own the Scotch brand, if you've ever used

or heard of Scotch tape.

They have all kinds of different well known names,

and they serve both businesses and consumers

with this wide variety of different products.

So it's really kinda difficult to explain

what it is that 3M does because they have so many

different products serving different industries

on both the business side and the consumer side.

And so that is one of the reasons why I like this stock

as a long-term investment, because of the well-diversified

businesses that they have, and how they're getting money

from all these different industries.

Now, one of the issues that you may run into with 3M

is that a lot of their products do serve

what are called, cyclical industries,

which essentially means sales of these products

are going to go up and down.

For example, let's talk about their automotive detailing

products, that's something they're well known for.

Well let's say we're in a prosperous economy,

more people are going to be getting their cars detailed

because they have extra money.

Well as soon as you see some economic retraction

that's something people are gonna stop paying for,

because it's a want and not a need.

So as a result, less people are gonna be getting

their cars detailed, and they're gonna see

less demand for those products.

That's what you see happen with a lot of the 3M product

categories, because they are serving cyclical industries.

Now on the other hand, that's not entirely true,

because some of their products serve more defensive

industries, like consumer staples and health care.

But that is one thing that people do mention

about 3M, is that when you do see a market crash,

or market correction, or economic retraction,

it tends to hurt them because of the cyclical industries

they are serving.

Now the reason why the stock has taken a haircut here

over the last couple of years

is due to disappointing financial results

and weak organic sales growth,

which is something 3M is currently up against,

and that is why we've seen the stock go from 250

to 260 a share, all the way down to the 150 to 175 range,

due to pessimism surrounding Wall Street,

and in 2019 they lowered their organic sales guidance,

and investors were just not happy with

what they're were seeing.

Now in my opinion, because this company's been around

for so long, they're not going away any time soon.

They have diverse products across all different industries.

I'm personally gonna take advantage of this sale

and dollar cost average into shares of 3M,

and take advantage of that nice attractive dividend,

and thanks to that share price dropping,

it's an even higher yield than you would have gotten

if you invested in the $200 to $250 range.

All right moving on now, let's talk about IBM

and why I've decided to buy shares of this stock as well.

And you might be laughing to yourself,

because this is probably another company where you're

struggling to identify, what is it that they actually do?

Because a lot of us are familiar with the IBM of the past,

the IBM ThinkPad, and primarily that's what they were

involved with for many years, was computer hardware.

So they manufactured desktop computers,

they manufactured computer screens, they manufactured

the hardware internals for computers,

and the only main hardware business

they're still well known for

is the mainframes, which are larger computers

for more enterprise applications.

Essentially, not consumer products.

So as far as consumer products go,

based on this huge shift away from using desktop computers

and laptops to mobile, and that is why they essentially

fell out of favor over the last couple of years,

and that is because people were just not using

desktop computers, or the laptops, or the ThinkPads,

so essentially they had to leave behind

the legacy business of hardware

and explore new business ventures,

and of course, that takes time.

And as a result of that, if we look at the stock

over the last five years, it's done basically nothing.

Five years ago, the stock was 150-something a share.

It's actually down 15% over the last five years.

And that's because they've essentially had no growth,

declining revenue, as they have been adjusting their sales,

and figuring out what new businesses

they wanna be involved with.

But that, in particular, is the reason why

I'm so excited about IBM, is because of the wide

variety of businesses and industries

they are involved with now.

So over the last decade or so, IBM has been shifting

into a lot of different industries in terms of their

research and acquisitions, and they're involved

in a wide range of industries now.

Instead of hardware, they are now leaders

in business cloud solutions.

They are the largest provider

of enterprise level cloud computing.

They also are involved with mobile solutions,

big data, artificial intelligence, cyber security,

and they're even a leader in blockchain technology.

And one of the big reasons why I invest in this company

is because of a very large acquisition they made in 2019,

purchasing a company called Red Hat,

which is an enterprise level software company

that used to trade publicly, and they acquired them

because this is the type of business

they are looking to get into.

And just to show you guys how large this acquisition was,

there was a $34 billion acquisition,

and as you can see right here, this company's worth

about 120 billion.

So they spent, basically, 1/4 of this company's entire

value acquiring this other company called Red Hat,

just to show you how dedicated they are

to this particular industry.

So if IBM was still out there as a hardware company,

primarily making, you know, laptops and stuff

for consumers, I wouldn't touch this company

with a 10 foot pole.

But the reason why I'm excited about them

is they have a very attractive dividend yield here

of 4.82%, and they're also involved

in a lot of really great industries,

that I think have a ton of potential.

And so, maybe the last 10 years has been a snoozefest

for IBM, but at this point in time,

I think that it's something I want to be invested in.

I see value in this company, in the industries

they're serving, and that is why I'm going to be

dollar crossed averaging into this stock

and building up a position in IBM.

So anyways guys, that wraps up my first video here.

As you can see, my portfolio is pretty small

to start off with, only worth $1,206.

But we're gonna be building it up month after month,

and if we see good deals taking place

in the stock market, I will certainly be ramping up

my monthly contributions.

My dividends will be reinvested.

I'll update you guys on what that looks like,

and it's going to be fun to see this portfolio grow

over time, or maybe it won't, and maybe it will go down,

and we'll have a good learning experience as well.

Overall, I'm just really excited about this,

and I hope you guys are too.

So let me know what you guys think of this new series

down in the comment section below,

and as I mentioned, if you too decide you want to do

investing with M1 Finance,

the link is in the description below.

And I've also included a link to that 30 minute

free training that shows you exactly how to get started,

how to navigate the platform, and invest with M1 Finance.

But thank you guys so much for watching this video.

I hope you enjoyed it, and I will see you in the next one.

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