How My $640,000 Portfolio is Invested
Asset # 1: Stocks
The vast majority of my net worth comes from the stock market. All of my stock sits in four brokerages: Robinhood, TD Ameritrade, Fidelity, and Motif (we’ll get into Motif later).
I opened up a TD Ameritrade account before Robinhood was “a thing,” but to be honest, I no longer actively use it. I prefer Robinhood, as I consider it to be extremely easy to use (not to mention Robinhood has free trades)!
I currently have about $197,000 sitting in my Robinhood account and about $15,000 in TD Ameritrade.
The vast majority of stock that I have in my Robinhood account is Vanguard ETFs. I’m a huge fan of their large, small, and medium cap ETFs, as well as the Russell Growth and sector-based ETFs.
If you’d like to gain broad exposure in the technology sector without purchasing stock in individual companies like Microsoft (which is very risky), check out ticker symbol “VGT”; the 10-year performance is about 22%, which is higher than the S&P’s 13.9% return over the past decade.
My employer uses Fidelity as our brokerage for our 401k, and I have about $259,000 in this account. I purchase the Fidelity “Zero” funds, as they have no expense ratios (fees)! They have no minimum investment amount, and they have four options: A large-cap, total market, extended market, and international index fund. I have the first three funds in my portfolio — I’m not a huge fan of international funds; over an extended period, they tend to not perform as well as US-based funds.
Now, let’s get to Motif — I have about $2,000 sitting in my Motif account. If you’re unfamiliar with Motif, they are a “build-your-own-ETF” company, and while it’s a neat idea, it’s a waste of time. Purchasing a simple Vanguard ETF will most likely yield better results.
Lastly, I have about $48,000 in company stock that I need to sell and re-invest into indexes!
Where I went wrong: When I was first starting to build my portfolio, I spent way too much time listening to the guys in the office talk about their winning stock picks in the break room…translation: I purchased individual stocks.
I’ve mentioned in other previous articles that purchasing individual stocks is never a good idea; it’s very hard over an extended period to outperform the overall market. I wrote an entire post on Warren Buffett’s million-dollar bet. He took a bet against the top hedge funds on Wall Street, claiming that they wouldn’t be able to outperform the S&P 500 over a decade. By year 8, the hedge fund managers were ready to concede, and Warren was victorious.
Building wealth is a matter of living under your means and investing as much as possible by buying and holding investments for a very long period.
Wealth very rarely comes from day trading. As tempting as it is to get involved in trading meme/pump-and-dump stocks, don’t waste time.
The last point that I need to mention is that you don’t need a complex portfolio with 50 different ETFs to retire wealthy; if you want simplicity, I’d recommend purchasing a simple S&P 500 index fund or a Total Stock Market fund to capture small, medium, and large-cap earnings.
Asset #2 Cryptocurrency
I understand this asset class is extremely controversial, but I’d be lying if I didn’t include it in this post, as I do have about $51,000 in cryptocurrency.
This is also where I need to place my disclaimer: Do not start buying cryptocurrency until you’ve built a substantial portfolio of more traditional, boring investments, like stock.
I dedicate 10% of my portfolio to higher-risk investments like private equity and cryptocurrency. Currently, less than 10% of my portfolio encompasses speculative investments.
Before making any speculative investments, it’s also important to assess your living and financial situation; I have no children and very few responsibilities. I also have a high-paying position in the technology sector. If you make $50,000 a year and have a family of four to support, you should weigh the pros and cons of making risky investments.
Now that my long rant/disclaimer is out of the way let’s get into the details of “what” cryptocurrency I have. I have about $33,000 in Gemini USD, $14,000 in Bitcoin, $3,000 in Ethereum, and $1,000 USDC.
If you’ve read some of my other posts, you’ll know I’m a huge fan of stablecoins (the $33,000 of Gemini in my portfolio are stable coins).
Stablecoins are a type of cryptocurrency whose value is tied to an outside asset, such as the U.S. dollar or gold, to stabilize the price — this means that you do not experience huge price swings with stablecoins like you do with Bitcoin or Ethereum.
I store my stablecoins in a cryptocurrency bank called BlockFi — I’m a huge fan, as the company is very easy to use for newbies, has extensive security policies, allows you to trade directly on the platform to avoid additional fees from Coinbase, and has great interest rates — I’m currently getting 9% on my stablecoins! Most traditional banks offer very menial interest rates, and thus I’m using BlockFi as a second savings account. I can withdraw the money at any time, and BlockFi converts the cryptocurrency into dollars automatically and deposits the money in my Wells Fargo account — it doesn’t get any easier than that!
BlockFi is currently offering my readers up to $250 in free cryptocurrency if you open an interest savings account — you can sign up here.