Brief explanation of what we are doing?
We are going to do a number of things here:
1. Invest ~$110 dollars up front, then $25/ week
2. Monitor how our portfolio grows
3. Compare the growth of these investments to other portfolios
4. Learn from the experience
Goals of this case study
This is part of a series of studies we are going to be doing about the stock market. We are going to be passively investing with one portfolio (shown below) , and actively investing in another portfolio (shown here), without doing proper fundamental or technical analysis to see what happens when uninformed people participate in the stock market.
Hopefully, in doing so we can help people understand what is required out of them to become successful investors, or possibly even day-traders.
It doesn’t seem wise to approach investing by just taking everyone else’s word for how to pick a stock. So it seemed appropriate to get some data and share it with people.
We are a business and we are trying to make a profit, while also trying to help people by sharing our experience and knowledge.
The idea is that if we can learn enough about investing and simplify it, then we can teach families with kids to set up custodial accounts and teach their kids about how money works. This helps everyone involved. It helps the stock market by getting more people involved, it helps parents by giving them something to teach their kids, it helps brokerages get more active customers, it helps kids learn and prepare for their future, and it helps us by getting views.
For this portfolio we have been investing exclusively into 2 ETFs on M1 Finance, split pretty much evenly 50/50.
Month 1 of this study was really only 2 weeks, so this month we are still building up those positions while keeping an eye on some other potential options.
For now, this portfolio is really boring, so there isn’t much to write about, so we’ll s what happens once dividends start coming in.
M1 Finance App
Summary of Week 1, Month 2
I’m excited to get into our first full and real month!
I’ll be updating this each week as we get more data, and each month will be a new post, to keep the articles from feeling too cluttered.
The above picture is the most recent update of the portfolio, taken on Tuesday, Aug 4, 2020.
The profit/loss of this portfolio keeps going up and down between about -$.50 and +$2.00.
I’m not really too concerned about a little market price fluxuation, so oh well…
Summary of Week 2, Month 2
Well, I almost had to change the rules already because of budgeting issues, BUT luckily, I found some money to invest!
So here’s what our passive investing portfolio is starting to look like:
I wanted to diversify a tiny bit, and I think REITs are probably going to be too uncertain for other investors to take a chance on.
I lost $.02 from SCHH, but LUCKILY, those are unrealized losses.
I really don’t want to have to be the one to let my family know that I lost such a large amount, but hopefully they’ll be understanding…
Summary of Week 3, Month 2
This week, the new ETFs I picked finally got caught up to the first ones I had been investing into.
Everything has been gaining value fairly steadily and I can see why people like ETFs.
I’m not sure if these are the ETFs I’m going to stick with long-term, but for now they seem fine so I’ll just keep investing in these for now and letting them build value.
Summary of Week 4, Month 2
My positions have been pretty sideways this week, but I’m still optimistic.
I changed my M1 Finance pie up a little bit to include SPHD because it pays monthly dividends and has a reasonable expense ratio.
The robo-advisor still hasn’t re-balanced my portfolio but it should happen tomorrow morning.
Thoughts and reflections for moving forward
I’m definitely seeing why people say “get rich slow”.
This does not appear to be a fast growing venture, but I can definitely see the potential.
Even IF the value of any of these funds go down, the dividends will end up buying shares at a lower price for me anyway because I’m just reinvesting my dividends.
I just keep dollar cost averaging down and hope for the best I guess…
Soon I should start seeing my first dividend payments, so I’m really excited to see that start happening, that should help a lot, AND it always feels good to receive a payment, even when it’s small amounts!