- 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.
