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An Inside Look At My Stock Portfolio

By Frugaling 8 Comments

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My Stock Portfolio Market Investing

Battling back to zero debt

In May 2013, I declared war on debt. I wanted to eliminate it. I started Frugaling to catalogue the journey back to zero debt and make a side income. It worked. More than a year later, my monthly budget contains a surplus, the checking account actually has extra funds, and my student loans are nearly gone.

Done with loan payments — for now — I’ve had tremendous urges to buy new clothes and travel. I look in my closet and see the same stale outfits. Nothing excites me about wearing the same shirt today that’s been there for about four years. The clothes work, but I’m tired of the sameness. For lack of a better word, my closet is boring. As for travel, I desperately want to venture out into the world without a prescription or plan. I want to get out of the country for a while, but cannot, as work must take precedence because of my precarious budget. Both wants must take a back seat to current needs.

Invest, invest, and then invest some more

Instead of consuming and spending my newfound money — at the expense of my financial future — I’m investing and saving the money. The same rules I used to pay off my debt are working to save even more. When I had student loans, I made regular payments to lenders, which nearly emptied my bank accounts. It forced me to say “no” more often when I simply couldn’t afford to spend money. Now, I’m socking away massive amounts of funds in retirement accounts — protected by tax-deferred growth, offered investment credits during tax season, and prevented from withdrawing funds until retirement age. The squeeze of investing more than might be comfortable is pushing me to save rather than spend. While financially dangerous in some ways, I’m preventing myself from spending — the ultimate psychological prevention.

I want my money to work for me. I’m choosing to invest, rather than consume. Each investment feels like a purchase in my future and that company. Using basic principles from the “Oracle of Omaha,” Warren Buffett, I’ve invested in companies I know and love. Secondarily, I’m selecting index funds that benefit from overall market momentum and general growth.

Today, I want to share what investment decisions I’ve made and why. I do not offer this as advice, but share it to explain how I’m handling my new influx of cash. I have a lot of learning to do, and many of these positions are quite small. My only hope is that it encourages you to save as much as you can, too!

Here’s my stock portfolio

Most investment managers suggest investing in mutual funds and/or ETFs to become broadly diversified. They note that the market averages about 7-8% gains over time. Just investing in a broad group of stocks should provide that return. As a young man, with many years of investing potential, I decided to mix it up between individual stocks and index funds. The stocks I’ve chosen are from companies I know quite well and care about. I’d love to know what you think and what you’re investing in, as well!

Individual Stocks:

1. Apple (AAPL)
Shares: 7 | Cost basis: 614 | Market value: 636

Apple was one of the first stocks I ever purchased. I was in high school, and thought the company had the coolest products. The iPod had just come out. The stock was around $40-50 per share (pre-split; Apple recently split 7:1, which means 7 times more shares are on the market now and the price was 7 times current prices). Unfortunately, with little money to my name or experience investing, I sold around $90 per share. I missed hundreds of dollars in share growth, but that’s okay. Now that I have money again, I still love Apple. The products are second to none, I follow the company religiously, and have a passion for their design. I’m a believer in this company, and believe the 2% dividend yield makes it easy to wait.

2. AT&T (T)
Shares: 14 | Cost basis: 503 | Market value: 493

I’ve held AT&T for what seems to be nearly half a decade. This cost basis comes from my most recent investment in the company. While the share price has stagnated in recent years, the dividend yield, which is over 5%, makes me a patient man. AT&T is one of the leading telecommunications providers, and it seems like a safe business with a bright future. The company recently made a bid to buyout DirecTV, but they’ll have to go through a slew of governmental hearings before they’re allowed to swallow the cable company. If they are allowed to buy it, this will make AT&T a leader in cable delivery.

3. Google (GOOGL)
Shares: 2 | Cost basis: 1082 | Market value: 1170

This is hands down my favorite stock/company. I’ve recommended people invest in Google for years (without ever owning a position and missing hundreds in gains). Google is simple: they make money off of people clicking on and buying ad space. As more of the world gets access to Internet services and high-speed connections, more and more money will enter Google’s pockets. This constant revenue source is a powerful force for research and investment. Google actively uses this cash infusion to buy technology companies, startups, and start their own dream products. They founded Gmail, which is my one and only email provider. Their calendar service syncs to all my devices. And, they’re growing at a spectacular rate. I love Google!

4. Royal Bank of Canada (RY)
Shares: 7 | Cost basis: 489 | Market value: 493

I don’t have a strong affinity towards the banking sector. During the Great Recession of 2007-08, it became clear that banks were responsible for massive losses due to risky investment decisions. That led me to be cautious with any investments in the financial sector. The Royal Bank of Canada is different, though. By in large, Canadian banks missed much of the credit default swap crisis and made safe decisions with their consumer loans. Their smart, modest banks avoided getting swept up in the quick money and walked away from the crisis largely unscathed. My investment in the Royal Bank of Canada came from Michael Lewis’ new book, Flash Boys. In the book, Lewis explains that the Royal Bank is a largely ethical bank with tremendous leadership. With a solid, safe dividend and a great track record, I’m happy to be an investor.

Index Funds (ETFs):

The following are three index funds that are commission-free and low-royalty at Vanguard. I wont explain each of these, as the titles explain their contents. I highly recommend Vanguard and have found that their ETFs are some of the best on the market. For more information about selecting a broker for commission-free ETFs, check this out.

Vanguard High Dividend Yield (VYM)
Shares: 5 | Cost basis: 331 | Market value: 331

Vanguard Long-Term Bond Fund (BLV)
Shares: 2 | Cost basis: 177 | Market value: 179

Vanguard Value (VTV)
Shares: 1 | Cost basis: 81 | Market value: 81

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Filed Under: Make Money, Save Money Tagged With: commission-free, Commissions, ETFs, Flash Boys, investing, Investments, Portfolio, stocks

Comments

  1. Erastus says

    June 27, 2014 at 5:11 am

    I like the way you’re doing your staffs man. I had a huge college debt then though now i am almost through from paying. Now there is flow of cash in my bank and I’ve a dream of traveling across the globe but with my current job i don’t think that will be possible for now, again i feel i don’t have enough money to traverse the globe. Investing and saving is the right choice for me. My grocery shop kicked off few weeks ago and its already picking. Hoping in three months from now I’ll be able to eat its fruits.

    Reply
  2. Al | Saving the Crumbs says

    June 27, 2014 at 8:36 am

    How fun! I remember when I first got into stocks and mutual funds, it was pretty exhilarating thinking of all the growth I can look forward to in my lifetime. I’m like you, I’m young enough to dabble in some individual stocks and still come out OK over the long run, but I do predominately invest in index funds. I first got in the market around late 2009/early 2010, so I didn’t have to suffer the big crash in 2008. I hope I’ve got the fortitude to stick it out whenever the next one arrives (I keep feeling like it’s just around the corner).

    Reply
  3. Will says

    June 27, 2014 at 6:11 pm

    Vanguard, FTW! I converted from EJ a few years ago and have never looked back.

    Reply
  4. Addison @ Cashville Skyline says

    June 28, 2014 at 11:18 am

    Thanks for letting us take a peak into your portfolio, Sam! The progress you’ve made in a short amount of time is definitely inspiring. I also own shares of Vanguard High Dividend Yield (VYM). Gotta love the low expense ratio!

    Reply
    • Sam Lustgarten says

      June 29, 2014 at 1:00 pm

      Absolutely, Addison! I love opening the portfolio every once and a while. I think it’s important to be accountable to others. You’ll never see me raving about crazy investment returns on my site, though. I think it’s reasonable to accept that the market does well most of the time. The VYM is a great way to get exposure to that! 🙂 Vanguard’s low expense ratios are terrific.

      Thanks for your comment,
      Sam

      Reply
  5. Syed says

    June 29, 2014 at 10:33 pm

    Great job turning debt into investments, the holy grail of personal finance in my opinion. I’ve been with Vanguard for a while as well and am very pleased with them. I don’t like to mess with individual stocks mainly because I don’t have the patience and diligence to do the research, so more power to you. Thanks for the insight.

    Reply
    • Sam Lustgarten says

      July 8, 2014 at 5:12 pm

      Syed,

      I’m quickly learning that there’s a tremendous advantage and time savings if I switch to Vanguard’s ETFs. The time savings alone may justify any losses that could be incurred, when compared to individual stocks. Likewise, the ability to beat the S&P is awfully difficult. It’s an incredible index. There’s even an ETF — VOO — that has a 0.05% fee, which is incredibly affordable.

      Thanks for your comment,
      Sam

      Reply
  6. Wade @ DestinationFinancialWisdom.com says

    July 15, 2014 at 9:50 am

    Visit Bogleheads.org. Read the getting started. I think you would be better served by sticking with low cost index funds over the individual stocks.Buy VTSMX and you get Apple, Google, Microsoft and 3,000+ other stocks. Much better diversification and far less risk.It is a progression. Start investing and then invest more and then figure out the intricate details of diversification, asset allocation, low costs/expenses. Lots to learn. Bogleheads.org is a virtual treasure trove of investment advisors that won’t take your money.

    Reply

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