The 10K Portfolio

For my first project on this blog I’m starting a real life portfolio and showing you step by step how I go about constructing it. I am contributing $10,000.00 out of my own pocket into a Robin Hood account. I plan on never adding a dime, so all gains(I hope) will be due to prudent investments.

Why 10k and Robin Hood?

I chose $10,000.00 as the starting amount for a reason. 10K is a large enough amount that it proves you are committed to saving over merely consuming. I feel that it is an amount attainable by most anyone. If you cut back on luxuries and dedicate yourself to saving, I really believe anyone can reach that amount. Whether it takes a couple of months or a few years, just keep saving. It is also large enough that it could one day turn into a huge amount if you let compounding work its magic.

I’m sure many of you are familiar with Robin Hood, but for those who aren’t the app allows you to make commission free trades. For a portfolio this small, this feature is vitally important. If I were to use another broker, commissions could quickly eat into my returns. Imagine using a broker with $10 fees for every trade. If you only bought stocks 10 times, commissions would total $100. $100 is already 1% of the total portfolio and that is only trading 10 times in an entire year. Hard to beat the S&P if you are being handicapped by commissions.

I will be benchmarking this portfolio against the S&P 500 index SPY which currently stands at 285.06. It is not enough to just make money, you can put your money into risk free government bonds and make a positive return. Rather, you have to outperform what you can get by buying an index fund, if you want to prove your merit. You will see in real time whether I’m successful or not. Copy me, berate me over my irrational picks or cheer me on. I’m in no way guaranteeing success, but I do have faith in my abilities to compound.

This portfolio’s performance will be judged over the course of years, not months. Don’t be surprised to see early underperforamance.  It takes time for a company’s market value to reflect their real intrinsic value. I’ll update results every quarter as well as an update any time I buy or sell a stock. I encourage you all to follow along, or even better create your own 10K portfolio and we can compare!

Keys To Success

1. Long term performance over short term mentality
2. No more than 10% into any one stock, diversification is important.
3. Buy a great company at a fair price, rather than a fair company at a great price.

Thanks for reading!