hi i'm jimmy in this video we're looking
at how we can build an investment
portfolio from scratch so there's two
different scenarios that we're looking
at
first assumes that we dollar cost
average which is we put in a certain
amount of money every week every month
every quarter whatever best suits our
needs so maybe we add a hundred dollars
a month or a thousand dollars a month
whatever it is we consistently do it and
then we gradually invest more and more
scenario two is we have a lump sum of
cash so let's pretend we have you know
we just received an inheritance or
something like that and we're going to
invest it all at once
that is a little bit different from a
setup perspective i'll get that i'll get
to that in a minute but for now let's
focus on if we were going to
dollar cost average our investment
portfolio so there's two different
investment types that we're paying
attention to first is exchange traded
funds or etfs for short and the second
is individual stocks now when it comes
to building an investment portfolio of
course we could combine the two to make
a fairly interesting portfolio so first
let's focus on if we wanted to use etfs
to build an investment portfolio now
that is great for dollar cost averaging
especially if we don't have the time or
frankly if we're not confident with our
skill set for picking individual stocks
perhaps we just want to go ahead and
pick etfs so what we could do is we
don't have to diversify nearly as much
if we're going to do etfs let's pretend
that this green dot here let's pretend
that this is v-o-o v-o-o is a is the
vanguard s p 500 etf the advantage to
that is this is essentially in this one
investment this is essentially the same
as owning 500 different stocks that's a
great way to diversify your portfolio
with a single investment so the idea
here is that every week or every month
or every quarter however often when we
decided we're going to invest however
much it is we just consistently add to
let's say an etf like v-o-o a
well-rounded stock portfolio
stock etf and this is all of the
diversification we need but let's
pretend we want to add some dividends as
well we like dividend investments well
in that case we might consider an etf
like nobl this is the dividend
aristocrats etf it's a solid dividend
etf and that could combine fairly well
with voo
but let's say we also were a bit worried
about inflation and although we know
that inflation's been in the headlines a
lot well commodities tend to do fairly
well in a higher inflationary
environment so maybe we add an etf like
cmdy this is the bloomberg commodity
strategy etf
and again this is just one example of a
way we could set up our initial
investment portfolio to set up a
portfolio with etfs doesn't have to be
all that tricky it doesn't even have to
be all that complex the idea is pick a
couple etfs that
are well diversified and just
consistently put money in it and let the
ebbs and flows of the market happen and
don't worry about trying to time it
that's scenario one scenario two is
perhaps we
like etfs but we maybe want to pick some
individual stocks as well
well in this scenario it would make
sense to use a combination of both etfs
and individual stocks for example let's
pretend we were to take an etf like voo
and then that's the s p 500 etf low car
low fee etf that's a vanguard one then
we've done our research we want to add a
stock like apple by the way they call
this a satellite portfolio
so the idea is that you have one core
holding that represents a bigger
percentage of the overall portfolio
maybe that's 75 80 percent of the
portfolio if that's 80 then each
individual holding might be five percent
a piece so maybe you have apple maybe
you also look around you say you know
what lows like looks like it could be
undervalued we'll jump in and buy lows
maybe we look at a stock like wbd i
recently did a video on that that looked
fairly well that's the stock that i
recently bought wbd looks like it could
be undervalued we'll add that as one of
our satellite positions and then finally
we would like a stock a little bit more
risk a stock like alibaba so the idea
here again is that we have a core
holding that if any one of these alibaba
pretend crazy things happen it goes to
zero well if that were to happen it's
only five percent of our overall
portfolio vo is going to be the vast
majority of our performance so it allows
for us to
sort of dip our toe in the water when it
comes to picking individual stocks this
investment setup actually works out very
well for a lump sum portfolio so if we
got a lump sum maybe ten thousand
hundred thousand doesn't really matter
well we take
80 75 some big percentage of it and we
invest invested in one
one maybe two core holdings that are
well diversified that would do very well
on their own and then we could spend
some time picking individual names but
the majority of the money is invested
that's one of the keys to having to
investing a lump sum is you want to get
all that money to work as quick or at
least a lot of the money to work as
quickly as possible but let's imagine we
did want to pick individual stocks now
if we did want to pick individual stocks
well one of the keys to that is that we
pick stocks that we will be happy
holding for a long time ideally we buy a
stock that appears to be undervalued and
we're willing to hold it for a long time
and we'll gradually build up our full
investment portfolio i'll illustrate
that in a second but first i just want
to tell you real quick about a website
that we're building
basically this will be a website where
it helps you research companies and we
started we kicked it off by building a
discounted cash flow calculator that
we've already built we're fine-tuning it
making it better but we're gradually
going to add each of these different
valuation methods so in theory we could
value all different types of stocks i
bring that up here because it's very
important that we don't get caught in a
lot of the hype stocks that are out
there so
if we're looking to build our investment
portfolio but you know there's some
stock we're buying only overpriced
stocks and then the market pulls back
like it has recently well that can
really hurt our portfolio if we get
caught early on because when we start
building a portfolio
dollar cost averaging on a name by name
basis well initially when we first
invest in a stock our first stock
is going to look something like this
it's going to represent 100 of our
portfolio now for me i bought disney
back when covid first happened and i
started investing i started once again
investing in the stock market before
that i
started my own investment research
company so that's where all my money
went and then after a while i said you
know it's time to get back into the
market
right at the beginning of covid when
covet happened disney tanked and i
jumped in and bought disney well at the
time if you looked at my portfolio this
is the way it looked which looks very
very under diversified and
on it on its own it is under diversified
but i knew in my mind that although it
looked like it'd be although that one
holding represented 100 of my portfolio
right then i knew that in time it was
going to look something like this and
then as time would go on i would
gradually add more and more positions
and those positions would eventually
become
the whole portfolio would eventually
become a well-diversified portfolio
that's exactly how in fact this
animation here is exactly how my
portfolio has shaken out some stocks
i've added to as time has gone on others
i
i waited for value opportunities to pop
up until eventually you end up with a
fairly well diversified portfolio now
this is actually my a pie chart of a
blank pie chart of the holdings that i
have i've done videos in the past if
you're curious on what all the
individual holdings are but basically
the point is that we don't have to wait
until we have some giant amount of money
before we begin investing if you had
just
fifty dollars a hundred dollars and you
wanted to start investing and you've
started doing the research and you
started to learn how to do it how to
pick individual names if you want to go
down this road don't feel that you have
to get fully diversified right now we
can wait for that we can get diversified
in time you could add a hundred dollars
a month and every month pick a different
stock assuming you can find good
investment opportunities that goes back
to the look for stocks that offer good
value
if you try to find the best value stocks
that you can
as the market gives them to you as they
present new opportunities over the long
run you're likely to do quite well now
if you'd like to sign up to get access
to our private investing community and
to the website i showed you a second ago
i will leave a link right here a link in
the description below and thank you so
much for sticking with me all the way to
the end of the video i really do
appreciate it thank you and i'll see in
the next video