Welcome Savvy Investor
I am excited to share with you the first installment of the Grow Your Dough Throwdown.
If you missed what this is all about, be sure to check out our recap post where I share the rules and the players involved in the throwdown.
In this post, I am going to dive in and show you the investment strategy that I have made in the seven different online brokers. As a recap, the seven online options that I have chosen are TD Ameritrade, Scottrade, , Betterment, Motif, Prosper, and Lending Club. Since there are 15 other bloggers that are participating, for the sake of the throwdown, the stock positions in the TD Ameritrade account are the ones I’m going to use for the competition. I also mentioned my wife will be participating and for her stock positions we are using Scottrade.
A quick recap on what the Grow Your Dough Throwdown is all about. People need to start investing or they need to start investing more. I want to show you how easy it is. There are so many different options nowadays that you can go to invest but the whole point and purpose of the Grow Your Dough Throwdown is to show you a wide array of online options that are available. I’ve opened up seven different accounts that I mentioned above and I’ve funded them each with $1,000 and this is showing you how I have invested that $1,000.
As a reminder, investing should always be a long-term strategy and this throwdown is meant to be fun, but also educational.
Without further ado, let’s take a look at stock picks. In case you missed this, I’ll say it again: I am not a stock picker. In fact, I am probably the worst stock picker on the entire planet. Sure, I’ve picked a few stocks that have made me a nice return but there are also the ones where I’ve lost my butt, including the time I lost $5,000 investing into a penny stock. If I’m being honest, hosting this throwdown is probably the worst thing for my street cred because I am pretty sure I’m going to be in last place compared to the competition, including my wife. I spent all of about two hours researching these stock picks, which further reinforces why I am going to lose. Plus my competition is fierce! I’m pretty sure they are not going to show me any mercy. Okay, here is the stocks that I have picked:
1. Bank of New York Mellon Corporation 2. Dunkin’ Donuts 3. eHealthInsurance 4. Fidelity Guaranty Life 5. Yahoo! Now that I’ve shared the stocks I’ve picked, let me share you the attempt at logic of why I did. Having only $1,000 to invest with TD Ameritrade, I wanted to break it down into five different sectors. I thought that way I could get approximately $200 into each stock.
Obviously, that can be tricky with different stock prices but I got pretty well close. First Pick The reason for the Bank of New York stock was I want to have one stock representing the financial sector. I think with rising interest rates, that financials will do well in the coming year and this is the stock that I picked.
Are there other financial stocks I could have picked that will probably do better? You betcha, but this is the one I’m going with. Second Pick The second pick of Dunkin’ Donuts, since my wife picked Starbucks then that one was off the table. I think Dunkin’ Donuts still has a lot of room to grow over Starbucks at this point in time, plus who can say “no” to a good doughnut covered in chocolate icing? I know I can’t. My obsessions for sugar and caffeine led me to pick this stock.
Third Pick. Obamacare is here whether you like it or not; because of that, I wanted to find a company that I thought would do well in the Obamacare realm. I’m also a lover of anything online if you can get a something resolved fast. eHealthInsurance also was hired on to help out with the Obamacare site and which is part of the reason of their huge rise in the last couple months. I might be buying this one on the high but what the heck, let’s see what happens.
Fourth Pick The fourth stock, Fidelity Guaranty Life was my IPO play. I wanted to buy one stock that had recently launched as an IPO. I think Twitter is tremendously overvalued otherwise I would have bought that one; but with Fidelity Guaranty Life, they’re an IPO in the insurance industry that I think will continue to do well and especially with rising interest rates and with people wanting to buy more life insurance. I’ve become a little bit more versed on the different insurance products and Fidelity Life has some pretty good products that are well-suited for the online consumer that is looking to get cheap life insurance fast.
Last Pick Rounding out my stock picks was Yahoo! because I had to have at least one in the technology sector. I would love to have bought Google or Apple but both of those were well out of my range with only $1,000. Is Yahoo! a good pick over Google? Lord knows I have no clue but it seems like their new CEO is doing a good job of bringing the Yahoo! brand back; and plus with their recent acquisition of Tumblr, I think Yahoo! has some room to grow. As a reminder, I can buy and sell stocks throughout the year if I choose. We’ll see how my first stock picks work out.
I’m currently having my wife write up a post of why she picked the stocks that she did inside Scottrade.
Initially, I emailed her and asked her to list some of the companies that I thought she used for products or services on an everyday basis. She, of course, never got back to me (you just have to know how we work to appreciate that). I then emailed her a list of nine companies that I felt would be a good fit for her. This included: Facebook, Coke, lululemon, Starbucks, Target, Apple, and Amazon.
She emailed me back and inquired also about Toys“R”Us as being a possibility. Upon further research, I learned Toys“R”Us was a privately-owned company; and once again, Amazon and Apple were out of our price range for this Grow Your Dough Throwdown. With that, we were left with the final stock picks of Facebook, Coke, lululemon, Starbucks, and Target. Here’s a quick video recap we filmed on how my wife went about picking her stocks. As you can see there’s a real science behind it. 😉
With , I wanted to do more of a dividend stock portfolio. Sometimes you hear it referred to as blue chips.
Typically, these are companies that have been around for a good amount of time and also pay a good dividend. Each of these stocks currently pay a dividend north of 2.6% and which makes them pretty attractive considering interest rates are extremely low right now.
The stocks I ended up picking after doing about an hour of research were: General Electric, Coca-Cola, McDonald’s, Microsoft, and Verizon. Can you hear me now?
I wanted the money to be invested as of January 2nd, but Betterment doesn’t waste any time getting your money working for you; because of that, Betterment has as bit of a leg up on everyone else, but that is okay.
Currently, I am invested in 90% stocks and 10% bonds. Betterment currently uses ETFs as their primary holdings. “ETFs” stands for exchange-traded funds. Exchange-traded funds are investment vehicles that will track various indexes.
For example, if you wanted to buy large cap stocks, you could buy an ETF that would track the large cap value index. The screenshot below shows the current holdings that I have with the ETFs that Betterment has currently chosen based on the goal that I gave them.
Motif was the last man out when it came to deciding which online option I was going to use. I had heard a little bit about Motif, but to be quite honest, I didn’t really know how they worked or even what a Motif actually was.
What I found out was a Motif is basically an investing theme that allows you to buy into 25 to 30 individual stocks and sometimes at fractional shares.
As an example, one of the Motifs that I invested into was Obamacare. The idea or the logic behind this is that by buying the Obamacare Motif, I then would get 25 to 30 different companies that should all stand to benefit under the new Obamacare law. The screenshot below shows some of the companies that are part of this Motif.
The other two Motifs I invested into were the Clean Tech Everywhere Motif, focusing on clean energy stocks, and also the Onward Online Ads Motif which is right up my alley with online advertising.
Motif holding #1: Cleantech Everywhere
Motiff Holding #2: Onward Online Ads
Motiff Holding #3: Obamacare
With both Prosper and Lending Club, which are the peer-to-peer lending giants of that industry, I tried to go as aggressive as possible.
The one thing that I have learned with both of these is that peer-to-peer lending has become uber attractive over the last couple years in that there is a lot more demand than supply for investor notes, and so trying to get $1,000 invested into higher-risk notes can sometimes take a little bit longer than a day or two.
Knowing that, I just selected the most aggressive strategy that I could that each one allowed and let it do its thing. You can read more about my previous Lending Club and Prosper experiment that shows almost a year’s worth of tracking.
A look at my Lending Club Notes
Other Grow Your Dough Participants
As I mentioned at the top of the post I invited a bunch of bloggers to join me in this throwdown as well. You can read their posts and learn how they are investing $1,000, too:
- Consumerism Commentary
- The College Investor
- PT Money
- Young Finances
- Planting Money Seeds
- Investor Junkie
- Frugal Rules
- Canadian Finance Blog
- Free From Broke
- Afford Anything
- Yes, I Am Cheap
- Working to Live
- Stacking Benjamins
- The Military Guide
May the best blogger win!
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