Investment Choices Requires Help
This post is Part 2 of a series I’m documenting on my Kids moving out & starting life after college/trade school, here is the link to Part 1:
My kids all have their investment accounts with Etrade, they have a Brokerage Account, Roth IRA account & a Free Checking Account.
I had them all link their Etrade account to their bank & start transferring 10% of their earnings every time they are paid. As time goes on 20% of their total salary will be invested in to their 401ks & self directed investment accounts. As expected the amounts they were transferring was small, less than $100. So I had to prepare a set of assets they could buy within their purchasing power & as their account balance grew switch some of those assets to other assets that have higher costs.
I decided to have them invest 80% in to ETFs & 20% in to stocks to start, I selected the ETFs based on their overall strategy & the stocks based on their capital growth potential. The 80%/20% allocation will change as they learn & become more invested in to their own portfolio.
Here are the ETFs I selected for them:
- S&P 500 Exposure: VOO ($434, they can’t afford this)
- Total US Market: VTI ($235 they can’t afford this)
- Tech Exposure: QQQ ($406 they can’t afford this)
- Dividends: SCHD, VYM, BST ($75, $110 & $34, they can afford these)
- REITs (Real Estate): VNQ ($87 they can afford this, but we’ll start with O, VICI & ABR instead .. will explain later)
Here are some of the stocks I had them put in their “Watch List” to buy & hold until it’s time to sell:
- Blockchain Related: MARA, COIN, CLSK, RIOT, BITF, CAN, WULF, HUT
- Finance Related: SOFI, HOOD, MFC
- Tech Stocks: TSLA, AMZN, GOOG, META, PLTR
- Communications: T, VZ, CMCSA
- Reits, Mreits, Builders: O, VICI, AGNC, ABR, PNNT, MHO, OPEN
- Bonus: BRK.B ($356, soon they will be able to afford this)
As mentioned, at the start they couldn’t add too much money in to their accounts so I had them start buying up: SCHD, BST, OPEN & SOFI. As more money gets added they would diversify in to O, VICI, ABR & eventually buy at least 1 BRK.B for long term hold.
I have a subscription to Seeking Alpha & that’s how I created the chart above. The chart compares the S&P 500, VOO, SCHD & BST price return for the past 5 years. Soon they’ll be able to switch some of their capital to VOO, but until then they’ll continue to stack on the assets they can afford.
At this moment in time the real benefit for them is to understand how to manage their investment account, buying, selling & learning to control their emotions thru market volatility.
On my next post I’ll discuss why I had them start their portfolio with SCHD, BST, OPEN & SOFI .. stay tunned.
