*Disclaimer: None of this should be taken as financial advice. It is for educational purposes only.

*Any links to articles, services and information is in no way an endorsement by me or by anyone associated with me. I simply find them interesting or useful.

1. Where I'm Coming From

2. Investment Ideals

3. The Great Filter


Where I'm Coming From

Before I get into my investment approach, let me describe a few attributes about myself as they surely influence it:

  • I am 28 years old, having started investing at 24
  • I like to stay nearly 100% invested, with about 3-6 months of cash for emergencies. I regularly fail to fund this over my portfolio.
  • I have a financial situation where I'm able to invest ~40% of my disposable income each month and I try to do so as much as I can.

The attributes below are, more generally, ones that may mirror those stated above:

  • Interest in investing and portfolio management
  • Long-term view (not selling for the foreseeable future)
  • Ability to regularly contribute (monthly, quarterly)

Investment Ideals

1. Maximize Returns:

Since the purpose of the portfolio is to achieve a certain number which would allow me to live off my investments, I naturally strive to hit that number as soon as possible. I'll do that by maximizing returns over an extended period. Easier said than done lol. But the strategy is as follows...

2. Invest in Individual Stocks (and other cash equivalents):

I ping-ponged around stocks, real estate, business, etc for a while. What ended up happening was indecision! Therefore, stock investing was the low hanging fruit. And that's a good thing! Investing in stocks is easy and accessible to anyone. The numbers for investing in individual stocks looks pretty good as well. Real estate does well against the market considering the equity you are gaining, but I don't think anyone would argue that a company growing at 30% per year compounded over a decade would be hard to beat. Those are the ones I'm aiming to find.

3. Hold:

Tax reasons sure, but mainly for compound growth. Compound growth is quite incredible, and you can only really see it in a chart (which I'll provide in another post). In short, take my portfolio of $150,000 and compound that at its CAGR of 25% for 5 years. What's the result? $457,764. Double the time to 10 years and you get $1,396,984. With no additional investment, at 25% growth it could increase ~$300,000 over 5 years, $1,250,000 over 10 years. Now I'm being incredibly optimistic here, but the potential is there more than other asset classes.

4. Keep Expense Ratio Low:

The expense ratios is basically what you pay to invest. And you really should take into consideration everything, including this blog (if you choose to subscribe). Some mutual funds have expense ratios of 1%, some asset managers have higher than that. When you add in this expense ratio to your compounded growth projections, they take a serious hit! For example, take the same situation above for 5 years and add in a 2% annual expense ratio (so 23% growth instead). The result? $422,296, a whole $35,500 less. That's more than $7,000 per year - pretty expensive to have someone manage your portfolio huh?

5. Use a Filter:

So how do you find high growth companies with minimal expense in the sea of information out there? The answer (for me anyway): determine your rules, and stick to them.


The Great Filter

In my search for information outlets that mirror my investment values, I found one service that I've come to rely on, the Motley Fool. I subscribe to both their Stock Advisor and Rule Breakers services, that provide a total of 19 investment ideas a month. I then pick from this cumulative list when making my investment decisions.

In this way, I leverage the Motley Fool for their stock analysis since I am not a financial advisor myself and I do not study corporate financial statements. So I leave that to the experts. I then use my process to incorporate these ideas into a logical portfolio.

While this is my current filter, it very well may change in the future. The important thing for me is to have a reliable source of information that aligns to my ideals, so that I can best filter out all of the noise.

Side note: Does the term "Great Filter" ring a bell? If not, I highly recommend checking out The Fermi Paradox from Wait But Why. Fantastic read and something I think about somewhat regularly.


What do you think about the portfolio? Any questions? Comments? Suggestions? I'd love to hear your thoughts, so please contact me if you feel so inclined!