A six-figure stock portfolio is a strong foundation for financial security, but most people see that many zeros and have no idea how to make it a reality. Truthfully, getting your investments to $100,000 is much easier than you think.
When it comes to investing, most people stay out of the stock market because of fear. They’re afraid of making a wrong decision and losing their shirt. But the fact is that investing in the stock market is the best way to achieve financial security and build long-term wealth.
How to Build a Six-Figure Stock Portfolio From Scratch
Like most goals, building a six-figure stock portfolio is easy once you break it down. Fundamentally, it’s simply a matter of planning and execution. Before you jump into the stock market, you should know what you’re doing. Then all that’s left to do is to go do it.
To build a six-figure stock portfolio, you’ll need to know:
- what the stock market is and how it works
- what kind of investor you are in terms of risk and goals
- what brokerage(s) and accounts to invest through
- the correct asset allocation to meet your goals
- how to evaluate securities for investment
- how to rebalance your portfolio, minimize taxes, avoid and recover from mistakes
If you don’t know all or any of the above, fear not!
Invest in knowledge first
There is one thing that always offers the best ROI: investing in yourself. Before you invest money in the stock market, you should invest time in learning how it all works.
You won’t (and can’t) learn everything there is to know about investing in a weekend. But you can pick up a few books, browse some financial websites, and take free and paid courses to learn about investing. You should approach investing as a skill that will be practiced and honed over your lifetime. You will get better at it as you go along, but you have to start.
Choose a brokerage account with low commissions
One of the biggest mistakes people make in growing their wealth is paying too much in fees. Expensive index funds and high trading commissions are some of the largest wealth-drains in the investing world. Paying as little as 1% or 2% more in investing costs can result in hundreds of dollars of lost wealth over your lifetime.
To avoid high fees, choose a brokerage account that provides low-commission trades. While some brokerage accounts will charge you as much as $30 per trade, others will be as low as $5 or even free, depending on the securities you’re buying.
Make sure your investment accounts are tax-sheltered
Right after fees, taxes are the next biggest threat to your long-term wealth. For this reason, you want to make sure you’re investing in a tax-sheltered account like a 401K or Roth IRA if you’re in the USA, or an RRSP or TFSA if you’re in Canada.
Many people think of these as savings accounts and aren’t even aware that you can invest through them. Investing in registered accounts is the only way to maximize their power! Once you select a brokerage, make sure the account you open is a 401K, Roth IRA, RRSP, or TFSA if you have contribution room in these accounts. Only once these accounts are totally maxed out should you open an unregistered trading account.
Balance your risk tolerance with your financial goals
Your goal is obvious: a six-figure stock portfolio. But getting there without losing your shirt takes discipline and time. Your investing strategy will be unique to you because it depends on your personal financial goals and your comfort level with risk.
Most people cannot beat the stock market index, no matter how hard they try. For this reason, your portfolio should always be built fundamentally on index funds. Generally, the simpler you’re investing strategy, the more likely it is to perform well.
How much you allocate to fixed income and equities depends on how much passive income you want and how much market volatility you can stomach. Whatever your asset allocation, choosing broad market ETFs to make up the foundation of your portfolio ensures most of your investing will happen on autopilot.
But what about investing for fun? Sometimes there’s a company or industry you’re really interested in and feel will perform well. You can and should add some shares to your portfolio! Over the years, my individual investments have outperformed my index ETFs. By investing in both common stocks and index funds, I minimized my risk in the market by still enjoying the profits from each.
Learn by doing
Believe it or not, everything you think you know about your investing style and goals might change once you’re actually in the stock market. Most people assume they’re more risk-tolerant than they actually are, only to find out they can’t stomach watching their money go up and down.
Some people like the predictability of steady dividends, others don’t care for income and want the big returns of capital gains. You won’t know what kind of investor you are until you start investing!
Furthermore, your investing style and strategy are likely to change with time as your income and lifestyle also change. Like all skills, investing profitably takes time, patience, and experience to build. You will get better at it as you go along. But it is imperative that you start sooner rather than later.
About The Six-Figure Stock Portfolio eCourse
I created The Six-Figure Stock Portfolio program during the last semester of my MBA in finance. Over the past 3 years, more than 300 students have completed the program with amazing results. It has helped both new and experienced investors create a portfolio that aligns with their investment goals, increase their passive income, and grow their wealth. Many now boast investment portfolios well past their $100,000 target!
The Six-Figure Stock Portfolio walks you step by step through creating a safe and profitable investment portfolio, no matter where you’re starting from. You get a crash-course in exactly what you need to know about the stock market to feel comfortable investing on your own. From instructional videos on specific stock market topics like dividend investing and keeping your emotions out of the market, to suggested asset allocations based on the amount you have invested, this course provides everything you need to create the portfolio of your dreams.
In addition to the course material, you also get access to a private Facebook group for students only. Here people ask questions, share what they’re investing in, and more. I only just added the group last year, but it quickly became one of the best parts of the program!
Interested? Registration for The Six-Figure Stock Portfolio just opened TODAY! You can SIGN UP HERE.
Looking forward to having you in the course!
Does your course address or provide guidance on ethical investing?