Here’s How to Invest Your First $10,000 through 2050
As always, Index based Exchange-traded funds (ETFs) are a great starting point when you are ready to start investing and learning the ropes. With market uncertainty and the debt ceiling at all-time highs, ETFs offer an opportunity to start SMART+ER than the average investment manager while being diversified. And definitely better than day traders.
Studies found that about 85 percent of active stock pickers underperform the market over a multiyear period. While there are moments when it seems that traders are making cigars and yacht money, the lifestyle is short-lived. This means that they can win (and win big) in the short run, and lose way more the next cycle.
Turns out, 68 percent of investors have lost more money than they made on crypto. More than one million people may have lost their money in the spectacular collapse of the FTX cryptocurrency trading firm.
So next time you hear about the hottest ticket in town, ask about their track record. And then go for something with a bit more certainty than gambling. Stick with something more traditional if you don’t have the stomach for a 60 percent loss.
Table of Contents
Advantages/Disadvantages to Consider when Investing in the Long Term
Invest in its Advantages
- Limits short-term market volatility. While market volatility, when financial markets are going up and down, is a common phenomenon; time smoothes out extreme highs and lows.
- If constructed properly, there are fewer management and turnover fees associated. Long-term investors are subject to transaction fees less frequently, if not at a lower rate than short-term investors.
- The longer you go, the more your money compounds. Even $5,750 annually invested in the market at an 8 percent average rate of return, would yield over $1 million.
- Takes the emotions out. One of the greatest aspects of long-term investing is that it almost entirely removes your emotions from the equation.
- Additionally, there is a degree of tax efficiency through long-term capital gain benefits. If you’re an active (short-term) trader, who owns their investments for a period of 365 or fewer days; you will pay tax at your top marginal tax rate. This could be anywhere from 10% to 39.6%. Long-term investors, or those who hold for more than 365 days, are taxed at long-term capital gains taxes of either 0%, 15%, or 20% at the highest, depending on your adjusted gross income.
Disadvantages
- Can be illiquid for immediate use in terms of emergencies.
- There are still no guarantees, especially with market swings.
- A lot of new investors end up over-diversifying with multiple ETFs in their portfolios.
- And finally, you still have to stay active and aware of your investment.
Check out the strategy below. Bonus for all the readers, if you want to get a near-accurate view of the TNFG Investment Portfolio with all the holdings, click because it’s blue. It will send you to the google sheets view. People ask and I always deliver on transparency.
After 10 years of diving into financial literacy, all I can say is that you really need to invest in yourself.
Build a Diversified Portfolio from the Start
70% – Broad ETFs (Pick 1)
| ETF Ticker Symbol | Name | Annual Expense Ratio | 5-Year Average Annualized Return | Price Per Share as of 5.23.23 |
| $VOO | Vanguard S&P 500 | 0.03% | 10.9% | $379.78 |
| $IVV | iShares Core S&P 500 | 0.03% | 11.0% | $415.17 |
| $SPY | SPDR S&P 500 | 0.095% | 10.9% | $413.41 |
| $QQQ | NASDAQ 100 Index | 0.20% | 15.35% | $319.24 |
| $SPLG | SPDR Portfolio S&P 500 | 0.03% | 11.20% | $48.61 |
20% – Staple Quality Stocks w/Dividend Opportunities (Pick 2)
| ETF Ticker Symbol | Name | P/E Ratio | 5-Year Annualized Return | Price Per Share as of 5.23.23 | Dividend Yield |
| $JEPI | **JPMorgan Equity Premium Income | — | — | $54.31 | 11.3% |
| $CMCSA | Comcast | 31.2 | 26.85% | $40.54 | 2.67% |
| $PFE | Pfizer | 7.2 | 8.48% | $39.77 | 4.15% |
| $XOM | ExxonMobil | 7.1 | 28.58% | $106.70 | 3.41% |
| $MAIN | Main Street Capital | 11.8 | 1.82% | $39.21 | 6.72% |
| $COST | Costco Wholesale Corp. | 36.4 | 147.21% | $483.63 | 0.73% |
| $CSCO | Cisco Systems, Inc. | 17.6 | 11.84% | $48.78 | 3.13% |
| $O | Realty Income Corp. | 42.1 | 15.42% | $60.09 | 4.95% |
| $DUK | Duke Energy Corp. | 28.3 | 24.17% | $91.03 | 4.35% |
| $BAC | Bank of America | 8.4 | -8.26% | $28.72 | 3.07% |
| $VZ | Verizon | 7 | -26.33% | $36.39 | 7.22% |
| $JPM | JPMorgan Chase & Co. | 10.1 | 21.42% | $136.59 | 2.93% |
**JEPI is kinda something else but I like it so it’s on the list.
10% Bolder and Tech Positions (Pick 2)
| ETF Ticker Symbol | Index/Industry Tracking | P/E Ratio | 5-Year Annualized Return | Price Per Share as of 5.23.23 | Dividend Yield |
| $AAPL | Apple | 29.7 | 272.30% | $171.38 | 0.53% |
| $AMZN | Amazon | 282 | 2,809.07% | $114.88 | — |
| $AMD | Advanced Micro Devices, Inc. | 438.7 | 732.05% | $108.07 | — |
| $NVDA | NVIDIA Corporation | 179.4 | 413.82% | $307.70 | 0.05% |
| $TSM | Taiwan Semiconductor Manufacturing Co., Ltd. | 14.3 | 131.35% | $$90.57 | 1.55% |
| $GOOGL | Alphabet aka Google | 27.7 | 132.58% | $122.58 | — |
| $TSLA | Tesla | 53 | 930.16% | $185.65 | — |
**Investors are most optimistic about the IT industry which is trading above its 3-year average PE ratio of 64.2x.
***Analysts are most optimistic about the Semiconductors industry, expecting annual earnings growth of 25% over the next 5 years.
About Author
