Growing Your Investments

by Building an Investment Portfolio

How to make your investments grow?

Buy investments that are in line with your objectives

Stick to your goal

Don’t make reactive decisions, make proactive ones

Add extra money to the investment

Growing investments

Where can I buy investments?

Brokerage Firm- Facilitates and processes purchases and sales of financial securities. Depending on what type of security you want to buy will determine what brokerage you want, so it would be good to research them. Your bank also may offer investment accounts. Here are some brokerages we recommend for multiple types of securities:

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Stock and ETF ONLY

We don’t get any compensation from the links above. Click on the icon for referral benefits.

Account Types

Brokerage (Standard)

This is a regular investment account where you will have freedom to choose from any investment the broker offers.

You can open an individual account, joint, or both.

Retirement Account

Educational

529 College Savings

These accounts have tax advantages, but also have limitations in what type of investments and the money can only be used for certain educational institutions.

Retirement

These accounts have tax advantages, but also have limitations on the types of investments and the money can only come out of the account at designated retirement age by the government.

Individual Retirement Accounts (IRA)

Traditional IRA- The money you put into the account would be exempt from your taxes (if you made the money that year), but would be taxed when you take the money out for retirement

Roth IRA- Money put into the account is all taxed, but when you take the money out for retirement it’s not taxed.

Workplace Retirement Plan

The place you work at may offer a retirement account and would be better to use over an IRA in most situations. So inquire your workplace.

Finding Investments

Your Brokerage will have screeners for different types of investments. You can also use another company’s screener. A screener finds investments based off criteria you set. Below are good criteria to use in a screener (you might not need to us all of them):

Stock Screener

Price > $10 (Usually companies under $10/share are small and very risky).

Size: Generally defined by the Market Cap. Small-Cap: $300M-$2B. Mid-Cap: $2B-$10B. Large-Cap: $10B-$100B. Large companies are less risky, but there is less opportunity for growth.

Dividend: If interested in dividends look for a high yield (over 2%). Dividends are payments from the company to its shareholders. To calculate the amount of money you would receive from the dividend multiply the dividend yield by the total dollar investment in that company.

Growth: Price Growth > 10%/year over the last 5 years.

Risk: Beta (over 1.0 means the stock is more volatile than the market, less than 1.0 is vice versa, and a negative beta means the stock performs opposite to the market). The higher institutional ownership usually means the less risky also.

Management Efficiency: Return on Equity (ROE) > 10%/year. ROE 

Financials:  You will want to see if the number is better than the industry average. Here are some numbers you could look at to know if the company’s financials are good: current ratio, debt to equity, asset turnover, working capital, etc.

Fund Screener

Performance > 10%/year over last 10 years

Cost:

No Transaction Fee: Simply means there is no extra fee on the purchase.

Expense Ratio < 1. If you notice that you have a high r-squared (closer to 100%), then make sure your expense ratio is low.

Turnover Ratio: The smaller the rate the lower the taxes.

Minimum Initial Investment: Just make sure you can afford the minimum initial investment.

Risk:

Less Risky = Lower Beta and standard deviation (σ), but a higher Sharpe ratio.

A higher top ten (or top five) investment percentage the more volatile the fund.

Composition: 

Small Growth vs. Large Value vs. Mid Core. This gives a good idea of what type of securities the fund invests in. For more info click this link: MorningStar

Net assets give you an idea of how many people invest in the fund. Net asset growth would help you see if the fund is on an upward trend (positive growth %) or a negative trend (negative growth %).

Morningstar Rating = 5 Stars

Manager Tenure >= 10 Years

Screen for your Investment Objectives (the above suggestions may not apply)

Picking Investments

Compare the good investments you found and pick the best ones. The best ones lineup with your investment objectives. The below icons are google sheets that can help you with choosing between different investments (Click file, then make a copy to transfer to your own drive):

Stocks Vs. Funds

Stocks

  • More Volatile
  • Buy and Sell quicker
  • No minimum holding period
  • No minimum initial deposit nor minimum balance

Funds

  • Less Volatile
  • Diversifies portfolio immediately with one purchase
  • Withdraw any amount of money (above minimum balance), instead of a specific number of shares

Referral Benefit Program

Stocks

Again, this company only allows stock, ETF, and cryptocurrency trading.

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Get 1 Free stock and free trades forever

Funds, Stocks, and More

The link will take you to the contact page. Please enter your first and last name and TDAmeritrade as a subject and we will get back to you within a week.

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S&P 500 Index

The S&P 500 Index is the most reliable long-term index. The stocks in the index consist of the top 500 U.S. companies. The S&P 500 is the best indicator of how the top 500 U.S. companies are doing.

Investment
  • 25% chance that the year you start investing will have a negative return

  • 59% chance that the year afterward will be positive

  • 99% chance that in one year you will regain all your money

  • 97% chance that in three years you will gain all your money after a consecutive 2-year loss

  • The S&P 500 has produced an average of 10% per year since its inception

Investment Templates

If you want to track your investments yourself or want other help through templates, you can access are free google drive folder. Just click the icon below:

Summary
Investment Growth
Article Name
Investment Growth
Description
Grow your investment portfolio with The Budget Guide. The Budget Guide will walk you through investing. You will learn how to invest, where to invest, and other important factors in investing.
Author
Publisher Name
The Budget Guide
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