A year ago, I had some of my investment money on index funds. It grew a little bit but not by a lot, but I kept trying in hopes that I would have good returns. I also ventured some in close-end funds. Thankfully, I didn’t put that much money there because some of my biggest losses later on per amount invested were in that investment category.
As the months went by, I accumulated a decent amount of cash that I didn’t know where to put. Then, the Covid-19 pandemic hit and I saw the market drop by a lot in a course of two or three weeks. It was then that I thought, “the market has dropped 30%, I could at least get 20% back when it recovers if I invest now.”
The next question was, but “where is safe enough to invest right now?.” Then, the lightbulb went off and I said to myself “I am just going to mirror Warren Buffet’s portfolio.” And that is exactly what I did: I googled Warren Buffet’s latest published portfolio and I downloaded it to Excel during a weekend. Then, I calculated the percentage of each holding per his total amount invested. After I had my percentages per holdings, I applied them to my total cash balance and invested it all the next week. I decided to mirror his percentages of holdings because of the history he has of picking good investments. I work full time so I didn’t have the time to study a lot of stocks. I concluded that he had already done the work of analyzing his buys from what I had read about him so I was going to go ahead and trust that it would be a good bet to invest my cash that way.
The effect of the pandemic on the market was not easy to ride. I saw my portfolio go to the red several times. And, I did have some losses along the way. Not everything was sunshine and rainbows. Thankfully, compared to the gains, they were not significant and it helped me get a refund this year for last year’s reported income. I knew I had invested in solid companies and that I had to be patient to see my future returns.
Also, I consistently invested while the market was down in 2020. It was easier to pick where to invest because everything was discounted and I just invested more in what I had already invested from Warren Buffet’s portfolio. And that my friends, is how, in a nutshell, I made a 39% return on my investments in a year. According to Nerdwallet, the average return on stocks is 10% per year so I consider myself fortunate to have been able to get a higher rate of return.
Now, fast forward to 2021, the market has gone up again and is hard to find good companies at a discount. I still follow some of Warren Buffet’s picks, but I also add my own spin to my investments, usually by purchasing companies that have a stock price lower than their intrinsic value or by reading different websites that state that a popular stock is undervalued. It is still a risk, but I make sure to diversify it as much as possible.
So what I’ve done to obtain the extra cash to invest in the stock market? Here are some ideas that might help you save your cash and invest it.
- HOW TO SAVE MONEY: HOW I WILL SAVE OVER $20,000 THIS YEAR?
- HOW LIVING WITH MY PARENTS HAS HELPED ME SAVE $12,000 IN 5 MONTHS
- HOW TO BECOME A FRUGAL FREAK
Now to what I’ve invested lately (March 2021). I will include my reasoning next to each purchased stock. Please keep in mind that invest to fund my retirement so I buy and plan to hold for a long time.
FACEBOOK – Facebook is currently considered undervalued by different financial websites, including Yahoo Finance so I thought it was a good time to invest in it.
TATTOED CHEF, INC. – It is still pretty inexpensive to buy even though is considered overvalued. It was recommended by a Youtuber I follow and I personally consume their products, which are sold at Costco. It sells plant-based food.
CHEVRON & VERIZON – I bought these 2 companies because they were recently purchased by Warren Buffet and are pretty well-known companies. They both offer dividend yields of above 4%. They are considered overvalued, but from reading about Warren Buffet, I’ve learned that he studies the value of these companies before purchasing so I usually trust and if I like them, I buy. I do not always buy what he buys, but I liked these two companies so I bought them.
APPLE – I am a fan of Apple. I always buy a little bit of Apple because I find the company to be always innovating. Lately, it has expressed interest in going into the electric car industry and I find this really exciting.
MERCK – I bought this company because it is considered undervalued it has a dividend yield of 3.49% and also because it is another company that Warren Buffet purchased.
ABBVIE INC – This is another Warren Buffet pick. It is considered overvalued, but it has a dividend yield of 4.81%.
WHAT IS A STOCK AND HOW DO I BUILD WEALTH WITH IT?
When you buy a stock, you are investing in a company and its profits. It means you own a share in the company that issued the stock. The goal is to obtain a return on your investment through price appreciation or dividends. If the price goes up from what you bought the stock at, then you get a profit if you sell the stock at that price. If the stock issues monthly, quarterly or annual dividends, you get cash on your brokerage account for the dividend that that company issued. A lot of retirees like dividends because it is additional income they can add to their social security income to help them have a comfortable retirement. You can also have both at the same time: price appreciation and dividends.
Would like to start investing and don’t know where to start? Consider joining Webull. It gives you 2 free stocks as a reward for joining with $100! Click the link below to join:
https://budgetingkat.com/webull
WHO IS WARREN BUFFET AND WHY I FOLLOW HIS INVESTMENT STRATEGY?
Warren Buffet is the most famous (in my opinion) investor of the 20th century. His fortune surpasses the $95 billion mark (as of March 2021). Due to his fame, he is widely known as “the Oracle of Omaha”, where he currently lives. I follow him because he believes in holding investments for a long time and that is what I would like to do (for retirement). Also, he thoroughly studies the companies he purchases shares of so I think is smart to follow the stock picks of someone who has spent a lot more time than I could ever spend in analyzing those buys and who has a history of being #1 at it.
Would like to start a blog of your own to share your saving and investing journey or your personal journey in general? I have created a step by step process on how to start a blog on the page below:
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