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How To Accumulate A $1,000,000 Investment Portfolio

If I had a penny for every time someone has said to me.... “If only I bought Google on its IPO and never sold a share”… well, I would have at-least a handful of pennies. Its true, had you been lucky to buy shares of Google and never sold a penny, you would be quite well off today. This of course would have required that you purchased shares and had the discipline to hold the position. We as human beings tend to suffer from hindsight syndrome and FOMO (fear of missing out). The infamous “coulda-woulda-shoulda”. So what can one do today to head in the right direction??

I will demonstrate what needs to be done to give you a chance to have a $1,000,000 portfolio in 28 years. I understand not everyone can afford to set aside the amount that I will use in this example, but this an example. Take the concept and apply to what works in your budget. The take away is to start today and you will be amazed how it can accumalate. This example does not require you to pick the next Google, it simply requires consistant savings and discipline. This is where I help clients. I act as accountability and emotional support, when times are tough and sometimes when you feel things arent working, and lets be honest… we all feel this way… I can help to remind you of the larger picture.

So this example uses the following assumptions.

  1. You start with $0 invested

  2. You start investing $1,000 per month starting July 1, 2017

  3. You continue to invest $1,000 per month, EVERY MONTH (automate it, its very easy to set up an automatic investment program where money sweeps from a savings account, treat saving like a utility bill that you need to pay)

  4. It assumes the portfolio makes 7% return per year (The S&P 500 has averaged approximately 10% return per year from 1928 through 2014 according to investopedia)

  5. This example is not adjusted for inflation or taxes

Here are the results depicted over time

Source: financial calculators

Source: financial calculators

As you can see, after 28 years you have just over $1,000,000 dollars. Obviously this is a very simplistic example, but it demonstrates the power of compounding and does not require any exceptional stock picking skills. If one wants to invest in single stocks, having a portion of your investments in single stock names could be an appropriate approach. For example, 75% is invested in a diversified portfolio and then 25% is invested in single stock names.

Many of us want the get rich quick solution. The most powerful tool that we have when it comes to our money is earnings power. The more we can earn, the more we can invest, the more you can invest the more wealth potential you have. So focus on earning first. If you cannot earn more, try to cut costs where you can to generate a savings account. Once you have your emergency cash account funded, then start to use the spillover and invest what you can afford each month. I use WealthVision with clients, it is interactive digital planning software that I offer for free to those who what to use it. You can sync your external accounts, credit cards, debit, 401(k) and so on. What I find nice is it generates a spending projection based on prior spending habits. It provides a breakdown of where your money is going each month. Budgeting is not fun, I understand. This tool automatically provides the data based on your history. Much of the heavy lifting is done for you when it comes to a budget.

You can watch a WealthVision video on our facebook page @newpointe. Email or message me if you would like to try it for free.

Disclosure: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The above hypothetical example is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.


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