In this video, a millionaire explains how to wisely invest your first $10K. Whether you're new to investing or already have some experience, these strategies will help you make the most out of your money. Learn how to pick the right investment opportunities and set yourself up for long-term wealth.
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00:00So how would I invest my first $10,000 if I were to start all over again as a complete beginner?
00:05Just to give you guys a quick update on one of my main portfolios, I recently hit a new all-time
00:11high, which is around $1.1 million. I'm actually very happy about this because the stock market
00:17has been going up. But I know a very popular question that a lot of you guys ask me is,
00:21hey Steve, if I were to start all over again, where would I allocate my money into the stock
00:26market? So in this video, I'm going to talk about the four different things that I would
00:29personally buy in my portfolio. Remember, this is what I'm comfortable with doing. You guys have
00:34to see what your own personal risk tolerance is, and you can use some of my strategies if you feel
00:38comfortable. First and foremost, I would put maybe around $3,000 or $4,000 of my money into the S&P 500.
00:44For those of you who don't know what the S&P 500 stands for, S&P stands for standards and pours,
00:49and 500 represents the top 500 companies in the United States. If I were a beginner, I personally
00:54wouldn't pick individual companies because I personally think that it's a little bit more on
00:59the riskier side. When I first started investing, I invested in a lot of random stocks like Honda and
01:04all these other weird penny stocks. And yeah, I lost a lot of money. So I just don't wish this upon
01:09any of you guys watching this. So something that I would tell my younger self in my 20s is to just
01:13really diversify into the S&P 500. Whenever you buy one share of an S&P 500 fund, you're essentially
01:19investing in all the top 500 companies in the United States. This includes Microsoft, Google, Amazon,
01:25Mastercard, Visa, Costco, waste management, you name it. If you take a look at something outside
01:30your window, maybe around your room, most likely that company or brand is part of the S&P 500. You
01:37can kind of see the S&P 500 as the honor roll students or the honor roll companies where they
01:42have proven to a lot of investors that they can actually make money year over year. These are
01:47usually the companies that have been around for a long time and have weathered through a lot of
01:51economic storms. Now, personally, I invest in an ETF that tracks the S&P 500 called SPY. However,
01:58there are a lot of different alternatives out there like VOO, SPLG, IVV, and FXAIX, which is
02:04actually a mutual fund. I personally invest in SPY because yes, it does have a higher expense ratio,
02:10but I like to sell cover calls and SPY is the most top traded ETF in the world right now,
02:17which means that liquidity and volume is the highest. It's very easy to sell cover calls
02:21against your shares. However, if you're someone who wants to just invest for the long term,
02:26you don't really want to sell cover calls, you're not very interested in doing that,
02:29then VOO, SPLG, IVV, FXAIX, these are all other great alternatives too. And also ETFs like VOO,
02:37they have a lower expense ratio compared to something like SPY. If you're someone who says,
02:41hey, SPY and VOO, each share is kind of pricey. It's around like 500 something dollars right now.
02:47Then you can even look into something like SPLG, which is a lower cost per share. You typically
02:53want to just choose one ETF that tracks the S&P 500. It's a little bit redundant if you were to
02:59buy one share of SPY, one share of VOO, and one share of IVV. Just stick with one and add on to
03:05that position. All of these ETFs are pretty much the same thing. They track the S&P 500. They're just
03:11from different companies. Okay. And that's really just it. For those of you who are visual learners,
03:15this is a chart of how well the S&P 500 has done over the past several years. On average,
03:21the S&P 500 usually gives around a 7% to 12% annual return. This doesn't mean that every year it goes
03:27up 7% to 12%. Some years it could go down 20%. Other years it could even go up 20%. But in the long
03:34term, if you were to stretch out the x-axis, the S&P 500 usually gives around 7% to 12% a year.
03:39The second thing that I would invest in is something that tracks the NASDAQ 100 or technology
03:45companies. If I were younger and I had a very long time period to invest, I would most likely invest
03:51a little bit more into technology companies. However, if you guys have seen my other videos,
03:56you guys know that with technology companies, they are more volatile in the short term. So if you're
04:01someone who can't really stomach a correction, a pullback, then maybe technology companies aren't
04:06really for you. But for me, because my risk tolerance is a little bit higher, then yeah,
04:11I don't mind investing in these higher risk assets. Okay, so what is the NASDAQ 100? Again,
04:17very similar to the S&P 500. These are kind of like the top 100 technology companies in the United
04:22States. A couple of examples of ETFs that track technology companies are QQQ. And if you want to
04:28buy shares that are a little bit cheaper per share, QQQM is a good alternative. Within these
04:35technology ETFs, they typically hold a lot of these companies like NVIDIA, Tesla, Meta, and even
04:41Google. And yes, there is some overlapping companies within these technology ETFs and the S&P 500. It's
04:47just that these ETFs that track these technology companies, there's a higher concentration of
04:52technology companies compared to S&P 500 funds. This right here is a chart that shows the performance
04:57of QQQ, which is the ETF that I invest in myself. Again, you don't have to choose this one. There are other
05:02alternatives out there, but I like QQQ. And again, I know a lot of you will ask me why I chose QQQ to
05:08invest in my portfolio. And again, QQQ is a higher traded ETF, has higher volume, higher liquidity,
05:16so it's easier for me to sell cover calls. But if you're a beginner and you want a share that's a
05:20little bit lower in price, QQQM is also a great alternative. The third thing that I would invest in
05:25are ETFs or stocks that pay a dividend. I know these companies and ETFs are more on the boring side
05:31because they don't grow as fast compared to technology companies. But for me, I do like
05:37getting paid dividends on a monthly or quarterly basis. SCHD is one of my favorite dividend paying
05:41ETFs. Again, you can choose whatever you're most comfortable with, but SCHD is kind of like the
05:46go-to for my portfolio. And within SCHD, there are a lot of these dividend paying companies like
05:52Pepsi, Coca-Cola, and Home Depot. Keep in mind that even though these dividend companies don't grow
05:56as much or as fast as these technology companies, they usually are the ones that can weather through
06:03a lot of storms, especially during a pullback or correction. You're going to notice that whenever
06:08there's negative news, technology companies, especially ones that don't really pay a dividend,
06:13they usually get sold off the fastest. This is compared to these boring dividend paying companies.
06:18They usually kind of hold their price. Of course, they're going to sell off too, but they hold their
06:23price a little bit better compared to these high volatile stocks. So if you're someone who likes
06:28to get paid dividends or you want a little bit more stability in your portfolio, then these
06:32dividend paying companies, assets, ETFs, these are the ones that you probably want to add into your
06:37portfolio. Within my account, this is a screenshot of what I was paid in the last payout. I got around
06:43$241 from SCHD. I have a couple of shares of waste management. I have this random share of Lockheed
06:49Martin that gave me $3.15. Meta pays a dividend too. I have a couple of dividends from Microsoft,
06:56Home Depot, MasterCard, Costco, and even Lowe's. The fourth thing that I would do in my portfolio
07:01is to keep my money as cash. A lot of people make fun of me for keeping cash in my account,
07:07but for me, it makes me sleep a little bit better at night. I usually like to keep cash just in case
07:12there's some sort of market pullback correction. So this way I have a little bit of ammunition
07:17or some money to deploy. So this way I can pick up a couple of my favorite shares for a lower price.
07:23Okay. So this is for me. I usually like to keep around five to 10% of my entire portfolio as cash,
07:30but again, you can do whatever you want to do, whatever you feel most comfortable with. Now,
07:34if you're someone who uses Fidelity or one of these brokerages that give you a higher interest on
07:39uninvested cash, this is a good opportunity for you to also make some money just by leaving your money
07:46as cash. For my Fidelity account, for my uninvested cash, that is automatically put into a money market
07:53that currently at the time of this recording gives around 4 point something percent. I actually don't
07:59know what it was, but the last time I checked, it was around 4.9%. Okay. So let's look at allocation.
08:04If I wanted something more on the balance side, I probably would put $4,000 into an S&P 500 fund.
08:12Again, for me, that would be SPY around $3,000 into more technology heavy ETFs like QQQ around $2,000
08:20into SCHD dividend paying ETFs assets, and then around a thousand dollars in cash. Now, if I were
08:29younger, then I would probably allocate a little bit more into technology companies. This is why I have
08:34around $5,000 here and everything else is going to be, of course, going to be pushed down a little
08:41bit lower. If I were someone who wanted to focus more on income, or maybe I wanted to be a little
08:48bit more on the conservative side, I would choose option C, where I would have around $4,000 into SPY,
08:55$1,000 into QQQ, and around $4,000 into SCHD. And if I wanted to just keep everything simple,
09:04then you know what? I would probably just put everything into SPY or whatever ETF that tracks
09:10the S&P 500, right? I would put $9,000 into that and just keep some of that money, my portfolio,
09:16in cash. Remember in the end, you want to see whatever is most comfortable for you. This is
09:21your money, so you don't want to listen to just anyone on the internet, including myself too. So
09:26see what strategies work for you that you feel most comfortable with. For those of you who want to
09:31build a high paying dividend portfolio, I'm going to leave a video next to my head right here so you
09:35can watch it right after. If you guys found a lot of value in this video, I greatly appreciate it if
09:39you could give me a follow, a like, or even a comment down below because it really does help me
09:44with the algorithm. Thanks everyone for supporting my channel and I'll see you guys in the next video.
09:48Bye everyone.