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Building Your Portfolio, Financial Independence, It'll Be Fun!



Father and Son
It'll Be Fun Crew

Financial Independence...

Maybe you've reached a point where you're ready to embark on your investment journey independently, with aspirations of eventually taking full control of your portfolio. Like us, you may choose to utilize a financial advisor for the majority of your investments while learning the ropes practicing with smaller investments. Maybe you just want to play with a portion of your money and leave the rest with your financial advisor. No matter your situation, this approach towards investment independence gave us the opportunity to accumulate knowledge, gradually. It gave us time to hone our skills, both in company analysis and investment decision-making. We got to make a bunch of mistakes while keeping our money safe, which is something everyone can get behind.


During this learning phase, we maintained a portion of our investments with index funds for stability, while also exploring options to generate income and make use of our stock holdings. As you begin, consider allocating your initial $10,000 investment towards a diversified, low-cost index fund such as an S&P 500 exchange-traded fund (ETF). Once a foundation is established through gradual purchases, it's time to delve into individual stocks and beyond.


Given the substantial time investment required for thorough company analysis and maintenance of investment theses, we recommend starting with no more than five companies to keep your portfolio manageable. Remember, you are learning. As your investments grow and you gain more research time, this number may expand to ten. Of course, think about yourself. Index funds offer exposure to numerous companies with research conducted by others, easing the burden of individual stock analysis. So maybe you will never want to own more than 5 stocks yourself.


Begin your evaluations with familiar brands and companies you trust—ones you interact with regularly. If a company's business model or products are difficult to grasp, it may be wise to explore other options. Stick to what you understand; it's safer and builds experience in your investment decisions.


Education is paramount in becoming a successful investor; it's not about quick riches but about selecting financially sound companies you believe in and can continue to learn about. Patience is key, waiting for stock prices to align with your determined valuation, similar to deciding on a good deal for a home or car purchase.


Once you've selected a stock, assess its current valuation before making a purchase decision. Begin building your position gradually, starting with a fraction of your intended investment. Scaling into a position provides flexibility to add more if the stock price declines while your investment thesis remains intact, thus improving your overall cost basis over time.


Consider the sectors you are targeting as you invest. Practicing diversification is good. As you progress, you may explore advanced strategies like covered calls and puts or spreads. These strategies, though complex, can help reduce your cost basis and enhance portfolio returns.


In summary, investing requires diligence, continuous learning, and a disciplined approach. As with everything, it starts with a solid foundation and thorough research. If you stay patient, you can pave the way for long-term financial success.


And It'll Be Fun! We Should Have Done This Sooner!


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