As you know, this blog is focused on my efforts to build wealth using the dividend growth investing strategy. It’s a slow path to financial freedom. But, while the strategy may eventually get me there, I also realize it’s not the only path to take. To that extent, for example, I’ve invested in real estate. Afterall, I think it’s good to have multiple sources of investments, just as it is important to have multiple sources of income. So, for the first time ever, I’ve decided to buy growth stocks!
Let’s dive in to see which ones, and why?
Which Growth Stocks and Why?
The list is small. I’ve decided to purchase the following stocks: Google, Amazon, Facebook & Tesla. In a nutshell, I chose these stocks because I am familiar with what they do. I generally understand their business model and I fully expect these stocks to grow in the future.
Admittedly, I recently became interested in growth stocks when both Google and Amazon announced that they will be doing a stock split. The current share price of Google is approximately $2600. Google announced that it will be doing a 20-1 stock split for owners of their stock on July 1. That means, for every one share of Google, the investor will get 19 additional shares, but the share price will be divided by 20. So, stock splits themselves don’t increase the portfolio position. The overall portfolio size will be the same.
For easy math, lets assume that Google was trading at $1000 per share and an investor owned 1 share of Google. The investor’s portfolio is worth $1000. Now, assume Google decided to do a 5 to 1 stock split. The investor would own 5 shares of Google valued at $200 per share, which still equates to a portfolio size of $1000. Honestly, I don’t think I’ll be able to invest 1 share of Google by July, but we will see!
Amazon also recently announced a 20 to 1 stock split in July.
For the remaining stocks, I’ve been interested in investing in them for a while, but never really had the spark to do so until now.
How Much?
This is going to be tough! But I may try to buy one share of Google and/or one share of Amazon by July 1. If I do, I plan on just holding these stocks for the long term. Then I may dollar cost average my way into building up the growth stocks from there.
Dividend Growth Investing will still be the primary focus. I love getting those dividends! And, the thing about Amazon, Google, Facebook and Tesla is that they don’t pay dividends. However, there is value in having growth stocks.
What About Diversification?
I am keenly aware that it is risky to buy individual stocks. Indeed, one might argue that it’s better to simply buy a growth index fund or ETF because just buying one of those provide instant diversification. Although it is true that is risky to buy individual stocks, I am willing to take that risk. Personal finance, is of course, personal.
I am hopeful that should there be any failure of any of the stocks in my portfolio, that they all don’t fail at once. In any case, the growth stocks will not make up a huge percentage of my portfolio. That way, I am somewhat protected in case the worst happens.
Besides, as the months and years go by, I may increase the number of holdings in my growth portfolio. Wish me luck.
Which Broker?
I like M1 Finance a lot. It’s not perfect by any means – no broker is. But, for dividend growth investing, it does a pretty good job. Although M1 Finance is great, I like to have some separation. Therefore, I decided to go with a different broker.
Hello Robinhood. I’ve had Robinhood for a while now, but I recently sold out of all my positions in that brokerage. But, I didn’t close my account. Although there are many reasons to be upset with Robinhood, for my purposes, I’ve decided to give them another try. I’m just hoping that decision doesn’t come back to haunt me.
Given that I plan on pursuing dollar cost averaging by automatically depositing funds from my bank account, and then have those funds automatically purchase stock shares is something a value a lot. There might be other brokerage firms that are better for day trading (which I’m not planning on doing any time soon), but few offer the automatic recurring investment options for stocks that Robinhood does.
Conclusion
Dividend Growth Investing is a worthwhile strategy and will continue to be the focus on this blog. But, there are more than one ways to get to financial independence. One way is by investing in growth stocks, even if they don’t pay dividends. That is what I intend to do.
Although Google and Amazon doing a stock split was the spark I needed to finally start my growth portfolio, I really have been thinking about doing so for a while. Unfortunately, I have such a limited amount of funds, and it’s not necessarily good to dilute my income to so many different directions. But, I am confident that as time goes by, I will increase my earning potential. Once that happens, I’ll be able to more easily fund my investment desires.
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