Category: Investing

Our Shocking Investment Strategy… Individual Stocks

This is the second in a series about how we do things differently.  Check out the companion post, Four Personal Finance Rules We Ignored (And Maybe You Should Too) for more about how we disregarded the advice of a popular mainstream personal finance personality to forge our own path to debt freedom and financial independence.  

I got interested in the stock market at an early age.  Around fifth grade, my parents helped me cash in years of birthday money to buy shares of Merck, Disney and TWA.  Merck was a broker’s suggestion, but the two other purchases were based on my own likes as a young consumer (including a love of travel that continues today!)

When I sold those shares of Merck and Disney shortly before college graduation, thanks to years of market growth and reinvested dividends, I had more than doubled my money.  And while TWA filed for bankruptcy just a few months after I bought the stock, it taught me a valuable lesson about risk:  No company, regardless of its size, reputation, or history, is infallible.  When it comes to investing in individual stocks, while you can make big gains, you also have to be prepared to lose it all.

Like many of my personal finance friends and idols (including Mama Fish Saves, Our Financial Path., Budgets are $exy, and of course, Jack Bogle and his devotees) our holdings include a variety of low-cost index funds.  Index funds replicate a market or segment of the market, such as the S&P 500, Dow Jones Industrial Average, FTSE 100, Nikkei 225, or the MSCI EAFE.  They are passively managed, and because of minimal buying and selling, fees are low, making them a popular investment vehicle.

Where our philosophies start to differ is when it comes to individual stocks, which are also a key part of our portfolio.  Our strategy is simple:  We regularly take $1,000 and buy shares totaling that amount in companies whose goods, services or commodities we see used in our daily lives and we believe will experience continued success.

Ideally, we prefer to buy  income stocks, or stocks that generate dividend payments, which we reinvest into more shares of that stock.  But you’ll see in the interactive visualization created by my smarter half, Ryan Sleeper, we also have a few growth stocks, which represent growing companies that reinvest their earnings back into the company instead of paying shareholder dividends.  The cost we incur is a one-time $7 per trade, and we buy and hold, so fees are still comparatively low.

Here’s how we’ve done since starting this strategy in 2013:

(Clicking on the image will take you to an interactive version of the visualization)


A few standouts include:

Transocean, Ltd (RIG) – One of our first stock buys, this was a broker pick.  While luckily it didn’t turn us off of individual stocks completely, it did teach us to go with our gut and buy what we know, and not what an adviser recommends.

3M, Johnson & Johnson, Microsoft, and Disney – These are all brands that every American has and uses on a daily basis.  Think you’re a uber-cool SINK or DINK and Disney isn’t reflective of you?  Think again.  Disney owns Marvel, The History Channel, Lifetime, A&E, ESPN and the American Broadcasting Company, better known as ABC.

Ulta and Amazon – We bought Amazon around the time they released Fire TV, knowing that an increasing number of Americans are cutting the cord and choosing streaming television and movies, as well as foregoing the traditional bricks and mortar shopping experience for one involving Prime (and for me, a glass of pinot).  I’ve also been a fan of Ulta for a few years.  I appreciate that they cater to a range of demographics by carrying drug-store brand beauty products as well as luxury labels.  I saw their growing presence in our city as a sign that others must like them too!

Tableau – My husband makes his living using this software to interpret data for corporate and non-profit clients, teaching others how to use it, and evangelizing its functionalities.  It took some convincing, but my husband believes so strongly in this product, that I relented.  And so far, he’s been right.

For us, including individual stocks as a part of our larger portfolio keeps us thinking, learning and engaged in our investments.   And it’s another way we keep personal finance, personal.

The author of this post is not an expert on buying and selling stocks or any other investment vehicle.  These and all investments come with a level of financial risk, which are the sole responsibility of the investor.  This post and commentary contained within is not professional advice or an endorsement or recommendation of any individual stock, company,  investment or strategy.