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Put all of my money into the SP500, this last year did well but I don't know how to diversify.

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NotAnotherUser11

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Last year I put a fair sum of money into the SP500, VFIAX to be exact. I've had nothing but great returns but I really take no credit for it. I picked the easiest, most common stock (at least in terms of advice I had been given) went all in and waited. What else was I to do, just let it sit in my bank account? I received the money from the death of a parent, I didn't earn this so I am extremely careful. I don't try anything crazy or attempt to make huge gains. I realized that this money can go just as fast as it has come. However - I am seeing stocks rocket like AMD, Tesla, NVIDIA - All things that I Have an interest in.
The one I've really had my eye on is AMD. I'd love to put a fair amount into that since I've seen what they've been coming out with and it's just incredible how far that company has come.
How do you decide where to diversify without over thinking it? I understand that you can only think so much, you can only read so much before you realize you cannot tell the future.

I keep reading that AMD is going to go off in 2020... But I am not a risk taker, I am somewhere between way too safe and completely manic in my decisions. I want to generate wealth but I also do not want to squander what ever bit I have.
 

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BizyDad

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I want to generate wealth but I also do not want to squander what ever bit I have.
So... you're on a entrepreneur forum talking stocks. Ok, cool. I'm a former stock guy, still have them, I can empathize with what you are saying.

I'd like you to consider this for a moment. Your stock return are what? 8%? 12%? Yearly.

I have a client who sells a product online. Every dollar he spends in advertising turns into $5 profit, after all expenses, including taxes. That's a 500% return. Monthly.

So I'll say it again, you're on an entreprenuer forum talking stocks.

If you really want to generate wealth, consider a better investment vehicle. Like your own business.

FWIW, I have money in AMD. Put a small amount in and have fun watching it. I did the same thing with TWLO and AYX.
 
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NotAnotherUser11

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Nov 23, 2019
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So... you're on a entrepreneur forum talking stocks. Ok, cool. I'm a former stock guy, still have them, I can empathize with what you are saying.

I'd like you to consider this for a moment. Your stock return are what? 8%? 12%? Yearly.

I have a client who sells a product online. Every dollar he spends in advertising turns into $5 profit, after all expenses, including taxes. That's a 500% return. Monthly.

So I'll say it again, you're on an entreprenuer forum talking stocks.

If you really want to generate wealth, consider a better investment vehicle. Like your own business.

FWIW, I have money in AMD. Put a small amount in and have fun watching it. I did the same thing with TWLO and AYX.
Sorry, I am a bit confused. You are mentioning that this is an entrepreneur forum but there is an entire section dedicated to stocks? I understand it's not 500% return, I am simply asking about diversifying from experienced people on here. Surely you're entrepreneurs but a lot of you do stocks as well.

You must understand that I do not have that type of "mindset" that others have. I'm not like you guys. I am not a business guy, I'm not successful. This money came to me from disease, not because I earned it. That's why I don't try anything crazy - because it is not something I can recoup easily, if at all... if ever.
 

BizyDad

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Right right. You didn't do anything wrong.

I'm just pointing out that you said you want to create wealth.

And there's a lot of other threads on here that can help you create wealth faster than your current chosen route. That's all I'm saying. Just trying to help a brother out...
 

InspireHD

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Last year I put a fair sum of money into the SP500, VFIAX to be exact. I've had nothing but great returns but I really take no credit for it. I picked the easiest, most common stock (at least in terms of advice I had been given) went all in and waited. What else was I to do, just let it sit in my bank account? I received the money from the death of a parent, I didn't earn this so I am extremely careful. I don't try anything crazy or attempt to make huge gains. I realized that this money can go just as fast as it has come. However - I am seeing stocks rocket like AMD, Tesla, NVIDIA - All things that I Have an interest in.
The one I've really had my eye on is AMD. I'd love to put a fair amount into that since I've seen what they've been coming out with and it's just incredible how far that company has come.
How do you decide where to diversify without over thinking it? I understand that you can only think so much, you can only read so much before you realize you cannot tell the future.

I keep reading that AMD is going to go off in 2020... But I am not a risk taker, I am somewhere between way too safe and completely manic in my decisions. I want to generate wealth but I also do not want to squander what ever bit I have.
Firstly, if you are not sure about AMD, then don't invest in it just because you keep reading about it. Whether it does or doesn't, it's ultimately your decision to make. You're literally throwing money away if you just invest in it because you're stuck on the idea of investing in the company without really knowing the value. Everyone can say it's "going to go off in 2020" but that doesn't mean it's a good investment. The secret to getting wealthy in the stock market is by buying companies that are priced well below their intrinsic value.

For example, if I have a $20 bill, the intrinsic value of that money is $20. If I offer it to you for $25, would you buy it from me? Probably not. If I offered it to you for $10 (50% discount), would you buy it from me? Absolutely. You should do that every single time it's offered to you. You can then turn it around and instantly have a 100% return. You will get rich very quickly if you can make 100% returns consistently.

The tricky part is knowing the value of an entire business. How much is AMD worth? It's currently valued at $64.7 billion. Is that high or low? I personally don't know. If the business is actually worth $50 billion, then you're paying too much. If it's worth $100 billion, then you should probably consider making an investment. You want to make sure you're building a "margin of safety" into the investment.

What does that mean? If it's currently valued at $64.7 billion and it's actually worth $65 billion, there isn't a lot of wiggle room there. If it's actually worth $100 billion and over the next couple years it appreciates to $90 billion, well, you didn't quite make it to $100 billion but you still had a good investment.

So back to your real question on how to diversify. With the S&P fund, you're already diversified. You'll probably see slow and steady gains over a long period of time. You'll ride the market waves. Last year, the S&P returned over 30%. Great! Some years, though, it'll go down 10-30% and you just have to roll with it. Make sure to reinvest the dividends to continually increase your shares and it'll start to become a significant investment in the future. It's probably the best place to have your money parked to protect it.

Now, Fastlane? That's a whole different ballgame.
 

Kak

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I’m definitely in the camp of keeping the money you earn.

Obviously reinvestment in a working system is a GREAT way to build wealth. But you need a working system first.

I hold investments of all kinds. Why? Because I have businesses that are either already well capitalized or too risky to invest my own money in. If I had 75 million laying around I wouldn’t sweat a 500k investment, but I don’t, however, I know people that do... so it works out for everyone.

I don’t gamble with my money. I look at all investments with opportunity cost in mind and choose wisely. It is part of good money management and a skill one MUST have after his or her business begins making good money. Grow what you make.

All of this said, the answer to your question is it depends. We would be doing you a disservice by giving you something to invest in. Might I suggest a bit of self education on the matter. Try reading the intelligent investor as a foundation and then start picking some other books written by experts to dive into once you are more well versed in the different options.

By the way... The S&P500 ETF is already extremely diversified.

My current investing philosophy will make heads explode. In my opinion, super diversified is the new “single stock exposure.”
 
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Kevin88660

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Last year I put a fair sum of money into the SP500, VFIAX to be exact. I've had nothing but great returns but I really take no credit for it. I picked the easiest, most common stock (at least in terms of advice I had been given) went all in and waited. What else was I to do, just let it sit in my bank account? I received the money from the death of a parent, I didn't earn this so I am extremely careful. I don't try anything crazy or attempt to make huge gains. I realized that this money can go just as fast as it has come. However - I am seeing stocks rocket like AMD, Tesla, NVIDIA - All things that I Have an interest in.
The one I've really had my eye on is AMD. I'd love to put a fair amount into that since I've seen what they've been coming out with and it's just incredible how far that company has come.
How do you decide where to diversify without over thinking it? I understand that you can only think so much, you can only read so much before you realize you cannot tell the future.

I keep reading that AMD is going to go off in 2020... But I am not a risk taker, I am somewhere between way too safe and completely manic in my decisions. I want to generate wealth but I also do not want to squander what ever bit I have.
If you want to take less risk google on dividend paying stocks and etf.

But really if you want a good answer it depends on the following.

1) Your age (younger people can take more risk)
2) Your risk appetite-okay you do not want to take too much risk
3) Other financial liability- debt, children...
4) How much time do you have monitoring your investment. Active management vs keep it simple

5)What are other jobs or business are you doing or intend to do. If you have a high income but a small portfolio to manage, active management is a waste time for you..spending one hour per day to monitor and research to earn more 3 percent per annum for a 50k port size is not worth it...while your hourly income (opportunity cost of active management) is much higher. If you do not even have fund to cover 6-12 month of expense go liquidate everything and be in cash.
 

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