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© 2023 by Troy Springer

How to Invest $500

March 18, 2018

 

In my last article, I talked about the difficulty of investing 500 dollars and offering casual financial advice. That can be summarized as.

 

-I want you to invest even with as little as $500
-It is hard to diversify with 500 dollars --you simply can't buy some stocks

-Offering casual investment advise is very difficult because:
         -Relationships with the advisee and the risk of losing money.
         -Their investing  experience

         -Hasty conclusions you can make from investing for your first time.

 

I do encourage you to read  my last article first as a disclaimer.

 

Great. Now you understand the challenges, so without further ado here is exactly how I would invest 500 dollars at current market prices as of 3/19/2018

 

The "I'm willing to lose all my investment, and my time horizon is forever." Portfolio
Pro: Most Reward

Con: Most Risk (little diversification)

 

This portfolio is designed to beat the market by picking individual stocks with great growth potential

 

1 Share of Shopify (SHOP) ~$145
Disclaimer Shopify is my largest position. It is perhaps my favorite investment of all time and it is positon to continue to change the way small business get their products to the market through e-commerce

 

1 Share of Disney (DIS) ~105
Disney has been sluggish the past two years as the way we have consumed media has changed, and some of Disneys offering have been sticky to change the way they are monetized and distributed. However, Disney stands to benefit owning some of the best intellectual property and offering new ways to consume their movies through a new streaming service and selling "a la cart" products like ESPN.

 

1 Share of Veeva System (VEEV) ~$75
Veeva system makes enterprise software solutions for the healthcare space. Enterprise software is a great business because it increases productivity, is sticky, and you have pricing power.

 

1 Share of the Trade Desk (TTD) ~$60
The Trade Desk is responsible for web marketing and sells personalized advertisements. It still is a young growing industry with a lot of growth potiental.

 

1 Share of Editas Medicine (EDIT) ~$40
Editas Medicine is a leader in CRISPR technology. Don't worry about the acronym means but just know that they work with genetic therapy to fight degenerative diseases. This is perhaps the most exciting areas of medicine right now. Many companies are involved but Editas seems to be the leader. Major Risk/Reward play here.

 

1 Share of Mulesoft (MULE)  ~$35
Mulesoft aims to make coding and technology easier for companies so they can tailor their technological solutions to their business. They are a young company with a lot of growth potential.

 

1 Share of Oaktree Capital (OAK) ~$40
With my remaining $40 I'll draft my only true "safe" pick in this portfolio. Oaktree Capital is an investment conglomerate lead by famed investor Howard Marks that specializes in distressed/contrarian companies. This pick will give you a dash of diversification and in theory should slightly underperform in rising markets and outperform in falling markets.

 

Total: $500

 

The "I'm interested in investing, but I don't know how I feel about losing money yet" Portfolio
Pro: Balanced risk
Con: Smaller chance to beat the market

 

Ill start by saying you can get most of what I am trying to achieve with this portfolio by owning "VOO" which is an ETF (exchanged traded fund) that tracks the 500 largest companies in the US. But if you want to try your hand at beating VOO, you can follow these picks.

 

1 Share of Berkshire Hathaway (BRK.B) ~$205
It is never a bad idea fo have Warren Buffet on your side. Berkshire Hathaway has absolutely crushed the market over time, and although it faces some difficult returns to scale right now, but stands to benefit greatly from tax cuts. This stock provides, diversification, downside protection, and even potential to beat the market.

 

1 Share of Paycom Software (PAYC) ~$110
Paycom is another enterprise software provider but for human resources management for processing payroll, managing hiring, keep track of time, and such. This is important software for every business and Paycom has created a product that is cheaper to maintain and is gaining market share from some of the bigger players. But the economics of the business model are great.

 

1 Share of Disney (DIS) ~105
Dito what I said earlier

 

3 shares of The Motley Fool 100 Index (TMFC) ~$60
This is an ETF that tracks 100 companies that investment advisory company the Motley Fool has picked. Based on historical returns with investment should beat the market in up (Bull) markets but may be more volatile than the S&P 500. It provides instant diversification.

 

Total: $500

 

The "my bank only gives me .005% interest, but I might need this money shortly" Portfolio
Pros: most safe
Cons: least expected return.

 

*this portfolio is not designed to beat the market but to be less volatile than the market*

 

1 Share of Berkshire Hathaway (BRK.B) ~$205
Cant go wrong.

 

1 Share of Vanguard Total Stock Market ETF (VTI) ~140
Theoretically a little less volatile than the S&P 500 or Dow or Nasdaq, but gives you all the upside of the total market.

 

2 Shares of Oaktree Capital (OAK) ~$80
Dito what I sadi earlier

 

2 Shares of Kinder Morgan (KMI) ~$30
Steady energy play that is less volatile than the market, or other energy stocks

 

2 Shares of Cambria Tail Risk ETF ~$45
The Cambria Tail Risk ETF is an actively managed fund that holds mostly cash and treasuries while using the strategy of buying put options on the S&P 500 with the purpose of portfolio downside protection. It is specifically designed to lose a little bit when the market goes up but goes with when the market goes down to limit the amount of money you lose.

Total: $500

 

 

AS ALWAYS YOU SHOULD DO YOUR OWN RESEARCH, I AM NOT A FINANCIAL ADVISOR. You can even incorporate a few streets from each of these portfolios to fit your needs.

 

I recommend the Robinhood App for trading with small dollar amounts to avoid commissions.   

 

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