My Stock Market Portfolio as a Teenager
In this article, I’m going to be breaking down my stock market portfolio as a teenager. I’ll describe each of my positions and why I invest in them, and what percentage of my portfolio they make up.
Also, I want to stress that this is not investment advice and should not be used to inform your investment decisions. This is just so that you understand my thought prosses
But before I get into my stock market portfolio, I’ll explain the importance of investing, how to invest as a teenager, and how to diversify your portfolio.
Why I invest
Investing is a great skill to learn that helps you build wealth consistently over a long period of time. If you invest wisely, without taking on too much risk, it can be one of the easiest ways to make money and grow your net worth.
And learning how to invest as a teenager will help to prevent you from making big mistakes as an adult. The more practice you’ve had investing, the more confident you’ll feel, and the less likely you’ll be to make critical mistakes.
Begining to invest as a teenager will also allow you to take advantage of Compound interest.
“Compound interest is interest earned from the original principal plus accumulated interest. Not only are you earning interest on your beginning deposit, you’re earning interest on the interest” – Justin Pritchard, The Balance.
Essentially this means that you can benefit from exponential growth and that the early you start investing, the more compound interest will benefit your stock market returns.
How to start investing as a teenager
If you want to start investing as a teenager, the good news is that it isn’t very difficult. Although there are some extra hoops you have to jump through, and you won’t be able to invest as easly as an adult, it’s still a very manageable task. To start, you’ll have to open a custodial account with the help of one of your parents.
“The term custodial account generally refers to a savings account at a financial institution, mutual fund company, or brokerage firm that an adult controls for a minor (a person under the age of 18 or 21 years, depending on the laws of the state of residence). Approval from the custodian is mandatory for the account to conduct transactions, such as buying or selling securities” – Troy Segal, Investopedia.
Custodial accounts essentially allow you to buy and sell stocks with the approval of your parents. All of the money in the account is still owned by you and you’ll have full access to it when your no longer a legal minor.
The best brokerages for custodial accounts
Depending on the brokerage you choose to open a custodial account with, the account will have different features and perks. It’s important that you understand these differences so you can make an informed decision about what brokerage is best for you.
From my research and experience, the best brokerages for teenagers to open a custodial account with are:
To learn more about the best brokerages for custodial accounts, read this article!
Diversification
Diversification is an essential part of having a good stock market portfolio. Being diversified means that you have many different stocks (and other investments), in your investment portfolio to generate a more consistent return.
“Diversification strives to smooth out unsystematic risk events in a portfolio, so the positive performance of some investments neutralizes the negative performance of others. The benefits of diversification hold only if the securities in the portfolio are not perfectly correlated—that is, they respond differently, often in opposing ways, to market influences” – Troy Segal, Investopedia.
Knowing this, it’s important to invest in at least 20-30 stocks across different sectors to benefit from diversification. If your investing in index funds that are already very diversified, diversifying your individual stocks is much less important.
Index funds – 50%
Index funds make up a large portion of my portfolio, approximately half.
“An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor’s 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets” – Jason Fernando, Investopedia.
One of the things thats great about index funds is that they allow you to easly diversify into many different companies, while only having to buy a single stock.
Vanguard Growth Index Fund ETF – 15%
Vanguard Growth Index Fund ETF (VUG) is a fund that tracks the CRSP US Large Cap Growth Index. As the fund’s name suggests, VUG’s funds are invested in companies with historical growth in earnings per share and sales per share.
Vanguard Total Stock Market Index Fund – 15%
Vanguard Total Stock Market Index Fund (VTI) is a great way to get broad exposure to thousands of companies in the United States. By investing in this index fund, you’ll gain exposure to almost every US public company.
Vanguard Developed Markets Index Fund ETF – 5%
Vanguard Developed Markets Index Fund (VEA) is a fund that tracks companies in developed markets around the world. Unlike many of the other index funds I invest in, this is not limited to the united states and in fact, North American companies make up a messily 9% of the fund’s assets.
Vanguard 500 Index Fund ETF – 5%
Vanguard 500 Index Fund ETF (VOO) is a fund that tracks the S&P 500, an index of the 500 largest US companies.
Other – 10%
ETFs – 25%
Ark Invest is an investment management firm that actively manages ETFs focused on disruptive innovation. They have 8 funds that each specialize in different areas like genomics, fin-tech, and autonomy. Together, across their different funds, Ark Invest is 20% of my stock market portfolio.
Other – 5%
Individual stocks -25%
Individual stocks make up around 30% of my portfolio. This category consists of 25 stocks, mostly in the technology sector.
1. Arcimoto – 8%
Arcimoto (FUV) is an EV company that produces compact, 3 wheeled electric vehicles. The company was built off of the idea of efficiency. “It no longer makes sense for one person to drive a seven-passenger SUV to work every day,” the company says. “In the future, we’ll drive small EVs built for one or two people to maximize efficiency” – Arcimoto. When you consider that a significant portion of car rides only have one or two passengers, Arcimoto’s goal really starts to make sense. Although Arcomoto isn’t the next Tesla, this niche electric vehicle manufacture is poised for significant growth in the future. Click here to read my full article on the company Arcimoto!
2. Matterport – 3%
Matterport (GHVI) is a company that sells Matterport Scanners, which are special cameras used to create immersive 3D renderings of indoor spaces that you can upload to a computer and move around in. This technology has a wide range of potential uses from real estate, to insurance, to interior design. We’re only starting to see all the applications of this versatile technology and future growth potential is undeniable.
3. Tesla – 1%
Tesla (TSLA) has become one of the largest companies in the world. It produces EVs and solar panels and is working to develop full self-driving software. Tesla is currently the leader of the electric vehicle industry while EVs are gaining market share. Tesla is at the forefront of innovation and is clearly a company that will be around for decades to come. The only reason Tesla doesn’t have a higher allocation in my portfolio is that it is heavily featured in some of the ETFs I invest in.
4. Pinterest – 1%
Pinterest (PINS) is a social media platform where creators can post “pins” to share information and inspiration. Pinterest is a great way for companies to target advertisements to the specific demographic and interests of a person.
5. Google – 0.5%
Google (GOOG) is an absolute behemoth of a company with a vast array of products and services ranging from advertising to high-speed internet. Google is clearly a company thats hear
6. Amazon – 0.5%
Amazon (AMZN) is another behemoth company with one of the highest market caps in the world. Amazon, as everyone knows, is an online retailer company where you can have almost anything shipped to your door at competitive prices within just a few days. The convenience that Amazon provides saves users so much time which is why so many people opt to purchase from Amazon. Amazon is a ridiculously big company with almost no competition, that shows no signs of stopping growth.
7. Target – 0.5%
Target (TGT) is one of the largest retail companies. But the reason I invest in this stock is their impressive 1-hour delivery service. Using Shipt a company Target acquired for over half a billion dollars, they are able to provide one-hour delivery of a wide range of products sold in Target stores. This is an amazing service that rivals the convenience of Amazon for many items.
8. AAPL – 0.5%
Apple (AAPL) is the world’s largest company by market cap that sells a wide range of products and services. Apple consistently designs beautiful electronics with cunning edge technology and has a huge fanbase of loyal customers.
9. Wayfair – 0.5%
Wayfair (W) is an online furniture retailer. Wayfair has a huge selection of high-quality yet inexpensive furniture. From all of my experiences purchasing off of Wayfair, the prices have been impressively low, but the furniture still is durable and looks good. As the world continues to shift away from physical retail stores, Wayfair is a company positioned to take advantage of this and continue to increase revenue.
10. Fivver – 0.5%
Fivver (FVRR) is an online marketplace where freelancers can sell services. On Fivver, you can sell anything from a video editing service to data entry, and users around the world can seamlessly place orders. Social media and the internet are increasingly used by both individuals and businesses which is causing the freelancing market to explode. Fivver will continue to grow as the freelancing industry grows, as it is the leading freelancing platform, so Fivver defiantly has huge growth potential.
11. Etsy – 0.5%
Etsy (ETSY) is another e-commerce company, where people and small businesses can sell products that are primarily handmade rather than mass-produced. This company is an amazing place to buy high-quality products and support small businesses. As e-commerce continues to grow, Etsy is the leading alternative to buying low-quality, mass-produced, products.
12. Coinbase – 0.5%
Coinbase (COIN) is an easy-to-use cryptocurrency exchange platform. Coinbase allows you to exchange cryptocurrency in a simple app that caters to beginners. The cryptocurrency market is rapidly growing (although not without pullbacks) and as cryptocurrencies continue to become more prolific Coinbase has a lot to gain. The more transactions there are on Coinbase, the more revenue they make.
