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Feb. 29, 2024
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Wiko Steyn
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Wiko Steyn

Monthly ETF Contribution

 

Picking stocks is like trying to choose a date at a singles mixer: it's overwhelming, confusing, and you're never quite sure if you're making the right choice. But just like dating, if you're persistent and don't give up, you might just find the one (stock) that will make your heart (and wallet) sing.

Sometimes it will feel like you are trying to navigate a minefield while blindfolded. You never know when a company is going to release a terrible earnings report, or when a competitor is going to come out with a game-changing product. It's like trying to predict if your date will turn out to be a total dud or a total catch.

Then there's the issue of too many options. Just like trying to decide between a vegan, a gluten-free, or a meat-loving date, there are so many stocks to choose from. Should you go for the blue-chip stalwart, the hot new tech startup, or the undervalued diamond in the rough? 

And let's not forget about the emotional rollercoaster of investing. It's like falling in love: one minute you're on top of the world, and the next you're questioning everything. Did I make the right choice? Is this stock going to be a long-term winner or a flop? Will my date turn out to be a prince charming or a frog?

Finally, there's the issue of insider information. Just like how your friend might know that the person you're about to date is a total player, some people have access to information that the rest of us don't. It's not fair, but it's just the way the game is played.

In conclusion, picking stocks is like dating: it's confusing, overwhelming, and emotionally taxing, but if you put in the effort and don't give up, you might just find the perfect match. And hey, if all else fails, there's always the "friend zone" option of buying index funds.


 

You might have heard of the new viral sensation that is taking the world by storm. It is known as AI or artificial intelligence and full disclosure, the paragraphs above were written by ChatGPT, an extremely powerful AI chatbot. It is quite amazing how quickly it has evolved and we can almost guarantee massive disruptions in many industries within the next decade. 

Although we asked ChatGPT to write the piece above in a humorous style it does contain some truths. Investing is difficult and picking individual stocks is really difficult. On several occasions, Warren Buffet has warned investors against picking individual stocks. 

I don't think most people are in a position to pick single stocks, he said during the Berkshire Hathaway annual shareholders meeting, A few, maybe, but on balance, I think people are much better off buying a cross-section of America and just forgetting about it. 

In essence, buy a low-cost index fund. Buffett recommends the S&P 500, which holds 500 of the largest companies in the USA, from Google to Disney to ExxonMobil and hold onto it for a long period of time.  


 

A recap of our strategy for our simulated portfolio

In total, we started with $70000, which was roughly R1 Million in April 2022.

  • ETF Portfolio ($28,000) investing in the general market for diverse exposure to companies all over the world (Risk 3/10).
  • Core Fund ($20,000) investing in established, growing market leaders. (Risk 6/10)
  • Unicorn Portfolio ($10,000) investing in asymmetrical risk/reward opportunities. (Risk 8/10)
  • Safe Haven ($10,000) investing in indestructible SWAN (Sleep Well At Night) companies (Risk 5/10).
  • Biotech Longshots ($2000) investing in the most innovative, early-stage biotech companies (Risk 10/10).  


Our ETF portfolio is our highest allocation, lowest risk and lowest maintenance portfolio. We simply add to our diversified positions on a monthly basis, this can even be done with a debit order. We highly recommend novice investors start with ETFs rather than individual stocks.  

 

A refresher on the 10 ETFs we hold in this demo portfolio

iShares Core S&P 500 ETF (IVV) If Buffet recommends it, who are we to argue? America might be facing some serious economic headwinds but in the long term, this fund has averaged more than 10% return per year.

VanEck Vectors Semiconductor ETF (SMH) Semiconductors are the new oil (well maybe not right now, seeing that oil is the new oil at the moment).  The digital world runs on semiconductors and this trend will continue into the foreseeable future. 

iShares MSCI Global Multifactor ETF (ACWF) Own the world.

iShares MSCI Emerging Markets ETF(EEM) This fund provide exposure to large and mid-sized companies in emerging markets.

Vanguard Dividend Appreciation ETF (VIG) This low-volatility fund also provides a healthy 1.94% dividend yield.

iShares S&P Global Clean Energy Index ETF (ICLN) The world is transitioning to cleaner energy and this fund should benefit.

VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) This ETF provides excellent exposure to rare-earth and strategic minerals.

Vanguard FTSE All-World ex-US ETF (VEU) Exposure to high-quality companies outside the US.

iShares Trust - iShares Global REIT ETF (REET) Own property around the world with this high-yield fund. 

Invesco QQQ ETF (QQQ) This index includes the 100 largest non-financial companies listed on the Nasdaq based on market cap.


 

Disclosure

This is not financial advice and only the opinions of the author. The $28K in the ETF portfolio is not real money and is only a demonstration of a typical portfolio.  All investments involve risk, and a financial product's past performance does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.


 


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