Last year, I participated in the Grow Your Dough Investing Challenge. And honestly, I sucked and didn’t do very well. Why? Because I speculated and didn’t invest – basically I broke the rules that I teach everyday.
I thought to myself, “hey, this is just a contest, let’s have fun.” And fun and games is great, but losing sucks. Losing money really sucks. Losing money to versus other financial bloggers sucks even more. Do you know the kind of crap other financial bloggers give you over drinks when you lose?!?!?
Well, this year, I’m participating once again in the Grow Your Dough 2.0 Investing Challenge. I’ll be going head-to-head with 20 other financial bloggers, but this time with a twist. The contest is being hosted by Motif Investing – one of my favorite new brokerage accounts.
What’s Motif Investing
If you don’t know about Motif Investing, they are focused on letting you buy a “motif” of stocks – or a group of stocks that are based around a specific theme. For example, you can buy the Obamacare Motif, or the Nanocare Motif, or The College Investor Motif. You can even build your own Motif of stock from scratch.
The cool thing about Motif is the pricing. You can have up to 30 stocks in a motif, and each motif only costs you $9.95 to invest. If you went with another brokerage firm, you would have to pay a commission for each stock – so you could literally spend $210 ($7 trades x 30 stocks) to do the exact same portfolio.
How The Investing Challenge Will Work
For the investing challenge, myself and 19 other bloggers all created our own Motifs, which I’ll detail more below. The goal is simple – highest overall return (including dividends) for the year. It’s not based on dollar value, but simply the performance of the underlying investments.
We will also be given the chance to rebalance our portfolio up to 6 times per year. So, I will be checking in and sharing any changes I make throughout the year.
Setting Up My Motif/Portfolio
The goal of my portfolio is similar to my real life portfolio – slow and stable growth. My goal is to see long term growth, lower volatility, and income reinvested to boost my return (i.e. dividends).
To achieve that, my initial motif consisted of the following:
- 60% US Bond Index (AGG)
- 7.5% Gold (GLD)
- 7.5% Commodities (DJP)
- 25% Stocks
- 5% Abbvie (ABBV)
- 5% American States Water (AWR)
- 5% CYS Investments (CYS)
- 5% Kinder Morgan (KMI)
- 5% Monsanto (MON)
So, why did I choose these investments? Let me break it down:
I put a large portion of my portfolio in bonds for a simple reason. They are less volatile and earn income. Yes, bond prices may fall this year, but yield will rise, and total return should still be positive. And it will likely be a wild ride in the stock market this year, so having a large portion of my portfolio in a stable sector is key.
For gold and commodities, this is an inflation focus. Inflation and interest rates will both likely rise this year, and both of these sectors should perform as a result. Furthermore, commodities are near 10 year lows, and so they should slowly start to rebound a little. Finally, there may be shocks this year that could impact the market. Oil is a possibility right now, but other unknown unknowns could always happen.
Finally, stocks are key for growth, but they are a smaller portion of my portfolio. In my real life portfolio, I stick to index funds, but for the competition, I did select stocks for my Motif. I selected Abbvie for it’s focus on healthcare, American states water because of the continued scarcity and increasing demand for water, CYS for it’s real estate focus, Kinder Morgan to get a rebound in oil, and Monsanto because people will always need food, and more and more people are getting GMO crops whether they agree or don’t.
If you want to see the standings, Motif Investing created a Leaderboard that you can follow on their site everyday. However, I will also be embedding the leaderboard on my sidebar so you can always see how The College Investor motif is doing.
What do you think about my choices?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.