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Grow Your Dough Throwdown: February Update

Grow Your Dough

Howdy all! If you remember from a few months back, I shared that I was partaking in an investing “challenge” with a number of other personal finance bloggers. This challenge, called the “Grow Your Dough Throwdown” is being run by Jeff Rose as a way to encourage a little competitiveness between fellow bloggers, but also as a way to encourage others to see that it is possible to invest, even with a little bit of money.

Anyhoo…it’s a full two months in to the challenge so I thought it would be appropriate to give an update on how my portfolio is performing. Before I do that, let’s take a look at the particulars of the Grow Your Dough Throwdown:

  • Open a brokerage account at the beginning of the year
  • Fund that brokerage account with $1,000
  • Funds may not be added to the account over the span of the year
  • You made trade as often as you wish, though no margin trading is allowed –which you really need to have at least $2,000 in a brokerage account to abide by minimum margin requirements
  • Track the progress over the year in order to see who the winner is

 

My Grow Your Dough Progress Thus Far

As I shared in my original post, I opened an account with my favorite brokerage Scottrade. We have numerous accounts with them so it was only natural for us to do so. Anyway, I invested in the always exciting Vanguard Total Stock Market ETF or VTI and have aptly named my portfolio “Dull Investing Wins the Game” since Boring Investment Portfolio was already taken. :-)  I could’ve done any number of things like actively trading the funds, which would eat up my money with commissions, or go with a company I use. There’s nothing necessarily “wrong” with either of those as I do them to certain levels in different parts of our portfolio.

That said, my purpose behind going the index fund route was largely because my investing view is a long one and not short. Also, right now I lack the time to adequately watch the portfolio the way I’d like to so this was easiest for me to do. Anyway, $1,000 didn’t go too far…allowing me to purchase 10 shares of VTI at a limit price of $95 bringing me to a total of $957 with commission included and thus leaving me with $43 in cash left.

As of end of trading on February 28th, VTI closed at $97.40 and thus bringing the value of my stock holding to $974. With my left over cash of $43 I have a total of $1,017 in my Scottrade Roth,  bringing my return so far to a whopping 1.7%. But, as you know, I’m not too bothered with that as it’s the long term that matters. In light of the other participants, some are doing better, some are not but my “dull” portfolio is sitting pretty much where I thought it would be.

If you’ve kept track of the market this year it was down a bit in January and has come back some in February to the S&P currently sitting up 1.38% at the time I’m writing this. With that in mind, I’m currently just over what the market has been doing and it likely all shakes out to be even once the minimal expense ratio and commission are figured in.

The Rest of the Year

Seeing as we’re only just a little over two months in to the year, God only knows where the market is going to go. With that (and other reasons) in mind, I’m planning on sticking it out with the straightforward strategy of my index fund to see where it takes me. I’ve not decided if I’m going to do anything with the $43 cash sitting in my portfolio…not that I could do a whole lot with it anyway. ;-) I could do something like buy a share of a lower priced dividend payer or even try out a lower priced option, but I’ll likely just stick with what I have.

Please know that my investment choice is not a recommendation by any means, but what I chose to fit best with my investment philosophy as well as life situation. So, what’s right for me very likely isn’t going to be right for you and vice versa. :-)

Also know that this should be used as an encouragement that you don’t need a lot of money to invest. Sure, it helps, but it is by no means a requirement. I get emails regularly from readers asking to know where they should start and how much they need to start investing and the key to remember is not to allow lack of funds to hold you back as numerous brokerages will allow you to start with as little as $500.

 

All that said, this’ll be an interesting investing year, especially if this past week is any indication.

 

Photo courtesy of: 401(k)2013

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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally

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18 Comments

  • Did you ever address why you chose to use ScottTrade over Vanguard’s brokerage if you’re just buying VTI? The purchase of Vanguard ETFs would be commission free through a Vanguard brokerage compared to the $7 per trade ScottTrade charges. Sure it’s not huge, but in a contest like this, every $ counts!
    Mrs. Pop @ Planting Our Pennies recently posted…PoP Balance Sheet – February 2014My Profile

    • John says:

      Good question Mrs. Pop. Someone had asked that after my initial post and had answered it, but I should have addressed it in this post. :-) It was for the sake of convenience really. We do a majority of our investing with ST and while we do invest in a lot of index funds, they’re not all in the Vanguard family and we also invest in some dividend payers as well. At the end of the year, I’ll just combine this Roth with my other Roth at ST which makes it easier since they’re all in house. I guess I could have just invested it with Vanguard, but didn’t want to have to deal with transferring it over at the end of the year.

  • I have $1,000 in an index fund that I started in late-November, and it’s up around $1,070 now – I was pretty pumped with that. Plus, I can buy fractions of units because it’s a mutual fund (so exactly $1,000). If I had known this was going on I might have waited a month or two :)
    Alicia @ Financial Diffraction recently posted…A Solitary Woman In A Sea Of Men.My Profile

    • John says:

      That’s not too bad at all, especially with the market being down a bit in January, but the upswing at the end of the year likely helped mitigate that.

  • I think you’re on the right track by using index funds vs. trading in and out and racking up transaction fees.
    MoneyAhoy.com recently posted…How to Get Sponsored Posts on Your BlogMy Profile

    • John says:

      Yea, I could have gone that route, but just don’t have the time to deal with that…not to mention eating up the small amount I have with commissions.

  • I love my slow and steady VTI.
    Stefanie @ The Broke and Beautiful Life recently posted…That’s a Wrap: My New MantraMy Profile

  • While I don’t disagree with your strategy in this challenge, I think these posts would be a lot more fun if you were only holding individual stocks and buying/selling a little more frequently ;) But this blog isn’t about speculative investing, nor do you promote it (or I haven’t seen anything that indicates you do!) so I applaud you for sticking with an index fund.

    With that being said, funny story. My wife told me to buy Zulily stock. It then went up over 30% in one day the next week. She has bragging rights when it comes to stock picking haha.
    DC @ Young Adult Money recently posted…The Weekly Quick Hits RoundupMy Profile

    • John says:

      Lol, I sort of felt the same way yesterday when I was writing this. I have a very small portion of our portfolio ( around 5%) for more speculative investing, but by and large I stick to index funds and solid dividend payers.

      Not bad! My wife wanted me to do the same with Groupon stock after it hit the market. We all know how that turned out…

  • Interesting Post! I like your strategy to just put in a grand and see where it goes. It sounds like you mostly purchased VTI. What was your reasoning behind that?
    Leonard @ The Wallet Doctor recently posted…How to reduce your food costsMy Profile

    • John says:

      Thanks! I picked VTI since it tracks the entire stock market and tend to lean heavily on index funds for our long term investing. We invest in different sector index funds as well and thought this would be a good fit.

  • moneystepper says:

    Good work John! I can’t see you winning the challenge with this method, as many other have taken a much riskier approach in search for greater reward. However, I think that this sets a bad example in the PF world and I like that you have taken the “slow-and-steady-wins-the-race” methodology!
    moneystepper recently posted…Maximise your annual ISA contribution – how to use your full ISAMy Profile

    • John says:

      Thanks Graham! I agree, I don’t see myself as winning this challenge, but then again I really wasn’t aiming to. ;) Having a great year is one thing, though my focus is much longer than that. :)

  • Cat says:

    Woo hoo. Even if you don’t “win” the contest you still “win” for being smart about it. I play with fake money in the Wallstreet Survivor online game. My husband made me after I told him I wanted to buy a few stocks. He said I had to play the game for a few months before committing lol. One of the stocks he picked doubled and another one plummeted. Guess that’s the name of the game. I’m glad we didn’t do it and maxed out the Roth instead but it’s fun to look at!
    Cat recently posted…You CAN Go On a Nice Trip If You Do Your ResearchMy Profile

    • John says:

      Lol, that sounds like me & Nicole! She’d rather pick some random stocks of companies she likes instead of something “boring” like a market tracking index fund. ;)

  • You’re right on man. Slow and steady wins the race when it comes to investing. Of course, I’m super boring when it comes to investing as well. Much flashier in real life though, just not at the cost of ruining my family’s future!
    Ryan @ Impersonal Finance recently posted…do money and family mix?My Profile

    • John says:

      I could not agree more Ryan. It may not be “sexy” but it does what you need it to do and avoids all the needless costs associated with being more active.

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