“Road To $1 Million” Investment Portfolio – How it works

Welcome to “The Road To $1 Million,” an investment journey designed for long-term wealth accumulation. Initiated in April of 2023, our objective is to navigate a 15-20 year path towards an ambitious milestone: a $1 million investment portfolio, a legacy we’re building for future generations.

Our Strategy: Weekly Investments and Dividend Compounding

Our approach is rooted in consistency and growth. With scheduled weekly investments of $500, we leverage the power of dividend compounding (sans the typical DRIP approach) and fractional shares to fuel our portfolio’s expansion. The aim is to not only reach the $1 million mark but also to establish a source of passive income exceeding $100,000/year, transforming our portfolio into a beacon of family wealth.

Tailored for Everyone: From Aspirational Investors to Seasoned Savers

Recognizing the universal appeal of wealth building, we’ve decided to share our portfolio on our website. Whether you’re an eager beginner or an experienced investor, this portfolio offers a starting point for anyone interested in cultivating their wealth. The portfolio spreadsheet details everything required to embark on this investment journey.

Weekly allocations, typically updated during the weekends for Monday investments, guide your contributions. We provide specific investment instructions for stock, ETF, and hedge allocations, ranging from $100 to $500, though you’re free to invest any amount within your comfort zone.

Personalized Investment Journeys

Returns on our website reflect our specific journey of $500 weekly investments starting from April 2023. It’s important to note that varying investment amounts and timelines will yield different outcomes. For instance, an investment of $200 per month will not parallel the growth trajectory of a $500 weekly investment. However, our dynamic weekly allocation model allows you to start your investment journey at any point – be it next week, next month, or even years down the line.

Flexible Investment through Dividend Utilization

Each week, dividends paid out are used as part of the next week’s investment, offering us enhanced flexibility and control. For example, if our typical weekly investment target is $500 and we receive $40 in dividends, the actual new cash investment for that week would be $460. This method allows us to dynamically adjust our investment based on current market conditions and opportunities. A significant advantage of this approach is how it affects long-term growth and net contributions. As dividends compound over time, their contribution towards the weekly investment target increases. Eventually, the portfolio can reach a point where dividends cover a substantial portion, or potentially all, of the weekly investment target, leading to a self-sustaining growth model. For instance, achieving $2000 per month in dividends would mean meeting a $2000 monthly investment target without additional deposits. Far down the road, if and when dividends will grow to a point of covering >50% of the weekly allocation, we suggest to increase the weekly allocation accordingly, to speed up wealth accumulation and reach the $1M target faster.

An Evergreen Investment Approach

The beauty of “The Road To $1 Million” lies in its flexibility and adaptability. Each week, we curate the best possible allocation for stocks and ETFs based on fair value, dividend yield, and growth potential. This means that no matter when you start, you’re always getting an optimized investment strategy.

The Power of Early Investing

Remember, the sooner you start, the more time your dividends have to compound, potentially catapulting your portfolio’s value well beyond the $1 million mark. This journey is as much about the destination as it is about the journey itself!

Getting Started

Here’s what you need to begin your journey on “The Road To $1 Million”:

  1. Open a Suitable Brokerage Account: Select a brokerage that supports fractional shares trading. We suggest WeBull for those planning to invest $500, and Robinhood for allocations between $100 to $400. If you’re considering a Roth IRA or traditional IRA for tax advantages, ensure the broker supports fractional shares in these accounts too.
  2. Deactivate Dividend Reinvestment Plans (DRIP) from your account: In conventional investment strategies, Dividend Reinvestment Plans (DRIPs) are a popular choice for handling dividends. However, “The Road To $1 Million” Portfolio adopts a distinctive approach. Instead of automatically reinvesting dividends back into the market, we receive them as cash in our brokerage accounts. This requires setting up your account to deactivate the automatic DRIP feature.
  3. Determine Your Investment Commitment: Decide on a weekly or monthly investment amount that is feasible for you. Consistency is more important than the amount – it’s the key to wealth accumulation. Choose an amount you’re confident you can commit to regularly.
  4. Stay Updated with the Latest Allocation: Always refer to the most recent spreadsheet update before making your investments. We typically update the allocations on weekends, with the “Last Update” date clearly noted at the top of the spreadsheet (under the title) for your reference.
  5. Execute Your Investment Plan: Place your orders every week (or month) according to the latest “Weekly Desired Allocation” column and dollar amounts (under “Amounts to purchase Next for $XXX allocation” columns) in the spreadsheet, and start building your portfolio. To track your progress and stay motivated, periodically record the dividends received and the overall portfolio return, preferably every three to six months. Watching your wealth and passive income grow can be incredibly rewarding and motivating.
  6. Stay updated with real-time trade alerts and news: Our portfolio strategically includes investments in short-term securities, like USFR, which we consider as our ‘cash allocations’. We allocate a certain percentage of each investment to these ‘cash buckets’, earning interest while waiting for the right moment to deploy these funds. This approach is especially effective during bear market conditions when we can purchase ETFs and stocks at significantly lower prices, enhancing our long-term total returns. We actively monitor market conditions and deploy our cash buckets when the stock market drops by certain percentages (typically 10%, 20%, or 30%). This strategy enables us to buy assets at a deep discount, a key tactic in maximizing the portfolio’s performance over time. To keep our readers well-informed, we provide updates on these trades and any regular trades (for example, selling a security mid-week due to significant news or events) in the “Trade Updates” section, located in the bottom left area of our spreadsheet. These updates are usually provided every weekend. However, in times of high market volatility, immediate action can be crucial. For those interested in real-time notifications about these trades, we offer a private Twitter/X feed. Subscribers to this feed receive instant alerts, enabling them to act swiftly in response to market changes. You can subscribe to this service by following the instructions at the bottom of the spreadsheet page.
  7. Focus on Long-Term Goals, Not Short-Term Market Movements: It’s natural for the stock market to have its ups and downs. Avoid getting swayed by short-term market fluctuations or trying to time the market. Remember, occasional declines are part of the investment journey. Your focus should be on the long-term objective of creating significant wealth for yourself and potentially your family.

Check our previous articles regarding the “Road to $1 Million” portfolio for a general overview of the idea behind it:

  1. 2023 in Review: TheFrugalFella.com “Road To $1 Million” Investment Portfolio Achieved Market-Beating 34.21% (CPR) Returns!
  2. The Road To $1 Million Portfolio: Maximizing Wealth with Intelligent Dividend Investing and Compounding.
  3. Introducing The Road To $1 Million Portfolio! Your Blueprint to Financial Freedom.