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How to build a $100,000 stock portfolio

Updated: May 16, 2023

Before I tell you my secret to getting to a $100,000 in a stock portfolio, let me tell you why it is actually necessary.

Charlie Munger, who is Warren Buffet's long time business partner and legendary investor once said, "The first $100,000 is a b*%*h, whatever you have to do to get it, you should." Now, why would such an accomplished investor say those words. There has to be a good reason. This is because after your portfolio hits $100,000, compounding interest takes on a new momentum.

According to the rule of 72 (look it up, its a real thing), this $100,000 will double every 7.2 years at a rate of return of 10% (Simply divide the 72 by the interest rate to know when your money will double). The beauty is that each time it doubles, the next time will be compounded. Let me explain, after your first $100,000 doubles to $200,000+, with the dividends in your portfolio. The next double will be $400,000+ and then $800,000+ and then $1.6 million+ over a total period of 35 years. This is why getting to a $100,000 portfolio is so important.

Ok now, let us talk about how to get there. The first thing you need to do is to develop an investor mindset. If you don't believe it is possible to get there, it will be difficult to get there. An investor buys things of value, hopefully at a low cost basis and sells it later at a higher value. In this case, we may not necessarily be selling but bear with me. Once you have accepted that you deserve to be wealthy and that you too can be an investor, you are on your way to building that $100,000+ portfolio.

The next step is to focus on your ROTH IRA and brokerage account. You should obviously be investing in your 401K/403B up to the match but we won't focus on that in this example. First, set up automatic contributions to contribute the maximum to your ROTH IRA ($500/month in 2022 and $541.66/month in 2023). Next, set up monthly contributions to your brokerage account up to an amount you can commit to each month. Now you need to build that portfolio. You can begin by selecting index funds or their ETF equivalent. The next step is to select sector ETFs which can include Energy, Banking/Finance, Technology, Retail etc. Next you can add single stocks which you have researched thoroughly to increase that rate of return we talked about above to help you double your money faster (remember the rule of 72?).

This is how you build a $100,000+ portfolio. Before you know it, you will be on your way to a $200,000 portfolio and so on until you finally reach a multi-million dollar portfolio and eventually replace your income with your portfolio. If this helped you, please share it with a friend or loved one. If you are in search of an investment group that will keep you accountable on your investment journey, you are in the right place. I have created a specific group to help investors reach their first $100,000 or more. Head on to the book online section and join us.

See you there, Dr. Boadu.

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