I Invested $5 a Day for 27 Months. Here's What Happened.

Summary

The video script details a personal finance experiment where the creator invests $5 daily into the stock market, starting in January 2022. By April 2024, the strategy has resulted in a modest return, with the creator emphasizing the importance of consistency and diversification. The video compares this approach with investing in individual 'hype stocks', highlighting the risks and potential pitfalls of focusing on individual companies rather than a broad market index like the S&P 500. The creator also discusses the benefits of using apps like Robinhood and Weeble for investing and the importance of not putting all eggs in one basket.

Takeaways

• 💡 The video discusses a concept of investing small amounts daily, such as $5, as an approach to building wealth over time.
• 🚀 The speaker started the '$5 a day investment challenge' in January 2022 and has been consistent for 27 months up to April 2024.
• 📈 The challenge involves investing in the S&P 500 index fund (VO) through an app like Robinhood or Weeble, which offers more options and higher interest rates on uninvested cash.
• 🔄 The speaker initially invested manually but then set up an auto-invest feature to automate the daily $5 investment.
• 📊 The investment strategy takes advantage of dollar-cost averaging by investing through market highs and lows, which helps to lower the average cost over time.
• 📉 The speaker emphasizes the importance of diversification and the risks of investing in individual 'hype stocks' that may not perform well in the long term.
• 📈 A comparison is made between the consistent returns of the S&P 500 index fund and the variable performance of individual stocks like AMC and TORAY, highlighting the unpredictability of single stock investments.
• 📊 The video shows that, despite the challenges of 2022, the S&P 500 investment has a total return of $921, or 2.93%, demonstrating the power of consistent, small investments.
• 💥 The speaker warns against the allure of 'hype stocks' that promise high returns but may not deliver, using the example of Tattooed Chef (TTCF) which went bankrupt.
• 🌟 The video highlights the success of Palantir Technologies (PLTR) as an exception, showing significant growth with a $5 daily investment over the period.
• 🤔 The speaker encourages viewers to consider the long-term stability and growth potential of their investments, rather than chasing short-term hype.

Q & A

What is the main idea presented in the video script?

The main idea is the concept of investing a small, consistent amount daily, such as $5, into the stock market as a way to build wealth over time, as opposed to investing a large sum all at once.

What was the initial investment strategy proposed in January 2022?

The initial strategy was to invest $5 every single day into the stock market, starting from January 2022.

Why is investing $5 a day considered easier than investing a large sum like $10,000 or $25,000?

Investing $5 a day is considered easier because it requires less upfront capital and can be achieved by cutting out small, non-essential expenses from daily life, making it more accessible for individuals with limited funds.

What is the significance of the 27 months of consistency mentioned in the script?

The 27 months of consistency refer to the period from January 2022 to April 2024, during which the investor has been consistently investing $5 a day into the stock market.

What is the difference between investing in individual stocks versus an index fund like the S&P 500?

Investing in individual stocks means putting money into specific companies, which can be risky as their performance may vary greatly. An index fund like the S&P 500, on the other hand, provides diversification by investing in a broad range of top companies, reducing risk.

Why did the author switch from manual daily investment to an auto-invest feature?

The author switched to an auto-invest feature for convenience and to ensure consistency, eliminating the need to manually invest $5 every day and reducing the chance of forgetting to invest.

What is the advantage of investing $5 daily instead of a lump sum amount monthly?

Investing $5 daily takes advantage of the highs and lows of the market, implementing a strategy known as dollar-cost averaging, which can potentially reduce the impact of market volatility compared to investing a lump sum at a specific time.

What is the result of the $5 a day investment challenge after 27 months?

After 27 months, the result is a total of 10.74 shares in the S&P 500 fund, with a market value of $512, an average cost of $391, and a total return of $921, or 2.93%.

What is the risk associated with investing in individual 'hype stocks' as mentioned in the script?

The risk with 'hype stocks' is that they can be highly volatile and their performance may not be sustainable in the long term. There is a chance that they could lose significant value or even go bankrupt, as seen with the example of Tattooed Chef (TTCF).

What is the conclusion the author draws from comparing the $5 a day investment in the S&P 500 to investing in individual hype stocks?

The conclusion is that while some hype stocks like Palantir Technologies (PLTR) may show significant growth, the overall performance of a diversified investment in the S&P 500 through an index fund is more stable and less risky, emphasizing the importance of diversification.

Outlines

00:00

💡 Starting Small with Investments

The speaker shares their journey of struggling to find money for investing and their idea from January 2022 to start investing just $5 a day in the stock market. This approach, they argue, is more manageable than trying to invest large sums. They discuss how cutting out small expenses like extra meals or coffee can free up this money for investments.

05:01

📈 Investment Challenge Update

The speaker updates viewers on their $5 a day investment challenge, explaining that they've consistently invested this amount from January 2022 to April 2024. They contrast this disciplined approach with the risky hype stocks often promoted on YouTube. The speaker intends to compare the returns of their method with those of investing $5 daily in a hype stock.

10:02

🔄 Automating Investments

Discussing their use of the Robinhood app for automated daily investments, the speaker explains the mechanics of setting up recurrent investments. They describe the process of calculating the correct amount to invest daily, considering the stock market's non-operational days, ensuring a consistent $5 investment throughout the year.

📊 Diversifying with the S&P 500

The speaker highlights their investment in the Vanguard S&P 500 ETF, emphasizing the benefits of diversification. They explain how this method provides exposure to the top 500 companies, reducing the risks associated with investing in single stocks. They also discuss dollar-cost averaging and its advantages.

💸 Portfolio Review and Performance

Providing a detailed portfolio update, the speaker shows their investment growth over the past two years and four months. They share their total shares, market value, average cost, and overall return. The focus is on the importance of percentage returns and the benefits of a diversified investment strategy.

📉 Risks of Hype Stocks

The speaker compares their S&P 500 investment strategy with popular hype stocks, such as AMC and Tattooed Chef, using a portfolio visualizer tool. They reveal that while some hype stocks like Palantir performed well, others like AMC and GameStop resulted in significant losses, illustrating the risks of investing in trendy stocks.

📉 Analyzing More Hype Stocks

Continuing their analysis, the speaker looks at additional hype stocks like Palantir and GameStop. They highlight Palantir's impressive returns but caution about the risks of relying on single stocks for long-term investments. The speaker encourages viewers to suggest more stocks for future analysis.

🤔 The Uncertainty of Single Stocks

The speaker reflects on the unpredictable nature of individual stocks, using historical examples like General Electric and IBM. They stress the importance of diversified investments through index funds to mitigate risks and ensure more stable returns over time.

📊 Conclusion and Viewer Engagement

Wrapping up, the speaker invites viewers to share their thoughts on other hype stocks for analysis and emphasizes their preference for index fund investing. They mention a related video explaining why they stopped investing in individual stocks, encouraging viewers to watch it for more insights.

Keywords

💡Wealth Building

Wealth building refers to the process of accumulating assets over time to increase one's net worth. In the video, the concept is central as the speaker discusses a strategy for growing investments through small, consistent contributions to the stock market. The idea is to start with small amounts, like $5 a day, and build up wealth gradually, which is a practical approach for those who may not have large sums to invest initially.

💡Investment

Investment in this context is the act of committing money with the expectation of generating income or profit. The video emphasizes the importance of investing small amounts daily as a means to grow wealth over time. The speaker contrasts this with the traditional view of needing large sums to start investing, advocating for the power of consistent, smaller investments.

💡Stock Market

The stock market is a platform where shares of publicly traded companies are bought and sold. The script discusses investing in the stock market daily with small amounts, highlighting the potential for growth over time. The speaker also mentions the importance of understanding that the stock market isn't open every day, which affects how investments are made and calculated.

💡Dollar-Cost Averaging

Dollar-cost averaging is an investment strategy where an investor consistently buys a fixed dollar amount of a particular investment, regardless of its price. In the video, the speaker explains how investing $5 a day in the stock market exemplifies this strategy, allowing for the purchase of more shares when prices are low and fewer when they are high, thus reducing the average cost over time.

💡S&P 500

The S&P 500 is a stock market index that measures the performance of 500 large companies listed on stock exchanges in the United States. The video script uses the S&P 500 as an example of a diversified investment, where instead of investing in individual stocks, one invests in an index fund that represents a broad section of the market, reducing risk and providing exposure to the overall market's performance.

💡ETF (Exchange-Traded Fund)

An ETF is a type of investment fund and exchange-traded product, traded on stock exchanges much like individual stocks. In the script, the speaker mentions investing in an S&P 500 ETF, which allows for diversification across the top 500 companies, as opposed to investing in a single stock, which can be riskier.

💡Hype Stocks

Hype stocks are shares of companies that are receiving a lot of attention and promotion, often on social media platforms like YouTube. The video discusses the dangers of investing in such stocks based solely on hype, without considering the fundamentals of the company or market trends. The speaker contrasts the performance of these stocks with a consistent investment strategy.

💡Diversification

Diversification is the practice of spreading investments across various financial instruments, industries, and other categories to manage risk and ensure that one bad investment doesn't disproportionately affect the overall portfolio. The script emphasizes the benefits of diversification through investing in an index fund like the S&P 500, as opposed to putting all money into a single 'hype stock'.

💡Autoinvest

Autoinvest is a feature that allows an investment platform to automatically execute trades based on predetermined criteria, such as investing a set amount daily. The speaker in the video uses autoinvest to streamline the process of investing $5 every day, reducing the need for manual intervention and ensuring consistency in the investment strategy.

💡Portfolio

A portfolio refers to a collection of financial assets such as stocks, bonds, commodities, cash, and cash equivalents, as well as investment funds like ETFs. In the script, the speaker provides an update on their portfolio, which consists of an S&P 500 ETF, and compares it to hypothetical portfolios based on investing in individual hype stocks.

💡Market Capitalization

Market capitalization is the total market value of a company's outstanding shares of stock. The S&P 500 index, mentioned in the video, is composed of the top 500 companies weighted by market capitalization, indicating the relative size and value of the companies included in the index.

Highlights

The concept of investing $5 a day in the stock market as a more accessible alternative to large initial investments.

The introduction of the '$5 a day investment challenge' started in January 2022.

The idea of cutting out small, unnecessary expenses to afford daily investments.

The 27-month consistency of the $5 a day investment from January 2022 to April 2024.

The comparison between the $5 a day investment challenge and investing in individual 'hype stocks'.

The recommendation of using Weeble over Robin Hood for new investments due to better options and higher interest rates.

The strategy of setting up a recurring daily investment of $5 using an auto-invest feature.

The calculation method for adjusting the daily investment amount to account for stock market operating days.

The advantage of investing in an S&P 500 fund for diversification compared to individual stocks.

The demonstration of the benefits of dollar-cost averaging through daily investments.

The portfolio update showing 10.74 shares acquired over 27 months with a total return of $921 or 2.93%.

The discussion on the unpredictability of individual stock performance and the wisdom of diversification.

The historical perspective on how top companies change over time, illustrating the risk of investing in hype stocks.

The use of a portfolio visualizer tool to simulate the performance of different investment strategies.

The simulation results showing the stark contrast between the performance of the S&P 500 index fund and individual hype stocks.

The cautionary tale of investing in 'the next big thing' and the potential for significant loss, exemplified by the bankruptcy of Tattooed Chef (TTCF).

The surprising performance of Palantir Technologies (PLTR) as a hype stock, outperforming the S&P 500 index fund in the simulation.

The final thoughts on the importance of considering long-term trends and the risks associated with investing in individual stocks versus index funds.

Transcripts

if you want to build wealth and you find

yourself constantly in this point where

you don't have enough money to invest

trust me I've been there too and back in

January of 2022 I got this idea of wait

a minute instead of investing all this

money in the first place Why not start a

little bit smaller and we're talking

only $5 a day and we'll do that every

single day into the stock market could

that be enough money to grow Investments

over time after all I I find that $5 at

least for me is a lot easier than

$10,000

$25,000 and all of these big figures

that investment professionals tend to

throw out see $5 a day is cutting out

maybe an extra meal a week or stopping

so many Starbucks runs or whatever

you're spending and blowing your money

on that you don't really need to be

that's the point of the $5 a day

investment challenge so in this video

today I'm going to update you on my

portfolio of what $5 a day looks like

from January 2022 until the latest April

2024 if you're counting that is 27

months of absolute consistency but a

little bit of a twist for those of you

who watch these videos on the regular

first of all thank you I really

appreciate that but second of all you

know there's a lot of things out here on

YouTube there's a lot of different

investment advice uh even though it

really shouldn't be investment advice

but there is it's hype stocks right like

there's certain stocks that you probably

have seen all over YouTube especially if

you search in all the wrong areas and

they talk about you know how this

particular stock is poised to 10x or

this one here it's going to the moon so

so I pulled you guys and asked what are

the top hype stocks and then I did some

additional research to see what videos

are out there that are getting the most

views that are getting the most

attention based on individual stocks

that are going up what we're going to do

is we're going to compare my $5 a day

investment challenge that I've already

set up back in January of 2022 to doing

the same thing but going in on one of

those particular individual stocks with

$5 a day which one ended up making more

money over the Long Haul from January

until now in April of 2024 let's start

however with an update on the portfolio

so we can see it right here now I

started using Robin Hood back when I

first started this so I figured you know

since I started with that I'll keep it

going but I would say if I'd start this

all over again I would actually

recommend Weeble it gives a little bit

more options they actually pay a higher

interest rate for any uninvested cash

that you'd have to pay extra for in

order to achieve that benefit with Robin

Hood so if you want to check out Weeble

they do offer a lot of great benefits

when you get signed up link in the

description below but uh in any case

this is what I started with so for this

particular challenge I'm going to stick

with this one but Vanguard vo this is an

S&P 500 fund currently going for

4768 as of the recording of this video

right now so here's the key when I set

out for $5 a day I've kind of I I was

going in manually at first and investing

$5 every day and then I got smart and I

said well I can do an autoinvest which

means I tell the app whether you use

Robin Hood or Weeble it doesn't matter

but you tell the app hey every day when

the Stock Market opens or when the stock

market ends or whatever automatically

invest $5 a day for me so I don't have

to come in here every day and deal with

this cuz you know me I'm going to forget

the next thing I did is I realized wait

a minute the stock market isn't open

every single day of the year it says

recurrent Investments vo daily buy

$727 now you may quickly say well wait a

minute that's not $5 a day you're

sitting here BL than $727 in but that's

because stock market's not open every

day so it's a very simple calculation

take $5 times 365 days or 366 if you're

in a leap year like we are here in 2024

and then divide that by how many open

Stock Market Days there are in the year

that you start this challenge all you

got to do is go to Google and Google it

that's all you got to do and then you

divide that total number divided by how

many stock trading days and that'll give

you how much you should set up on your

recurrent investment and that's why it's

$727 what's beautiful about this I

literally no longer have to worry about

this every day this is open it's

investing and that way I know even

though the stock market's not open on

Saturday and Sunday I'm theoretically

getting my $5 a day invested for all 365

or 366 days a year last point before I

show you the portfolio is right up here

at the top Vanguard S&P like I said 476

85 now the S&P P 500 is the top 500

companies weighted by market cap in

America the key Point here though is

it's not an individual stock you can go

out and invest in an individual stock

and I'm about to show you some very

interesting information based on the

hype stocks all throughout YouTube here

but this one you're taking advantage of

all 500 top companies you're immediately

diversifying by buying into this

particular ETF now you could do it one

time a month but there's a trick to that

let me show you what I mean if we go

here to the 3-month chart and let's say

for example you decide to invest only

one time per month and we're not talking

about $5 a day so you invest right up

here let's say it's like February 22 you

see that and look at the going price at

that point

$466 so if you do it by the month and

not by the day it's around

$155 a month so that means that you put

$155 straight up into this fund at

$466 then the next month rolls around

and let's say you invest right around

the same time so in this case it's right

near the end of the month at it's

February 22nd so here comes let's say

March 22nd now look what happens it's

now going for

$479 so while the graph is going up as

you can see on this particular chart the

real trick with that is you got to

realize that there when when you do it

every single day you take advantage of

the highs and the lows so right down

here when it's sitting at$ 469 you're

buying when it's down here where it's

sitting at 456 before it blasted up to

$466 on February 23rd you're buying

you're buying the highs and the lows

consistently this is like the ultimate

dollar cost averaging let's get to the

point cuz I know you're all like yeah

yeah yeah yeah that's great where's the

portfolio right here it is all right so

now I've racked up over the last two

years and and four months 10.74 4515

shares that's amazing I love the fact

that just a simple investment can get

you that many shares in such a short

period of time that means my market

value is sitting at

$512 at an average cost of

$391 because 2022 was such a bad year in

the stock market as I was investing I

was taking advantage of all those lows

which really brought that average cost

down that means that my total return for

this particular challenge so far is $921

or

2.93% and that's the thing to focus on

is the percentage now some of you out

there are going to say well why would

you invest in the S&P 500 you could do

so much better with this or so much

better with that I get the comments all

the time I get it but here's the thing I

want that calm Diversified approach by

investing in the index you sure I could

have went all in on Apple back in 1985

and have like 10 $20 million but at the

end of the day nobody truly knows what

is going to happen in the stock market

you don't know if your your stock that

everybody's talking about that you think

is great is going to go to the moon or

not it brings me to this beautiful

website right here and I've shared this

before but it's so important when it

looks at the S&P 500 now the top company

in the time of 1993 was Exxon Mobile do

you see that what is the top company now

in 2024 well it kind of goes goes in

between Microsoft and Apple but have a

look here where's Apple at where's Apple

at it's nowhere and see the problem is

everybody goes after what's being talked

about they go after the exciting things

let's go up here to 1998 take a look at

that General Electric the top talked

about company and I bet if it was 1998

and we were as vibrant as we are here on

YouTube today everybody be talking about

well GE is the top dog look at where GE

is right you see this okay now let me

hop to 2024 tell me where General

Electric is it isn't even on here and in

fact

go over to seekingalpha.com type in

ticker symbol GE have a look at the

stock chart see here's the problem

everybody's like oh yeah come on it's

the next big thing it's great it's

awesome first of all a you didn't

predict that Apple would have been as

successful as it was let's be honest and

two you would have gone in on the bigger

companies that you know about everybody

talks about Apple they talk a lot about

Nvidia right now what happens 10 20 or

30 years from now that's the key of

investing in the S&P 500 through an

index fund like vo or spy you take

advantage of all of these things you you

your investment gets spread across all

these different companies every time you

invest so let me show you the portfolio

visualizer this one is free and I'll

include a link in the description below

so you can go check it out yourself but

here's what we're going to do we're

going to simulate some of these you know

YouTube hype stocks against the $5 a day

S&P 500 that we have been doing remember

2.93% up but let's take a look here so

in January of 2022 as you've heard

before this is when we started the

challenge and now we're going to go all

the way to April of 2024 which is the

recording of this video so what we're

going to do here is we're going to

invest $155 a month that roughly gives

you about $5 a day so we're going to

contribute a fixed amount at $155 and

this is where I get screwed and it says

monthly quarterly or annually if they

had a daily that would be incredible by

the way if you're if you're like somehow

magically watching this and you like own

this website dude if you could do it

daily that would take this whole thing

to a next level but I'll settle for

monthly for now so here we are at

monthly right and what I'm going to do

is we're going to put in vo because

that's the $5 a day challenge currently

and that's portfolio number one

indicated by 100% of that portfolio was

invested in vo the next thing we're

going to do is look at let's see

herec you know everybody keeps talking

about AMC and especially back in 2022

everybody seemed to be on this like big

kick about oh it's going to be the next

big thing I was also going to do ttcf

tattooed Chef that was another big one

everybody was talking about tattooed

Chef is the next big thing uh

unfortunately I can't do that anymore

the thing went bankrupt it's on the pink

sheets if you invested a lot of money

into tccf go ahead and comment below so

I can just empathize with you and I hope

it wasn't a lot of money I hope it

wasn't all your money oh my gosh that is

just heart-wrenching because you know

ultimately if you didn't get out on time

you literally lost all your money cuz

this thing went boom gone on the pink

sheets not cool so I guess we're stuck

with some some weed we're going to talk

about some weed and that's Tay

apparently another hype stock according

to you all in the comments so you know

personally I haven't seen the hype stock

at toway but if uh if you want let me

know where I can find that where that's

being hyped out but let's see what

happens here okay so if you invested $5

a day into V or you an AMC person you're

like I'm all in on AMC that's the next

big thing it's going to short squeeze

again oh my gosh 10x or you're into the

weed and you do $5 a day into T analyze

a portfolio have a look what happened in

the last 3 years it's pretty obvious

what the clear winner is vo going to

that $5,700 as you just saw in my

portfolio but have a look at AMC you

literally lose money you're down to a

th000 bucks all that money you put in

all those $5 a day that you put in gone

poof buy only giving you $1,000 if you

sell right now today and then of course

if you invested in the weed you're doing

a little bit better than AMC at

4,177 but to be honest with you that is

still terrible have a look I mean we're

looking at negative

37% you know it's just come on what

what's the point of that the only one

that was hyped up that I I see is

actually doing better is paler and it's

ticker symbol pltr paler Technologies on

portfolio 2 and then what we're going to

do is also look at GameStop which is

another big hype on portfolio 3 so paler

is actually going to beat vo let's take

a look at it and see what's going on

here so as you can see if you would have

done $5 a day into Palante here you

would actually grow to a remarkable

$9,000 that's freaking phenomenal so

hats off if you if you decided to do

that but then also uh GameStop is

another sad story like AMC stop stop

doing that guys get get get a little bit

better with the money now here's the

thing to think about though will paler

be a good thing like if you sold out now

you're looking pretty good and you're

like yo I did it I'm awesome congrats

you're absolutely right will paler

continue its upward Trend will it be

like a Tesla and be like mooning and

make the S&P 5 vo all of us even though

we're all kind of making money in the

deal yeah you're going to make a lot

more if you're going into palent two but

here's the thing will that become the

next General Electric will that become

the next Exxon Mobile let's go back here

to 1990 will that become the next IBM

you know like that's that's something to

think about I we don't know that's what

the risk is when you go into single

stocks you're literally putting all your

eggs into one basket you know this was

kind of fun are there any other hype

stocks out there that I'm missing that

you think I should do an analysis on

that you think hey do you think this one

actually will be a moon or am I wasting

my time and I should really look into

index funds drop them down below and

we'll do a a true analysis on them I'll

dig in and see hey is this one actually

doing well from a revenue perspective

from a growth perspective or not I will

tell you though paler is looking good

not Financial advice to buy hold or sell

I an index fund investor I'm always

going to buy all the companies and not

just one single one by the way if you

want a little bit more on why I stopped

investing in individual stocks you got

to check out this video next and we'll

see you on the next video