How I’d Build a Long Term Stock Portfolio From Scratch in 2026

Summary

In this video, the creator outlines a step-by-step framework for building a successful investment portfolio in 2026 and beyond. Starting with a firm foundation, the video covers how to prioritize core investments like S&P 500 ETFs and dividend stocks. It also touches on adding growth drivers, such as individual stocks, while managing risk. The video emphasizes long-term compounding, maintaining a balanced portfolio, and managing risk through diversification. Ultimately, it encourages viewers to stay focused on long-term goals, patiently allowing investments to grow over time, while adjusting portfolio positions when necessary.

Takeaways

• 😀 Establish a firm foundation for your portfolio, focusing on long-term discipline and compounding growth to withstand market cycles and recessions.
• 😀 Strong core holdings should include businesses with solid balance sheets, consistent cash flow, wide margins, and steady demand.
• 😀 Core portfolio holdings typically consist of S&P 500 ETFs (such as VO, SPY, IVV) or others like VTI, which includes all public companies in the US, not just the S&P 500.
• 😀 ETFs like SCHD (Schwab US Dividend Equity ETF) and VUG (Vanguard Growth ETF) can help balance exposure between tech-heavy and dividend-focused sectors.
• 😀 Be aware of the risks when adding growth stocks to your portfolio. Consider blending growth stocks with dividend stocks for balanced long-term returns.
• 😀 For growth stocks, focus on companies with strong secular tailwinds, high-quality assets, and efficient management teams.
• 😀 Example growth stocks include Alphabet (GOOGL), Amazon (AMZN), Nvidia (NVDA), and Microsoft (MSFT), which offer high potential but may not rise in straight lines.
• 😀 Optionality and speculative bets (such as options or early-stage companies) can be part of your strategy but should be kept under 10% of your portfolio to manage risk.
• 😀 Always apply risk management by understanding your risk profile, position sizes, and strategies like tax-loss harvesting or cutting ties with underperforming stocks.
• 😀 Maintaining your portfolio is key. Regularly review it (monthly or quarterly), but avoid overreacting to market noise. Keep a long-term focus and stick to your investment thesis.
• 😀 Time is a crucial factor in investing, especially with dividend stocks. The power of compounding dividends becomes most apparent after 10+ years of reinvestment.

Q & A

What is the main goal of building a portfolio as discussed in the video?

The main goal is to build a long-term, disciplined portfolio that focuses on compounding over time. The strategy is designed to work through market cycles, ensuring sustainable growth regardless of short-term market movements.

What is the importance of having a 'firm foundation' in a portfolio?

A firm foundation provides stability to the portfolio during both good and bad market cycles. It consists of core investments that are reliable and less likely to be affected by short-term volatility. These foundational holdings are crucial for long-term success.

How much of the portfolio should be dedicated to core holdings?

For a more hands-off investor, core holdings could make up 50-60% of the portfolio. For someone more hands-on, this may be around 30-40%.

What types of investments are considered core holdings for the speaker?

The core of the speaker's portfolio includes ETFs like the S&P 500 ETF (VO, SPY, IVV) and alternatives such as SCHD, the Schwab US Dividend Equity ETF, for more stability and exposure to dividends.

What is the difference between the S&P 500 ETF and the Vanguard Total Market ETF (VTI)?

The S&P 500 ETF focuses on the top 500 companies in the U.S., while the Vanguard Total Market ETF (VTI) invests in all publicly traded companies in the U.S. The speaker prefers the S&P 500 ETF to avoid exposure to poorly-run businesses that may be included in the broader market index.

Why does the speaker suggest adding individual growth stocks to the portfolio?

Individual growth stocks provide additional exposure to high-growth sectors and companies. This helps increase the potential for higher returns, but it comes with increased risk. The speaker likes to balance growth stocks with dividend-paying ones.

What are the key factors the speaker considers when adding individual stocks to the portfolio?

The speaker looks for companies with secular tailwinds, solid demand, improving efficiency (margin expansion), and great management teams. The goal is to select high-quality companies at attractive valuations.

What role do speculative and optionality bets play in the portfolio?

Speculative bets, like high-risk stocks or options, are used to potentially generate high rewards. However, they should be a small portion of the portfolio (no more than 10%), and the position sizing should be carefully considered due to the higher associated risks.

How does the speaker approach risk management in portfolio building?

Risk management is about understanding the risks in your investments and ensuring your strategy aligns with your goals. The speaker advises being proactive in cutting ties with underperforming stocks, using tax-loss harvesting, and keeping risk in check through position sizing.

What does portfolio maintenance involve according to the video?

Portfolio maintenance involves periodic reviews to ensure that the portfolio aligns with your goals and market conditions. It’s essential to avoid making unnecessary trades based on short-term noise, focusing instead on long-term conviction.

What mindset is crucial for dividend investors, especially in terms of time?

Dividend investing requires patience. The power of compounding dividends becomes apparent over time, particularly after the 10-year mark. Investors should not expect significant returns in the first few years but should instead focus on long-term growth through reinvested dividends.

How does the speaker suggest handling dividends in the portfolio?

The speaker prefers pulling dividends together into a lump sum to reinvest them into high-quality assets at attractive valuations. However, for those less hands-on, automating dividend reinvestment through a DRIP (Dividend Reinvestment Plan) is also a good option.

What is the significance of understanding your 'why' when making investment decisions?

Understanding your 'why' ensures you have a clear thesis for each investment, which helps you stay committed to your strategy even when external factors or market noise might suggest otherwise. This clarity makes decisions about selling or adding to positions easier.