I Invested $5 a Day for 27 Months. Here's What Happened.
Summary
TLDRThe 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
💡 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.
📈 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.
🔄 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.
Mindmap
Keywords
💡Wealth Building
💡Investment
💡Stock Market
💡Dollar-Cost Averaging
💡S&P 500
💡ETF (Exchange-Traded Fund)
💡Hype Stocks
💡Diversification
💡Autoinvest
💡Portfolio
💡Market Capitalization
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
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