Reward Yourself: an Easy Way to Build your Stock Portfolio

Author

Yan Carlos Ospina
November 01, 2023

Do you feel lost or unsure about what stocks you should buy? I have an easy solution for you. Start thinking about where you shop the most. Where do you buy your coffee, shoes, electronics, gas, or whatever you like to spend on? My answer to this question would be Starbucks, Nike, Apple, Exxon, and Chevron. All these companies have great stocks to buy. These are companies that are likely to be around forever.

I had this idea today when I was shopping for shoes at Nike. I thought, “how much have I spent at Nike over my lifetime so far? Probably a lot. And I know I will continue to spend at Nike. What if I also invested the same amount I spent?” I spent $63 on a new pair of running shoes. I decided that this week I will also invest $63 into Nike stock. It takes a great amount of self-control and discipline to do something like this. If people thought about spending this way, perhaps they would not overspend.

What would it look like if you bought just one new pair of shoes at $63 and invested the same amount into Nike stock once a year? Over the past 5 years, you would have spent $315 ($63 × 5 years). If you also would have invested another $63 per year to match what you spent, after 5 years this investment would be worth $422.73 ($63 × 5 years = $315 × 34.2% = $107.73 profit + $315 investments = $422.73 total ending value. This is because Nike stock has risen by 34.2% over the past 5 years.

This is just one small example of what investing can do for you. Imagine if you continued doing this over many years. You would be shocked at the results. Start thinking about where you spend the most money unnecessarily and start applying this rule. Your overspending habits will decrease and your net worth will increase exponentially. Before making a purchase just because you want it, say to yourself, can I buy this twice? If not, then you probably can’t afford it.

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