How My Sister Turned Her Love of Shopping Into a Profitable Stock Portfolio
No research, and she crushes the markets
Habit #1: Leverage your buying habit
We all like to buy stuff. But, my sister is passionate about buying stuff.
She likes to buy things as if there is no tomorrow. Her motto is to meet the WANTS and NEEDS of today, as you might not see tomorrow.
But, she is a smart woman. She knows that she has to invest to continue this lifestyle.
So, she leveraged her strength of buying things as if there is no tomorrow to create a 6-digit portfolio in 5years.
Here is how she did it:
- She buys a lot of stuff. Thus, she knows her products and brands.
- Every time she buys a product of her favorite brand, she also buys the shares of that company.
- To keep it simple. She decided to use at least 10% of the product’s cost to buy its company’s shares.
How she made it a habit:
- First, she opened a trading account with a broker that offers fractional shares. A fractional share is a feature that allows investors to buy a fraction (less than 1) of a company’s stock.
- My sister uses a credit card to buy things. Thus, she wanted her broker to accept a credit card to buy shares.
- Next, she downloaded the app to her mobile phone.
- Created a watchlist of her favorite brands in the trading app.
- Now, every time she buys something online or offline, she also buys that company’s shares. She calls it to buy as you go. Her motto is, I do not want to keep track of what I bought one hour ago.
- As we know, she is a smart woman. So she put a hard limit on her credit card. Which means she cannot buy things once she reaches the limit. This ensures she never ends up in debt.
- Lastly, she practiced these steps for a month, and it became a habit.
So far, I have shared the gist of what she does. So let’s take a deep dive.
Did she do a technical or fundamental analysis of the companies she bought?
NO! She never does any research about a company. The only research she does is about the product she wants to buy.
Once, she picked, tried, and liked the product. The next step is to add the company that produces that product to her watchlist.
Then every time she buys the product, she buys the stocks of that company too.
She reduced the amount she could spend to buy things. Did she experience any challenges because of it?
NO! There are two reasons behind it.
- She falls under a decent income group, i.e., earning around $100k per annum. Thus, she can fulfill her NEEDS easily and spend the rest to meet her WANTS.
- As she spends everything buying her WANTS and NEEDS, a 10% reduction didn’t make a difference.
When does she sell a company?
She doesn’t! As long as she buys a company’s products, she won’t sell.
She will only sell when she has found a better alternative to the product. In this case, she will sell the old company and buy the new one.
What type of companies does she have in her portfolio?
It is a long list. To give you a feeling, here are some companies in my sister’s portfolio:
Top winners
- Being an Apple fan, she has bought iPhone, Apple Watch, Mac book, iPad, and Apple’s shares.
- Her most visited store is Costco. Thus, she owns shares of Costco.
- If she has to buy anything online, Amazon is her platform of choice.
You might wonder how she allocates the money towards buying a platform or a physical store.
Whatever the total is after her checkout, 10% goes into buying shares. She uses half of that sum to buy the stocks of the platform and the other half to buy the shares of the purchased products.
Let’s continue with the list.
- Google to search the internet.
- Netflix to watch movies.
- Disney and its Disneyland.
- Microsoft at work.
- Nike for shoes
- Louis Vuitton for clothes and bags
- P&G for Ariel, Gilette (for her husband), Vicks, Oral B, etc.
You see some free products she uses, like Google’s services, in this list. So, how does she calculate the amount to buy Google’s shares?
For this, she uses a time tracking app. First, she tracks the time she spends on different websites and apps. Then, based on the time spent, she distributes the money. The money she distributes is 10% of her hourly wage.
She does it on weekends while watching Netflix. She does not take the calculations very seriously. A rough estimate is enough.
This also helps her not spend unhealthy time on the internet and social media.
These are some of her winners. Next, let’s have a look at some of her losers.
Top losers
- Lately, Zoom has been the preferred choice of communication. Thus she owns the shares of this company also.
- She owns PVH, a parent company of Tommy Hilfiger, Calvin Klein, and Michael Kors.
- Unilever is another stock she owns. Unilever offers products under the brand Dove and ice cream, i.e., Magnum. I should not call it a loser, as she gets regular dividend income. But, the stock didn’t perform as well as others in her portfolio.
- She likes to drive expensive cars and owns a Mercedes and a BMW. To be transparent, both cars are second-hand and bought on credit. Thus, 10% of every monthly installment goes into buying these car companies’ shares.
- Lastly, she needs gasoline to drive her car. The petrol station around her area is Aral. Aral’s parent organization is British Petroleum (BP). Hence, she owns BP also.
Surprisingly, she does not have many losers. And she managed to achieve this feast without spending a minute studying a company’s fundamentals.
Want to know other habits my sister leveraged? Then, keep reading!
Habit #2: Go crazy during discount season
She watches discount season like a hawk. And during the sales, she goes on a crazy shopping spree.
She applied the same habit in buying the stocks of her favorite companies.
Whenever her favorite stock is down more than 25%, she doubles the amount to buy its shares.
So, she usually allocates 10% to buy shares. But, during a bear market, she allocates 20% to buy shares.
Habit #3: Spend the dividends on buying more stuff
Her goal to start investing is to keep buying stuff. Hence, she uses her dividend income to fulfill her WANTS.
But, her 10% rules still apply. :)
One thing I like the most about her habits
You don’t have to look outside to find great companies. You are surrounded by amazing products you use every day.
By buying the shares of the companies producing those products, you can create a profitable 6-digit portfolio.
My sister did it, so can you and me.
Disclaimer
The character “my sister” is fictional, but the results are real in theory. So you can try this habit on paper and simulate the results.
In the end, it is not financial advice. Always do your research and due diligence.
