Last year a big group of bloggers came together at the prodding of Jeff Rose of GoodFinancialCents.com to have a friendly investing competition, the Grow Your Dough Throwdown.
They each took $1000 of their own money, and then invested it for an entire year in the brokerage of their choice to see who could come up with the largest gains over the year.
While I wasn't able to participate last year, it was fun to watch as people picked stocks and then saw big gains, big drops or just flat-lined for the entire year. In the end a couple of the participants ended up making about 30% on their initial investment for the year, and PTMoney squeaked out a victory over DoughRoller by speculating on individual stocks.
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The Grow Your Dough Throwdown 2.0
The first throwdown is complete, and the Grow Your Dough Throwdown 2.0 (GYD 2.0) is now launching for 2015. This year I decided that I would take part.
So what's the idea behind the throwdown?
- To show just how easy it is to get started investing.
- To look at just how many different ways to invest there are.
- Show people that they can do it on their own.
I'd also add that the throwdown has underlined for me just how perilous it can be to trust that you can pick individual stocks and beat the market. Most of the time you can't beat the market, you'd be better off choosing an index fund. Some people may come out ahead in the short term, but in the long run index funds and investing for the long haul will win.
With that said, let's get into the details of GYD 2.0.
Motif Investing: The Brokerage We'll All Be Using
This year's GYD 2.0 challenge is being sponsored by one of my favorite brokerage companies, Motif Investing. I was already familiar with Motif Investing from reviews I wrote about them over the past couple of years. I had an existing account with them, so I was all set to go.
All of the contestants in GYD 2.0 are being provided with $500 to invest by Motif (thanks guys!), and we will all have to create and buy our own custom “motif” on their site.
Before I get too far ahead of myself, let's take a step back and do a quick review of what Motif Investing is, what they offer, and why they have a great value proposition when compared to some other brokerages.
Motif Investing – Investing In Themes
Motif Investing is a relatively new company, having launched back in 2012. The idea behind the company is to allow investors to create their own low cost investing strategy through the use of their theme based bundles of up to 30 stocks that they call motifs.
Investors can invest in already pre-built motifs that experts have put together (High Yield Dividend Stocks, Obamacare Stocks, Real Estate Stocks, etc), or they can create their own custom motifs and then invest in those. You can have anywhere from one stock up to thirty stocks in your motif. It's essentially a way to create your own ETF-like bundles of stocks, without the added expense ratios.
You are allowed to do real time market trades via Motif Investing, and part of the great thing about investing in a motif is that you can buy fractional shares in up to 30 stocks, but still only pay the one fee per transaction, instead of one fee for each stock you buy.
Here’s what the fees look like to invest at Motif Investing.
- $9.95 per motif trade, no minimum trade requirement.
- $250 minimum per motif (bundle of up to 30 stocks)
- $4.95 per stock trade to customize stocks in a motif.
- No maintenance fees.
- No inactivity fees.
The main numbers to take note of are you have to spend a minimum of $250 to buy a motif, and anytime you buy a motif (no matter how many stocks are in it) it will be a commission fee of $9.95. That's a great deal!
How Will It Work?
So how will the contest work?
All 20 competitors are going to be given $500 to invest with Motif Investing (We'll actually be investing $475 since the account requires a small cash cushion, as well as the $9.95 fee to invest). We all have free rein to invest in whatever stocks, bonds, index funds or whatever else we want to from within our accounts.
To do that we each will create our own custom motif – or bundle of stocks – and then we'll all have our motifs and account balances tracked so that by the end of the year the investors with the greatest return will be crowned the winner.
The Grow Your Dough 2.0 Leaderboard
During the contest Motif will host a leaderboard that is continually updated with the current standings in the contest. I'll check in from time to time to see how I'm doing.
As of today, only a few days into the contest I'm barely holding onto third place out of 20 competitors with my motif GYD – High Yield Dividend Portfolio.
View the entire leaderboard and what people are investing in here.
It looks like Phil with PTMoney, winner of last year's contest, is off to a smashing start again. I may have to reconsider my portfolio (see below) since it may be more suited to a long term strategy. We'll see.
My Theme For The Throwdown: High Yield Dividends!
So what kind of an investing strategy will I be employing in GYD 2.0? For now I'm going to start by investing my $500 in a basket of around 30 high yield dividend stocks. Not only will I reap any gains in the stock price, but I'll also gain some stability due to the dividends they pay out.
Here's what I'm doing as I pick the stocks:
- Diversifying among 25-30 stocks: I'm looking to diversify among a variety of good stocks.
- Diversifying among multiple industries: I believe my portfolio currently has between 5-7 different industries represented. That way, if one goes down, it doesn't bring my entire portfolio crashing down.
- Choosing high dividend paying stocks: Most of the companies represented pay between 4-5% in dividends to help make the portfolio more stable.
- Choosing stocks with a history of not cutting dividends: Most of the companies have a track record of not cutting dividends for 10 years or so.
- Choosing stocks that have done well recently: The stocks that I chose had a performance of about 30% return in the past year. That's not a promise of future results, but they do seem to be mostly still trending positive.
Here's a widget showing my GYD – High Yield Dividend Portfolio motif in case you want to look at it more in depth, or even invest in it yourself.
Open An Account With Motif Investing And Play Along!
If you open an account now and play along with us on the GYD 2.0 challenge, you can get up to a $150 bonus through the link below. Here's what you need to do to get the bonus:
- Open an account with Motif Investing
- Fund the account with at least $2000.
- Do a motif trade within 45 days. If you do at least 1 trade you get $50. At least 3, $75. At least 5 and you'll get $150.
If you decide to jump in with us and try your hand at our investing challenge, let us know in the comments!