Several days* ago a friend wrote and asked about setting up a portfolio where $500 would be deposited every month. What advice would I pass on to such an investor? The first bit of advice is to read all the Beginning Investor and Critical Information posts. These can be found under Categories in the right-hand sidebar. My first portfolio would be a Robo Advisor portfolio such as the Schrodinger. Once that is established I would begin a Copernicus style portfolio. Schwab now requires a $5,000 minimum to open an Intelligent Portfolio where the Schrodinger is such a portfolio. If this is still the minimum requirement, then move to the second paragraph.
What to do with that first $500 investment? After opening up an account with a discount broker such as Schwab, I would purchase as many shares of VTI as the $500 will buy. This is the first move to populate the Large-Cap Blend asset class and gives one broad exposure to the U.S. Equities market. This first purchase is essentially starting your Copernicus portfolio. Continue adding to this initial portfolio until you have sufficient funds to move $5,000 into an Intelligent Portfolio with Schwab. Now you have two portfolio operational. Each month split the money and invest $250 in each account. Continue this strategy until you feel familiar with the Sector BPI model and might want to experiment with this third approach.
These few basic instructions will help a beginner launch a portfolio. If you decide to experiment with the Sector BPI, the Kipling spreadsheet is almost a requirement.
Follow the Schrodinger and Copernicus updates or reviews. Select one or two of the Sector BPI portfolios to follow to see if this is something you want to tackle. It does require a little more work whereas the Schrodinger and Copernicus are very easy to manage.
One last suggestion. Check out investment books on this site or search books. I highly recommend reading William J. Bernstein. It is important to get started on the right track and the Top Ten Investment Books is a great starting place.
- This blog post was revised in January of 2024.