With 2021 out of the way, I wanted to take time to analyze my stock portfolio performance over the last year. I also want to set clear objectives for what I want to accomplish in 2022 in my stock market investment portfolio, in terms of growth.
In this post, I will explain what my investment focus will be for the next 12 months. Remember that I am not a financial advisor and this post is not financial advice.
What broker/platform do I use?
Here I will share the main brokers I use to manage my portfolio. Keep in mind that these are affiliate links. This means that if you don’t have an account with them yet and use my link, you and I will get some stock or benefit, so thank you in advance:
So far, I have directed my investments to Robinhood for the most part. It is the platform I started with and I like the interface. However, I will try to use Public more in 2022 because I find its social aspect intriguing. It is worth pointing out that both platforms are commission-free brokers.
Beating the S&P 500 index
By the end of December 31st, 2021, my portfolio had outperformed the S&P 500 by a reasonable margin. Now, that is not to say that I’m some kind of investing genius.
In fact, I believe that for the past few years, almost anyone could have beaten the index by investing in popular tech stocks.
The S&P 500 closed the year with gains of 28.7%, which is an incredible performance in my opinion. More so considering all the scares related to covid-19. However, I was very pleased to see that my own personal portfolio managed to outperform the S&P 500.
As you can see in the screenshot, my returns for 2021 were just above 33%.
I actually took this snapshot on January 3rd because I forgot to do it on New Year’s eve. Nevertheless, the returns at the time were about the same.
Again, anyone could have done this and much better with even a random strategy.
In fact, there have been several experiments where stock portfolios randomly selected by monkeys (and other animals) managed to outperform professional fund managers and occasionally the S&P 500.
It seems many of those successes are due to investing in small-cap stocks which tend to have more room to grow, but you increase your risk slightly.
What did I do differently in 2021?
The main changes:
- Focusing on growth stocks instead of dividend stocks
- Finally investing in ETFs
Focusing on growth stocks
In 2021 I changed my investment style towards more growth stocks. Before that, and since the beginning of my investing life, I was investing almost 100% towards dividend-paying stocks. Dividend investment resonates with me at a fundamental level. So, why did I change my strategy?
The main reason was that my portfolio was significantly lagging behind the S&P 500 for the first 3.5 years.
Even now, when I look at the performance of my 4.5-year-old portfolio, it has only a 79% return. Meanwhile, the S&P 500 reached almost 100% in the same period.
Another reason is that with growth investing, I do not pay taxes until I sell. This is great for me since I am relatively young and don’t plan to sell for many years or decades. That gives my portfolio a lot of room to grow.
This is not to say that I am abandoning dividend investing. It’s just that for my age, I will probably benefit more from the growth given by tech companies and the S&P 500 in general.
With that said, I still automatically reinvest all of my dividends into the companies that paid them (except for 2 or 3 that are overweight).
By the time I retire, my dividend income will have grown to a considerable size and my growth portfolio will provide a nice cushion.
Investing in ETFs
Another change in 2021 was that I finally got my feet wet in diversified investing with ETFs.
They are usually described as a basket of investments because instead of buying a share from several companies, one can buy one share of the ETF and automatically get a portion of each company.
This is still a very small part of my stock portfolio – less than 5% by value. Over time, I would like to get this number much higher (maybe 50/50).
Some of the ETFs I bought follow broad market indexes and some follow specific sectors.
Here are some of my most prominent positions (not investment advice):
- VOO – tracks the S&P 500 index
- QQQ – tracks the NASDAQ 100 Index
- VGT – tracks stocks in the technology sector
- FINX – tracks stocks in the financial and payments industry (i.e. PayPal, Square, etc)
Just in December I also started investing in some ETFs to track global markets both emerging and developed. Another one of my new ETFs is tracking small-cap companies in the US.
I know this is not a lot of detailed information but I will write more in-depth about my ETF allocation in another post. If that sounds like something interesting, make sure to sign-up for the newsletter. I promise I won’t spam you.
My plan for 2022 and final thoughts
The plan for my stock portfolio in 2022 is simple. I will continue re-investing my dividends and directing new cash at my growth stocks and ETFs. In terms of performance, I want to be able to beat the S&P500 again or at least stay on par.
I’m also aware that in case of a market correction, these growth stocks might fall the hardest.
Nonetheless, I don’t plan on selling. In fact, my favorite days in the markets are those when everything is red and every news outlet is predicting doom and gloom.
I’m always happy to buy things at a discount, including stocks.
Of course, this only relates to my stock portfolio. My crypto investments are separate.
In fact, I recently made a post where I started a weighted crypto portfolio of the top 20 cryptos by market cap. I will be tracking that portfolio throughout the year and posting updates here.
All in all, I am happy that I got started first with dividend investing. I feel that it gave me a chance to practice patience and now I can use that skill to build my portfolio while resisting any storm that comes along.
Tell me about your portfolio plans
I also want to hear from you about your investment plans for 2022. If you have already been investing before, what kind of returns did you have in 2021? Let me know in the comments and don’t forget to join the newsletter.