April 28, 2021

So now you're at half a million dollars and that's actually fantastic. You're very close to achieving financial freedom.

In this video, I'm going to share nine tips on how you can go from half a million to a million dollars.

 I think half a million is a very exciting mark and you're very close to the finish line.

90% correct transcript

So now you're at half a million dollars and that's actually fantastic. You're very close to achieving financial freedom. And in this video, I'm going to share nine tips on how you can go from half a million to a million dollars. So let's get started. So how to invest half a million dollars to a million dollars and the nine tips to get you there. And for this video series, I really started with how to invest $10,000 to how to invest $50,000 to how to invest a hundred thousand dollars. And I kind of skipped over to $300,000 one, even though I plan to make a video for it. So now we're at half a million. And before we dive into the nine tips, let's talk about where you're at. I think half a million is a very exciting Mark and you're very close to the finish line.
And in this slide, you can see the finish line right there. And the rainbow is just behind the finish line. So you just got to hang on. And when I'm talking about the finish line, I'm talking about being a millionaire, retiring early, eating unlimited amounts of chocolate muffins and taking advantage of the, I hop 10% elderly discounts when you retire. And technically you don't need to be a millionaire to do that, but it would be really cool if you are in nearly near and then you do that as well. So let's talk about what kind of income you are expected to make. Now, if you have half a million dollars and you make 10% return, that is $50,000 per year, that is a pretty sizable income. If you already have your house bought out, you don't have a mortgage anymore. So you don't really need to pay rent.
And if you are able to make 30% on half a million, then your income per year will be closer to 150 K. And this will actually put you as the top 5% income earners in Canada. So that is pretty amazing as well. Now, when you're thinking about how you can go from half a million to a million dollars, it really depends on the return that you can make. If you're making 10% return per year, then going from half a million to a million, it will be approximately eight years. So right now you're 55 or if you're 45 or if you're 50 years old and look ahead for the next eight years, that is pretty close to what your retirement age would be. So it's good to think ahead now. And if you are looking to make 30% return per year like myself, then you can double your accounts in approximately three years or so.
So tip number two, when you're investing with a half million portfolio, a lot of people think you need to have 50 or a hundred stocks, but when I'm investing with my half a million dollar portfolio, I only had less than 10 stocks. In fact, when I was at half a million, I had eight companies and that's probably a surprising fact to a lot of people, because if you can find eight companies to 10 companies, even it was a half a million dollar portfolio that is ready enough diversification, because what you really want to achieve at this stage is a higher return percentage so that you can double your portfolio and become a millionaire. And this brings me to tip number three. It is okay to invest in companies that are safe and big. And if you look at my portfolio, when I was at half a million Mark, I don't have any EDD companies.
I don't have any SBAC shell companies. So these are shell companies with no operations in them. And I don't have any hot IPO stocks just that just got IPO maybe a month or two ago. And there's a lot of hype around them. And if you look at my portfolio during that time, you'll find out I have American express, a company that has been around a very long time, FedEx international shipping company, out of beauty. It's an American makeup distribution chain, very similar to Sephora and Canada, and also Intel, one of the largest chip makers in the world. And if you think about these companies, they're basically blue chip rowing, stable, predictable companies. And that's why I invested when I'm at half a million dollars. And just because you're investing a large sum of money, doesn't mean you need to take a lot of risk. It's all about taking calculated risk and how to minimize that risk as much as possible.
And this brings me to tip number four, don't invest in bonds and dividend stock. Now this is a little bit counter-intuitive because if you're a 55, 65 years old and you go to a bank and you go talk to your financial advisor, they're going to tell you to put some money into bonds. They're going to tell you to put some money into dividend stock, because the idea of generating passive income consistently that is guaranteed makes a lot of sense. It's very attractive because as you get older, you should focus on generating income to a certain extent. That makes sense, but you also need to note that what's happening in the world. And right now the fed is printing money. And what does that really mean in the world where it feds it's printing money? The extra money generated will be pumped into the stock market because not everybody needs that money.
And this will inflate a return on equity in the stock market because everyone is kind of investing in the market now, and this will actually hurt the return on debt. So let me explain, imagine you're buying a bond. And what that means is really you lend out a hundred bucks to somebody for 3% interest or 5% interest so that they can give it back to you maybe a year or a couple of years from now. So hopefully you get your money back and you get your three to 5% interest. But what happened during this period of time fed has been printing more and more money. So the purchasing power of that $100 you get back along with the $3 interest has deteriorated over time. And that is really the problem of investing in bonds. As more and more money are being printed. You actually get more return by borrowing money by using leverage instead of letting other people use leverage on your money, which is buying a bond.
And this is why Robert Kiyosaki keeps saying that if you are saving money and if you're not investing, you're stupid because inflation will decrease your purchasing power and basically put you as a disadvantage compared to everyone else that is investing in the markets, whether that is real estate or stocks. Now, I also mentioned that you shouldn't invest in dividend stocks and when you're investing in dividend stocks, you're really looking for income. Maybe it's a quarterly dividend or a monthly dividend, and it sounds very good on paper. But when you think about what a dividend really is, you put money to buy a stock. So then you own a part of the company and the company is giving you back money that you put in on a regular basis. I mean, if the company is a growing thriving company, wouldn't they take that money and put it into research and development.
If that company is growing and is expanding its market share wouldn't they use that money to hire more staff. Why is the company giving you back dividends? And that's exactly the problem with dividend stocks when you're buying a dividend stock, it means that the company is usually mature. They are very stable, which is good to a certain extent, but they're also giving you back the money you invested it. And the money that is being paid in dividends will end up reducing the stock price. So then you get taxed on your dividend income, and then later on you will incur a capital loss if the company is not growing. And that is a crucial observation. And on the left-hand side, you'll see a chart that supports my claim. And this is a on FinFET is where the Y actually is a 12 months stock price change.
And the X ACCE is the dividend yield. And here you can see that there's clearly a distribution to the left-hand side. And what does that really mean? It means that in layman terms, the higher, the stock price increased the lower the dividend and the opposite is also true. The higher, the dividend that is being paid out to investors, the lower the stock price will increase and maybe sometimes decrease as well. And if you look at this charts very closely, 0% change in terms of stock price line is actually not at the bottom left corner. It's actually slightly above and it's kind of, um, two thirds way down the charts. So that means they are some stocks in the markets that pay such a high dividend, that they have a decrease in stock price for the last 12 months. And that's exactly the problem with high dividend stocks.
So if you are looking to grow your portfolio to half a million to a million dollars, then focus on low dividends and high percentage gain stocks. And that will bring you to a million dollar a lot faster than the other way around tip number five, put some money aside for the market crash. As of the time I'm recording this video, the market is hot. There's a lot of hype going on around the UV markets, which is fantastic, but you got to always remember the market will crash and it has been crashing for many, many years. It's just a matter of which stock, which sector. And when that, here are a couple of examples this year gain stock, which is a gaming company, retail chain what's over shorted. And then afterwards, the hedge funds covered their positions, which caused the stock price to go from $3 all the way to around $400.
And it came back down to around $65 all within two months. And here on the left hand side, you can see that charts. Now, the second example is cannabis, which is weed. And here I got a charts of ACB back when it first got IPO, there was a lot of hype. People are buying into it. Of course the company is losing money. And then after we'd encounter some regulation issues or a slow down, or an oversupply that bubble burst and the company went from a hundred something dollars all the way down to eight to $3 or so. So here you can see the drop. And a third example is really Nicola, which is a UV company. And it talks about making a hydrogen driven, steady truck. There was a lot of hype around a stock, and you can see that it has gone up quite a bit.
And then afterwards people called them a fraud. They have no product. They only have an idea and a stock came crashing down. So that's why it's always good to have some cash aside to invest when there is a market crash, because it always happened and it will always will. So this brings me to tip number six, how much cash should you have on hat? And here's a quick and dirty formula for you to determine how much cash you should have on hat. Now, the best thing you can do when the market is about to crash is to hold onto cash. Unless somehow you're very smart and you are able to short the markets. And here is the rule of thumb that I use a percentage of cash you should have in your portfolio should equal to the probability you think a market crash will happen.
And let me give you a couple of examples. So let's say, I think that there's a 10% chance of a market crash happening. So I'm going to hold 10% cash in my portfolio. And that is quite reasonable. Let's say, I think there's a 50% chance of a market crash happening. Then I'm going to hold a 50% cash in my portfolio. So then I can average down until I want to. And let's say, I think there is a hundred chance a market crash is happening. Then I'm going to hold a hundred percent cash in my portfolio. So this adjust the amounts of cash in your portfolio, based on how likely you think a market crash will happen, which gives you the flexibility to invest in stocks. Even though you're a little bit scared of a market crash happening and tip number seven, focus on investing and discount as stocks.
Now this is diving a little bit deeper into my investing strategy, but basically the way I see it is a two by two table. You have the good times what the market is going up, and you also have the bad times when there's a market crash. And on the other side, you have investing in hype momentum driven stocks, and you also can invest in discount to stocks. Now during the market is going up, it usually works out for both strategies where whether you're investing in a momentum driven stock or at discount to stock, what's really important is when there is a market crash and you are investing in a hype stock, you end up buying at a high and you will be incurring a much larger loss. And if you studied the.com bubble, even a tech company, like Apple can go down by 60 to 80% during a market crash for that specific sector.
And you can see the same pattern when it comes to investing in cannabis stock during the market crash. And it can go from a hundred dollars to $3. And this brings me to the other side of the coin, where if you are investing in discount to stocks and there is a market crash, then at least your drawdown, the decrease in your portfolio will be a lot less than investing in hype stocks. And that's, what's really important because it's not the good times that will take you out of the market is the bad times that will take you out to the market. You can imagine like you are sailing a ship on a sunny day and the sea is calm. And whether your ship is good or bad, it will sail. But if you're a sailing your ship on a rough sea and there's a leak in your ship and you're going to sink, and that's why I have such a strong focus on investing in discount of stocks, because I'm always prepared for it at that time.
And tip number eight, focus on improving your skills. And one of the complaints that I get a lot is that I couldn't find discount to stocks for the last five years. I've been investing in a market. Most people will claim that it is a bull market. And I have to say, even though it is one of the strongest bull markets in history, I continue to find discount to stocks I can get in for a cheap price relatively. So this means that finding discount to stocks is a matter of skill, not the market. And there are 2000 stocks on the New York stock exchange and another 2000 stocks on NASDAQ. At any given point, there are going to be discounted opportunities. If you just know where to look and the final tip number nine is to subscribe to this channel. I know 96.4% of you guys are not subscribed yet.
So if you want to receive further tips, when I make my meals video, click the subscribe button. So when it comes to investing, Michael is really to make 30% a year. So in order for me to go from half a million to a million dollars in portfolio, it would take approximately three years now, in my case, I actually was saving money, uh, aggressively as well. So it took me less time than that to reach a million dollars, but that will be for another video. So if you're interested in learning more about investing and how to have a successful strategy to grow your portfolio, then here are the nine questions you need to answer to become a successful investor. Especially if you want to aim for 30% return, for example, what's your stock process? What is your risk management process? What is your portfolio management process?
What is your entry and exit strategy and how do you deal with the market crash and how do you reduce capital gain taxes when you make money? And this one is especially important because you're planning to make half a million in a couple of years or in the next eight years. And if you're able to save your taxes on that, it's going to be a huge help too, in terms of your growth and how quickly you become a millionaire. So if you want me to take a look at your strategy, then you can email your detailed response@ericatfiveminuteinvesting.com. And I'll take a look and maybe we'll hop on a call to discuss it as well. And if you're interested in how I invest as a long-term investor, then you can grab the free four hour training in the description below. So it is the first link and it is perfect for you.
If you are a full-time professional with no financial background, and you want to manage your own portfolio with confidence and you want to target something like 30% a year. So the link is five minute investing.com/free case study. It is the first link in the description below. Now, in terms of investing accelerator in this video, I want to celebrate the success story of Adrian, where he made 35% from Motorola in seven months, Daniel, where he made 25% it's from Altrix in two months and Annie, where she made 48.5% gain from ADP in two months. So congratulations to you all. And all three of them are veterans in investing accelerator. So these are multiple success stories that have come from them before and after. And in terms of investing accelerator this month, I'm looking to help another 20 professionals without a financial background to master investing. So the targets is really 30% a year, and the stretch goal is 30 people. I think that is the maximum I can handle for now. So if you want to secure a seat and master investing ASAP and go to the first link in the description and watched a free case study to start in terms of the giveaway in this video, I'm looking to give away
One thing by Gary Keller. So it focuses on what's important
And ignore everything else. That's not important, which is very similar to how I invest in the market as well. So if we reach a hundred likes for this video, I'll be giving away to book to one of the people who comments below. So leave a comment and it is free. So we'll see who's the winner. And the next video is really about how to manage a million dollar portfolio. So it is an untitled video. I haven't thought about exactly what to talk about yet. So we'll get to that when we get there.

About the author 

Eric Seto

Investor, CPA (Canada) based in Hong Kong and Vancouver

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