The Grow Your Dough Challenge involved putting $1,000 into your investment choices, via whatever investing platform you liked, at the beginning of 2019. I initially invested in six different platforms, plus myself and my blog. Most of my accounts were opened right at the end of January 2019. Then in the summer, I added a seventh platform with all new investments, just for fun. All account amounts discussed in this article were taken on Thursday, January 30, 2020 (after the markets were closed).* For more in-depth details on the challenge and my original investment choices, please read my first article about it. The linked heading for each platform name below will take you to a more in-depth article about my initial investment plan for that platform. Now that 12 months have passed, let’s see how these investments fared!
*I attempted to take the final numbers as close as possible to one year after I opened the accounts and started making investments and deposits. The results hang heavily on that date, particularly for the stock market linked investments: a week earlier and the account values would have been higher, only a few days later some of the numbers were lower.
7. Lending Club
Lending Club is meant to work this way: the lender deposits money in a Lending Club account, the borrower needs some money for a project or to pay off purchases, so takes out a loan, then Lending Club connects the lender and the borrower financially. The risk is diversified for lenders by spreading investor money across multiple, smaller notes invested in the loan, the borrower is able to accomplish what they need to, and the lenders earn their money back with interest (minus the 1% Lending Club fee). Unfortunately, I made some mistakes early on in this account that wound up with me losing money!
When I opened the account and selected the different level of notes to invest in, I allocated 20% of my investment to the riskiest level loans, Grade E notes, which had the potential for the highest return. Also, I didn’t realize that I should have only invested the minimum of $25 into each note and I split my money into $100 lots. Lending Club stopped offering Grade E notes for investments in July, but I was already stuck with mine. Both of my $100 Grade E notes defaulted and were charged off. I also have one $25 note that is currently in the late period of 31 to 120 days overdue. Since opening the account, I have earned $120.64 in interest, but I lost more than that because of the charged off notes. The total adjusted value in my Lending Club account is now at $913.08, with an adjusted net annual return of -8.71%.
Moving forward, I plan to keep this account open and running, but not to add any additional money into it. I had previously adjusted my note allocations in the summer and after checking my one year results, I made further adjustments for the future. I have set the target allocations to be Grade A at 30%, Grade B at 55%, and Grade C at 15%. As the previously issued notes are paid off, my account will slowly move toward these new percentage allocations. The average historical return on a setup like this one has been 5.51%. I want to see if these new allocations will allow me to get out of the red. I figure it will take over a year to almost two years to get back the money that I had originally invest through Lending Club. It seems likely that I will eventually close the account, but I want to test it out some more first.
After this experience investing in Lending Club, I cannot confidently recommend it for other investors. The risk of losing money to charge offs seems too high. Investing in the less risky notes only produces mediocre returns compared to what is possible through other platforms and investment strategies.
6. Capital One Certificate of Deposit
Last year I set up a 12 month CD at 2.7% APY with Capital One. This was one of the easiest investments for me to make as I already had a Capital One 360 Savings Account; much of the application form for the CD was autofilled from my information and I could transfer the money from the savings account straight into the CD. It only took about five minutes. I earned a little bit of interest each month in the CD. In the graphic below, at first glance, it looks like I had $0 for the CD, but you can see the transaction information showing that I transferred the $1,027.01 final balance back into my savings account when the CD matured. I earned $27.01 with this CD, which isn’t very much, but a lot better than Lending Club.
On a slightly separate note, I recently decided to open up a Capital One 360 Checking account. There are no fees or minimums for opening or maintaining an account and your money earns .20% APY in interest. Yes, that’s interest being earned on a checking account! OK, it might not be much — for my first month I earned $0.52 — but it is better than nothing. I intend to transition to using this as my main checking account and to eventually close the account I was using with Wells Fargo.
If you are interested in opening a Capital One 360 Checking or Performance Savings Account, you can use my Refer a Friend link to receive a cash bonus in your account ($25 for $250 minimum deposit, other stipulations may apply depending on the type of account, see Capital One for more details). Unfortunately, the bonus payment is not valid on CDs. The savings account has a 1.70% APY, which is currently a fairly standard rate for a high interest savings account. Once you have your own account you can refer your own friends and earn $20 per referral.
5. Fundrise
My account with the crowd sourced real estate investing platform Fundrise has had steady growth throughout the year. I deposited my money into their Balanced Investing Plan, which has an even balance of dividends and appreciation. I like the diversification of my investment money into real estate, which protects some of my wealth from the wider fluctuations of the stock market. While my stock market based investment values have dropped over the last few days, my Fundrise account has remained the same. The total dollar return for the year was $78.15. The current value of my Fundrise account is $1,1078.15.
Fundrise is meant for a longer term investment time frame than one year, as many projects take more than one year to complete and earn revenue. I plan to continue to keep my Fundrise account open and intend to add another $1,000 to the account soon. It is likely that I will commit some of my money to this platform each year.
If you open an account with Fundrise through my Fundrise Refer a Friend link, we will both have the .15% advisory fees waived for 90 days. Fundrise charges .15% in annual advisory fees and .85% for their annual management fee. The fees equate to them taking $10 per year for every $1000 you have invested. This seems like a high fee for the return, considering what you could make on an S&P 500 index fund for a .02% fee, but I like this platform and I want to support it. Plus, it has shown that it performs better than a Certificate of Deposit.
4. Robinhood
I opened up my Robinhood account last year and decided to focus on buying stock in individual companies for this account. My investing strategy was to mimic the industry percentages of an S&P 500 fund and then I selected companies representing those industries. Because trades are made commission free, I was happy to be able to buy between one and four shares in each company without racking up any additional costs. I currently hold shares in this account with the following ticker symbols: S, MXIM, LAZ, PFE, LEG, CIM, RWT, D, ABB, NYMT, PAG, AEO, and INPX.
The value of this account slipped below $1,000 pretty soon after I made my initial investments, due to my having purchased Kraft Heinz (KHC) right before they slashed their dividends and the share price fell at the end of February 2019. I soon sold those four shares and that seems like it was the right thing to do as the stock price never really recovered. I then purchased Penske Automatic Group to fill in the consumer industry slot that was left open, which has done all right, though has lost some steam in the last month. With the dividends I had earned in my account, I bought one share of American Eagle Outfitters in June, which has slowly declined in value, ending as the worst performer, down 13.83%. Dominion Energy proved to be my best investment in Robinhood, with a total return of 19.97%. Earlier this month, someone used my refer a friend link (for the first time!) and I added one share of Inpixon to my account. The current value of my Robinhood account is $1,085.56, an increase in value of 8.56% for the year.
If you are interested in opening up an account with Robinhood, please use my Robinhood Refer a Friend link. When you open your account, we will each receive a free stock. I received Sprint (S) when I first opened my account.
My favorite thing about Robinhood has been its well-designed, easy to navigate, user interface. I like the app and will keep the account going. For the coming year, I will probably be selling some of the investments I made earlier and buying other shares. I currently have $24.71 in cash that I will use to buy something. I will treat Robinhood as an experimental account to purchase different stocks than what I do in my personal investment accounts, which are largely made up of dividend stocks and ETFs.
3. E*Trade
For my E*Trade account, I picked investments that cost less than $50 per share and paid dividends. All dividends earned were automatically reinvested. I chose the following initial investments for this account: General Mills Inc (GIS), Brookfield Property REIT (BPR), and SPDR Portfolio S&P 500 High Dividend ETF (SPYD). Later, I added one share of the Global X Super Dividend U.S. ETF (DIV) with the remaining cash in the account. In this account, General Mills was the best performer with a 20.87% total gain. At the end of the one year period, the total value of my E*Trade account is at $1,143.77, with an unrealized gain of 8.62%.
2. M1 Finance
Not originally a part of the Grow Your Dough Challenge, I opened an M1 Finance account in June 2019. But since I decided to invest $1,000, I thought I would add it to the challenge. The investments I chose have the best return of all of my accounts at 22.06%. This is mostly thanks to purchasing $300 worth of Nvidia (NVDA) shares when they were priced at $151.48 per share; the share price has since risen by about $100 per share. You get an idea of how much better NVDA is doing than the other investments in the portfolio: DIS, CSB, or DON, where it’s piece of the pie is bulkier than the others in the image below. M1 Finance gives the option to rebalance the portfolio as your investments move out of the original percentages you have set. I have no intention of rebalancing that. That total value of this account checks in at $1,243.07.
I intend to keep this account open but I doubt that I am going to be adding any money to it. I prefer to use my personal (private, not the one above) E*Trade account for buying and selling stocks, ETFs, and handling other investments. If I want to buy more of any of these investments, I can do it there. Since E*Trade moved to commission free trading, M1 Finance lost one of their advantages of being commission free. I can see how the pie system is great for people who like to keep their portfolios set to a certain percentage balance, use preset pies to determine their investments, or to visually aid diversification, but that isn’t me! I never became interested in using this platform beyond my initial investments. Having said that, if this platform interests you, M1 Finance has a referral bonus, where if you open and fund your account using the referral link, we will each receive $10 in our accounts. They are also currently offering cash bonuses based on the amount that is transferred over from a different brokerage.
1. Acorns
Acorns is an incremental saving and investing platform. Instead of putting in $1,000 at the beginning of the year, I deposited $400 in my account. Then I began adding $50 per month so that I purposely deposited $1,000 in a 12 month span. The next largest portion of money in Acorns comes from Round-Ups to the next dollar on items I have purchased on my credit card or through my bank account. I’ve also used a 2x multiplier (so that if the item purchased was $14.25, instead of receiving 75 cents, $1.50 would be added to my Acorns account). After one year, I had sent $829.84 in Round-Ups to my Acorns account!
When you subtract out fees (Acorns charges $1 per month to maintain the account), then the dollar increase on my invested money was $157.91, for a total investment gain of 8.59%. The final amount of money in my Acorns account was $2,007.74!
Acorns is a nice platform for saving, especially for people who don’t have big chunks of money to transfer to savings at one time or who need the automated Round-Up feature. If you would like to open an Acorns account and save your money incrementally, please use my Acorns Refer a Friend link and we will each receive $5 in our accounts.
Financial Summary
In conclusion, the most successful way I found to Grow Your Dough in 2019 was through a combination of continual savings and investment of that savings, as seen in the Acorns account. The next best way seems to be through having some smart and luckily-timed stock picks. The steady way to Grow Your Dough was through investing in dividend earning stocks and dividend ETFs, as well as through the Fundrise platform. The way to Lose Your Dough was through choosing to invest in the riskiest loan levels in Lending Club.
Adding the gains of all of these accounts and subtracting out the losses from Lending Club, on top of my deposits totaling $7,000 in these accounts, I saved and earned an additional $1,498.38 in one year that I wouldn’t have had if I hadn’t done this Grow Your Dough Challenge. That’s a total return of 21.4%.
Now some might say Acorns shouldn’t count because of the additional cash savings involved, so with Acorns out of the calculation all together, I earned $490.64 from my investments (that’s with the Lending Club loss subtracted), for a return of 8.17% on a $6,000 investment. This is a fair return considering the S&P 500 typically averages between a 7% and 10% annual return.
However, considering that this past year, if I had bought about $6,000 worth of the Vanguard S&P 500 ETF (VOO) on January 28, 2019, at its average price for that day of $248.22 (let’s say 24 shares for $5,957.28), and checking the value on January 30, 2020, with an average price of $301.09, I would have shares with a total value of $7,226.16 or a return of 21.3% for the 12 month period. That doesn’t include the dividends, which would have been about another $134. I could have made my life easier and just made one simple investment in VOO and had a much better return. But that wouldn’t have been as interesting to follow, now would it? And I certainly wouldn’t have learned so much about different investing options.
BONUS – Me and My Blogs
The end of the 2019 Grow Your Dough Challenge also means that I have been working on the Squintillions blog and associated Squintillions YouTube channel for just over one year. Hooray for this milestone! At times it was very difficult, due to certain things happening in my personal life that seemed to want to throw me off track. Lack of traffic to the site and the channel has sometimes sapped my motivation. I watched other finance-focused YouTube channels that started at the same time that I did, grow 10 times faster. But despite this, I kept producing content, through struggled with consistency. Now, I am publicly committing to increase my content in the future as I would like to publish a new blog post every week and to make at least two YouTube videos every month.
I dedicated $1,000 to myself for growing my blogs and my YouTube channel over the year and making improvements to my process and the content. I have another blog as well, You Make My World Rock, that I worked on for a couple years as a hobby, but had left dormant in 2018 due to time constraints. I started working on it again at about the same time that Squintillions was created, near the beginning of 2019. I ended up spending a total of $980.17 on expenses relating to the blogs, YouTube, and for my education over the last year. Some of these were one time expenses, so I don’t think the coming year will cost me quite as much money. Though having said that, I could easily upgrade some of my recording set up for YouTube (I could use a teleprompter!) as I am getting by with minimal equipment. Paying for additional services or features for either the blog or YouTube could be possible too.
The only money I made was from a couple affiliate referrals and that was less than $10 total. For that reason, I don’t really plan to spend much more money until I start making more on affiliate income or have some other source of revenue coming in (besides my investments, of course). I don’t desire to have a costly hobby and I’m too pinched for time to treat this as if it is a full-time business. Nevertheless, I endeavor to continue to publish content as I am driven to share all that I have learned with others.