1000-dollarsMy dream is to invest $12,000 a year or $1,000 a month in stocks every single month. Not only can you get a killer diverse portfolio, but you can potentially strike it rich.

Let me break it down to you. As times goes on I see that my goal is to live as frugally as possible, and housing tends to be an individual’s largest expense. I have written several articles about extremely cheap housing (think less than $500 a month), and in these articles I talk about sacrifice. You are not living the best house or condo, but your so net cash flow positive every month its sickening.

I believe that if I took extreme measures I could take off $500 – $800 a month in housing expenses. I am currently already investing $200 a month in stocks — so  you see where I am going with this idea, having $1,000 a month to invest. Now to many this won’t sound like a lot of money, but remember I make roughly $60k a year in salary and I’m 25 years old.

First off I might have to change brokers to get the lowest rate commission since I’d be trading so frequently. Now the question then becomes, what do you invest in every single month? Maybe an IPO happens (such as Zynga) that month and you toss your $1,000 in on it hoping that in the long-term picture it takes off. I think you could make a strong argument about taking some heavy risk (especially at my age) with your $12,000 a year.

I’ll give you an example – Last year I thought about going long in Panera Bread (PNRA), but I just didn’t want to tie up all of my cash (what little I have in my brokerage account), and since that time it is up roughly 45%. That would be a perfect example where you toss your $1,000 down on a feeling (usually based of fundamentals) and go long.

Let’s say you get aggressive and put your stocks in high risk/return stocks and you get a return of .095% a month or about 12% year – you would put in $120,000 and end up with $224,214 in 10 years minus taxes.

If taxed at 15%, that would be $208,581 in 10 years of pure cash.

Now being real for a minute, its not very likely that you would save all of the cash you saved during that 10 years – heck maybe you wouldn’t save any of it. The idea here is simple – cut your largest expense (housing) down to a fraction of what it is and enjoy the rewards for your sacrifice.

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