How to Become a Millionaire by Investing $700 per Month – Part 16/360

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$15,427!

That’s up $4,227 (37.7%) in 15 months and that’s miles ahead of our 10% annual goal. At a 37.7% rate of return, using our compound rate calculator and adding $700/month – we will hit $1M in year 10 – not year 30! Don’t get too excited though, last month we were only up 24% as the market dipped and that could easily happen again – it’s a long and winding road

If you are just getting started on your path to being a Millionaire – you haven’t missed very much at $15,427 and you can go over months  123456789101112, 13, 14 and 15 to see all the moves we’ve made to get this far. This is a small portfolio, which means we can’t use all of our favorite option techniques yet – but it’s a great way to learn how to get started on a wealth-building adventure.  

Last month we did not add any new positions but we made a few bullish adjustments. With this month’s $700, we now have $3,344 but we’re using $1,000 in margin so $2,344 is what we have to play with this month:  

    • F – I think $14 is a very conservative target and that would be $4 per share ($2,000) so the upside potential is $872 (77.3%). Of course, at $14 we would probably cover and reduce the basis but let’s not complicate things…

    • GPRO – At $6 the calls will be worth $1,600 so upside potential of $1,025 (178%) would be very nice in 13 months. 

    • IVZ – We are ahead on these but $20 would be $2,500, which is an upside potential of $962 (62.5%), so it’s worth holding for now. 

    • BCS – We’re a little aggressive on these and our goal is $1,500+ and currently just net $465 but what’s the point of the short $10 calls if all we can make is $60 in 13 months?  Let’s buy those back and hopefully earnings will be kind to us in January. Upside potential should be better than $915 (156%) after we spend the $60. 

    • SOFI – I’m very confident in this one hitting its $3,500 goal and that’s $2,312 (194%) upside potential from here.  

    • SPWR – Maybe NOW!?!? I’d buy back the short calls if they were cheaper.  It’s a $7,500 spread at net $1,898 but we’re almost $3,000 in the money – aren’t options fun? Upside potential is $5,602 (295%) – this could be the only trade in the whole portfolio and we’d be on track if it works!  

    • TROX – This one is on track with a year to go.  It’s a $2,500 spread at net $1,262 so $1,238 (98%) upside potential here.  

    • WBA – Annnd NOW!!!  Another horse that won’t leave the starting gate but they’ll get there.  It’s a $2,000 spread at net $786 so $1,214 (154%) upside potential on this one.

    • FF – We’re down on this one but not down enough to make changes. They just paid out 0.06/share ($60) on Nov 30th and we only paid net $700 for the position so that’s 8.5% for the quarter in just dividends – that’s a keeper! We added the calls last month but going the wrong way so far.  If they get back to $10 that’s $823 (552%) upside potential – not even counting the long calls (May is too soon to count on).  

So, if all goes well, our 11 long positions have $14,963 (96.9%) of upside potential over the next two years and that will keep us on the 40% annual path – IF all goes well.  If it does not, we have our hedges:

    • SQQQ – It’s a 3x ETF so at $16.52, if the Nasdaq drops 20%, SQQQ should go up 60% and that would be $26.43, not $30.  At $26.43 we’d get $3,858 from our longs to cover losses on the rest of the portfolio.  It’s probably not enough now that we’re up to $15,433 so even a 20% loss of that would be $3,000+ and we’re leveraged – so it could easily be worse. 
    • We haven’t spent any money yet this week so let’s spend a bit on hedges and buy back both sets of short calls for $620.  We’ll sell some again when SQQQ bounces. This does not, however, fix the problem of only collecting $3,858 on a 20% drop so let’s roll our 6 2025 $20 calls ($2,160) to 10 2026 $15 calls at $6.40 ($6,400) and sell 7 2026 $25 calls for $5 ($3,500).  That roll will cost us net $740 + the $620 to buy back the old calls is $1,360.  Now we’re $1,652 in the money with another year of protection and, at $25, we get back $10,000 – now THAT’s PROTECTION!
    • And, don’t forget, we can collect $420 selling 3 March $18 calls for $1.40 (but not yet) – so we’ll make that $1,652 back in no time! 

Well that only leaves us with $692 to spend so let’s wait until the holidays have passed before we deploy any more cash.  It’s been a great first year (and 4 months) – thanks for joining us on this Investment Journey Lesson!  

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