How a 25-year-old built a 6-figure stock portfolio with a small salary
- By the time Jeremy Lefebvre was 25, he had a portfolio of stocks worth almost $ 200,000.
- He was making $ 40,000 running a gas station and investing every available dollar.
- He researched every business he bought and invested more each time his income increased.
- Read more stories from Personal Finance Insider.
It was a corporate incentive that first led Jeremy Lefebvre to take an interest in stocks. âIf you had a certain amount of your salary going towards Walgreens stock, you would get something like a 10% or 15% discount on the Walgreens stock traded,â he told Insider.
Growing up, Lefebvre did not always have a clear path for his future. Her early childhood was marked by poverty, her family relying on food stamps and government assistance. At age 12, his father moved the family to Arizona, where he started a small swimming pool business, propelling them into a more middle-class income. âI thought we were rich back then,â says Lefebvre.
A successful high school career earned him a place on the Glendale Community College team, prompting him to pursue a business education. “My first job was $ 7.50 [an hour] and I felt lucky to have this, âhe says. It was in 2008, during the Great
, and he worked at Einstein Bagels in California.
When he started at Walgreens a little later, now earning $ 8.50 an hour, he was looking for ways to grow his money. âReal estate was completely unrealistic because I had no money or experience in it,â he says, but the stock market was intriguing.
At 25, Lefebvre had built up an impressive portfolio of stocks. By this point, he was out of college and working as a manager at a QuikTrip gas station, spending his evenings and holidays reviewing his portfolio and individually picking stocks. The work paid off, according to documents reviewed by Insider: his account at the time was valued at just under $ 200,000.
He used free and inexpensive resources to expand his knowledge and learn how to evaluate businesses
When Lefebvre first discovered the stock market, he discovered a man named Warren Buffett. “I was watching Warren Buffett’s interviews that people uploaded to YouTube or the presentations he gave for college,” says Lefebvre. He started to learn how Buffett perceives a business and what he looks for in a stock.
He has read books recommended by Buffett, such as “The Intelligent Investor” by Benjamin Graham. He took advantage of all that these free and inexpensive resources could offer. “There are other good ones,” he says of books he’s read, like “The Little Book of Common Sense Investing” by John Bogle.
Now, when he chooses where to invest, he has a fairly standard system. âIf you really want to pick stocks, you have to read the annual report or the 10-K report,â he says.
These are long documents, usually 100 pages long, but worth it. “If you read about the business, how they make money, what they actually doâ¦ and it doesn’t quite click, it’s probably not the one for you.”
Stocks can go up and down, and if something you’ve invested in goes down in the short term, “If you don’t know what a company is doing at a very high level, you’re going to be scared and you are probably going to panic to sell and suffer a loss. ”
âAn important factor is to understand financial statements, to understand how to read an income statement, how to read a balance sheet,â he said, adding: âI took three levels of accounting in college; luckily I had a very good instructor. ”
Whenever his disposable income increased, he invested it in the market
When Lefebvre discovered Warren Buffett, he only had small amounts of money to invest. “But, I did it anyway,” he emphasizes.
He had three jobs, raced on the track, and took a full load of college courses, investing around $ 250 to $ 500 at a time. After graduating from Glendale, he chose to seek a high paying job, unwilling to take out loans for a college.
Walgreens weren’t hiring any managers, but one day, during a random refueling, saw a sign in a QuikTrip window advertising an assistant manager position starting at just under $ 40,000. âIt was in November 2010; I had just turned 21 at the time, âhe says.
It was an exciting time for him. After landing the job, he now had a lot more income to invest. âNow I can really get things done,â he recalls thinking at the time. After his expenses, he had about $ 1,000 to $ 2,000 per month of disposable income to invest.
He became a model in the life of Lefebvre. Every time his disposable income increased, so did the amount of money he invested. When he and his girlfriend (now his wife) moved in together, cutting the bills in half added to his investable income. He later got a promotion at QuikTrip and was now earning $ 50,000 a year.
And every time he sold a stock, he would reinvest all the profits back into his portfolio. âLet’s say I made $ 3,000 on one stock, it wasn’t like I took that out and bought something with that money, I would just go back and buy the next stock,â says -he.
He invested in fewer companies to better follow his choices
Some of his big hits at the time included Cabela’s, a subsidiary of Bass Pro Shop; Monster Energy, formerly Hanson’s Natural Beverage; and Trinity Industries, an industrial company.
âToday, I probably own about 20 stocks, but if we go back 10 years, I probably had between three and six stocks at a time,â he says.
The reason was simple: With limited time and a desire to learn from one’s portfolio, fewer stocks were easier to manage. “You are going to be able to follow them better and learn better from them,” he said. “As your wealth increases, you start to become more diverse.”
Choosing successful individual stocks requires a lot of research; when you work full time or have other commitments in life, “you have little time to do that research,” he notes. âSo keeping track of 20 stocks is difficult. ”
Options like index funds and exchange-traded funds are great choices for investors who don’t have a lot of time to keep up with the growth of individual companies and want broad market access.
He bought stocks with long-term profits in mind
Lefebvre’s equity thinking process hasn’t changed much since its inception. “I think I own a share for three to five years at a time,” he explains.
That said, sometimes he will sell sooner if he finds a stock that he believes will perform better. “If a better stock comes along, I might end up selling it [initial] stock, and reinvest that money in the next stock. “
But in general, this long-term strategy is extremely important to Lefebvre’s success. Not just because of the perks of owning stocks, but also because of the mindset it gives him. âThe stock market is open Monday through Friday and stocks are moving everywhere, people are hanging on to it,â he says. “But you’re investing in a real business, a real underlying business.”
There’s an analogy he likes to think of: let’s say you own a McDonald’s franchise, “You wouldn’t think, ‘How many burgers have we sold in the last hour,’ and judge that alone.”
There is also the tax benefit of long-term investment. “If you sell a stock for long-term gain, you are taxed at the capital gains rate.” For most people, it’s around 15%. Short-term capital gains are taxed as ordinary income. This could go up to 37% depending on your tax bracket.
âThe moral of the story,â says Lefebvre, âis to get down to business, to look for companies, to have self-confidence.