How to Invest with $2,000

Over the past year or so, from the markets' lowest point on March 23, 2020, through the all-time highs of this week, we've seen more direct inquiries about stocks than at any time since the financial crisis of 2008-2009.

We're not surprised.

After all, depending on what numbers you look at, there are as many as 72 million new investors out there.

And those investors are hungry - for stocks.

Of all the queries we get, it's this one that has me the most intrigued: "I have $2,000. I want to invest it in stocks. But I'd sure be grateful for some guidance on which stocks to buy and what 'strategy' to employ."

Let me tell you folks: I love this question. I truly love it. And I respect the heck out of the folks who posed it, or who were thinking along those lines. They're ignoring the noise and focusing on the long term, taking control of their own financial destiny - and do so by taking action.

So I shared two simple "How to Invest $2,000" strategies with my Private Briefing subscribers. And folks who followed along had the chance to take gains of 199%, 97%, 74% (and more) with the stocks and the simple but unbelievably powerful strategies we talked about.

The piece got a strong response, and we continue to hear this question, so today, I'd like to share one of those strategies with everyone. It's a foolproof way to find the right stocks for you, and a way you can quickly allocate a $2,000 nest egg to put yourself on the road to lifelong wealth.

Let's take that first step and jump in...

The Awesome Power of "Just" $2,000

Editor's Note: Bill's Private Briefing subscribers can check out both strategies here.

Two years ago, I sat down with my then 11-year-old son and told him we were going to start picking some stocks for him to invest in.

I'd set aside some cash to make this possible. And just by happenstance, the "seed money" totaled $2,000 - the same amount of investment capital that you folks have been asking for advice about.

With Joey, the results have been dramatic. Not only did he choose well - meaning he's made some serious money - but knowing that he's invested has him watching the moves "his" companies are making.

And with electronic trading - and investing apps like Robinhood - it's no longer cost-prohibitive to buy "micro blocks" of an individual stock.

I also like the strategy of buying individual stocks vs. exchange-traded funds (ETFs) or mutual funds because of the real-world education you'll get from following the shares of real companies.


Our chief investment strategist says 2021 could be a gold mine for Americans - and these 5 stocks are "screaming buys."


Our chief investment strategist says 2021 could be a gold mine for Americans - and these 5 stocks are "screaming buys."

Next, let's move on to a tried-and-true "How to Invest $2,000" investing strategy that's worked not just for Joey, but for quite a few other Wall Street notables, too.

It's the Peter Lynch "Invest in What You Know" strategy - where you buy stock in companies whose offerings you know and use. It's simple, but incredibly powerful.

Let's take a look...

Invest $2,000 in What You Know

With Joey, we chose the first strategy. By sitting down with my son, talking it over, and really listening to what he said was important to him, we were able to zero in on the companies that make, market, and service the things he really likes. You can sit down, by yourself or with someone you care about, and do the same.

So those investments included:

Apple Inc. (NASDAQ: AAPL): This one makes total sense. Joey loves Apple products: He has an iPhone, an iPad, a MacBook, an Apple Watch - and we just subscribed to Apple TV+. It's been a big moneymaker for Private Briefing subscribers. We grabbed Apple in July 2013 at a (2020 split-adjusted) price of $15.02 a share - just before raider-turned-activist investor Carl Icahn moved in and ignited the stock. Apple was recently trading at nearly $130 a share - meaning that "call" has given you a capital gain as high as 765% on one of the world's most valuable companies. Joey will be happy to watch this one as he plays on his new iPad.

Microsoft Corp. (NASDAQ: MSFT): Joey loves Minecraft, which Microsoft bought a few years back. At the time that we recommended Apple, we did the same with Microsoft. And like Apple, Microsoft proved to be a timely call. The post-Steve Ballmer shakeup led to the installment of visionary CEO Satya Nadella and an acceleration of the firm's move into the cloud. That stock - which we've re-recommended many times since and still like for the long haul - was recently at $252, up 626% from our initial "Buy" call at $34.70. Each time Microsoft has sold off, we've re-recommended the stock - and then watched as it soared and you profited. That's part-and-parcel of our "Accumulate" strategy, which is designed to build wealth. We believe there's lots more to come.

Berkshire Hathaway Inc. (NYSE: BRK.A): The investment vehicle operated by iconic investor Warren Buffett, Berkshire, is flat out just a great company with great brands and a track record for delivering results. It's a no-brainer that will hold up well in a downturn - which is why we've dubbed it our "Heads You Win/Tails You Win Stock." Joey liked my pitch on it because I said it was run by one of the world's richest people (all kids "get" that concept) and because it owns products he likes. The holdings make Berkshire look like a "Best in Class" wealth fund. Our family uses Duracell batteries, eats Kraft Heinz food products, enjoys ice cream at Dairy Queen, and likes railroads. Joey will make money on this stock as he learns. The $137 billion in cash Berkshire holds will come in handy if stocks crash. The "B" shares are trading at about $290, just a few cents off their 52-week high.

Alibaba Group Holding Ltd. (NYSE: BABA): Our "Single Stock Wealth Machine" play is the "Amazon of China." Joey understands Inc. (Nasdaq: AMZN). He's fascinated right now by world geography. And he knows I spent time in China during my newspaper days. So he was totally down with this stock. Plus, it'll make him lots of money over the next 40 years. I once showed my subscribers why I believe that each share of Alibaba stock purchased now at $225 a share will be worth $2.1 million when Joey is my age and has a family of his own.

Netflix Inc. (NASDAQ: NFLX): Joey is a huge fan of this OTT streaming service, so he wanted to buy some shares. It was a smart move for an 11-year-old: With Netflix trading at roughly $432, my son is up nearly 95%.

Beyond Meat Inc. (NASDAQ: BYND): My wife Robin is a vegan, and Joey has become a vegetarian, leaving me as the only "carnivore consumer" in the house. They introduced me to Beyond. Joey loves Beyond Burgers, and I really dig Beyond Sausages. He wanted to own the stock. It's now trading at about $110.


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Wall Street insider Shah Gilani reveals the names of 5 obscure stocks that could dominate 2021 in this free video.

The Best Way to Divide Your Stake

Allocating your $2,000 is just as important, and fortunately, it's just as simple these days.

Take the $2,000 and divvy it up so that you're making equal dollar investments in each stock. That'll mean more shares of a lower-priced stock, or only one or even a fraction of one share of a higher-priced stock - the important thing is that you own it.

From there, look to "Accumulate" your way forward. Protect your money with trailing stops. Here in Private Briefing, I usually recommend a 25% trailing stop that protects profits and principle, but you can "loosen" or "tighten" those as market conditions dictate.

After taking these initial "foundational" stakes, look to add to your holdings on pullbacks, or as you get more cash. You can even consider some kind of "automated" investments, so you're forcing yourself to keep investing - and at regular, scheduled intervals.

And that's how you can start investing for lifelong wealth, no matter your age. You can do the same thing my son did - the same thing Peter Lynch did - examining the products, services, and activities that you use and enjoy - and then work backwards to invest in the companies that offer them.

As your wealth grows, you can keep your growing nest egg hard at work, while you avail yourself of all the different kinds of opportunities there are out there. For instance, some folks find they're more comfortable with trading after they've been in the markets for a while.

My colleague, "Millennial Millionaire" Andrew Keene is an interesting young guy who never stops watching the markets. For months, he's been watching the flow of the "smart money," big, institutional investments, into and out of sectors, developing what he calls a "four-pronged formula" for jumping on profit opportunities. Over the past eight-and-a-half months, he's made 45 trades - average gains on each, winners and losers included, were 47.8% every 13 days. Andrew's using his new formula to put together a free trade recommendation that could yield 300% in gains in a matter of months. You can go here to take a look and learn more.

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About the Author

Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.

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