I built a 6-figure portfolio in under 6 years: Here is my best wealth-building advice

"Taking action, even when it was scary, was the single best financial decision I ever made."

Lisa Seery is a financial coach and the founder of Wealthy Within.
Courtesy Lisa Seery

I started working in the wealth management industry shortly after I graduated from college. My job was to help our clients set up nonretirement investment accounts and oversee daily transactions. Watching people grow their accounts through investing inspired me to take action and begin to teach myself the basic investing concepts, so that I could understand how to invest and leverage the market to grow my own money.  

But as I was gaining confidence in my career and in my skills as an investor, the Great Recession hit. From 2007 to 2009, the value of my investment portfolio dropped by almost half. Meanwhile at work, I was liquidating millions of dollars out of client accounts every day. 

It was a really scary time: The financial stability I once felt suddenly became very uncertain. It caused me to react emotionally and make rash decisions in my own accounts, like panic-selling shares

But in 2009, as the market became less turbulent, I was reminded of a quote by Warren Buffett: "Be fearful when others are greedy. Be greedy when others are fearful." So while I could have easily avoided the stock market and waited to resume investing until it felt more "safe," I didn't. I chose to shift my mindset to see an opportunity instead of a setback. 

Taking action, even when it was scary, was the single best financial decision I ever made. In just under six years, I was able to rebuild my investment portfolio and grow it to multiple six figures

Here are the biggest lessons I've learned, and my best advice for new investors. 

Think strategically and gauge your risk tolerance 

Working in portfolio management gave me a behind-the-scenes perspective of how mutual fund managers seek to outperform market returns, and I use a similar method for my personal portfolio today.

If one of my individual stocks returns a certain percentage, for example, I may decide to sell a portion of my shares to lock in some of those profits. Or, if I buy a losing stock, I know when to cut my losses based on the forecast for that stock and my risk tolerance.

Investing can seem volatile, and even scary, especially for people who are brand new to it. But one way to take some of the anxiety out of the equation is by understanding your risk tolerance.

My best advice is to regularly do a reality check. Ask yourself an important worst-case scenario question: If your portfolio lost 30% of its value over the course of a year, would you panic and sell? If the answer is yes, consider changing your investing strategy. If the answer is no and you are certain in saying you wouldn't change a thing, you are on the right track.

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Start simple and minimize risk with diversification

Not diversifying was one of my biggest mistakes as a new investor. If I could start investing all over again, the first thing I'd do is invest the majority of my portfolio in two broad-market exchange-traded funds, a total market index fund, and an international index fund. Then I'd invest in individual stocks.

I was diversifying in my employer 401(k), but I didn't adequately do the same in my own portfolio from the beginning. In 2006, index funds weren't as popular as they are now, so it was easy for me to overlook them. 

The majority of my portfolio consisted of growth and value stocks. Growth stocks are companies that are considered to have a high likelihood to outperform the market over time. Value stocks, on the other hand, are companies that are valued below what they are really worth compared to the company's performance, which makes them attractive to long-term investors. 

While I had a variety of stocks, I was too narrowly focused in a few sectors of the market, particularly the technology sector. In hindsight, I would have started with a more diversified foundation before branching out and investing in individual stocks. 

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I still love being an active investor and investing in individual companies. The difference is now I have a portfolio that is well-diversified across various market sectors and over time I've increased my allocation to ETFs. About 70%-75% of my portfolio is invested in quality individual stocks, 20%-25% is in ETFs, and the remaining 5% or less is divided between cryptocurrency and cash. I also hedge my portfolio against downside risk by investing in precious metals.

My best advice for new investors is to build a solid and simple foundation for your portfolio with natural built-in diversification, like an index fund, and limit riskier investments like highly volatile stocks and cryptocurrency to a small portion of your portfolio. 

Practice patience over instant gratification

When I left my job in trading to take a work hiatus in 2013, I was looking forward to being able to trade and invest freely. Working in the industry and with portfolios, there are regulations on trading within your personal accounts. But I got a bit too excited, and ended up losing more than I bargained for trading a penny stock. 

While this was a portion of my portfolio allocated for fun investing, I let the hype over the potential of that stock get the best of my emotions. And while I'm not super–risk averse, the extremely volatile nature of penny stocks was beyond my tolerance. 

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I learned a couple of important lessons. First, even with money that I could afford to lose, extremely high-risk investments with questionable return potential were not investments I wanted to be trading. Secondly, I'd rather follow a long-term investing strategy than play the short game of day trading trying to make a quick profit. 

As an investor, one of the best ways to keep yourself on track is to tune out the noise and stick to a proven strategy. Avoid the temptation to constantly check your portfolio or look at trending stocks on the news and social media.

And remember that if you're new to investing, the best strategies are actually pretty boring.

Cultivate your skills over time

You don't have to invest perfectly, be an expert, or have a lot of money to be a great investor and build wealth. Successful investing is more about managing emotions, than investing strategy itself. 

It is human nature to make impulsive decisions based on feelings when faced with uncertainty. For a new investor, this could lead to high-risk behaviors or to a fear of investing, both of which can hinder your growth.

You don't have to invest perfectly, be an expert, or have a lot of money to be a great investor and build wealth.

My best advice is to trust that, like anything else you try for the first time, you will get better with practice. I gradually became a more confident and balanced investor after years of making mistakes and learning from them. 

You'll likely make mistakes as well — it's part of the journey. The important thing is to start investing. But knowing who you are as an investor, having a plan for your money, and investing according to your risk tolerance is a great place to begin.

Lisa Seery is a former Wall Street VP and personal finance expert who is passionate about helping women manage their money so they can feel powerful and confident with their finances. After spending 18 years in the investment industry and working with Global 100 financial clients, she wanted to help women in a more impactful way. Now, as a financial mentor, Lisa teaches others how to cultivate a healthy relationship with money and create a sustainable path to financial freedom. She is the founder of Wealthy Within, a collaborative financial education program for women. For more personal finance resources and tips, you can connect with her on Instagram.

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