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Should Your Investment Style Change Over Time?

By Rachel Warren, Jason Hall, and Toby Bordelon – Dec 8, 2021 at 6:50AM

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Three investors discuss their approach to growing their stock portfolios.

While the basic tenets of a long-term investing thesis involve buying great companies and holding on to them for many years, every investor has a slightly different approach to portfolio building. In this segment of Backstage Pass, recorded on Nov. 15, Fool contributors Jason Hall, Toby Bordelon, and Rachel Warren discuss a member's question on this exact topic.

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Jason Hall: Let's see here. We had some extra stock ideas right there. I want to do Charles' real quick here, his other one here, about investing style. His question is: Will your investing style change depending on your portfolio size? He offers an example like, let's say you're at a half-million-dollars portfolio versus $5 million. 

For me, I don't think it's as much about portfolio size, as it is about where I am on my investing journey. My strategy may change as I get closer to financial goals. I have to de-risk in terms of volatility, but beyond that, I don't think it's going to change substantially. Toby, you're partly retired, semi-retired, living off some of your portfolio?

Toby Bordelon: I mean, maybe a couple of years ago I would have that, but now I've gotten so roped into this Motley Fool stuff. [laughs].

Rachel Warren: You're just having too much fun.

Toby Bordelon: I spend quite a bit of time doing this myself now,.

Jason Hall: I think it'd be interesting to hear though your perspective being somebody that's further along in your investing career. Rachel, you've talked about the fact that you are a newer investor before. I'd be curious to hear how you think about maybe your style changing over time versus where you are now?

Toby Bordelon: I think it absolutely changes. It certainly changes. I know mine has changed as the portfolio size has grown and as, honestly, it's not just your portfolio size, it's where you are in life. It changes when you're young and unmarried or even when you're just married, and so when you have kids, it changes, it absolutely changes.

Your priorities get different and you tend to because you now have definitive things you have to pay for in the future. You start shifting your mind set into that a little bit. You also start, I think, at least for me -- for a lot of people -- once you have kids, you start really thinking about that mind set of what are you going to pass on one day.

But to an actual person, right, not just  for, I guess some charitys going to get this, but like as an actual person you want to give a little bit to. You stop investing just for yourself and your future. You start investing for another generation's future.

That shifts how you think about stuff. But I think it is true, as your portfolio gets larger you start to take more risks maybe with a portion of it. Because if you're fortunate and you invested well, you're going to have a lot of money that's like, I wake up and that 10% goes away tomorrow.

Jason Hall: Doesn't matter.

Toby Bordelon: Not that big a deal. You're like, I can have fun with this and just see what happens. But it's different for every person, but you absolutely, you're going to get shifts in how you approach investing and what you're investing for, your overall mind set as time changes. It's just a natural progression.

Jason Hall: Rachel, what about you?

Rachel Warren: I feel like I'm gaining so many pearls of wisdom from you guys. [laughs] I am a newer investor and so obviously I'm a lot earlier on in this journey. I could see not so much that my investing style will change, perhaps the amount of capital I'd be deploying and where I would put it and the type of companies might change a little bit.

But in terms of like my underlying strategy of the types of companies I look for and the length of time that I would hold them, I don't see that changing. But I would imagine that as time goes by, I could see myself being willing to take on a little bit more risk than perhaps I'm willing to right now, as I'm still a little newer and trying to build my portfolio a little bigger based on some of these really massive solid companies. 

But I also think it depends on the individual investor as well.

Jason Hall: I think you're both spot-on. We evolve. If you're not evolving, you're not living. It's going to inform how you invest over time.

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