Crafting a Tech-Driven Investment Portfolio: A $50,000 Plan

Leo Tolstoy once said, “All happy families are alike; every unhappy family is unhappy in its own way.”

A similar idea applies to investment portfolios: the most successful ones tend to share key characteristics, while the less successful struggle for various reasons.

A critical factor distinguishing these portfolios is the balance between emerging tech companies and established leaders. With this in mind, let’s explore how to build a hypothetical $50,000 tech-focused portfolio.

Image source: Getty Images.

Investing in Netflix: $20,000

To begin, I will allocate $20,000, or 40% of my hypothetical portfolio, to Netflix (NASDAQ: NFLX), a stock that has climbed over 63% year to date as of this writing.

Netflix has demonstrated resilience in a competitive landscape.

Back in 2021, many thought Netflix was losing its edge. Major companies like Disney, Paramount, Comcast, and newcomers such as Apple were launching their own streaming platforms and heavily investing in content, posing a threat to Netflix’s dominance.

Fast forward three years, and Netflix seems stronger than ever. The company recently reported impressive results for the quarter ending September 30, 2024, which included:

• 15% revenue growth
• 30% operating margin, a record high
• $5.40 in diluted earnings per share, another all-time high

With a lineup of content set to increase viewer engagement, Netflix is also venturing into live streaming with NFL games and high-profile boxing matches.

Having weathered a challenging phase, Netflix has not just survived; it has thrived, making it a strong candidate for investment.

A Bet on Reddit: $5,000

Next, I will allocate $5,000, or 10%, of my hypothetical portfolio to Reddit (NYSE: RDDT).

Every portfolio could use an element of excitement, and Reddit fits that bill.

Known for its diverse online forums, Reddit hosts subreddits on various topics, from car repairs to plant care.

Although Reddit has been around for years, it went public less than a year ago, in March 2024, and its stock has surged over 167% since then.

In many ways, Reddit mirrors a smaller version of Meta Platforms, particularly the original Facebook platform. This is because of the highly targeted nature of its subreddits, making it an attractive option for advertisers.

As a result, Reddit’s advertising revenue is rapidly increasing, with marketers keen to reach specific audiences.

In its latest quarter, Reddit enjoyed revenue growth of 68%, with daily active unique visitors increasing by 47%. The company saw its net income rise to $30 million compared to a loss of $7 million a year earlier.

While these numbers are promising, I’ve only allocated 5% of my hypothetical portfolio to Reddit due to its short history as a public entity. Caution is advised, but it’s worth keeping an eye on this potential future star.

Going Big with Amazon: $25,000

Lastly, I will allocate $25,000, or 50%, to Amazon (NASDAQ: AMZN).

It’s essential to have a significant portion of the portfolio in a company with proven success, and Amazon certainly qualifies as that.

Since its launch, Amazon’s shares have skyrocketed by 200,000%. Over nearly three decades, its compound annual growth rate (CAGR) has averaged around 32%.

To illustrate, a $10,000 investment in Amazon in 1997 would be worth approximately $20 million today.

While expecting such extraordinary growth in the future may be unrealistic, Amazon is far from finished growing.

In its most recent quarter, Amazon experienced revenue growth of 11%, reaching $159 billion.

Moreover, net income and free cash flow have reached all-time highs under the leadership of CEO Andy Jassy.