How I'm Investing for 2025

Summary

In this video, the creator breaks down their investment strategy for 2025, offering insights into how they allocate their net worth across various asset classes. The plan includes stocks (33%), real estate (33%), Bitcoin (15%), cash (15%), and precious metals/collectibles (4%). They discuss their investment approach, such as dollar-cost averaging and using a barbell philosophy—balancing conservative and high-risk assets. The video also touches on specific holdings, including VTI, small-cap stocks, and Bitcoin, with a focus on long-term growth, risk management, and diversification. The creator emphasizes the importance of sleep well at night investing.

Takeaways

• 😀 The speaker shares their investment strategy for 2025, breaking down the allocation of their net worth across various asset classes.
• 😀 The 'pie chart' analogy is used to explain how the speaker divides their net worth: 33% in stocks, 33% in real estate, 15% in cash, 15% in Bitcoin, and 4% in precious metals and collectibles.
• 😀 The speaker follows a dollar-cost-averaging (DCA) strategy, regularly investing a fixed amount in stocks to average out market volatility over time.
• 😀 Vanguard's Total Stock Market Index Fund (VTI) makes up 53% of the speaker's stock portfolio, with a strong focus on small-cap value stocks (AVUV).
• 😀 The speaker employs a 'barbell' investment strategy, balancing conservative assets like cash with riskier assets like Bitcoin and options.
• 😀 The speaker bought a $19,100 options contract for MicroStrategy with a target strike price of $400 and a break-even price of $591.
• 😀 Real estate comprises 31% of the speaker's net worth, with a paid-off home offering equity but no plans to purchase rental properties in 2025.
• 😀 Cash allocation (15%) is currently split across high-interest savings accounts (Robinhood Gold, M1 Finance, Capital One) and is used for liquidity.
• 😀 Municipal bonds are suggested for high-tax-bracket investors as they offer tax-free interest income, making them an appealing option in the current market environment.
• 😀 Bitcoin is a core part of the speaker's strategy, with 22% of their net worth invested in Bitcoin-related assets, including a microstrategy position. The speaker plans to continue DCA into Bitcoin with the belief that it represents long-term generational wealth.
• 😀 The speaker discusses precious metals and collectibles, such as gold, trading cards, and watches, as hedges against inflation and stores of value, despite holding a smaller portion (around 2%) in these assets.

Q & A

What is the primary investment strategy discussed in the video?

The primary strategy discussed is dollar-cost averaging, where the investor invests a fixed amount of money at regular intervals regardless of market fluctuations. This approach aims to reduce the impact of market volatility over time.

How does the speaker break down their investment portfolio by asset class?

The speaker divides their investment portfolio into five key asset classes: stocks (33%), real estate (33%), Bitcoin (15%), cash (15%), and precious metals/collectibles (4%).

What specific stock investments does the speaker focus on?

The speaker focuses on Vanguard’s Total Stock Market Index (VTI), small-cap value stocks like AVUV, and a mix of conservative investments like VTI and small-cap growth with more risk exposure from individual stock options like MicroStrategy.

What is the 'barbell' investment philosophy the speaker mentions?

The barbell investment philosophy is about balancing the extremes: one side consists of very conservative, low-risk investments (like cash), while the other side contains high-risk, high-reward investments (like Bitcoin). This approach aims to provide stability while taking on some risk.

Why does the speaker prefer investing in small-cap stocks?

The speaker prefers small-cap stocks, especially small-cap value stocks, because they tend to have more upside potential compared to large-cap stocks. They also offer diversification away from the heavy concentration in mega-cap stocks, like those in the 'Magnificent 7'.

What role does real estate play in the speaker's investment strategy?

Real estate is a core component, representing about 33% of the portfolio. The speaker invests in REITs (Real Estate Investment Trusts) for exposure, though they don't plan to buy rental properties. They also emphasize that owning a paid-off home can be a good hedge against inflation.

Why does the speaker invest in Bitcoin despite its volatility?

The speaker views Bitcoin as a generational wealth asset, seeing it as a long-term investment with asymmetric upside potential. They emphasize holding Bitcoin through market fluctuations and believe that future catalysts will push Bitcoin higher.

What is the speaker's stance on cash investments?

Cash makes up 15% of the speaker's portfolio, with the funds invested in accounts like Robinhood Gold, M1 Finance, and Capital One, offering yields of around 3.8% to 4.25%. The speaker also mentions municipal bonds as a tax-efficient way to invest cash for higher earners.

How does the speaker view precious metals and collectibles in their portfolio?

Precious metals like gold are viewed as a hedge against inflation, and the speaker aims to increase their gold holdings. They also invest in collectibles like trading cards, which can appreciate over time, though the speaker acknowledges the speculative nature of these investments.

What is the speaker’s perspective on diversification in investing?

The speaker believes in diversification as a way to achieve peace of mind. They argue that diversification across different asset classes helps reduce the risk of losing everything in any one area. They also emphasize that this strategy is especially useful for wage earners who do not want to take on the risks of running a business or side hustles.