Want to be Rich? Combine these ETFs for $100k FASTER
Summary
TLDRIn this video, Nolan Goa, also known as Professor G, addresses five questions from his audience about investing. He discusses ETF-only investing, the best mix of ETFs to reach $100,000, taxable brokerage versus 401K accounts, investing with varying time horizons, and dollar-cost averaging out of one fund into another. He emphasizes the importance of a diversified, broad-market investment strategy and the psychological and financial benefits of consistent investing. He also shares personal insights about his passion for Jiu-Jitsu and his focus on being present and improving as a professor and YouTube content creator.
Takeaways
- 📚 Investing exclusively in a handful of ETFs is recommended for simplicity and diversification, with a suggestion to read 'Trillions' by Robin Wigglesworth for a strong case on index fund investing.
- 💰 There's no one-size-fits-all answer to the fastest way to reach $100,000 with ETFs, but a mix of broad market ETFs, growth ETFs, and cash-flowing ETFs can provide a balanced approach.
- 🚀 For long-term growth, consider investing in ETFs with an average yearly appreciation, such as the S&P 500, and supplementing with growth ETFs for potentially higher returns.
- 🔄 Dollar-cost averaging is a strategy that can be applied when moving funds from one ETF to another, but it's important to consider the tax implications and market conditions.
- 🏦 It can be beneficial to invest in a taxable brokerage account alongside a 401K to access funds before retirement and to benefit from potentially lower fees.
- 💡 The importance of understanding the fees associated with 401K investments and comparing them to other investment options like the Vanguard S&P 500 fund was highlighted.
- 🏠 When investing for specific life goals with different time horizons, it's crucial to balance the risk and reward, choosing the right investment vehicle based on the time until the goal is reached.
- 💎 For short-term goals (within 5 years or less), it's suggested to keep the majority of funds in the safest possible investments, like high-yield savings accounts or CDs.
- 🤔 The psychological benefits of dollar-cost averaging were discussed, emphasizing its role in managing emotions and maintaining a disciplined investment approach.
- 🌐 The speaker, Professor G, shared personal insights on the importance of focusing on the present, setting goals, and enjoying the journey of life and career.
- 🤸♂️ A personal anecdote about the benefits of Jiu-Jitsu training for discipline and resilience was shared, highlighting the speaker's commitment to personal growth.
Q & A
Who is the host of the video, and what is his background?
-The host of the video is Nolan Goa, also known as Professor G. He created the channel to simplify investing concepts.
What book does Nolan recommend for understanding the benefits of investing in index funds and ETFs?
-Nolan recommends reading 'Trillions' by Robin Wigglesworth to understand the benefits of investing in index funds and ETFs.
Can someone invest exclusively in a handful of ETFs and nothing else?
-Yes, according to Nolan, it is possible to invest exclusively in a handful of ETFs and achieve a good investment strategy, especially if one chooses broad market index ETFs like the S&P 500 or the total US Stock Market.
What is Nolan's suggested mix of ETFs to achieve $100,000 faster?
-Nolan suggests a combination of broad market ETFs, growth ETFs, and cash-flowing passive income ETFs like SCD or VYM to balance high reward and lower risk.
Is it a good idea to invest in a taxable brokerage account before maxing out your 401K?
-Yes, it can be a good idea to invest in a taxable brokerage account before maxing out your 401K if you want access to investment returns before retirement and to potentially avoid high fees associated with 401K plans.
What is dollar cost averaging, and is it useful when shifting funds between different ETFs?
-Dollar cost averaging involves spreading out the buying or selling of investments to minimize the impact of market volatility. It can be useful when shifting funds between different ETFs to manage risk and taxes.
How should one invest for different life goals with varying time horizons?
-For short-term goals (within 5 years), Nolan suggests safer investments like high-yield savings accounts or short-term treasuries. For long-term goals, diversified investments in the stock market can be beneficial, but it's important to consider the potential for market volatility.
What are the advantages of having money in multiple types of accounts?
-Having money in multiple accounts, such as savings, brokerage, and retirement accounts, allows for flexibility and risk management. Different accounts serve different purposes and time horizons.
How are fees different between 401K plans and brokerage accounts?
-401K plans often have higher fees compared to brokerage accounts. For example, investing in the S&P 500 through a Vanguard fund in a brokerage account typically has lower fees than in a 401K plan.
What is Nolan's personal approach to life and career goals currently?
-Nolan is focusing on taking life one day at a time, appreciating each day, and aiming to improve as a professor and content creator. He emphasizes being present and enjoying time with loved ones.
Outlines
📊 Simplifying Investing: Your Questions Answered
Nolan Goa, aka Professor G, introduces the video by addressing his viewers' questions about investing. He received over 200 questions but picked five to discuss in this video. The main topics include ETF-only investing, strategies to reach $100,000 faster, the comparison between taxable brokerage accounts and 401Ks, the best ways to sell stocks or ETFs, and investing with varying time horizons. He emphasizes keeping investing simple and highlights the importance of reading 'Trillions' by Robin Wigglesworth to understand the benefits of index funds and ETFs.
🚀 ETF Combinations for Faster Growth
Nolan addresses a question about which mix of ETFs can help achieve $100,000 faster. He stresses that no one can predict the exact combination of ETFs for rapid growth. However, data suggests that a broad market investing strategy, such as the S&P 500 or the total US Stock Market, with consistent contributions, is effective. Adding a growth ETF to the mix can boost returns but comes with higher risk. To balance this, including a safer, passive income ETF is advisable. The key to faster growth is diversifying among these ETF categories and consistently investing as much capital as possible.
💼 Taxable Brokerage vs. 401K: Smart Investing
Nolan discusses whether it's a good idea to invest in a taxable brokerage account before maxing out a 401K. He acknowledges the importance of having funds accessible before retirement and highlights the tax advantages of 401K contributions. However, he points out the often high fees associated with 401Ks compared to lower fees in brokerage accounts, which can significantly impact long-term growth. He advises checking the current fees in your 401K and considering a brokerage account for its flexibility and potential cost savings.
💵 Transitioning Funds to Dividend ETFs
Nolan answers a question about moving funds from total market to dividend ETFs and whether dollar-cost averaging (DCA) is beneficial in this process. He affirms that DCA helps manage psychological aspects and average buy prices over time. However, he notes that selling in a brokerage account incurs capital gains taxes, whereas retirement accounts do not. He advises considering tax implications and the seriousness of the new investment before fully transitioning. Easing into the new position through DCA can be a prudent strategy.
🎯 Investing for Different Life Goals
Nolan addresses how to invest for various life goals with different time horizons, such as buying a house, an engagement ring, or planning for retirement. He emphasizes the importance of aligning investments with the time frame of the goal. For short-term goals (within five years), he recommends safer options like high-yield savings accounts or short-term treasuries. For long-term goals, investing in the stock market can be beneficial despite potential short-term volatility. Diversifying investments across multiple places ensures better financial stability and growth.
🏦 Safe Investments for Short-term Goals
Nolan further elaborates on investing for short-term goals, advising to keep funds in safe places like high-yield savings accounts or CDs, especially if the money is needed within a few years. He uses the example of planning to buy a house, explaining the risks of having such funds in the stock market due to potential volatility. He stresses the importance of having money in multiple places to balance risk and returns, particularly when planning for specific short-term financial goals.
💪 Personal Growth and Jiu-Jitsu
Nolan shares a personal update, mentioning his ongoing journey in Brazilian Jiu-Jitsu, which he finds rewarding for its discipline and resilience benefits. He reflects on his approach to life and career, emphasizing living in the moment and appreciating daily blessings. Nolan's goal is to become a better professor and content creator, aiming to provide maximum value to his audience. He invites viewers to support his channel and continue learning through his videos.
Mindmap
Keywords
💡ETFs
💡Index Funds
💡401K
💡Taxable Brokerage Account
💡Dollar Cost Averaging
💡Growth ETFs
💡High Yield Savings Account
💡Capital Gains Tax
💡Retirement Planning
💡Diversification
Highlights
The video received over 200 questions, but only five were selected for this video, indicating a strong engagement with the audience.
The first topic discussed is ETF-only investing and whether it's sufficient for building wealth. The response supports the idea, emphasizing simplicity and broad market index ETFs like the S&P 500.
The speaker recommends the book 'Trillions' by Robin Wigglesworth, which argues for the effectiveness of investing in index funds and ETFs.
While investing in ETFs is supported, the speaker cautions that choosing the right ETFs still requires research and that there are no guaranteed paths to reaching specific financial goals quickly.
For a goal of reaching $100,000 faster, the speaker suggests a balanced mix of broad market ETFs, growth ETFs, and income-generating ETFs to manage risk and reward.
The importance of consistent investing and adding as much capital as possible to achieve financial goals more quickly is emphasized.
A discussion on taxable brokerage accounts versus 401(k)s highlights the benefits of both, including tax advantages and the ability to access funds before retirement.
The speaker mentions the importance of checking fees in 401(k) plans and compares them with the lower fees of investing in an S&P 500 index fund through a brokerage account.
The video advises on dollar-cost averaging when shifting investments from one ETF to another, noting the psychological and financial benefits.
The speaker recommends considering taxes and account types (brokerage, 401(k), Roth IRA) when moving investments to minimize tax impacts.
Investment strategies for different time horizons are discussed, with a focus on aligning investments with specific life goals, such as buying a house or retirement.
For short-term goals (less than 5 years), the speaker suggests safer investments like high-yield savings accounts or short-term treasuries.
The speaker highlights the potential volatility of the stock market for short-term goals, using the example of the S&P 500's fluctuations in 2022 and 2023.
Diversifying investments across multiple accounts and types is recommended to balance risk and return for different financial goals.
The video concludes with personal updates from the speaker, including their passion for Jiu-Jitsu and a focus on daily improvement in their professional and personal life.
Transcripts
recently I asked you fine people what
you wanted to know and you guys
delivered and I received over 200
questions but could only pick five for
this video with that many questions I
could have made like 43 different videos
so if you guys enjoy this one then I'll
go ahead and pick five more and make
another video soon today I'm going to go
over ETF only investing which ETFs
combined get me to
$100,000 faster taxable brokerage versus
the 401K and when or how to invest best
the best way to sell stocks or ETFs
investing with varying time Horizons and
then two quick bonus questions my name
is Nolan Goa my students call me
Professor G and I made this channel to
make investing simplified the first
question asks is it enough to invest
exclusively in a handful of ETFs and
literally nothing else I'm an expat with
no pension and prefer to keep things
simple super quick answer on this one
yes I'd highly recommend reading the
book trillions by Robin Wigglesworth
because the amount of data and the
amount of case studies and everything
else within that book just makes the
easiest case ever that we should
definitely be investing in index funds
and etf's track index funds and so that
to me is the best way to invest in
equities what I'm definitely not saying
is that just because you invest in ETFs
that's going to get you to your overall
investing goal or get you super rich you
still have to do the research and pick
the right ETFs but if the question is
more more so can I just invest in ETFs
and not have to worry about stocks or
bonds or any of these other things my
opinion definitely a hard yes on that
best place for anybody to start would be
in a broad market index like the S&P 500
or the total US Stock Market I like the
idea of keeping it simple there so good
job Bob the Builder
asks but seriously he asked what mix of
ETF combined can get me to
$100,000 faster first off the professor
and me is going to ask you to Define
faster since I don't know what we're
comparing this to I don't know exactly
but what I do think that you're asking
is what types of ETFs can we put
together to get us to $100,000 the
fastest and if I knew that I'd certainly
have a lot more money and probably most
of you that are following me would also
have a lot more money spoiler no one
knows exactly which ETFs to put together
together to get to the fastest
$100,000 and if they do say that they
have the answer run fast here's what I
can tell you piles of data suggests that
for the average investor to become a
millionaire one needs to have a broad
Market investing strategy and to stay
consistent specifically investing in
something like the S&P 500 or the total
US Stock Market with an average yearly
appreciation of over 10% has been the
move one could invest $500 per month in
something like that and in 30 years
would have about $1
million to supercharge that a bit I like
to add in a growth ETF or two into the
mix because some of the best ones have
consistently hit 15 to 18% appreciation
yearly for perspective if one were to
invest the same amount $500 per month
into one of those type of ETFs and
received 18% consistently for 30 years
they would be at over 4 million
$800,000 that's quite a bit different
the issue with putting all of your eggs
into that one basket is that even though
you're getting that possible High reward
you're definitely putting yourself into
somewhat of higher risk so to keep your
reward somewhat high but also pull the
risk down a little bit I like to add in
the growth ETF to that foundational
style ETF rather than going 100% growth
ETFs and then to balance everything out
I add in a much safer cash flowing
passive income type ETF like SCD or VM
so you're getting the best of all worlds
so to answer your question the best way
to get you to that $100,000 faster is to
pick multiple ETFs with these three
categories and then do whatever you can
to get more gas on the fire adding in as
much Capital as consistently as possible
is what's going to get you to that
$100,000 so much faster check out my
videos on my three fund portfolio for
more information on all of this I got
this next question from penguin Pat and
fun fact for you all penguins are my
favorite animal of all time I have no
idea why but I seriously love penguins
I'll go to the zoo or aquarium and hang
out with those little guys for hours I'm
not embarrassed you're embarrassed
anyway penguin Pat asks is it ever a
good idea to invest with a taxable
brokerage account before you've maxed
out your 401K I'd love to have access to
some of my investment returns before
retirement yes this is a a good idea for
exactly what you said but also for
another reason having money in your 401k
is so important because retirement is
coming y'all and you need to be prepared
you also get a tax advantage by putting
money into your 401k because then that
brings down your taxable income for that
year and so you have to pay less taxes
but you can't access those funds until
age 59 a. half or later so if you do
want to take advantage of some of those
funds earlier than that age it would be
very smart for you to start putting a
portion of your money into a brokerage
account as well within the brokerage
account you can pull out your money at
any time with no penalty but when you
sell the stock or ETF in order to pull
the money out you will get taxed on the
capital gain part of that portion so if
you buy a stock for $100 and then it
goes up to $150 you're going to have to
pay a tax on that $50 that you profited
now the other reason why I say it is a
good idea to start putting money into
into a brokerage even before maxing out
your 401K is because in those 401ks
they're pretty sneaky about how high
those fees actually are most of the time
you're paying a fee of50 to one full per
as an expense fee for the funds invested
in your 401k context if you were to
invest in the S&P 500 through the
Vanguard s&p500 Fund in your brokerage
you're only paying a fee of
0.3% the difference there is an expense
that is 10 to 20 times less expensive
and longterm will make your compound
interest grow so much faster I'd highly
recommend you checking what the fee is
that you're paying currently in your
401k cuz most people don't know this
next person asked I'm trying to shift
some funds more toward dividend ETFs out
of pure total Market is there any
advantage to dollar cost averaging out
of something as well great question and
yes the same thing applies we dollar
cost average due to the psych logical
aspect and because data has shown that
the average Buy price over time is a
very smart move unless something crazy
happens where your investment goes up
like 10,000% in one night where you
definitely should probably sell that
because that gain is insane a smart move
would be to dollar cost average to pull
the money out but there's some things
that you have to consider like number
one with your example you're saying that
you want to sell out of one fund and put
it into another fund and if your dollar
cost a aaging out of one fund the idea
there is that hopefully you're getting
the most amount of profit within that
fund and so that's when you're pulling
out the money but you have to keep in
mind that you're probably going to be
buying into another fund that's probably
profiting similar if Market's going up
usually other ETFs are going up at the
same time at some level and so yes
you're getting more profit out of this
one ETF but if you're then just going to
buy this other ETF at a higher price
than you would have bought it like a day
or two ago kind of evens out the thing
that you really need to think about is
where is this money so specifically is
it in a brokerage account your 401k a
Roth IRA traditional IRA because if it's
in a retirement account then you don't
have to worry about taxes when you make
a sell but if it's in a brokerage
account even if you're taking that money
directly from the ETF and putting it
into another one so you're not actually
taking those gains or seeing the money
you still are taxed when you make the
sell and when you move the money to the
next place so you do have to take that
into account and so that's why some
people don't sell out fully in their
position say it's six or seven figures
worth because when you sell that out
that's going to be a huge tax hit
whereas if you just sold like 10% or
something then that's more manageable
amount of taxes that you're paying to
move it over last thing that you want to
consider is how serious are you about
moving it into this next position
because if you've done all the research
and you just believe like yeah I don't
want to do this ETF anymore I think that
this is the one then it just makes sense
to cut and start that new position but
for most people you want to dip your toe
in the water see how it kind of works
and then go slowly from there it all
really comes back to that whole idea of
the psychological reason why we dollar
cost average that kind of keeps your
emotions in check that keeps you
mentally strong and it helps you just
kind of like ease into it Ethan asked my
question is how to invest for life goals
with different time Horizons such as
buying a house buying an engagement ring
retirement Etc I love this question
because it shows that you're actually
wondering and trying to think about why
you're doing these Investments and what
specifically is the goal for why I'm
putting this money into this place
versus this place I hope you all are
starting to do this there are pros and
cons for having your money in the stock
market versus having your money in like
a high yield savings account versus
having your money in Bitcoin or real
estate there's different reasons why you
put money in different places some are
long longer term outlooks and some are
shortterm some don't really matter if
the market crashes in the next year 2
years 5 years especially if you know
you're not going to touch that money for
20 years for anything where you think
that you're going to actually need that
money you're going to need to pull it
out within 5 years or less I would
suggest having the bulk of that in the
safest place possible while still
earning at least a little bit of
Interest so this would be like a high
yield savings account a CD possible
short-term treasuries there's also the
case that this could be in like the S&P
500 in a brokerage account but just know
that there's a level of risk there for
example if you had planned to buy a
house or some big purchase in 2022 and
at the beginning of 2022 you had $50,000
ready for that down payment but you
didn't need to buy the house till the
end of the year if you had your money
sitting in the S&P 500 in January of
2022 by the time it hit that December in
2022 the S&P 500 was actually down down
over 18% so if you wanted to sell you'd
actually only have
41,000 not 50,000 on the flip side
though the S&P 500 could be way up like
this year in 2023 in total return at
this point at the end of December the
S&P 500 is up almost 25% with dividends
reinvested so your $50,000 would
actually now be
62,500 in just just one year this is why
I and so many other investors advocate
for having money in multiple places
having a solid builtup amount of money
in your savings specifically in high
yield savings account is so great having
retirement building especially monthly
and consistently monthly is great adding
to a brokerage account a taxable
brokerage account is a great idea but
just remember that if you need a certain
amount of money by an actual certain
time like in the example if you were
actually going to be buying this
engagement ring in 6 months the stock
market is not guaranteed to go up and
actually can be quite volatile and could
go down especially in the short term
like 6 months so I'd have that kind of
money in a high yield savings account
especially nowadays when you're able to
get a Guaranteed Rate of between 4 and
6% to just park your money there now
just remember especially with Powell
coming out and saying that they're going
to be cutting interest rates next year
that means the high yield savings
account and other guaranteed account
rates will go down as well so keep your
eye on that the last one or two bonus
ones here asked me about me personally
and they asked what's next for you in
life and career professor and how's
Jiu-Jitsu going how long have you been
training well anyone who actually trains
Jiu-Jitsu probably has the same answer
and my answer is it's going great but it
could always be better and there's
always so much to learn and so I love it
because it's something that's totally
different than what I do daily with
finances or being a profession Prof I
get to shut off my brain there and I get
to go compete every single time that I'm
rolling with somebody it teaches a lot
of discipline and a lot of resilience
which definitely carries over to all
areas of life as far as what's next for
me in life and career honestly I'm just
trying to take it one day at a time I
used to be somebody who was very very
big goal oriented and yes I do have
goals and they are there but I'm not
just shooting for what's happening later
I'm trying to really focus on what's
happening today and the fact that were
blessed with just even being able to
have this day and be on this Earth and
enjoy time with loved ones and just have
a good time my goal honestly is just to
become a better professor and to do
better on these videos and try to give
you as much value as possible so if you
enjoy what I do here on YouTube please
give this video a like tell somebody
about the channel and remember to keep
investing simplified watch this video
next to keep going on this financial
Journey
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