Want to be Rich? Combine these ETFs for $100k FASTER

Summary

In 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

00:00

📊 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.

05:01

🚀 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.

10:01

💼 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.

Keywords

💡ETFs

ETFs, or Exchange-Traded Funds, are investment funds traded on stock exchanges, much like stocks. They typically aim to track the performance of a specific index, such as the S&P 500. In the video, ETFs are highlighted as a simple and effective investment vehicle, especially for those who prefer a diversified and passive investment approach.

💡Index Funds

Index funds are a type of mutual fund designed to replicate the performance of a specific market index, like the S&P 500. They are often favored for their low costs and broad market exposure. The speaker emphasizes the benefits of investing in index funds or ETFs that track these indexes for a consistent, long-term growth strategy.

💡401K

A 401K is a retirement savings plan sponsored by an employer, allowing employees to invest part of their paycheck before taxes are taken out. The video discusses the advantages and limitations of 401Ks, such as tax benefits and restricted access until retirement age, compared to taxable brokerage accounts.

💡Taxable Brokerage Account

A taxable brokerage account is an investment account that allows individuals to buy and sell a wide range of investments, including stocks, bonds, and ETFs. Unlike 401Ks, there are no tax benefits, but investors can access their funds without penalties. The video suggests using these accounts for financial flexibility and access to funds before retirement.

💡Dollar Cost Averaging

Dollar Cost Averaging (DCA) is an investment strategy where an investor divides the total amount to be invested across periodic purchases of a target asset, reducing the impact of volatility. The speaker advises using DCA when moving funds between investments, particularly when shifting from total market funds to dividend ETFs.

💡Growth ETFs

Growth ETFs focus on stocks that are expected to grow at an above-average rate compared to other companies. They are often associated with higher risk and potential for higher returns. The video suggests including growth ETFs in a portfolio to potentially enhance returns, though they carry more risk compared to broader market or income-focused ETFs.

💡High Yield Savings Account

A High Yield Savings Account offers a higher interest rate than a traditional savings account, making it an attractive option for short-term savings. The speaker recommends using these accounts for money needed in the near term, such as for buying a house or an engagement ring, to avoid market volatility risks.

💡Capital Gains Tax

Capital Gains Tax is a tax on the profit realized from the sale of a non-inventory asset, such as stocks, bonds, or real estate. In the video, the speaker mentions the importance of considering capital gains taxes when selling investments in a taxable brokerage account, as these taxes can impact the net returns.

💡Retirement Planning

Retirement planning involves determining retirement income goals, risk tolerance, and the actions necessary to achieve those goals. The video emphasizes the importance of contributing to a 401K or other retirement accounts consistently and planning for financial needs at different life stages.

💡Diversification

Diversification is an investment strategy that involves spreading investments across various assets to reduce risk. The speaker advocates for a diversified portfolio, including broad market index funds, growth ETFs, and income-focused investments, to balance potential returns with risk management.

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