Top ETFs for young investors to build that Million Dollar Portfolio - Best Growth ETFs!

Summary

In this video, Dave shares valuable advice on the best ETFs for young investors, emphasizing the importance of time in the market and consistent investing. He discusses seven top-performing ETFs, including tech-heavy options like Vanguard’s VGT and VUG, as well as broader choices like the S&P 500’s IVV. Dave highlights low fees, tax efficiency, and long-term growth, urging young investors to avoid high-fee products and diversify with international exposure. He even touches on the potential role of Bitcoin ETFs. His goal is to help young investors build wealth over time through strategic ETF investments.

Takeaways

• 😀 Stay invested for long-term growth. Time in the market is crucial to building wealth, and it generally trends upwards over the long run.
• 😀 Avoid focusing too much on short-term market fluctuations. Corrections and bear markets can be opportunities for young investors to buy at lower prices.
• 😀 Choose low-fee ETFs. The fees may seem small but can accumulate over time, significantly affecting long-term returns.
• 😀 Tax efficiency is important. It's better to invest in low dividend-paying ETFs in taxable accounts to minimize unnecessary tax payments.
• 😀 Vanguard’s VGT (Information Technology Index Fund) is recommended due to its solid performance, low fees, and heavy tech exposure, including major companies like Microsoft and Apple.
• 😀 Vanguard’s VUG (Growth Index Fund) has a lower expense ratio than VGT and has performed well, offering another great tech-heavy option.
• 😀 Vanguard’s MGK (Mega Cap Growth Index Fund) focuses on large-cap stocks and has a reasonable expense ratio, making it another solid option for long-term growth.
• 😀 Schwab’s SCG (US Large Cap Growth ETF) offers similar exposure to Vanguard’s MGK but with a slightly lower expense ratio and strong historical performance.
• 😀 For a simple investment strategy, consider an S&P 500 ETF like IVV, which tracks the broader market and has very low fees, though its tech-heavy peers may outperform over time.
• 😀 International exposure is important, and Vanguard’s VXUS (Total International Stock Index ETF) offers global diversification, although its recent performance has been weaker compared to US-based funds.
• 😀 Bitcoin ETFs like FBTC can be considered a small portion of your portfolio as an insurance policy, with potential growth driven by the increasing popularity of cryptocurrencies.

Q & A

What is the main piece of advice that Dave would give to his younger self regarding investing?

Dave would advise his younger self to start investing early, specifically in ETFs, and to continue buying them regularly over time to build wealth.

What is the significance of 'time in the market' according to Dave?

Dave emphasizes that time in the market is crucial for long-term wealth accumulation. He believes that, based on over 100 years of data, the market generally goes up in the long run, and staying invested is key to success.

Why does Dave consider market corrections and bear markets to be beneficial for young investors?

Dave sees market corrections and bear markets as opportunities for young investors to buy assets at lower prices, which can lead to better returns when the market eventually rebounds.

How does Dave view the role of fees in ETF investments?

Dave stresses the importance of low fees when selecting ETFs, as high fees can significantly erode returns over time. He suggests avoiding ETFs with high fees, ideally opting for ones with fees as low as possible.

What does Dave recommend regarding tax efficiency in investments?

Dave recommends prioritizing tax efficiency by avoiding investments that generate high income or dividends, especially if they are in taxable brokerage accounts, to minimize tax liabilities.

Which Vanguard ETF does Dave recommend as a top choice for young investors?

Dave recommends the Vanguard Information Technology Index Fund (VGT) as a top choice for young investors due to its strong performance and relatively low expense ratio.

What are the key differences between VGT and VUG according to Dave?

VGT is more tech-heavy and has a slightly higher expense ratio, but it has outperformed VUG. VUG, on the other hand, has a lower expense ratio and a more balanced portfolio, with a wider range of sectors included.

How does Dave suggest combining ETFs in a portfolio?

Dave suggests combining a few carefully chosen ETFs, like VGT, VUG, and others, to create a diversified portfolio. While there is overlap in some of the holdings, each ETF has its strengths and can contribute to long-term growth.

What is Dave's opinion on including international ETFs in a portfolio?

Dave believes it's important to have some international exposure in a portfolio, even though the international market has not performed as well in the past decade. He recommends VXUS, the Vanguard Total International Stock Index ETF, for this purpose.

How does Dave view cryptocurrency investments, particularly Bitcoin?

Dave sees cryptocurrency, specifically Bitcoin, as a small but necessary part of his portfolio, viewing it as an insurance policy. He suggests young investors consider adding Bitcoin ETFs, such as FBTC, to their portfolios for potential long-term gains.