I Invested $5 a Day Into VTI for 500 Days – Here’s What Happened

Summary

In this video, the creator shares their 500-day journey of investing $5 a day into VTI, Vanguard's total stock market ETF. Despite market volatility, their portfolio has grown by 8%, with consistent contributions and dividends reinvested. They discuss the benefits of VTI over VU, the long-term potential of this strategy, and provide estimates for portfolio growth over 5, 10, and 20 years. The video also addresses common questions about investing platforms, dividend income, and using this strategy with other ETFs or stocks, emphasizing simplicity, discipline, and the power of dollar cost averaging.

Takeaways

• 😀 The author invested $5 daily into VTI, Vanguard's total stock market ETF, for 500 consecutive days, totaling $2,500 in contributions.
• 😀 Despite a volatile market, including factors like inflation, high interest rates, and geopolitical tensions, the portfolio grew by nearly 8% to $2,699.
• 😀 The strategy of consistent investment and dollar-cost averaging allowed the portfolio to grow in value over time, even amid challenging market conditions.
• 😀 VTI pays dividends with a current yield of 1.32%, resulting in $24.3 in dividend income over the 500 days.
• 😀 The author chose VTI over VU (S&P 500 ETF) because VTI offers broader exposure, including small and midcap companies, totaling over 3,600 stocks.
• 😀 Assuming a 10% annual return, a $5-a-day strategy could lead to approximately $115,000 after 20 years of investing.
• 😀 Consistent contributions and reinvesting dividends are key to long-term growth, as illustrated by the potential growth of the portfolio over 5, 10, and 20 years.
• 😀 The app used for the investment is Robinhood, which also offers a 1% match on Roth IRA contributions, but the strategy can be used with other platforms like Fidelity or Charles Schwab.
• 😀 When deciding between VTI and VU, the choice comes down to whether you want broader market exposure (VTI) or just the largest companies (VU).
• 😀 The strategy works with other ETFs or individual stocks, but careful research is required when investing in individual stocks due to higher risk.
• 😀 The video emphasizes that the strategy is simple, consistent, and works over time, reinforcing the power of disciplined investing and the benefits of dollar-cost averaging.

Q & A

Why did the creator choose to invest $5 a day into the US stock market?

The creator chose to invest $5 a day as a consistent and disciplined approach to building wealth through dollar cost averaging. This method allows for regular contributions regardless of market conditions, which can lead to long-term growth over time.

What is the investment product used for this $5 a day strategy?

The creator invests in VTI, Vanguard's Total Stock Market ETF, which provides exposure to a broad range of U.S. stocks, including large, mid, and small-cap companies.

How much has the creator invested and what is the current value of the investment after 500 days?

After 500 days, the creator has invested $2,500, and the current value of the VTI account is $2,699, reflecting a gain of nearly 8%.

How did market volatility affect the creator's $5 a day strategy?

Despite the market's volatility, including factors like inflation, high interest rates, and geopolitical tensions, the creator’s portfolio has grown by nearly 8%. This highlights the power of staying consistent and ignoring short-term market noise.

What dividend income has the creator received from their VTI investment?

The creator has received five dividend payments totaling $24.30 from VTI. Though the amount is small, the creator emphasizes how these small dividends can snowball over time if reinvested.

Why did the creator choose VTI over VU for this investment strategy?

While VU tracks the S&P 500, VTI offers broader exposure to the entire U.S. stock market, including over 3,600 stocks. This provides greater diversification, which the creator believes is important for long-term growth.

What are the potential long-term growth projections for the $5 a day strategy?

Assuming a 10% average annual return, the portfolio could grow to approximately $11,700 in 5 years, $31,000 in 10 years, and over $115,000 in 20 years, with contributions totaling $36,500.

What platform does the creator use to invest in VTI, and are there other options?

The creator uses Robinhood for simplicity and a 1% match on Roth IRA contributions. However, other reputable brokerage platforms such as Fidelity, Charles Schwab, and M1 Finance are also good choices for this strategy.

Is VTI a good choice for dividend-focused investors?

VTI is more focused on growth than dividend income, with a current yield of around 1.3%. For those seeking higher dividends, the creator recommends other ETFs like SCHD, which are more dividend-focused.

Can this $5 a day strategy be used with other ETFs or individual stocks?

Yes, this strategy can be applied to any ETF that aligns with the investor's goals, whether focused on growth, dividends, tech, or international markets. It can also be used with individual stocks, though these are riskier and require more research.