The Only 6 ETFs You'll Ever Need (To Become A Millionaire)

you don't need to be an expert to start investing and building wealth in the stock market in fact there are literally only six etfs that you will ever need to invest in i know that sounds too easy like how can it be that simple but it is that simple and by the end of this video you'll be kicking yourself wondering why you didn't watch this video sooner in this video we're gonna go over six different categories of etfs and the best etfs that you can invest in within each of these categories in my opinion these are the only six etfs that you'll ever need to invest in to build wealth long term and we'll start first with number one your portfolio needs a core holding one main central investment that makes up the bulk of your portfolio yes you can have other investments but your core holding is the main dish it's the entree and it typically makes up over 50 of your entire portfolio and a very common strategy that has been proven to be effective is to hold on to an etf that tracks the entire market and use that as your core holding and with that the best core stock etf that i believe that you can invest in is vti or the vanguard total stock market etf vti's goal is to track the performance of the crisp us total market index a stock market index that represents nearly 100 of the u.s stock market from mega cap stocks all the way to nano cap and everything in between for the average investor investing in an etf like vti is a one size fits all approach it provides a low cost and easy way to gain access to all the returns in the entire u.s stock market vti holds about 4 100 stocks in total with top holdings in some of america's largest companies including apple microsoft amazon google and many others but vti doesn't only invest in large cap companies it's a balanced fund with a robust mix of stocks in the small mid and large cap segments of the stock market ensuring that you'll never miss out on any opportunities presented in any of the market caps over the past 10 years this etf has returned an average of 12.52 per year this means if you would have invested ten thousand dollars ten years ago your investment would have grown to about thirty two thousand five hundred and eighteen dollars even despite recent volatility and yes while past performance is certainly not a guarantee of future results ask any investor why they're investing in the stock market and they'll tell you it's because deep down inside they just know that the stock market is always going to go up over the long term now let's talk about dividends so although vti isn't a dividend focused etf it does still have a dividend yield of one point five six percent or about three dollars and four cents per share per year in dividends this means if you would have invested ten thousand dollars into vti one year ago you would have been paid about 158 dollars in dividends and as with any etf there will be a fee to invest in this fund but luckily vti has a very small one the expense ratio for vti is only 0.03 which means you'll only have to pay three dollars per year on 10 000 invested to own this etf vti is one of those etfs that you just cannot go wrong with and if you combine vti with some of the other etfs that we'll go over in this list then consider yourself in the perfect position to build wealth long term how would you like to own hundreds of swanky modern office buildings lux hotels and real estate all around the country without needing millions of dollars in capital you want to make money voice of real estate now we've talked a lot about stock market investments in this video but every great investor knows that a well-diversified portfolio goes beyond just the stock market in order to truly reduce risk and maximize your returns you have to start investing in assets outside of the stock market such as real estate and no i'm not talking about putting down thirty thousand dollars to buy a physical piece of real estate i'm talking about investing in reits or real estate investment trust reits are companies that own and manage income producing real estate and so when you buy shares of a reit you are instantly adding real estate to your portfolio just like magic one of the best alternative investment etfs that you can hold in your portfolio is vnq or the vanguard real estate etf vnq's goal is to try and replicate the returns of the msci u.s investable market real estate 2550 index an index designed to capture the returns of wreaths in the real estate sector of the stock market and so vnq doesn't actually invest in real estate it invests in reits and then those reits are actually the ones that are investing in real estate and so by investing in this real estate etf you are immediately adding over 171 different reads to your portfolio including popular reits like american tower corp public storage and many others now reits are actually a lot like dividend paying stocks where the goal of the stock is not necessarily to grow the fastest the primary goal of the stock is to pay dividends to investors consistently right and a reit is the exact same way for example over the past 10 years vnq has an average return of about 7.48 annually but as i said the focus is not growth if you would have invested ten thousand dollars ten years ago into vnq your investment would have grown to about twenty thousand five hundred and forty eight dollars that's honestly not that bad but where this etf really shines is its dividend vnq has a dividend yield of 3.1 percent and over the past year has paid 2.86 cents per share in dividends this means if you would have invested 10 000 into vnq one year ago you would have been paid about 309 dollars in dividends i think this is going to be very important to add that the dividend payments that most reits pay to investors are taxed as ordinary income you see dividends are usually taxed in one of two categories as qualified dividends or as ordinary dividends also known as non-qualified dividends qualified dividends are taxed as long-term capital gains meaning that depending on which of these income brackets that you fall under you'll have to pay between 0 and 20 in taxes on your dividend income and that may still sound like a lot but consider this if your dividends were taxed as ordinary income depending on your income bracket you would have to pay nearly double taxes on your dividends compared to if your dividends were taxed as qualified dividends and so with that in mind the dividends that most reits pay are taxed as ordinary income now vnq does have the highest expense ratio on this list with an expense ratio of 0.12 this means you'll pay 12 for every 10 000 that you invest into vnq if you can't afford to invest in physical real estate that does not mean that you're out of options investing in a real estate etf such as vnq will still give you adequate exposure to the real estate market with the flexibility and liquidity offered by stock market investments because reits are traded on the stock market now in addition to real estate what other alternative investments can you include in your portfolio to help mitigate your portfolio's volatility and risk in the stock market now i know this is probably going to surprise a lot of you guys but just hear me out okay fine art investors and finance professionals are recognizing the potential of fine art more than ever with 85 percent of wealth managers recommending art as part of a wealth offering according to deloitte but why exactly is fine art so exciting as an investment well it can hedge against inflation deliver some incredible returns and yes diversify your portfolio to help fight against volatility when it comes to hedging against inflation art is a physical asset with a set value tied to it and so it won't fluctuate as much based on internal factors in fact art becomes more desirable during times like these with inflation over three percent with stronger price appreciation than gold and the s p 500 at a whopping 23 and when it comes to returns not only do some paintings have price appreciation in the thousands of percent but a recent forbes article showed that an art collection has the potential to rival the long-term returns of bonds and the most important part is reducing volatility a recent new york times interview said it best when stock markets take a nosedive people look to invest in art it's more tangible the art market is bulletproof this is because it shows the lowest correlation to stocks compared to every other major asset class which helps to explain why the art market doesn't dip whenever stocks do now if you heard all of that and you're excited to invest in art like i am then you should check out masterworks it's the only platform that i trust for investing in art because their paintings are actually registered by the sec and they have a team of registered account advisors standing by to answer any questions they buy high value art from the likes of picasso and banksy and break it into smaller shares this means you don't need millions of dollars for the full painting to still get art into your portfolio if you want to check them out there's usually a waitlist but my viewers get priority access to skip the waitlist by going to masterworks.art joshua mayo or by clicking the link in the description below grab your passports and let's fly overseas to take a look at some investment opportunities beyond just the united states you may not be familiar with names of companies outside of america which might make you feel like the stocks that they issue are risky but that's not necessarily true now although i don't believe that international stocks should act as a core holding in your portfolio markets outside of the us do tend to have a low correlation with u.s markets and so if you're investing in stocks outside of the u.s you're kind of helping to spread out the risk in your portfolio compared to if you were just investing in u.s stocks plus data shows that the u.s markets don't always outperform international markets and it's impossible to know when international will outperform u.s and vice versa and so it's best just to hold both with that i believe one of the best international etfs that you can hold in your portfolio is vxus or the vanguard total international stock etf this etf seeks to track the performance of the ftse global all cap x us index which measures investment returns of stocks located outside of the united states a very popular combination amongst investors is to combine vti with vxus you see vti only invests in american companies and so if you're wanting to add international exposure to your portfolio then you can do that by adding vxus in addition to vti it's worth mentioning that vanguard actually has an etf that invests in both international and u.s markets it's called vt or the vanguard total stock market etf but the problem with this etf is that you don't have any control over how much of your portfolio you want to invest in u.s stocks versus international you see because by default vt invests about 60 in u.s stocks and 40 in international but you may not necessarily agree with this allocation perhaps you want to have a smaller percentage of your portfolio being held in international stocks like 30 or 20 and this is why i personally recommend the combination of vti with vxus over vt because vti plus vxs gives you more control over how much international exposure you want in your portfolio now i'm certainly not going to say that it's a requirement to have international stocks in your portfolio this is purely personal preference i mean even people like jack vogel vanguard's founder didn't invest in international stocks same with warren buffett but you can't just not invest in international just because they didn't you have to do your own research on why you do or don't want international exposure in your portfolio now vs holds a total of 7 871 international stocks with top holdings in names like taiwan semiconductor nestle tencent samsung and many other international companies over the last 10 years visas has returned 5.2 annually meaning 10 000 invested 10 years ago would be worth around 16 578 dollars but remember the purpose of this etf is to add international exposure to your portfolio okay and just because international is not performing well right now does not mean that it's always going to be that way at any point the tables can turn and international stocks can start outperforming u.s stocks and when it comes to dividends visas actually has an impressive dividend yield of 3.86 percent and paid about 1.99 per share in dividends over the past year this means if you would have invested ten thousand dollars into vs one year ago you would have been paid about 309 in dividends and the expense ratio comes in slightly higher with this one but not too expensive at 0.07 this means you'll only have to pay seven dollars per year for every ten thousand dollars that you invest into this etf but guys i can't stress this enough okay make sure that you do your own research when deciding if you want to include international stocks in your portfolio or not but for most investors it's probably safe just to keep them in your portfolio because nobody can tell the future and if you can tell the future then please give me a call dividend etfs can be a great addition to your portfolio of non-dividend-focused stocks dividends provide a steadier stream of income that can help accelerate the magical effects of compound interest something that albert einstein himself called the eighth wonder of the world and one of the greatest dividend etfs that you can invest in in my opinion is schd or the schwab us dividend equity etf the main goal of this etf is to track the total return of the dow jones u.s dividend 100 index an index specifically designed to measure performance of high dividend yielding stocks in the us that have a record of consistently paying high dividends dividend etfs like sthd are so easy to love because not only do they provide dividends but they also experience growth and they provide downside protection during bear markets for instance take a look at this chart so far this year every major index is down over 15 percent or more but if you look at schd a different story emerges schd is only down 10 compared to the broad market now a loss is still a loss i get it okay but sdhd is still down a lot less than everything else and that's kind of got to count for something right schd currently holds 104 dividend-paying stocks with top holdings in mercanco pepsico coca-cola ibm and many other high dividend-paying companies and over the last 10 years schd has returned 13.33 which means if you would have invested thousand dollars ten years ago your original investment would have grown to about thirty four thousand one hundred and thirty four dollars which is really great for a dividend focus etf now being that sthd is a dividend etf it does provide better dividends compared to other etfs on this list with an annual dividend of 2.83 over the past year schd has paid out 2.23 cents per share in dividends this means if you would have invested 10 000 into this etf one year ago you would have been paid about 310 in dividends now you may be thinking to yourself joshua that seems kind of low i mean the first etf on this list vti which is not even technically considered a dividend etf still paid a dividend of three dollars and four cents what's the deal with that well something that you have to take into consideration is the share price for example vti is currently trading close to two hundred dollars per share and so in order to earn three dollars and four cents you need to invest two hundred dollars on the contrary schd pays 2.23 in dividends per share which does seem lower right but each share only costs 72 nearly three times cheaper than one share of vti and so with that same logic if you invested 200 into vti you'd earn three dollars and four cents in dividends however if you invested that same 200 into sthd it would buy you nearly three shares of the stock and so you'd earn about 6.69 in dividends which is over double the dividends of vti with the same 200 now that is a juicy dividend right there and to make the deal even juicier sthd's expense ratio isn't even that high with an expense ratio of 0.06 percent you'll only have to pay six dollars per year for every 10 000 that you invest into this etf now there is a very strong argument that this etf could potentially act as a core holding in your portfolio alongside other etfs like vti and vxus but schd's strong portfolio of stocks consistent growth consistent dividends and downside protection during bear markets are all reasons to consider putting money to work inside of this etf now a portfolio that invests in the broad market is proven to be more successful long term however that doesn't mean that other strategies like investing in growth stocks are completely out of the picture growth stocks can still be a very important part of your portfolio because popular growth stocks like apple google and tesla can deliver above average returns helping to boost your portfolio's overall returns beyond just the broad market returns for that reason i'd like to talk with you about what i believe to be the best growth stock etf that you can include in your portfolio and that's vgt or the vanguard information technology etf the goal of this etf is to track the performance of the msci u.s investable market information technology index a stock market index made up of companies in the information technology sector now although at the time of this recording we are in a bear market and technology stocks are getting hammered right now it doesn't mean that the technology sector will never recover whether it's some version of web 3.0 that we don't know about yet or just a continuation of what's already been happening over the past two decades technology will continue shaping and defining the world that we live in and so technology is not going anywhere and so technology etfs like vgt will always play an important part in our portfolios okay so what exactly is inside of vgt the etf holds 394 stocks in total with top holdings in the world's largest tech companies including apple microsoft nvidia and many others over the past 10 years vgt has given an annual average return of about 18.24 this means if you would have invested 10 000 into this etf after 10 years your 10 000 investment would have grown to about 58 886 now vgt is considered to be an aggressive growth etf but with that being said it does still pay dividends vgt has a dividend yield of 0.87 and has paid a 2.98 dividend per share over the past year this means if you would have invested ten thousand dollars into vgt one year ago you would have been paid about eighty seven dollars in dividends now the expense ratio for this one is a little bit higher at zero point one zero percent you'll have to pay ten dollars per year for every ten thousand dollars that you invest into this etf now i'm gonna be 100 honest with you guys this etf is not gonna be for everybody plus many people argue that tech stocks are far overvalued and due for a pullback and a couple of years of sideways price consolidation now whether that's true or not i don't know but if you think that technology is the future and you want to aggressively invest your money into technology then an etf like vgt is the perfect place to put your money to work fixed income etfs or just bond etfs can provide a lot of benefits to your portfolio especially during times of really high market volatility but because broad bond market etfs can have low correlation to the stock market it can help to reduce your portfolio's volatility which is an ideal situation for anybody approaching retirement with that being said i'd like to talk with you about what i believe to be the best bond etf that your money can buy and that's bnd or the vanguard total bond market etf bnd's main goal is to track the bloomberg u.s aggregate float adjusted index which provides broad exposure to the investment grade bond market now it's important to specify the etf's focus on investment-grade bonds okay because this etf is not investing in junk bonds for example a junk bond is a type of bond that is considered very risky because it has a high default risk meaning that if you invest your money into the bond and the company defaults on the bond you aren't getting your money back junk bonds have a credit rating of bb ba or lower in contrast investment grade bonds are considered less risky because they have a low risk of defaulting these bonds typically have a triple b rating or higher bnd currently holds about 10 173 bonds inside of one single etf giving your portfolio ultimate exposure to bonds with that being said of the over 10 000 bonds that this etf holds about 66 of the bonds are government bonds and then going down the list you can see that only 1.10 are less than triple b which is good however depending on your risk tolerance and time until retirement a diversified portfolio that includes bond etfs can help to reduce your portfolio's volatility which can help during turbulent time and of course because bnd holds bonds bonds pay interest and that interest is paid out to you the investor in the form of distributions bnd has a dividend yield of 2.2 percent and has paid about 1.79 in interest over the past year this means if you would have invested 10 000 into bnd a year ago you would have earned roughly 238 and finally the expense ratio for bnd is very low at only 0.03 percent you'll only have to pay three dollars per year for every 10 000 that you invest into this etf and that right there my friends are the only six etfs that you'll ever need to invest in hey if you want to learn more about how to invest in etfs then i would highly recommend that you watch this video here next you guys are amazing i mean just incredible and as always i will see you again very soon take care

Channel: Joshua Mayo

Views: 264,063

Keywords: best investments, best investments to become a millionaire, best investments to make, how to invest, how to invest in stocks, investing in your 20s, investing for beginners, how to become a millionaire, joshua mayo, how to invest in stocks for beginners, best etfs 2022, best etfs to invest in 2022, etfs to invest in 2022, top etfs 2022, best etfs to buy now, best etf 2022, best etfs, best etfs for long term investing, best growth etfs to buy now

Id: qFmGlTcn90g

Length: 19min 46sec (1186 seconds)

Published: Fri Jul 15 2022