A 27-year-old investor who's building a retirement portfolio of $2 million in 8 years shares the 3 index funds he's betting on, including one with an over 500% return in the last 10 years
A big part of his retirement accounts holds Index funds. Austin Hankwitz plans to have $2 million in his investment portfolio in the next eight years. At least, that's what he's aiming for.
While he still enjoys scouring the web and social media looking for stock picks, he realized that tracking individual companies takes a lot of work. For the journey, Hankwitz set up two types of accounts: a regular brokerage account where he takes riskier bets and picks single stocks, and a retirement account that consists of a solo 401 that holds a Roth and after-tax account. In his retirement accounts, he's heavily weighted towards indexes.
People get intimidated and frustrated because they don't know enough about investing, he said. But index funds can take all the guesswork out of picking and choosing the winners. They expose an investor to diversification tax-efficiently because you don't need to weave in and out of it as you may in a stock. The Index rebalances itself to keep the strongest performers on the list.
For this reason, he believes every investor should have exposure to the flagship index, especially in a retirement account.A majority of his retirement account sits in index funds. One of his top holdings is the Vanguard 500 Index Fund ETF , which tracks the S&P 500. The index is a basket of 500 of the largest and most profitable companies across 11 US sectors, which is exciting, Hankwitz said. As of Friday, it was trading at around $416.03, with a year-to-date gain of 18.87%.
The 10-year total return on VGT as of August 3 was 518.53% compared to the S&P 500, which had returned about 163% for the same period.
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