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The Perfect All ETF Investment Portfolio - YouTube
Channel: Jarrad Morrow
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so you want to build a solid investment
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portfolio made up of all etfs that are
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not only going to make you money but
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save you money by not having to pay
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insanely high fees to an advisor that
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will most likely end up costing you
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hundreds of thousands of dollars in lost
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returns but the question is how do you
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actually put one together from scratch
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and feel comfortable with your decisions
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in this video i'm going to walk you
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through the steps of how to create an
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all etf portfolio for yourself that you
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can use in something like a roth ira or
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taxable investment account now i'll also
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give you a few example portfolios during
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this video to help give you a starting
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point hey i'm jared with 2as and 2rs and
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on this channel we talk about investing
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and financial independence my dogs molly
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and cooper would greatly appreciate it
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if you hulk smashed that thumbs up
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button a benefit of building an all etf
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portfolio is when you buy them you are
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instantly diversifying your money among
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however many stocks that etf holds it
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makes the whole process a lot easier
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than trying to pick a bunch of
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individual stocks that you hope are
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winners while also trying to manually
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diversify your whole portfolio in the
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process there's nothing wrong with
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buying individual stocks if you know
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what you're doing then technically you
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could kind of build your own etf that
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way an etf is also great in that it can
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give you some exposure to a sector that
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you might not know enough about to feel
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comfortable picking an individual stock
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for example if you really feel like the
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gaming industry is going to take off
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over the next 10 or 20 years then
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instead of trying to pick between
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investing and we'll say nintendo
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activision nvidia or roblox stock you
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can just choose a gaming and esports etf
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that buys a little bit of everything in
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that sector when you create an etf
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portfolio it's good to start with the
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end in mind now by that i mean what is
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the goal or the outcome that you're
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looking for this is extremely important
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to know going into the whole process
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because not only is it going to help you
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decide what to invest in but also help
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prevent you from making very irrational
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decisions when the stock market is going
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through something like a correction
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don't think too hard about this though
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for most people it's going to be a
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pretty simple answer so we don't need to
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get all woo-woo and call on some higher
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power to kind of dig deep inside of our
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loins just to figure it out i'd imagine
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that everyone wants to make the most
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amount of money possible but that's too
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obvious of an answer for this one to
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know how to build a portfolio for
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yourself you'll want to figure out what
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exactly you're saving up for for most
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it's going to be retirement but after
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that another goal might be to save up
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for something like a home purchase miley
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cyrus tickets a car purchase or even
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college for your kids to go one step
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further you might have a goal of
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building a dividend specific portfolio
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or something like a fun account where
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you play around picking a bunch of
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different etfs once you decide on this
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one of the topics that we'll touch on in
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a minute will help you determine the
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types of investments that you want
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you'll want to hold to achieve what your
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goal is keep in mind that you can have
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multiple investment accounts that serve
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different goals now i'm someone who
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likes to separate my retirement accounts
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from everything else because of that my
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roth ira and 401k is for retirement
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money only which means that i have a
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very long investing time horizon but i'm
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also investing
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saving up for a future car which is a
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shorter term goal so i have a separate
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investment account through m1 finance
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for that i'll have a link in the
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description to check them out and get a
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free 30 once you figure out the goal
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then we need to talk about the time
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horizon or how long until you're
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actually going to need the money for
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retirement that's most likely going to
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be 20 plus years away for some of you if
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you're going to help pay for your kids
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college then this money might not be
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needed for another 10 years answering
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this question is going to help determine
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if you should even be investing this
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money to save up for that goal or if the
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money is safer just sitting in a bank
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account the main reason for this comes
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down to the unknowns in the stock market
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because the stock market is basically a
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casino in the short term we have no clue
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if the market is gonna go up or down and
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by how much within the next couple of
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years pick the wrong time and that ten
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thousand dollars worth of etfs that you
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bought might be cut in half by the time
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you need the money imagine investing
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some money for three years to save up
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for a ring so you can propose only to
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have the stock market crash at the
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two-year and 11-month mark hopefully
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that person is willing to accept that
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promise ring that you made from a twist
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tie that you got from a bag of bread
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because that's technically all you can
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afford but over the long term we have a
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pretty good idea of what the stock
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market is going to do go up now this of
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course isn't guaranteed and the returns
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that we've seen in the past might not
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play out the same way going forward but
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i'd bet money that something like the s
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p 500 is going to be higher in eight
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years than it is today look i'm not your
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dad at least that i know of and if i am
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please have your mom freaking call me
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but but it is your money so if you want
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to invest it for the short term then go
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for it my personal opinion is that if
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you need the money within a five year
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period then it's better served sitting
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in a savings account i need to put an
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asterisk by this though if you're
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willing to risk it and the date that
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you'll need the money can be pushed out
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a little bit if the market is down at
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that time then by all means invest that
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money but that decision is going to be
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based on the level of risk you're
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comfortable with now this part of
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investing gets overlooked a lot until it
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actually becomes a problem just like
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with anything it's easy to want to take
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more and more risk when things are going
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up but when things come crashing down
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every decision that you've made leading
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up to that point comes into question
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this is where choosing an asset
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allocation is extremely important a good
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rule of thumb is that the longer amount
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of time that you have the more
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aggressive you can be to maximize your
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returns because what happens on a
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day-to-day or week to week or
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month-to-month basis is irrelevant
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reading the news daily or watching some
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youtube channels no names please would
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make you think differently because
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according to them the world is on fire
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24 7. the further away you are from
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needing this money and the more risk
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you're willing to take the more
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equity-based investments you can have
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your money allocated towards for example
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if you're someone who wants to maximize
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returns to the fullest extent and you
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could care less about risk then you'd
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probably want to hold 100 of your money
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in stock-based etfs i'll have a few
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example portfolios to show you this sort
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of thing in just a minute so hang tight
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it's all a big balancing act and as time
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goes on you'll kind of figure out what
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works best for you just keep in mind
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higher risk higher potential returns
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medium risk medium investment returns
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and of course lower risk lower returns
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if you looked at my personal portfolio
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you'd probably say that i am taking a
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very high risk approach to my
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investments because i hold 100
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stock-based etfs i'm far enough from
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needing any of my money and i've been
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through enough stock market corrections
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to where i can handle my portfolio
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tanking for many years which affords me
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the ability to hopefully maximize my
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returns your risk tolerance is going to
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determine how you allocate your money
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across the portfolio but when it comes
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to allocating your money how many etfs
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should you actually hold because there's
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thousands of those things out there side
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note i did create a video showing you
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how to pick and analyze an etf that
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works best for you which i'll throw a
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link to in the description and above my
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head the simple answer is that it
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depends on what you prefer and the types
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of etfs that make up that total number
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in reality i could make a case for
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holding one etf and i could also make a
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case for holding six different ones i'll
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break the different etf options that you
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have into four groups then i'll briefly
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touch on a few example portfolios the
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first option that you have is a us-based
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stock market etf that aims to match the
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average returns of a certain sector or
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index within the stock market this would
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usually look like an s p 500 etf another
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index based etf such as one that tracks
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the dow jones or nasdaq 100 a mid cap
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etf or even small cap etf as well then
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there's index based etfs that hold a
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little bit of everything so something
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like a total stock market etf the reason
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why it might be ideal to hold a u.s
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stock-based etf as a large portion of
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your portfolio is because of how
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dominant the country is as a whole and
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the free markets that exist within it
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think about it there's no other place at
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this point in time that leads the world
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in business technology investment
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opportunities consumption and growth
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potential like the united states does if
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you believe this will continue then
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having more of your money in this type
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of etf will be advantageous but just
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because the united states is as dominant
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as it is today doesn't mean it's gonna
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stay that way forever whether it's the
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roman empire mongol empire or british
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empire history has shown us that one day
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it won't be the same powerhouse as it is
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today whether that downfall happens in
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our lifetime or not it's nearly
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impossible to know all we know is that
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nothing lasts forever that's why having
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some exposure to an international etf
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might make sense for you as an investor
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international etfs essentially hold
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stocks of businesses that reside out of
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your home country now my audience is
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pretty much based in the us so we're
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talking about anything outside of
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america but we also have to be aware
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that not all countries operate like the
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us and that they can hinder the growth
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of companies which will directly impact
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the price of their stocks over the past
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couple of years we've seen the chinese
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government mistreat find and even
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threaten to de-list certain companies
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for not informing them of certain things
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that they were doing there's also
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different economic factors at play
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within each individual country that will
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directly impact how well that company
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will perform because of all this an
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international etf might be a little bit
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more risky and might not perform as well
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as u.s stocks in the short term but it's
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going to help diversify your overall
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portfolio so not everything is
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concentrated into u.s businesses another
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option would be a fixed income etf aka
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bond etfs now these are used more when
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you're trying to preserve your wealth as
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you get closer to needing the money if
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you're someone who is headed into or is
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already in retirement then you might not
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be able to afford to risk too much money
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in stock based etfs because you need the
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money to live on right then and there
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the returns on these things are next to
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nothing so if you're in the wealth
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accumulation phase of your investing
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life then i'd suggest not even touching
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these or at least limiting the amount of
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money that you have allocated towards
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them remember that you only have 100 of
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your pie to allocate towards certain
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etfs the more that you put into
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something like a bond etf the less of a
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percentage that you'll be able to put
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into stock-based etfs which have a
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higher upside than the fixed income etfs
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with the last option i'm going to
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combine two different types of etfs
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together high dividend-based etfs and
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reit etfs both of these etfs are going
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to be used if you have immediate income
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needs within your portfolio because
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they'll usually pay you regularly
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through dividends you most likely won't
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see as as high of returns through price
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per share increasing like you would in
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an etf that mainly holds growth type
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stocks if you don't need the residual
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dividend money for a long period of time
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then you'd probably want to avoid these
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two types of etfs because they might end
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up dragging down the overall returns in
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your portfolio okay so now i'm going to
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give you a few portfolio examples based
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on different goals and different time
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frames once again none of this is
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financial advice use this as a starting
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point to think through how you'd like to
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create an etf portfolio of your own the
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first portfolio would be for someone who
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is looking to maximize growth high risk
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high return that doesn't need the money
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for 10 plus years and only cares about
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us-based stock etfs this portfolio would
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consist of 100 in an s p 500 or total
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stock market etf now i created a whole
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video comparing my two favorites which
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i'll link above my head and at the end
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of this video as well the next portfolio
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is for the same type of person that i
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just mentioned so they don't need the
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money for 10 plus years and they want to
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add in some international stock exposure
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this portfolio would consist of 70 in an
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s p 500 or total stock market etf and 30
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into an international etf the next
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person is someone who is investing for
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10 plus years looking for medium risk
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medium reward and wants to hold both u.s
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and international based etfs as well
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that portfolio would look like 60 in an
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s p 500 or total stock market etf 20
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international etf and 20 us-based bond
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etf if we were talking about someone who
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is very conservative that needs their
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money within five years still wants
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their money to grow a little bit but
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wants to preserve some of their money
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then an example portfolio would be 60
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percent in an s p 500 or total stock
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market etf and 20 percent us-based bond
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etf make sure to hit that thumbs up
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button before you go and leave any
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questions or comments down below as well
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and i'll do my best to answer every
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single one of them for you check out the
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description for a bunch of different
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ways to get some free stocks and more
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investing and financial independence
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resources i'll see you in the next one
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friends done
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