How My $640,000 Portfolio is Invested

one of the first articles that I ever posted on this platform was about how I built a net worth of $500,000 before I turned 30; I can’t believe I wrote that article almost a year ago!

Since then, I’ve received numerous questions about how my portfolio is invested. In the article, I discussed at a very high level the importance of cutting back expenses, living within one’s means, taking career risks to make more money, and how I moved out of California to further reduce my living expenses.

In this article, I’d like to get a bit more tactical and discuss my asset allocation and the aspects of my portfolio that I’d change if I had a do-over.

Asset # 1: Stocks

The vast majority of my net worth comes from the stock market. All of my stock sits in four brokerages: Robinhood, TD Ameritrade, Fidelity, and Motif (we’ll get into Motif later).

I opened up a TD Ameritrade account before Robinhood was “a thing,” but to be honest, I no longer actively use it. I prefer Robinhood, as I consider it to be extremely easy to use (not to mention Robinhood has free trades)!

I currently have about $250,000 sitting in my Robinhood account and about $15,000 in TD Ameritrade. A long time ago, I made a young/dumb decision and bought some crypto, but decided that I’d be best served selling it an re-investing it into indexes (which I converted to USD and bought indexes in my Robinhood account).

The vast majority of stock that I have in my Robinhood account is Vanguard ETFs. I’m a huge fan of their large, small, and medium cap ETFs, as well as the Russell Growth and sector-based ETFs.

If you’d like to gain broad exposure in the technology sector without purchasing stock in individual companies like Microsoft (which is very risky), check out ticker symbol “VGT”; the 10-year performance is about 22%, which is higher than the S&P’s 13.9% return over the past decade.

My employer uses Fidelity as our brokerage for our 401k, and I have about $259,000 in this account. I purchase the Fidelity “Zero” funds, as they have no expense ratios (fees)! They have no minimum investment amount, and they have four options: A large-cap, total market, extended market, and international index fund. I have the first three funds in my portfolio — I’m not a huge fan of international funds; over an extended period, they tend to not perform as well as US-based funds.

Now, let’s get to Motif — I have about $2,000 sitting in my Motif account. If you’re unfamiliar with Motif, they are a “build-your-own-ETF” company, and while it’s a neat idea, it’s a waste of time. Purchasing a simple Vanguard ETF will most likely yield better results.

Lastly, I have about $48,000 in company stock that I need to sell and re-invest in indexes!

Where I went wrong: When I was first starting to build my portfolio, I spent way too much time listening to the guys in the office talk about their winning stock picks in the break room…translation: I purchased individual stocks.

I’ve mentioned in other previous articles that purchasing individual stocks is never a good idea; it’s very hard over an extended period to outperform the overall market. I wrote an entire post on Warren Buffett’s million-dollar bet. He took a bet against the top hedge funds on Wall Street, claiming that they wouldn’t be able to outperform the S&P 500 over a decade. By year 8, the hedge fund managers were ready to concede, and Warren was victorious.

Building wealth is a matter of living under your means and investing as much as possible by buying and holding investments for a very long period.

Wealth very rarely comes from day trading. As tempting as it is to get involved in trading meme/pump-and-dump stocks, don’t waste time.

The last point that I need to mention is that you don’t need a complex portfolio with 50 different ETFs to retire wealthy; if you want simplicity, I’d recommend purchasing a simple S&P 500 index fund or a Total Stock Market fund to capture small, medium, and large-cap earnings.

Asset #2: Cash

Right now, I have about $37,000 sitting in cash in a Wells Fargo account as an emergency fund, which is much less cash than what I used to have — and it’s painful talking about “why” I had significantly more cash in my savings than I do today.

I recently wrote a post about my decision to forgo purchasing a home, as purchasing a home can destroy your net worth.

Buying a home doesn’t make much financial sense given the home prices in Austin, Texas, and what I’m currently paying in rent as a single and childless individual.

My inability to make a decision cost me a ton of money in the form of inflation, and if I had a do-over, I wouldn’t have saved for a down payment. Instead, I would have invested the down payment into the stock market and pulled the money once I was truly ready to buy a home.

Asset #3 Real Estate

One of my favorite ways to generate passive income — that is truly passive — is through real estate syndication.

Many realtors, lenders, title representatives, etc., will talk about the benefits of buying a rental property — one being that it’s a passive income vehicle.

I’m sorry, but dealing with tenants that don’t pay rent or cause damage to my property, having to work with a property management company (or deal directly with the tenants), repairs, and other maintenance issues is anything but passive. This is where Fundrise comes into play.

Asset # 4: An HSA account

This asset can technically be filed under “stock”, but I don’t want readers to gloss over this — HSA’s can be an important retirement vehicle.

Don’t sleep on HSA accounts; medical expenses are one of our greatest expenses in retirement, and an HSA account can enable you to retire sooner and more comfortably. If you’d like more information on HSA’s, I wrote a post here.

If you’re unfamiliar with an HSA account, it’s essentially a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (a PPO plan). The funds that you contribute into the account are not subject to federal income taxes, as long as they are used for medical purposes.

I use Health Equity for my HSA account, and what’s exciting about opening an HSA account is the fact that it’s not just a savings account that will lose money due to inflation — you can invest the money in Vanguard indexes!

If you max out your HSA each year and hold for an extended period, you can retire with 6–7 figures in your HSA!

As of right now, I have about $10,000 in my HSA; I had major surgery earlier this year, and used some of the money to pay for it (tax free)!