- SUMMARY
Investing wisely can lead to substantial financial freedom.
This video introduces the updated “3 ETF Portfolio” strategy, which has consistently outperformed the stock market and the old version of the 3 ETF Portfolio.
The foundation of the portfolio remains unchanged: the S&P 500 or Total US Stock Market ETF.
This provides stability and diversification, with a 74% probability of positive returns over a one-year period, increasing to 92% for ten-year periods.
Suggested options include Vu or Vti.
The second category aims for safety and consistent cash flow through a dividend ETF.
The outdated approach recommended bonds, which have low returns (1.6%) and lose value against inflation.
Instead, the updated portfolio suggests ETFs such as VM or SCHD, which have solid growth potential and dividend yields of around 3.5%.
The third category, previously focused on international exposure, has been replaced with a growth ETF.
Globalization has made US companies more dominant globally, so investing in an international ETF no longer offers significant benefits.
Instead, a growth ETF, such as QQQM, invests in companies like Amazon and Nvidia that are expected to experience high future growth (18.36% average return over the past 10 years).
As for the allocation of funds, it depends on individual goals and timelines.
For those aiming to accumulate wealth quickly, a higher allocation to growth EFTs may be suitable.
For those prioritizing safety and cash flow, the dividend ETF allocation should be higher.
The video suggests an equal allocation (one-third in each category) for those with a long-term horizon (20-30 years).
The portfolio is designed for consistent investing (dollar-cost averaging) regardless of market conditions.
- Key Takeaways
Maintain stability and diversification with stock ETFs
The S&P 500 ETF (Vu or Vti) provides stability and diversification with a high probability of positive returns over short and long term periods
Favor dividend ETFs over bonds for yield and growth
Dividend ETFs (VM or SCHD) offer higher dividend yields (around 3.5%) and growth potential compared to bonds that have low returns and lose value against inflation.
Allocate to growth EFTs for high return potential
Growth ETF (QQQM) invests in high-growth companies with an average return of 18.36% over the past ten years.