Passive investment is the most reliable way to grow your wealth if you do it smart. All you need is a plan, self discipline to stick to it and patience to wait for your investment fruit to ripen. In the following article I’m aiming to help those who do have the dedication to invest in their financial future, but hesitate where to start. Some people might find passive investment strategies boring, but if you do not wish to spend much more time on finances than 5 minutes per month, this might be the best option for you.
One of the easiest forms of investing is via purchasing an ETF (Exchange Traded Fund). This investment form has first been introduced in 1993 and by today it became extremely popular. In 2015 there were over 4,000 different types of ETFs, therefore the choice is endless.
An ETF can suit almost all kind of investment needs from simple index ETFs (e.g. VTI, which represents the total US stock market) through sector ETFs (e.g. VFH, which represents the US financial sector) to some really wide spread investment vehicles (e.g. GIVE, which holds both US and global stocks, just as bonds, all focusing on environmental friendly and sustainable themes).
It’s been a week since we know that the next president of the US will be Donald Trump. Once thing I can promise: this is never gonna be a blog about politics. Also this post will be totally politically neutral. First of all it’s easy for me to be neutral as I live in Europe. Secondly everyone must respect the decision of the American people; at the end of the day the guy got almost as many votes from them as Hillary 🙂 But let’s stick to the topic of finance and let’s see what kind of conclusions we can make from this week!
In the previous post we have checked whether it worth to reallocate our portfolio during the wealth accumulation phase in case the stock market dips. That example showed that it doesn’t really worth the effort. Seemingly I am not the only one who was thinking about such strategy. Joe from retireby40.org (who is by the way a great example to prove that early retirement is achievable) had similar thoughts and asked how this strategy would work in the years of early retirement. Let’s see what the numbers show!
One great way to invest in many different stocks at the same time is via an ETF. If you buy a Vanguard S&P500 ETF (VOO), your returns will be almost the same as you bought the shares of all the S&P500 companies according to their index weight. All this with one purchase, one time transaction costs and as low as a yearly 0.05% fee. As a bonus, it currently has a 2% dividend yield. Nevertheless if you are looking for ETFs that solely hold dividend paying shares, here are 4 great ones to consider including in your early retirement portfolio: