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

  • Austin Hankwitz is challenging himself to build a $2 million portfolio in eight years.
  • A big part of his retirement accounts holds Index funds.
  • They are spread across overall exposure, technology, and growth stocks.

In the next eight years, Austin Hankwitz hopes to have $2 million in his investment portfolio. At least, that’s his intention.

The 27-year-old from Nashville, Tennessee, began his career as a financial analyst at a healthcare company before taking to TikTok to share investing advice during the pandemic lockdowns that began in 2020.

His videos featured short clips of his favorite stock picks and company news that could result in great buying opportunities. He has amassed a following of over 700,000 people since 2020.

While he still enjoys scouring the web and social media for stock picks, he realized that keeping track of individual companies is time-consuming.

As a result, index funds — those that seek to replicate the returns of an index, such as the S&P 500 — or funds that track them, are among his preferred investment vehicles. He’s using them to help him reach his seven-figure retirement goal, which he set for himself in December. At the time, he shared his plan to begin allocating towards the goal in January in a Substack post so that his followers could track his progress.

According to records reviewed by Insider, he has so far accumulated $47,400 in a brokerage account and another $72,774 in a retirement account. The combined balance of the two accounts is $120,174, with $2,822 added before beginning his challenge.

Hankwitz set up two types of accounts for the journey: a regular brokerage account where he takes riskier bets and selects single stocks, and a retirement account consisting of a solo 401(k) with a Roth and after-tax account. Indexes are heavily weighted in his retirement accounts.

“I believe index-fund investing is the best way for the average retail investor to start building wealth for the future — period,” Hankwitz said.

The main reason is that it is a simple way to invest in and gain exposure to some of the best US companies. He continued, “It’s like watching paint dry.”

People become intimidated and frustrated when they don’t know enough about investing, according to him. However, index funds can take all of the guesswork out of picking winners. They expose an investor to tax-efficient diversification because you don’t have to weave in and out of it like you would with a stock. The Index rebalances itself to keep the best performers at the top of the list.

While past performance does not guarantee future results, you can look back over decades of returns to see what kind of gains you can expect.

“Sure, we’ve known for years that it’s much more than that. It’s up 20% year to date. The S&P 500’s performance last year was negative 22%, according to Hankwitz. “So it does go up and down, but on average, it goes up about 12% per year,” Hankwitz explained.

As a result, he believes that every investor, particularly those in retirement, should have exposure to the flagship index.

His top 3 favorite index funds

The majority of his retirement savings are invested in index funds. The Vanguard 500 Index Fund ETF (VOO), which tracks the S&P 500, is one of his top holdings. Hankwitz describes the index as “an exciting basket of 500 of the largest and most profitable companies across 11 US sectors.” It was trading at around $416.03 on Friday, representing a year-to-date gain of 18.87%.

Companies in the fund are rebalanced quarterly to meet the index’s requirements, which include a minimum market cap of $14.5 billion or more and positive four-quarter returns.

The Vanguard Information Technology Index Fund ETF (VGT) is the second index he owns that is tied in ranking. This fund has 322 stocks and provides him with more targeted exposure to big technology names such as Apple (AAPL), which has the largest holding at 23.2%, followed by Microsoft (MSFT) at 20.7%. It also includes Nvidia (NVDA) and Broadcom (AVGO), which are up 217.24% and 60.89%, respectively, year to date.

“By investing in VGT and having it in my retirement portfolio, I can see the upside potential in this big-tech movement that we’ve seen over the last 10, 15, 20 years,” Hankwitz explained.

VGT’s 10-year total return as of August 3 was 518.53%, compared to the S&P 500’s 163% for the same period.

Finally, the Vanguard Growth Index Fund ETF (VUG) is his third-largest holding. This fund gives him access to growth stocks of large-cap companies from a variety of industries.

“A growth stock, in short, is a company that grows revenue by double digits every year,” Hankwitz explained. “And I think it’s important for me to have some exposure to that, especially since I’m younger and this is part of my retirement portfolio, which means I won’t be able to touch it until I’m 59 and a half.” I have decades to weather the volatility that may accompany these growth stocks.”

He believes that having this fund is important because the growth aspect of a portfolio will help push capital appreciation even further, he says. As of August 3, the fund’s 10-year total return was 279.31%.

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