A 30 year old who built up a net worth of more than $1 million and quit his day job says he primarily invests in 2 types of funds — and explains why he diversifies with real estate instead of bonds

  • Tyler Wright saved the majority of his money for years and quit his day job in 2022 to work for himself.
  • His investment strategy is simple: He invests in two types of funds.
  • He’s also diversified his portfolio with real estate and owns two rental properties.

Tyler Wright began his sales career after graduating from the University of Central Florida in 2015.

“I realized pretty early in my corporate career that I didn’t want to be working a typical 9-to-5 for the rest of my life,” he stated to Insider. “I was getting up at six a.m., leaving at seven a.m., arriving at work at eight a.m., and working until 6:30 p.m.” I’d get home around 7:30 p.m., watch one episode of something, and then it was almost time for bed.”

The monotony of his day job inspired him to increase his income, set aside the majority of it, and save enough money so that he could eventually quit and work for himself or change careers.

He increased his annual income from $30,000 to $250,000 between 2015 and 2021, saved up to 80% of his paycheck, and documented his financial freedom journey on social media. He quit his day job in March 2022 to focus full-time on his personal finance brand, Defining Wealth, and coaching business.

According to account screenshots viewed by Insider, Wright’s net worth exceeds $1 million due to his stock-market investments and real-estate holdings (he owns two investment properties).

The 30-year-old discussed his investment strategy, including the funds he uses and why he prefers buy-and-hold real estate.

Investing most of his stock-market money into 2 types of funds

Wright’s stock-market strategy is straightforward: “Find great companies or groups of great companies — low-cost index funds or ETFs — and hold onto those for the long term.”

According to Insider, the majority of his stock market money is invested in two types of funds: a broad US fund and a broad international fund.

“There are a lot of different versions and brokerages that have their own spins on it,” Wright stated. For example, Vanguard, Fidelity, and Schwab’s total stock-market index funds, VTFAX, FSKAX, and SWTSX, are designed to provide investors with exposure to the entire US equity market.

Similarly, major brokerage firms, such as VTIAX and SWISX, have funds designed to provide investors with exposure to developed and emerging international economies.

Wright holds Vanguard S&P 500 ETF (VOO) and Vanguard Total International Stock Index Fund ETF (VXUS).

He prefers the simplicity of owning only a couple of funds to having a slew of different ticker symbols in his portfolio.

“I’m a pretty big proponent of ‘the three-fund portfolio,'” he says, referring to a portfolio that includes a domestic stock-index fund, an international stock-index fund, and a bond-index fund.

He owns the first two and plans to invest in bonds as he ages and desires a more conservative portfolio, he explained. At the moment, “I don’t personally invest in bonds because I’m so young and my time horizon is so far out,” he stated.

It’s worth noting that Treasury bond yields, which are considered risk-free returns, are quite appealing right now, particularly if you have a lot of cash. For example, the 3-month bill yielded about 5.48% on Monday, the highest in two decades.

“I’ve made the decision that I don’t necessarily need to be involved in bonds at this point,” Wright says. I’m more concerned with long-term growth because I don’t need the money right now and can get by with just two funds.”

In terms of individual stocks, Wright owns “just a few,” he says. “I try to diversify the majority of my portfolio by investing in a variety of companies and industries.” But, in terms of single stocks, I’ve been a supporter of some of the larger tech companies, such as Amazon, Facebook, Google, and Apple, since I began investing.”

He also puts a small amount of money into cryptocurrency. His investment philosophy for a volatile asset like cryptocurrency is to only invest what you’re willing to lose.

“You should be comfortable losing all of that money,” said Wright, who invests no more than 2% of his total portfolio in cryptocurrency.

Strategically contributing a small amount to his 401(k)

When Wright was in sales, his company provided a 401(k). He could afford to contribute to it and even max it out, but he rarely used the retirement savings plan.

“I invested a small amount early on, between $5,000 and $10,000,” he stated. “Then, I focused almost all of my stock investing within brokerage accounts from there on out.”

Wright desired the freedom to spend his money whenever he pleased. (With retirement-specific accounts, you typically cannot withdraw funds before the age of 591 without incurring a penalty.) He noted that his company did not provide a match, so he was not missing out on so-called free money.

There are numerous advantages to investing in a retirement plan if your company provides one: Your contributions are deducted automatically from your paycheck, you will benefit from compound interest and earn returns on your returns over time, and some employers will match your contributions. A 401(k) is also a tax-advantaged investment vehicle because it is funded with pre-tax dollars and your funds grow tax-free.

But for Wright, “the idea of holding my money there until I was 59 or older when I was trying to ideally retire before 35 just didn’t make much sense to me,” he stated. “It’s a personal matter.” I’m not saying that using a 401(k) is wrong; I just felt like it didn’t completely align with where I saw myself and my goals.”

Adding real estate to his portfolio

Wright wanted his savings to be more accessible so that he could eventually purchase real estate, which requires a down payment and closing costs.

In 2018, he began investing in real estate in Orlando, Florida, where he was living at the time. His first purchase was a primary residence, which he and his wife moved into. He used a conventional loan to purchase a $400,000 home. He cashed out some of his stock market investments to put down 10%, or about $40,000.

In less than a year, in June 2019, Wright purchased his first investment property: a $145,000 triplex that he paid cash for. He used stock market money he’d accumulated over the previous four years to fund the purchase once more.

He now has seven rental units spread across two investment properties in Orlando. When he and his wife relocated to Nashville in 2022, they sold their primary residence. They are now renting because they are unsure how long they will be in Tennessee.

Furthermore, he stated that it is now more expensive to buy and own a home: “Prices have gone up, and interest rates have gone up.” We used to pay around $2,000 per month for our house. People who bought it are probably paying $4,000 or more because the price has risen and the interest rate has doubled, making it a difficult time to buy.”

Wright is focused on growing his company, but he hopes to return to real estate in the future because he believes it is a good long-term investment.

Wright enjoys real estate investing because “you’re buying an asset that’s producing income,” he says. “With stocks, you buy it and hope it increases in value so you can sell it later.” You buy a house and hope it increases in value, but a rental property — if you buy the right rental property — pays you cash flow every month that you can live off while the house increases in value.”

In addition, “the mortgage is being paid down by tenants,” he said. “And there are a lot of tax advantages.”

He prefers to buy and hold real estate in particular.

“The opposite strategy of that is flipping, where you buy a house, fix it up, and then try to sell it for a profit,” he explained. “The possible good part is that you can make more money quickly but, once you sell it, it’s back to the grindstone, trying to find another one.”

With buy-and-hold, “you can make money in five, six, or seven different ways,” he says, citing rental income, appreciation, and tax benefits. That is why he has no intention of selling his rentals anytime soon: “I’ll probably hold on to those for the rest of my life.”

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