Revealing My Roth IRA Portfolio + How To Pick Investments for YOUR Roth IRA (2021)
I reveal my entire Roth IRA portfolio and the passive investing strategy approach I use which includes ETFs. I also explain what is a Roth IRA and give you some beginner tips on how to choose what’s in yours.
A Roth IRA is a tax free savings account (if you’re not in the US – you can look up similar ones). Enjoy!
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1. What is a Roth IRA
The Roth IRA is an individual retirement account that anyone can start provided they have something called EARNED income. This means that you need to make wages/salaries/tips, so basically you need to have a pay stub or W2 or 1099 income.
You can open a Roth IRA at almost any brokerage firm, and the main advantage of having a Roth IRA is that your earnings and profits are growing tax free. That means when you retire, and you withdraw all the earnings on this account, you won’t pay ANY taxes on it.
That’s the biggest benefit of this account, so since all our earnings grow tax free – there are going to be some investing strategies that we can employ within the Roth IRA to really take advantage of this fact.
2. What’s in MY Roth IRA?
My Roth IRA has around 29k invested and holds the following:
VTI, which is a Total Stock Market ETF – $13k
VEU – gives you broad access to international markets that are developing and emerging – about $8.8k
BNDW – 4k world bond ETF, this gives me access to bonds in the world
VOO – $3.3k S&P 500 ETF.
Now initially when I started my Roth IRA, I chose these three funds only, and the split at the time was 40% VTI, 40% VEU, and 20% BND.
Now at the time, the reasoning was pretty simple, I was in my late 20s, I wanted to have exposure to the US and International stock markets, which are riskier than bonds, but I didnt want to be 100% in equities – and I wanted a passive investment that I did not have to actively manage, hence why I chose ETFs.
Based on my risk tolerance at the time – which was moderate/moderately aggressive for the next 30+ years, I chose an 80/20 split of equities to bonds, and I wanted my equities to be hedged across US and emerging world, just in case something happened with the US market, I still had the international ones to bolster me up. This was diversifying not only with the ETFs, but with the international markets as well.
3. How should you pick investments for YOUR Roth IRA?
1. Assess your risk tolerance (conservative, aggressive, etc)
2. Identify the type of investor you are (passive vs active)
3. Pick investments that are beneficial for your Roth.
You can invest in:
ETFs like I do – these are great, passively managed, they also will pay dividends and those dividends won’t be taxed in the tax sheltered Roth.
Individual Stocks – these are also great to hold in a Roth IRA since earnings are tax free, over a long term time horizon that could be amazing.
Bonds – since you cant reinvest interest payments from Bonds, having bonds in your roth IRA could be a good investment since the Roth IRA will protect you against taxes of those payments.
Real Estate Investment Trusts – Reits are especially good because they’re required to pay 90% of their income as dividends to their shareholders, which are typically taxed in a normal account, but in a Roth the dividends will be tax sheltered so you get a ton of value.
▶️ My name is Humphrey Yang, I’ve built multiple businesses and am passionate about Personal Finance. If you’re trying to build a solid foundation of financial literacy, learn to invest, or become financially free – then I’m here for you! This channel cover topics like getting out of debt, managing money, building credit, multiple income sources, passive income, etc.
📧 Contact: If you have a question feel free to leave me a comment on my videos or follow me on IG and send me a DM! If you have a business related inquiry, please then send me an email at email@example.com
Disclaimer: I am not a financial advisor, any investment commentary are my opinions only. Some of the products and services that appear on this channel are from companies that I have an affiliate relationship with, such as Robinhood, for which I recieve a small percentage made via those links, but it doesn’t cost you anything extra!
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0:00 – Start Here
1:28 – What is a Roth IRA?
4:03 – What’s in MY Roth IRA?
6:12 – Investing for YOUR Roth IRA