I started getting serious about my Roth IRA about a year ago – but that didn’t stop me from making a costly mistake this year. I’m breaking down my Roth IRA strategy and the mistake that cost me thousands!
00:00 – Intro
1:20 – My Roth IRA Strategy
4:28 – My Roth IRA Holdings & Allocations
9:48 – My Roth IRA Mistake
11:07 – My Roth IRA Portfolio Reveal
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Since I’m only 25, I am willingly taking on a little more risk in my portfolio, because I’ve got nearly 40 years until retirement if things don’t go my way in my early years. However, I also want to be clear that I’m not deliberately SEEKING risk in this portfolio either. So I’ve tried to balance my strategy by minimizing trading, selecting holdings that I can dollar cost average into for years or even decades, and keeping a diversified portfolio that supports these practices.
To do this, I’ve based my portfolio on a few key ideas of diversification and asset allocation.
First is straight up stock diversification. As I said, almost every study shows that total market index funds beat most other investing strategies over the long-term, which will be super important for my 40-year timeframe. Because of this, I focus on total market index funds and ETFs for my portfolio. In other words, no individual stocks.
Next is having international diversification. I did a video on this a few months back and found a lot of great reasons to diversify internationally. You get diversification away from U.S. market risks, lower volatility, higher returns and recently, better valuations, which means relatively cheaper stocks. After considering all these details, I ultimately decided to target an international allocation of about 30% within my Roth IRA.
Another component is asset allocation, which is the practice of diversifying into other asset classes outside of stocks. Since I’m young and consider myself to be quite tolerant of risk, I do not allocate any of my portfolio to bonds and probably won’t for at least another 15 or 20 years. But, I do allocate to real estate with real estate investment trusts, or REITs. In addition to providing diversification out of stocks with lower correlation to the stock market, REITs pay really high dividends, which means I can get substantial cash flow coming into my Roth IRA to reinvest for compound growth over the years.
And while I don’t hold any commodities, gold or other precious metals, I AM allocating 5% to Bitcoin to participate in that growth within my tax-shielded account.
Finally, although this is less about diversification, I’m also staying focused on highest total returns. I don’t want to sacrifice growth and price appreciation for the sake of dividends. Even though IRAs are one of THE best places for dividend investing, a high dividend yield doesn’t mean much if I can hold a different investment that simply grows faster.
But as I said, I made one big mistake a couple months ago – and it probably cost me thousands. I abandoned my allocation and diversification rules and traded into a single stock trying to beat the market, I failed, and it cost me thousands in opportunity costs. If I stuck to any of the common sense investing rules that are so simple to follow, my IRA would be worth significantly more today.
Luckily, I only need to make that mistake once to learn my lesson, and I’m glad I did it so early in my life. I’ve learned my lesson, I finally have a strict asset allocation strategy laid out that I will commit to following, and now I just have to keep investing money every month, which as it turns out, might be the easy part.
#RothIRA #Investing #InvestingMistakes
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If you’re like me, you’ve made some mistakes when it comes to investing in a Roth IRA. I recently made a huge mistake when I decided to invest in a strategy that was too aggressive for my retirement goals.
I had been researching various strategies for investing in a Roth IRA, and I decided to go with a strategy that was very aggressive. I thought that if I invested heavily in stocks, I could make a lot of money in a short time. Unfortunately, I was wrong.
The strategy I chose was to invest in a portfolio of stocks and ETFs through a platform called M1 Finance. I thought that I could diversify my investments and reduce the risk of losses. However, the strategy was too aggressive and I ended up losing a lot of money.
The lesson I learned from this mistake is that it’s important to be aware of your risk tolerance and to invest in a strategy that is appropriate for your goals. I should have done more research and taken more time to understand the risks associated with investing in a Roth IRA.
I have since changed my strategy and am now investing in a portfolio of index funds through M1 Finance. This strategy is much more conservative and is more appropriate for my retirement goals. I am also investing in a diversified portfolio of stocks and ETFs to ensure that I am not overexposed to any one sector or asset class.
My mistake taught me an important lesson about investing in a Roth IRA. It’s important to be aware of your risk tolerance and to invest in a strategy that is appropriate for your goals. If I had done more research and taken more time to understand the risks associated with investing in a Roth IRA, I would have avoided making this huge mistake.
Wow you were so wrong about ARK lol
I’m sorry but I have a hard time taking advise from someone with only 10k/much less then I have, in their account.
When you invest money into a Roth IRA are you putitng your money into the Roth IRA and it grows or is the Roth IRA where all your index funds / stocks are and that’s where your money gets invested and grows hope this question makes sense thank you
Are you still holding everything you mentioned in this video if you don’t mind me asking?
What do you think about ARK funds now? Still continuing it?
Great video, thanks.
Wow have you changed that ARK investment yet? Can’t imagine how much it’s come down in the past 7 months since u made this video
Hopefully, these do well for you. Mine is mostly in dividend stocks PDI, QYLD and soon to buy some downside protection ones JEPI/NUSI. Planning to drip distributions back into the dividend stocks at 50% and the other 50% into VOO and/or VTI. Planning on 3% crypto and 5% Gold/Silver. Actual percentages are yet to be determined. Next, I plan on using my small RH account for riskier-type stuff like options and growth stocks such as TTCF (buy at $16, sell at $20, rinse and repeat, etc.). Other investment is tax liens. I'm close to retirement now. If I were half my age it would be 80% index funds, 15% growth and 5% crypto. Side investments would be tax liens and real estate. Job would be hard work at a professional (or any) job and online side hustles when not working the day job.
To me on of the big benefits of a Roth is that dividends don't count towards 6000k limit. Imagine 1000s of dollars in dividends over the 6k limit every year..to invest what you want. Tax free. I use my Roth as a dividend making machine.
I appreciate your videos and the time you put into them. We are learning from you and your mistakes. Your transparency is a valuable share and encouragement for me to develop my own portfolio strategy.
Appreciate you putting your mistakes out there. Takes a lot of guts to do that. I lost 30K jumping on the GME/AMC bandwagon trying to make a buck during all the hype. Live and learn.
Look into a self directed IRA to include crypto in your Roth. Personally, I don't think BTC is great but others like ETH, MATIC, SOL, and ALGO are great long term holds. DAI is also great as a savings which you may not need to keep in the Roth. Its a stable coin with 2% return which is good for a savings account so you don't lose as much if any value due to inflation
Can you or have you done a video on JEPI ? Thanks love your videos
STEM has been dropping for a few days you think this is a good buy opportunity to add to my long term portfolio?
Great video!! I literally just made a video on my YouTube channel about the Roth IRA and all the benefits compared to a traditional Ira. There are so many things people don’t even realize about it
Drop stem and check out CWSFF
Okay guys I’m time to see my Roth IRA portfolio. This is completely going to be a transparent video.
Qyld, I hold 100% of my money in qyld lol
Tyler, a great video. I learned long ago that asset allocation is unbelievably important. Decide what percentage of stocks, bonds, reits, covered calls, etc you’re happy with. Then, dollar cost average for decades. You wind up buying certain assets cheaper when they do not meet your allocation!
Thanks for your transparency Tyler. We’ve all done things with our portfolio and had regrets shortly thereafter (I have anyway). I can be my own worst enemy at times with the over analyzing/thinking. My best results have always come from a well thought out/researched plan and just leaving it alone. Keep up the good work.
I just watched your fantastic analysis of NUSI versus QYLD once again. That was as in depth and as good as it gets! So how can the same person throw all his IRA money into a single stock no matter what it is?!? You need to dump that position and get real.
VBK, XLY, VUG, MTUM, HYG and XLV are worth a look too. Your account is screaming growth as is so you can handle a higher yielding corporate bond fund like HYG or SHYG or VCLT!
ARKK needs no apologies! This ETF has outperformed practically every ETF for years. The recent retracements are absolute buying opportunities. It's on sale right now in a huge way. You are investing in innovation which is like the tech of tech.
You're young and will easily bounce back. Vanguard VWUSX has been absolutely clutch for my SEP, ROTH, and Brokerage.
Is my Roth IRA too diversified? Im 27
Roth IRA 90% stocks
Stocks
VTI 30.31%
VTV 8.23%
VOE 6.71%
VBR 5.70%
VEA 24.57%
VWO 15.14%
Bonds 10%
VTIP: 1.20%
AGG 3.51%
BNDX 3.49%
EMB: 1.72%
Great video! My Roth holds 60% VTI 21% ARKK 15% VXUS and 4% MSOS.
Thanks for sharing. Hard to beat the ease of ETFs.
The most dangerous words in investing "This time is different"
"as the dangers of climate changes become more severe"?! The teachers are very happy— brainwashing complete.
I wouldn't invest in real estate ETFs. you would probably be better served on streitwise, fundrise, or peerstreet, better returns imo.
What do you think of having BDC shares in your Roth IRA?
Traditional IRA is my preference over Roth. Deferred taxation!
Digging the explanation and information Tyler, keep it up!