Personally, I believe that everyone should be invested in ETFs and hopefully
by the end of this video you'll understand why
What's up everyone my name is Ben, I'm a former JP Morgan investment banking
analyst and welcome to rareliquid the best channel for tech investing
Today I'll be first explaining my case for why you should invest in ETFs
then I'll be going over my ETF strategy and lastly I'll share with you the 10
ETFs I'm holding and recommend before I begin
please remember that I am not a financial advisor so please treat all
content as for education and entertainment purposes only. First
off let me present to you my case of why almost everyone should be buying ETFs
just in case you're unfamiliar with them ETFs are funds that mirror the
performance of an index, market, commodity, or geography
and you can buy and sell them as you would any other stock each ETF has its
own goal or strategy that provides investors with a unique set of companies
they can invest in so for example there are some ETFs that
focus on large cap companies while other focus on small ones
There are also some ETFs that only buy Chinese companies while others are only
US-based and there are others that may focus only
on the cyber security market while others only buy precious metals
So now that you know what an ETF is let me present to you my case as to why I
believe every investor should be investing in ETFs
The first reason is that it's a time efficient way to invest in the markets
If you're like most people, you probably have a full-time job or maybe you have
classes if you're a student and you don't really have
all the time in the world like an unemployed Youtuber like me to just
spend endless time and hours researching
companies and markets But you probably do have some thoughts
on certain markets that you are pretty bullish on you think will grow whether
it's biotechnology, artificial intelligence, or cloud computing
So let's pick one of these industries like cloud computing. Let's say that you
think that this industry will 5 to 10x in the next 10 to 30 years
and normally what you would do if you were to just invest in a stock
is look into the company's filings, maybe look at their latest earnings call,
build a model for them, do some valuation analysis you know
a lot of work into just one company but instead of doing that
what you can do is just buy an ETF that will continue to grow as the industry
grows The investment companies behind the ETFs
are also incentivized to pick the best possible companies that they can
because then of course the better that ETF performs
the more likely it's going to attract new investors like you and me
This leads to the second reason you should invest in an ETF and that's
because they are diversified securities Since ETFs hold anywhere from tens to
hundreds of stocks it doesn't really matter if one company
underperforms because there's going to be a lot of other companies in that ETF
that will probably overperform. This also means that you probably won't see as
much upside versus if you invested in a star
performer like Amazon but just also remember that for every Amazon
there are hundreds of other companies that just go either bankrupt or are just
mediocre performers This all leads to the third reason that
you should invest in ETFs and that is that it allows you to most passively
invest as an investor Because ETFs don't require that much
research and are well diversified you can basically buy and forget about
your ETFs for decades which make them the perfect
investment vehicle for your retirement accounts. In fact the robo advisors like
Wealthfront and Betterment, which are in charge of a lot of people's 401k's and
IRAs, all they really simply do is invest in
ETFs and I personally think that it's better to manage it yourself
This is a good segue to the next section of the video which is my ETF strategy
Personally I hold two different portfolios that I manage-
one for individual stock picking and one for my Roth IRA retirement account
if you'd like to see what I own in both of these portfolios and also receive buy
sell alerts whenever I make a trade, make sure to check out my Patreon in the
description below but back to the topic at hand I actually
used to invest all of my Roth IRA through Wealthfront,
but I wasn't really seeing great returns and so i decided to really just manage
it myself The problem mainly was that I didn't
really see a lot of exposure to tech and I really just believed that tech is
just at the beginning of its dominance of the world and here's just one example
For most of the 1980s and onwards, the largest companies in the world were
utility and oil companies, but over the past 10 years,
now nine of the 10 largest companies in the world are tech companies
Robo advisors like Wealthfront and Betterment really need to provide a
vanilla strategy that works for all types of investors and I know you
can also adjust your risk tolerance but I still found that of
the individual holdings that Wealthfront was holding for me in my Roth IRA,
I wasn't getting enough exposure to growth and tech that's primarily what my
ETF portfolio invests in so without further due let me share with you the 10
ETFs i'm personally invested in Let me first start off with the full
list of ETFs which as you can see here are organized by industry ticker, the
market they're tracking, one year and five year returns, their
expense ratios, which are the fees you paid to the fund manager each year,
and allocation. As you can see 60% of my portfolio is dedicated to tech, which for
a retirement portfolio is pretty aggressive
and that number is probably closer to 75 percent because
a few of the remaining funds also have a lot of tech exposure
I then allocate 15% to China because even though there are a lot of problems with
the country right now, I think there's no denying that it will
continue to be an economic powerhouse, and I also allocate 10 percent to
emerging markets to gain some additional non-US
exposure. The remaining 15% are miscellaneous ETFs that provide exposure
to biotech and genomics, real estate, and marijuana. For each of
the ETFs you just saw on that list, there were about five competing ones or
so that I also looked into that either covered the same industry or had a
similar strategy these just happen to be the ones that I
personally picked out to be the best, but if you disagree or have any other
ETFs that you think I should consider, please leave them in the comments below
because I think everyone would of course appreciate some additional research from
the community. The most important thing about ETFs are their strategy and
holdings, so I'll go into each of these pretty briefly
First up is QQQ which tracks the performance of the nasdaq which is
heavily weighted towards the top largest tech companies
I weight QQQ the most at 20% because the largest tech companies are overall less
volatile than smaller tech companies so it provides my portfolio with
relatively more stability Second on the list is WCBR which tracks
the cyber security sector which I'm very bullish on
as well. I really like this ETF because its top holdings include some of the
best software companies in the world such as Datadog, Octa, Cloudflare, and
Crowdstrike Third is WCLD which tracks the cloud
computing space and this fund only invests in new companies with
growth rates of at least 15% over the past two years,
so it's really focused on high growth. To be honest, I don't love the top two
holdings Box and Dropbox but they don't take up a lot of the portfolio and I
really like the fund's overall strategy Fourth is BUYZ which manages a group of
companies that seek to benefit from disruptive commerce by investing in
e-commerce online auctions, the sharing economy,
and more. This ETF holds a lot of names that you really don't find in just one
ETF like Sea, Shopify, MercadoLibre, and Square,
which are all leaders in their spaces The fifth and last tech ETF in my
portfolio is ARKK which is ARK invest's flagship fund that focuses on disruptive
innovation As you can see from the fund's holdings
they consist of many of the top disruptive companies in the world,
and the fund only invests in companies they believe will return 15%
annually across the next five years. Six on the list
is CXSE, which is an ETF that focuses only on chinese companies that are less
than 20% owned by the Chinese government. The
holdings in this ETF include a lot of the top chinese companies like Tencent,
Alibaba, JD, and Baidu, and I think these companies will all
continue to do really well as china continues to grow
Seventh on the list is EMXC, which is an ETF that invests in emerging markets
excluding china. I like that the largest holding focuses on India, which I'm also
really bullish on, and there are also some notable names
here like Taiwan Semiconductor and Samsung
Eighth on the list is ARKG which focuses on the genomics industry and is
uncorrelated to the rest of my ETF portfolio
I do recognize some of these names from my JP Morgan healthcare days but I don't
really follow the healthcare sector anymore, so this is a good way for me to
gain some exposure without looking too much into the
healthcare industry. Ninth on the list is VNQ,
which is a real estate ETF that is also another way to diversify my portfolio
To be honest I have no idea what these holdings are but I chose this one
because Vanguard is really well known as an industry
leader for ETFs and VNQ was one of the most recommended
ones that I found in my research And last but not least is MSOS, which
provides exposure to the cannabis market, which i think will continue to
strengthen over time as cannabis continues to get legalized
This ETF focuses on US players and cannabis stocks are known to be
extremely volatile and so that's why I personally find
an ETF is the best way to bet on this market. Okay so that concludes my
overview of the ETFs in my portfolio what I plan to do over time as I add
more money into the portfolio I'll just need to allocate where I put
the money into to make sure that the allocations continue to remain constant
over time. Personally I think an ETF portfolio like this which focuses
a lot more on tech and growth will give me a lot more potential upside
and I can afford to take this risk because I'm relatively young and I feel
like even if there are some major downturns
there eventually will be a lot more outperformance in the future
so I'm willing to take that risk. Alright that concludes the video if you have any
thoughts on other ETFs that you think people should be investing in or I
should look into please leave them in the comments below
thanks so much as always for tuning in and hope to catch you in the next one
[Music] peace