5 Things To Know About ETFs When Investing In Your 40s+

So, if you're in your 40s and you're trying to get started with investing in ETFs, however, everything seems so complicated and you don't know where to begin. Maybe you have recognized that you are behind with investing and you need to catch up and perhaps you have a larger sum of money, maybe 50 or $100,000 that you want to get started with right now, then this is going to be the perfect video for you. I am going to show you step-by-step on how I invest in ETFs myself, how I choose ETFs for my own portfolio, how I built my seven figure portfolio and basically the guidelines that I use for my community members who are in the same exact position as you, where they're investing a little bit later, they're trying to catch up and yeah, basically I'm going to give you 100% clarity by the end of this video. So, this way you have your own autonomy, you know how to get started right away by yourself. So, I'm going to share my screen here. If you haven't done so already, you can download my study guide down below in the $1 million investing roadmap and you can see all of my resources in there. I basically make a study guide for a lot of my videos, so this way you can follow along, but I truly believe that this is going to help you out. So, first things first, if you are in your 40s, the things that you want to avoid investing in are these items that I have listed out here. So, specifically in individual companies, in penny stocks, meme stocks, remember back in 2020 when GME, GameStop, AMC and all of these hyped up stocks, they shot up, but then they dropped and a lot of people lost money. You don't want to be investing in this at this age. IPOs and any of these speculative cryptocurrencies. Okay, because in your 40s, you have a lot of responsibility. You have to take care of your kids, maybe you have to take care of your parents. I know for myself, I take care of my parents, it's like an Asian cultural thing, but you need to make sure that you are not going to mess up with your money because hey, you don't want to lose your life savings. I get so many messages, so many DMs and emails where people will share with me their stories about their investing journey and how they just invested in everything in all of these crazy stocks back in 2020 where the stocks shot up and then they dropped and they lost a lot of money. Or they invested in some sort of NFT or Dogecoin or whatever it is that's trending right now. So you want to stay away from these hyped up assets and you are investing in these responsible assets because you have no more time for mistakes right now, okay? So that just be a clear warning to you. And also I just want to put it out there. This is not the time to be gambling your money away with Kaoshi or with that other one, what is it called? Polymarket. This is not investing. This is gambling, okay? So I want to make sure that we are all responsible 40-year-olds and then we're investing. So I'm currently 39 years old and basically I help a lot of 40 and 50-year-olds get started with investing and this is how to do it, okay? So these are the things that you want to avoid. So what do you want to focus on instead? Well again, like what I say in all my other videos, this isn't financial advice but I am sharing with you all the guidelines, all the things that I have done for myself and how I grew my seven-figure portfolio. But what I would do is I would essentially focus on two things. ETFs that are low cost and they are broad-based indexes, okay? They follow they track some sort of broad-based index. So why not invest in individual companies? Well, when you invest in individual companies, you have the higher risk of whatever the company's progress, whatever their stock price, you know, if it goes up or down, if it drops really fast, then you are subject to that risk. However, if you invest in an ETF, it's like you investing in a large basket of stocks. If one stock in that basket drops, the other stocks in there are going to hold you up. So you want to make sure that at this age that you are well diversified and that you're not just putting all your eggs into like this one company. I know this one person, he basically put all of his money in I forgot some sort of meme stock a long time ago and he basically wiped out his life savings. So, this is very very scary for him and it was really scary for his family, too. So, I don't want this to happen to you guys, okay? So, what are some ETFs that I generally like to invest in, what I like, what my community members like. So, this is something that you can screenshot right now or you can just get the road map where I list out everything. But, if you are someone who wants to invest in the total markets, then these are some examples. There's SCHB, VTI, SPTM, ITOT. If you want to invest in the S&P 500, which I really like investing in, which basically allows you to invest in the top 500 companies in the United States, then there are examples here SWPPX, VOO, SPY, SPYM, and IVV. And the list goes on and on and on. So, you want to see what you want to invest in yourself. So, just a quick learning moment here, any ETF that starts with SCH just means that it is most likely from Schwab, Charles Schwab. Anything that starts with a V comes from Vanguard. Anything that starts with SP comes from State Street. And anything that starts with I, usually it's from iShares. And of course, anything that starts with F comes from Fidelity. So, that's it. I know when a lot of beginners see this, they get very intimidated with all of the letters, all the ticker symbols, but that's how their naming system is. They basically get the first couple of letters of whatever their brokerage is from and they slap it on to that index fund, into that ETF. That's all it is, okay? And here are some of the expense ratios. If you want to invest in a lower cost ETF, something that is less than 0.5%, that's usually ideal. You can take a look at this table here. I listed out all of the low-cost index funds for you here, so you can check it out here, okay? But, essentially, like what I said before, right now at this age, stick with the low-cost broad-based index funds. Keep it simple. Keep it simple. Keep it simple. All right? Okay, so how do I analyze ETFs? Okay, so this is something that you can do because again, I like to promote autonomy. You can figure this out yourself. It's very, very easy. If I can teach I used to be a public school teacher. If I can teach my little 11-year-olds, 12-year-olds linear equations, quadratic formulas, systems, I am 100% confident that you as a 40-year-old can learn how to invest too. I promise you that you can also do this too. Okay? All right, so these are the five things that I look for in an ETF. So hopefully you're taking notes right now. Step number one, I am going to look at the ETF and I'm going to look at three things, three timelines. The one-year, five-year, and the 10-year plus charts. And I'm going to make sure that they are all upward trending. They're all going up. I know that with a lot of beginners, they tend to want to purchase things at a lower price. So they will look for ETFs or any stocks or whatever it is that is trending downward. You don't want to do that because if there is a sign that they are trending downward over a long period of time, that will signal to you that nobody wants it. Nobody is buying into these ETFs. Nobody is buying into these companies. So if they don't want it, if these institutions and money managers and all these people who are smarter than us don't want it, why would you want it either? It doesn't make sense. So there is this famous saying on Wall Street, let the trend be your friend. Okay? So when we are investing, we are looking for things that have a proven track record of increasing in price year-over-year that have decades of data that show you that it is trending higher because I want to take away, really delete that mindset of oh, we want to only invest in things that are going down. That is false. That is false. That is false. We want to invest in things that are going up consistently over time. Okay? Hopefully that makes sense. So, this is a an example of an S&P 500 fund. This is VOO. So, if I take a look at the one-year chart, pretty good. It's going up. This is the five-year chart, also pretty good. Of course, there's all these ups and downs, which is normal in the stock market, but that's something that you don't need to be concerned about because remember, we are in our 40s right now. We are investing for the long-term. As long as we are disciplined, we are doing it for the long-term, we are going to be okay. All right? And then over here, if we take a look at the overall perspective of the index fund over the last 10, 20 years or so, is this an upward trending chart? Yes, it is. So, VOO checks this off. Nice. So, that's step number one. Check the one-year, five-year, and 10-plus year chart. Number two, we are now going to check the one-year, five-year, and the 10-year performance and make sure that these numbers are between 7% to 12% per year. So, why is 7% to 12%? Because if you look on Google, you check out the data yourself, the average stock market return per year is usually between 7% to 12%. It depends on what the market conditions are. It depends on what the period is, right? But usually it's between 7% to 12%. So, anything that is below 7% maybe the index only grew the ETF only grew like 2%, 3%, it's a little bit funny. That's a little bit suspicious for me, right? And if it's way more like 100%, 120% like for a stock that just shot up, you want to be a little bit careful there because usually with stocks that have an exponential growth like that, they will typically drop really fast whenever there is some sort of market uncertainty. So, if you want to be on the conservative side, anything between 7% to 12% is usually the way to go. When you go to finance.com, which I already linked on this study guide. You're going to go to the left where it says performance. Click on that and then you can check all of these numbers here. You see the one year chart or the one year performance is around 31% for VOO, the five year performance is around 13% and the 10 year is around 15%. Is this between 7 to 12%? Yes, it is. So, that checks off number two. Number three, we want to make sure that the expense ratio for these ETFs that you choose is under 0.50%. 0.50%. Why is this? There are a lot of people in their 40s that I work with. They used to have a money manager investing for them where they would charge 1% to 2% to manage their portfolio to invest in the same exact thing that I am showing you right now. And what usually happens is because they are letting their money managers invest for them over the next 10, 20, 30, 40 years, do you know how much they end up paying? Theoretically, they would be paying around 300, 500, sometimes even like $800,000 of fees. You might think this is crazy for me to say, but I am telling you right now, if you do the calculations of a 1, 2% money manager fee a year after year, you can be paying very easily six figures over your investing lifetime. So, this is why I again like to promote investing autonomy that you can do it this yourself. You don't need anyone else to invest for you. You don't need to be scared by all of these Wall Street people to say, "Hey, this investing world is scary. You don't know how to do it. Give me your money. I'll invest for you." Don't do that because I will tell you right now, most money managers, most active money managers, they actually underperform the stock market. So, doesn't make sense for us to give our money to a money manager that one underperforms and two charges us these high fees. Does that make sense? So, likewise, we want to make sure that we are choosing ETFs that have a low expense ratio. And usually, that's below 0.50%. How do we check this? Well, when you go to Yahoo Finance and you see the entire summary here, go to the bottom right corner. You're going to see this part where it says expense ratio. So, for VOO, what do you see? You see that it's 0.03%. All this means is that you are going to pay 3 cents for every $100 invested per year. Is that a pretty good deal? Yes, it is. 3 cents is pretty much nothing, right? If you were to give this to a money manager that charges you a 1 to 2% management fee, that would result to 1 to $2. 1 to $2 versus 3 cents. Which one is better? The 3 cents is obviously, right? So, we want to make sure that we are choosing expense ratios that are below 0.5% or even better, 0.2 0.3%. All right? Okay, so VOO, does it check it off? Yes, it is. It checks off this criteria here. Cool. Let's go over to the fourth criteria. If you are someone who wants to invest in ETFs and because at this age, you might be now shifting or maybe later on, you might want to shift into more dividend focused portfolio where you get this cash flow, maybe you get like 2%, 3%, whatever it is, then sure. You want to generally make sure that the dividend yield that you're getting for these ETFs are between 0.5% and 4%. Anything lower, it might not be that great of a fund and ETF that actually pays you meaningful amounts. And anything that is above 4% might not also be good because generally, anything that is more than 4% or 5%, the actual underlying asset itself, right? The actual ETF may not even be increasing. It might be going sideways or even worse, it might be going down. I know a lot of investors in their 40s where they told me that they are investing in some sort of ETF. I'm not going to say the name of it, but it was paying out like 6%, but then when I look at the actual ETF, the price of the ETF keeps going down and down and down year after year after year. And that's not a position that you want to put yourself in. Because if you think about it, it's kind of like real estate property. You purchase a home and then you are renting out your rooms for rental income. Sure, you are making money from the rental every month, every quarter or so, but the house itself is declining, it's depreciating in value instead of increasing in price, which is backwards. It doesn't make sense. You don't want to purchase a home that is decreasing in value over time. You want both to go up, both the asset itself, right, the house or the stock itself, and second, the actual dividends or that rental income. Does that make sense? So, between 5.5 to 4% is usually what I look for within a dividend yield. And then lastly, you want to make sure you are investing in ETFs that hold strong companies. So, they don't include any penny stocks, meme stocks, or IPOs, or any themed stocks. I have found these crazy ETFs out there where they invest in like K-pop companies or something like that, right? So, or like dog companies. You don't want to do that, okay? It sounds fun, it sounds cute and everything, but cute doesn't cut it when it comes to investing in your 40s. Right now, we need to invest in responsible companies that have proven to Wall Street, to investors that they are able to increase their revenue year after year, and they are responsible companies. They know how to scale their company, right? They have goods and services that people actually want to use, they have sticky businesses. So, how can you check this? Well, you can go to Yahoo Finance again, go to the left side and click on holdings. When you click on that, it's going to show you all of the companies within the fund. So, for example, in VOO, there is Nvidia, Apple, Microsoft, Amazon, Google, right? Facebook, Meta. All of these companies have proven to Wall Street year after year. You can even check their balance sheets, their their their their data, that they are actually making money. All right? So, these are the companies that we want to hold, whatever institutionals or other institutions and other money managers are holding. Now, here's the thing. When we invest in ETFs, this is an amazing thing because we actually don't have to do any of the heavy lifting because if there is a company, and this will happen, I will tell you right now, if one of these companies do fail, they are not making consistent revenue, the S&P 500 committee, this group of people, they're going to kick out these companies and be like, "Why aren't you making money anymore?" Because all of these companies are all hand-selected by this committee. It's like choosing the honor roll students for the list, right? If a student is not getting consistent A's, A pluses, right? B, B pluses, then they are not supposed to be on honor roll. They're going to get kicked out. And then they're going to reintroduce another student who is getting all of these straight A's, straight A pluses, if that makes sense. But you see, for you as an ETF investor, for myself, we don't need to do any of the hard lifting, the heavy lifting. All of the people who are managing these ETFs for that very low low price of say 3 cents per $100 or 2 cents or whatever it is, they will automatically sell introduce the new companies, the good performing honor roll companies, if that makes sense, okay? So, all of these ETFs that we invest in, they're all self-filtering, okay? They're all self-filtering. This is why, again, I like investing in ETFs so much because it's just so easy to do and it's just so easy to grow your wealth, all right? So, the next question now is, "Great. I know how to choose my ETFs. How do I allocate my portfolio? So, typically there are four or five ways to do this. I don't want to overwhelm you with all these different options, but here is option number one, okay? Keep it simple, okay? Keep it simple. Every community member that I work with, we just like to keep it simple. You don't want to be investing in 20 ETFs, 30 ETFs. I have worked with a couple people they have like 15, 20 ETFs and they were so confused on what was what. Simplify it to just one, two, three, four or maybe even five ETFs. That's all you really need. And if you want to invest in a couple of satellite individual companies, you can do that, too. That's totally up to you. It's your money, you get to do whatever you want to do. But here is option number one. What you can do is you can invest 30% into some sort of stable ETF, 30% into a growth ETF, 30% into an income specific income focused ETF and then maybe even keep a little bit of money as cash into a money market fund, okay? Especially if you're just starting off, you're a little bit uncertain about the stock market. You don't need to invest everything all at once. You can just dip your toes into the stock market and just invest maybe one share here, one share here and one share there. That's it. And this is very different from real estate investing where you just have to purchase a whole house, right? For stock market investing, you can just purchase a couple of shares just to see how you feel. And from there on, you wait maybe a month, a month and a half, see how you feel emotionally because money is an emotional thing and then you go, "Okay, you know what? I can invest in more stable ETFs. I like this." Right? I don't mind the volatility. Maybe I can invest into a lot more growth ETFs. Or maybe you say, "I really like the income coming in. I can invest in more of these income driven income focused ETFs here." All right? So, this is the option number one, balanced approach. If you want to do option number two, this is more income approach where you can do 30% into stable, 10% into growth, 50% into income and around 10% into cash. Another option, a growth focused ETF. If you have say, the next 10, 20, 30 years that you want to invest. So, I'm 39 years old. I am planning on holding on to my shares for the next 20, 25, 30 years. Actually, even more than that because, of course, I'm going to use a 4% rule, which I'll talk about in another video. But, I like investing more into growth. So, I have a lot of shares, a lot of ETFs more focused on something like QQQM, okay? Or if you like VUG or VGT, that's okay, too. All right? Or if you want to do this, this is totally okay, too. Option four, simple and chill. You're basically just going to choose one ETF that you really like, some sort of stable ETF. Maybe it's SPYM, VOO, VT, whatever it is, and you're just going to add a couple of shares of this every single month. Maybe two shares this week, two shares next week, two shares the following week. Or five shares this month, five shares next month, five shares next month, right? And you're just dollar cost averaging into it. So, I know a lot of community members where they are team VOO and chill. Or VTI and chill. Or SPY and chill, all right? So, you can do whatever it is that you and your spouse are comfortable with. Talk to them, see what they like. But, I have everything here in my $1 million road map. You can check out my sheets here. I list out everything, all of the different ETFs that me, myself, that I actually invest in, and all of my community members also invest in, too. So, here are some examples of S&P 500 funds like SPY, IVV, SPYM, VOO, FXAIX, which is from Fidelity. It's not an ETF. This is more of a mutual fund. I'll talk about that in another video. These are tech and growth fund comparisons like QQQ, QQQM, VUG, so on and so forth. And if you want to check out the high dividend paying ETFs, here they are right here, SCHD, VOAM, SPYD, so on and so forth. So, see whatever it is that you are comfortable investing in. Now, if you are someone who has a larger amount of money that is just sitting around in a low interest account and you are saying okay, I'm 40 years old, 45, 50 years old. I need to get started with investing. I need to catch up. It's okay. I am here for you. I am going to totally help you, okay? You can download my road map down below and if you qualify, if you have more than 50 or 100,000 dollars that you want to put to work right now, I am going to invite you within the email, okay? I'm going to invite you to my five-day investing challenge. I'm going to help you get set up, diversified, all under five days and I am going to be on you and I'm going to make sure that you are accountable because here's the thing, folks. A lot of people, they watch all these investing videos and that's great and everything, right? They're getting a lot of education, but the thing that holds them back, the thing that makes them not progress forward is the execution. People do not actually take any action, which is why they get stuck and 10, 20, 30 years pass by again and they're like, oh my gosh, I am even more behind, right? So, if you are learning this, that's great. You should give yourselves a pat on the back, but if you really want to take action, this is going to be for you because not only if you are qualified, if you have more money, I'm going to invite you to my course. It's a free course. All of my videos are here. I tell you step-by-step on exactly what to do, what you can do, what to click on if you are someone who's very afraid of clicking on the wrong thing. I show you exactly what to do, okay? This is what I use with all my community members. I also put quizzes in here, too, because I'm a teacher at heart. I want to make sure you understand everything and you get to join my live chats every Thursday. So, you get to ask me personally your questions and I'm going to help you out. My team members are there and you also get to talk in my community. So, if there is no live chat, you want to ask me or someone else a question, other community members a question, you can type your questions in here. We're going to help you out. But, here's the thing. Do not join if you are someone who is not serious about this because I have said this many times in my other live streams and my other videos, I do personally have to pay $1 to $2 for every account that I make for you because it's this thing called internet rent, okay? I have to pay money for these website hosting platforms. So, please do not sign up and trigger my whole automation thing and then I have to pay $2 for you, okay? And also, do not say that you're going to join the live chats. Like, when you go in here, don't click on going and then not actually show up. Because what happens is you actually take up someone else's spot who actually needs it. So, that's not really cool. That's not really nice. If someone really needs it and you say that you're going but you actually don't show up, you're taking someone else's spot who actually needs a lot of help, all right? So, if you are someone who is serious, you're like, "Okay, I am someone who's going to take action right now." This is going to be for you. You're going to love it 100%. I am that confident that I'm going to help you get set up as long as you do the work, okay? As long as you do the work. You don't want to sign up for a gym membership and not actually go to the gym and not work out, if that makes sense. So, get that gym membership, I mean, get this. This is all free, really, right? And you get access to all of my resources, my ebooks, my study guides. I wrote this all myself. It is not AI generated. It It's all from my 10 fingers right here, okay? I put tons, like, hours and hours and hours, thousands of hours putting this all together so this way you can help you move forward with investing, all right? And if you find this helpful, the only thing that I ask is that you either leave a review, you let me know in the comments for one of my shorts that it helped you out. It really does make me feel really happy just cuz, you know, like, I make all these videos. I'm just awkwardly staring at a video camera here and there's like no sounds or anything like that, but it really does give me feedback that I'm actually helping you guys. And if you say, "Hey, Steve, I would like it if you added this or this or this." You let me know. I will listen to you. I promise you. I will listen to you and I will add it into this sheet here, into some of my study guides or whatever it is, or I'll make a new video on it, okay? So, whatever it is that you need, I am here to help you. Anyway, if you guys are interested, you can download the road map below. I really hope that this helps. Let me know your questions down below. I'm going to take some time, probably on Wednesday or Thursday, to answer some of your questions in the comments. So, please let me know. Please ask me in complete sentence, and yeah, I will see you all in the next video. Love you guys, and have a good night.