A 28-year-old investor building a $2M retirement portfolio shares why he's buying a tax-advantages ETF

businessinsider.com08-17

Austin Hankwitz launched an investing challenge to build a $2 million portfolio in December 2022.He uses a mix of dividend stocks, technology stocks, ETFs, and a solo 401(k).Now, he's increasing his ...

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It leverages the same options strategy for 500 of the biggest US companies. It distributes a yield monthly for a total annual yield of 12.34% at a 0.68% expense ratio.Both ETFs were timely because they allowed Hankwitz to gain exposure to large-cap technology stocks, which led to market gains in 2023 and into 2024. But as we near the end of the year, the Federal Reserve is expected to cut rates, which could cause a rotation of equities.As debt becomes cheaper, small-cap stocks that had been largely left behind are expected to gain from an e","collect":0,"end_time":0,"defaultTopTitle":"businessinsider.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"SDS":"两倍做空标普500ETF","BK4534":"瑞士信贷持仓","BK4585":"ETF&股票定投概念","SPYI":"NEOS S&P 500 High Income ETF","FDN":"First Trust Dow Jones Internet I","BK4559":"巴菲特持仓","VOO":"Vanguard标普500ETF","BK4550":"红杉资本持仓","BK4588":"碎股","QQQI":"NEOS Nasdaq 100 High Income ETF","SSO":"两倍做多标普500ETF","SH":"标普500反向ETF","IWMI":"NEOS Russell 2000 High Income ETF","OEF":"标普100指数ETF-iShares","SPXU":"三倍做空标普500ETF","BK4581":"高盛持仓","BK4504":"桥水持仓","IVV":"标普500指数ETF","OEX":"标普100",".SPX":"S&P 500 Index","SPY":"标普500ETF"},"translate_title":"一位建立200万美元退休投资组合的28岁投资者分享了他购买税收优惠ETF的原因","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SPYI":1,"QQQI":1,"IWMI":1,"FDN":1,"VOO":0.62,"SPY":0.62,"ESmain":0.6,"IVV":0.6,"OEF":0.6,"OEX":0.6,"SDS":0.6,"SH":0.6,"SPXU":0.6,"SSO":0.6,".SPX":0.6},"content_text":"Austin Hankwitz launched an investing challenge to build a $2 million portfolio in December 2022.He uses a mix of dividend stocks, technology stocks, ETFs, and a solo 401(k).Now, he's increasing his small-cap exposure with the NEOS Russell 2000 High Income ETF.Austin Hankwitz has always loved analyzing stocks. In 2020, he began posting TikTok videos on the side, sharing his insights on stocks while juggling his job as a financial analyst for a healthcare company,His ability to explain investing concepts and break down stock picks helped his side gig amass over 700,000 followers. His successful content pushed him to become a full-time personal finance content creator.In December 2022, he wanted to take his content one step further by creating an investing challenge that others could track and follow. Simply put, it was to build a portfolio worth $2 million in eight to 15 years. His ultimate goal by the end of it was to have enough dividend-paying stocks that could pay out $80,000 to $90,000 annually.The 28-year-old began experimenting with different types of securities to reach his goal. Being young meant that he still had many years to retire. This meant he could afford to ride out market volatility or make a few mistakes here and there while his followers took cues from his experiences.For the challenge, he uses a regular brokerage account and a retirement account. In the brokerage, he can contribute as much as he wants. There, he holds dividend stocks, technology stocks, a few ETFs, and the S&P 500. In the retirement portion, he has a self-employed or solo 401(k) that has a Roth with an annual contribution limit of $23,000 and an after-tax account with no contribution limit where he invests in Vanguard indexes and individual stocks. He also has added some bitcoin. His account values now sit at over $391,000, according to records of his brokerages viewed by Business Insider.Hankwitz enjoys hunting for ETFs with a unique edge over their peers. He previously began investing in the NEOS Nasdaq-100 High Income ETF (QQQI) because it exposed him to stocks within the Nasdaq 100 while trading call options on the index. The second part allows the ETF to provide monthly payouts that equal an annual yield of 14.96% at a 0.68% expense ratio.\n                                Related stories\n                              He also began investing in a similar ETF for the S&P 500 called the NEOS S&P 500 High Income ETF (SPYI). It leverages the same options strategy for 500 of the biggest US companies. It distributes a yield monthly for a total annual yield of 12.34% at a 0.68% expense ratio.Both ETFs were timely because they allowed Hankwitz to gain exposure to large-cap technology stocks, which led to market gains in 2023 and into 2024. But as we near the end of the year, the Federal Reserve is expected to cut rates, which could cause a rotation of equities.As debt becomes cheaper, small-cap stocks that had been largely left behind are expected to gain from an easing economic environment. The Russell 2000 saw early signs of that as the small-cap index rallied in July, initially sparked by weaker-than-expected CPI data, according to a Bank of America note from August 5.However, the index reversed shortly after as a slew of negative economic data began to roll in, including higher-than-anticipated unemployment and a slowing manufacturing sector.Still, markets anticipate a high probability of the first rate cut this year in September which could put small caps back in favor. With that in mind, Hankwitz began increasing his exposure to small caps. But instead of buying ETFs that just track the Russell 2000, he invested in one with the same structure as the SPYI and QQQI from the same firm: the NEOS Russell 2000 High Income ETF (IWMI). The fund is actively managed with exposure to the Russell 2000 while leveraging options to take advantage of tax loss harvesting.The ETF sells and purchases options on the Russell 2000 in an attempt to capture the index's upside.It pays a monthly yield for a total annual yield of 14.03% with a .68% expense ratio.This bet has two advantages. The first is to ride the potential upside of small-cap gains he's expecting. The second is to earn a steady monthly payout while he waits for the small-cap rally to play out. 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