How I Invest

A personal look at how my wife and I built our investment strategy—from index funds to real estate—and how we're securing financial freedom through simple, consistent investing.

In July 2018, Sarabeth and I opened our first retirement accounts: two individual IRAs and a shared brokerage. At first, we invested inconsistently. We set aside what we could when there was something left over. Eventually, we automated it so that every time a paycheck lands in our account, a percentage is automatically withdrawn from checking into our investments. The only thing that changes today is the portion we invest—which has only gone up.

Fast forward to the end of 2024. I walked into Sarabeth’s home office. “Do you have a minute?”

I asked Sarabeth to open an investment calculator and then gave her the numbers to input: Our current retirement balance times 8% growth over 30 years. She clicked “Calculate,” and a number populated on the screen.

I explained what the number represented: hypothetically, if we never contribute another dollar to investments, and just let compounding work its magic over the next three decades, we will enjoy a comfortable retirement.

In other words: At 32, we’ve already secured a comfortable retirement.

Learning about investing at 26 changed the trajectory of our lives and I’ve become an evangelist for encouraging friends and family members to invest as well. I wrote this article to put everything I know down on paper.

Below are the simple steps that changed our lives. Here’s how we invest.

Foundations

Save first

The greatest indicator of future wealth creation is your savings rate. Your rate of return, your income, and your frugality are secondary wealth-building factors at best. If you want to invest and build wealth, you must develop a savings muscle.

The rule to remember is: Save first.

In my early twenties, I thought saving was what you did with whatever money was left over. You get paid, pay your living expenses, and then set aside the remainder.

This is exactly backward. The most consistent savers set aside savings as soon as the paycheck lands. Then, they use the remainder to pay expenses. This order matters because there’s always another expense. Money left in your checking account is like water in a leaky bucket—it’ll find a way out.

Save first. Sarabeth and I do this automatically. Every two weeks, after our biweekly paychecks land, money is automatically extracted from our checking account. This money is split between retirement accounts and a shared brokerage. Let’s talk about that.

What are retirement accounts?

Investment gains are taxable. If you put $100 into an asset and it grows to $200, you’ve had a gain of $100. When you eventually sell that investment, the U.S. government wants a piece of your upside. This is known as capital gains tax.

The benefit of a retirement account (like a 401k or IRA) is that everything invested in that account is tax-free or tax-deferred as long as you don’t touch the balance until retirement age (59½).

If retirement accounts are superior to a traditional brokerage, why do we also invest using a traditional brokerage? Two reasons:

1. Retirement account contributions are capped. You can’t stuff infinite money into your IRA. A traditional brokerage allows you to continue investing even after maxing out retirement funds each year.

2. Traditional brokerages give us more flexibility. If we want to retire early, buy a house, make an alternative investment, or cover a major emergency, we don’t face an IRS penalty by withdrawing cash from our brokerage.

Where can you open a brokerage or retirement account? There are many options. We use Vanguard because of their low fees and strong reputation. Other strong alternatives, which I’ve heard recommended amongst good investors, are Fidelity and Schwab.

What to buy (our investment portfolio explained)

Retirement and brokerage accounts are not investments; they are simply the boxes in which your investments sit. You can use these accounts to purchase stocks, bonds, ETFs, REITs, and many other assets.

We primarily invest in index funds—broad collections of stocks. For example, a total market index fund invests in the entire U.S. stock market rather than individual companies. Many people choose to invest in the S&P 500, which represents the largest 500 U.S. companies.

We invest in both. Stocks are volatile, meaning the value in any given year can swing dramatically. However, both the total stock market and the S&P 500 are fairly predictable when you zoom out to decades.

With our long time horizon until retirement, we’re willing to keep a large portion of our investments in stock indices. Averaged over the decades, we expect to earn 8% per year.

Consistency is your investing superpower

Sarabeth and I don’t try to time the market. The stock market goes up and down all the time. Instead of caring about individual swings, we simply invest the same amount on the same day every two weeks, every time we are paid.

This is called dollar-cost averaging, a strategy that automates buying the same asset over time. This is easy to do within Vanguard. Broadly speaking, you select the date you’d like money withdrawn from checking (e.g., the 1st of every month) and choose the asset you’d like to invest in (like the S&P 500 index).

By dollar-cost averaging, you’re buying at both highs and lows, which smooths out volatility over the long run.

I could end the article here…

I love spreading the gospel of index fund investing. If you’ve never invested and are just getting started, the best thing you can do is follow the steps I’ve laid out above:

1. Save first

2. Invest for the long term in index funds

3. Prioritize tax-advantaged accounts like an IRA or 401k

4. Use dollar-cost averaging to automate the investing process

Index funds are in my opinion the holy grail of investing, especially for young people with a long time horizon. But this article is called “How I Invest.” It wouldn’t be complete without me at least taking a few minutes to break down the rest of our portfolio.

Index funds make up the core of our investing strategy, but we also allocate capital to two other areas:

1. Risk-on investments (7% of total liquid portfolio)

2. Real estate equity (38% of total portfolio)

Our entire portfolio looks something like this:

We’ve already covered the big topic of index funds. Now, let’s talk about the two remaining categories.

Our risk-on investments

Most of our liquid wealth is in low-cost index funds. However, we also allocate a small portion of our portfolio to riskier investments, including individual stocks and cryptocurrency.

Individual stocks

If index fund investing is the simple, low-risk way to invest, individual stock investing is the opposite. It’s active and comes with more risk.

I invest a small portion of our portfolio in individual companies because I enjoy the research process. I like developing a thesis and betting on my own ideas.

My approach focuses on financially strong companies with long-term growth potential that are temporarily out of favor. My investing horizon for these opportunities is typically between six months and three years.

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Cryptocurrency

For some additional diversification, we own a small amount of larger, established cryptocurrencies. We don’t yolo on memecoins. We don’t actively trade our crypto holdings, but instead hold them for the long term. This is a high-risk portion of our portfolio. It’s money we’re willing to lose.

Real estate equity

I didn’t grow up knowing anything about the stock market. My parents invested by flipping real estate. Even today, long divorced, my parents respectively have done well in rentals and flipping.

Because of their influence, I expect I’ll always take pleasure in real estate investing. Growing up, I worked alongside my dad on properties in Florida and North Carolina, becoming a functional novice in home repair.

When Sarabeth and I were looking for a home a few years ago, we wanted something we could add value to through renovation. That’s exactly what we’ve done. Every few months, we update another small piece of the house. Eventually, we plan to turn it into a rental, making real estate a key part of our investing strategy.

I imagine we’ll always dedicate a portion of our portfolio to this somewhat active approach to real estate investing.

Investing changes everything

It’s hard to overstate the importance of investing. To me, it’s a foundation of life—like eating well and exercising. Do a few things right, and you set yourself up for a better, easier, and longer life.

I was forced to think about money in my early twenties. I started my own business, got married a year later, and quickly realized how little I knew about finances. Until then, my ignorance had no real consequences. My employer handled my taxes. I only had myself to support.

In the months leading up to our wedding, I picked up my first personal finance book. At first, I was overwhelmed, but over time, fear turned into passion. Today, I take pride in being good with money. I love learning, and I believe that mindset gives me an edge in life. I want others to experience that same advantage.

Money isn’t something to fear. Investing, though sometimes technical on the surface, is simple at its core.

I created this newsletter to dive deeper into investing. This article is a broad overview—a starting place. Future issues will explore my investing principles, how I evaluate individual stocks, and timely financial topics.

So, stay tuned. Welcome to The Writing Investor.