Investment Spectrum: Diversifying Your Portfolio for Growth

The investment spectrum covers cash, bonds, US stocks, international stocks, indirect and direct real estate, but individual stocks and alternative instruments are not recommended.

### The Financial Tortoise Investment Spectrum: A Comprehensive Guide to Investment Options
* 💰 The investment spectrum outlined by Financial Tortoise includes various investment options, starting with **cash** and moving through **bonds, US large-cap stocks, US small to mid-cap stocks, total US market, international stocks, indirect real estate, direct real estate, individual stocks**, and **alternative investments like commodities and cryptocurrencies**.
* 🏦 Cash is recommended as a necessary component of a well-rounded investment portfolio, with suggestions for **checking accounts, high-yield savings accounts, certificates of deposit (CDs), and money market accounts**.
* 🏛 ️ US bonds are described as a **stable, lower-return investment option** that can help balance the volatility of stocks, with recommended funds including Vanguard's VBTLX, Fidelity's FXNAX, and Charles Schwab's SWAGX.
* 📈 US large-cap stocks, specifically the S&P 500 index, are highlighted as the **growth engine** of most portfolios, with recommended funds such as Vanguard's VFAx, Fidelity's FXA, and Charles Schwab's SWPPX.
* 🌐 US small to mid-cap stocks are presented as a way to **add diversity and potential growth** to a portfolio, with suggested funds including Vanguard's VSSMAX, Fidelity's FSSNX, and Charles Schwab's SWSSX for small caps, and Vanguard's VXM, Fidelity's FSMDX, and Charles Schwab's SWMCX for mid caps.
* 🇺🇸 Total US market funds are recommended as a **simple and comprehensive way to invest in the entire US stock market**, with options like Vanguard's VTSAX, Fidelity's FSKKAX, and Charles Schwab's SWTSX.
* 🌍 International stocks, representing the global market outside the US, are suggested for diversification, with recommended funds including Vanguard's **VTIAX**, Fidelity's **FTIHX**, and Charles Schwab's **SWIX**.
* 🏠 Real estate investment options include indirect methods like REITs (Real Estate Investment Trusts) and crowdfunding platforms, as well as direct ownership of rental properties, each with its own **risk and return profile**.

hi if you're new to the channel, my name is T from Financial Tortoise, where we learn to grow our wealth slow and steady. The first investment in the investment spectrum is the simplest and the most straightforward: cash. This can include actual cash that we keep under our mattress or cash we hold at our local bank. We all need cash in order to pay our mortgage, buy groceries, and indulge in life's small pleasures. And where to keep cash, here are some options: one, the easiest and the most common, a simple checking account. You don't get much interest from cash in the checking account, but it is easily accessible. Two, a high-yield savings account. If your bank has them available, you can continue to easily access your cash while at the same time earning higher interest than a checking account. Three, certificate of deposit, AKA CD, higher interest rate than a checking or savings account, but you have to lock your money in for a period of time. And if you don't mind doing that, a CD is a good option. Four, a money

market account, a type of savings account that typically offers a higher interest rate, but often they come with a higher balance requirements, account fees, and limit the number of transactions. Regardless of where you decide to keep your cash, consider cash as fuel for your day-to-day expenses and how much to keep. A good range is minimum 3 months up to 12 months. My wife and I personally lean more towards 12 months. We feel we can better sleep at night knowing that we have some cushion to be able to ride out life's uncertainties. The second investment in the investment Spectrum: bonds, specifically US bonds. If you live in the states, when you buy bonds, you're essentially loaning money to a company or a government agency. You likely heard of these terms: US savings bond or corporate bonds. Government agencies or corporations issue these bonds, and when they're bought, these organizations are essentially getting a loan from the buyers, and the buyer earns interest on these loans. Now, the returns are not something to write home about. The average return on the bonds over the

past 20 years, as represented by the Bloomberg US Aggregate Bond Index, is around 3.22%. But they help to bridge the gap between your stock holdings and cash. They don't have all the volatility that comes with stocks, but they have better returns than just cash in your checking or savings account. Here are a few great US bond investing options. If you're investing with Vanguard, the Vanguard Total Bond Index Fund, also known as VBTLX. If you're invested with Fidelity, Fidelity's US Bond Index Fund, also known as FXNAX. If you're invested with Charles Schwab, Schwab US Aggregate Bond Index Fund, also known as SWAGX. All three represent a broad cross-section of the bond market and also have excellent expense ratios. The general rule of thumb is that as you get closer to retirement age, when you plan on withdrawing from your portfolio, you want to start adding a little bit of bonds to smooth out the volatility. The third investment in the investment spectrum, moving on to equities, your growth engine, US large-cap.

stocks. This is the bread and butter of most investors' portfolio holdings. If bonds are what's going to keep your portfolio stable, equities are what's going to make it grow. Most often, the US large cap is represented by the S&P 500 Index, the Standard & Poor's 500 Index, an unmanaged benchmark that represents the 500 largest publicly traded companies in the United States. The big boys like Amazon, Apple, Google, and Microsoft, and smaller in market cap but still fairly big companies like Kroger, Dollar Tree, and Delta Airlines. And because the company's representation in the index is proportional to its market value, the bigger its market cap, the bigger its representation in the S&P 500, and the smaller its market cap, the smaller its representation. Also, it's good to understand that the S&P 500 is one of the most widely followed equity indices in the world. It is often used as a benchmark for the health and performance of the broader economy. Here are a few great large cap stock investing options if you're investing with Vanguard, the Vanguard

500 Index Fund, also known as VFAx if you invest with Fidelity. Fidelity 500 Index Fund, also known as FXA if you invest with Charles Schwab. Schwab S&P 500 Index Fund, also known as SWPPX. Now, whenever I share a list of options to people, one of the most common questions I get is this: which one is the best? And I'll give you the same answer I give everyone else: they're all the same because they all follow the same index, the S&P 500 Index. All three are pretty much identical to each other. Your decision really comes down to which investment firm you like to do business with. My preference is Vanguard, but that's just a personal preference. How you will win at investing is in what firm you go with, rather than what simple product you buy, how much you invest, and for how long. In talking about investment spectrum, let's talk about some other investments that are very important to our lives: investing in good online security, which is why I'm excited to

talk to you about Aura, the sponsor of today's video. Most recently, AT&T revealed that over 73 million customer records, both existing and former customers, were released on the dark web. If you're an AT&T customer, this is quite frustrating. A company couldn't keep their data secure, and now your information is exposed online. They recommend those affected to use strong passwords, monitor account activity, and consider credit freezes or fraud alerts from credit bureaus. But how to do this? Well, this is where Aura can help. Aura shows me which data brokers are selling my information and automatically submits opt-out requests for me. And why is this important? Do a quick exercise with me. Do a Google search for your name or your email address and see what comes up. When I first did this, I was quite uncomfortable with what I found. My full name, email, home address, and even my previous employer. For me, Aura has already had 21 successful data broker removals, with 11 more in progress. Cleaning my information not only helps reduce the amount of spam I received, but it

protects me from hackers who could use this information to access my social media and even my bank account. But Aura does more than just data broker removals. It does so much more: identity and credit monitoring, credit lock, password management, antivirus protection, and VPN. I personally use this VPN service on a daily basis, and all this at one affordable price. If my information was compromised in the AT&T data breach, I wouldn't worry because Aura is always on, always doing the hard work of keeping me safe online. I value my privacy, and I value yours, so go to my special link ora.com Financial toris to start your free, free 2E trial today. That's right, it doesn't cost anything to test out this powerful tool. I'll also have a link in the description below. All right, with that said, let's get back to the video. The number four investment in the investment Spectrum us small to midcap stocks. If the S&P 500 represents the 500 largest company in the US, think of the US small

cap and midcap to represent the smallest and middle-sized US public companies in the world of finance. Companies are categorized based on their size, most often simply called large cap, midcap, or small cap. Large cap companies are companies valued more than $10 billion. Midcap companies are companies with market cap generally between $2 billion and $10 billion, and small cap companies are companies generally valued between $300 million and $2 billion. Most often, differently sized companies operate differently, therefore potentially different future performance. A big company might not have an aggressive growth trajectory like a small up-and-coming startup, but are considered more stable. A midcap company might be more stable than small caps but provide stronger growth opportunities compared with a large cap company, and a small cap company though may experience more volatility and pose higher risk. Investors have the potential for higher growth, plus if you want exposure to fast-moving small to midsize companies, you might want to consider adding some to your portfolio to balance your large cap holdings. Here are a few small cap

funds to consider if you're invested with Vanguard: the Vanguard Small Cap Index Fund, also known as VSSMAX. If you're invested with Fidelity: Fidelity Small Cap Index Fund, also known as FSSNX. If you're invested with Charles Schwab: Schwab Small Cap Index Fund, also known as SWSSX. Here are a few great midcap funds to consider if you're invested with Vanguard: the Vanguard Midcap Index Fund, also known as VXM. If you're invested with Fidelity: Fidelity Midcap Index Fund, also known as FSMDX. If you're investing with Charles Schwab: Schwab Midcap Index Fund, also known as SWMCX. All right, but let's say that all this talk about large cap, midcap, and small cap is giving you a headache. Is there a better option to get exposure to the US equities market? Let's move up the investment spectrum. The number five investment in the investment spectrum: the US Total Market. And just to be completely transparent, this is my personal favorite way to invest in the

US Stocks instead of holding a separate large Cap Fund, midcap fund, and a small Cap Fund, just hold them all by investing in a single fund that represents a total US Stock Market. Today, there are approximately 4,000 US companies in the stock market, and a good US stock market index tries to replicate the market as a whole. Here are a few great total market index fund options: If you're invested with Vanguard, the Vanguard Total Stock Market Index Fund, also known as VTSAX. If you're invested with Fidelity, Fidelity Total Market Index Fund, also known as FSKKAX. If you're invested with Charles Schwab, Schwab Total Stock Market Index Fund, also known as SWTSX. Again, this is my favorite way to invest in the US Stock Market, not only because this one fund is so comprehensive, but it is simple and affordable. All total market index funds have expense ratios that range from 0.015% to 0.04%, rock-bottom costs in the mutual fund world. If you want to make the simplest yet one of the best investment decisions.

of your life. Select one of these funds and invest as much as possible. The number six investment and investment Spectrum International stocks. But let's say you don't want to just hold all US Stocks, you want some exposure to the international market. Valid given the US Equity Market represents about 43% of the global market. The global stock market is about 9 trillion in total market cap and the US Equity Market is about $46 trillion. A that that is a lot but there are still 60% of the global market that is now represented when you buy only US Stocks. So if you want exposure to the rest of the world, there are a few different ways you can approach this. You can choose to focus just in the developed markets like Europe Pacific region and Canada. Or you can choose to focus just in the Emerging Markets like China India and Brazil. Or feel like simplification, choose an index that represents a good cross-section of both develop as well as emerging market. Here are a few total international market index funds to consider if you're

investing with Vanguard. The Vanguard Total International Stock Market Index Fund, also known as VTIAX. If you invest with Fidelity, Fidelity Total International Index Fund, also known as FTIHX. If you invest with Charles Schwab, Schwab International Index Fund, also known as SWIX. Now, even the broadest international fund will not capture every single company outside the US because how each country operates their stock market is different. However, it is still a good representation of the market. If you're interested in learning more about international funds, I'll have a link in the description below to a video where I delve deeper. A quick reminder before we move on to the next point, make sure to download your free one-page companion PDF guide that goes along with this video. Everything I'm covering here in a simple to digest one-page format. So, go to the link I'll have in the description below to grab your free copy. The number seven investment in the investment spectrum. This is where we start getting into real estate with indirect real estate investing. So far, we talked primarily

about the stock market. Now, the stock market is a great way to invest and grow our money. They represent some of the best companies, and by investing in a broad market index fund, we get to share in their upside. However, stocks represent just one asset class of many. So, if you want to diversify your holding beyond stocks, I recommend taking a look at real estate. However, investing in real estate can be complex, and the way you can invest in real estate runs the gamut. But there are simple, easy ways to dip your toes into real estate investing. So, let me share with you a few here. One, invest in a REIT (Real Estate Investment Trust). Buying a REIT is very similar to buying index funds. Index funds allow us to buy publicly traded companies without buying actual individual stocks. In the same way, REIT allows us to invest in real estate without actually having to buy, manage, and finance any properties ourselves. Here are a few good specific REIT funds to consider if you're investing with Vanguard. The Vanguard Real Estate Index Fund, also known as

vgslx. If you're invested with Fidelity, the Fidelity Real Estate Index Fund, also known as FSR NX. If you invest with Charles Schwab, the Schwab U.S. REIT ETF, also known as SCHH. They all track a broad real estate index, thus representing a good cross-section of the real estate market. However, let's say you want to get a bit more targeted in your real estate investment. You don't want just a broad exposure, but you want to target specific real estate assets, such as multifamily, commercial, or build-to-rent. In that case, consider an online real estate crowdfunding investment platform. Some popular platforms are Fundrise, Crowdstreet, and RealtyMogul. Many of them have a higher threshold for investing, but they allow you to participate in more targeted investment opportunities that have a higher potential for returns. The number eight investment in the investment spectrum: stay with real estate but direct real estate investing. Let's say you really like investing in real estate, but you want more than just targeted exposure. You want more; you want to directly own and control the asset.

owning comes with higher risk, but it also has potential for higher returns. In that case, you might want to consider investing directly into a single-family home or multifamily units. I personally am a fan of this strategy because of the cash flow and tax benefits that come from directly owning a property, but understand it does come with a lot of work: sourcing the property, financing, renovation, finding tenants, maintenance, and so much more. But if you don't mind all the work that comes with directly owning rental properties, consider direct real estate investing. If you're indecisive about direct real estate investing, I have a whole video where I compare my rental unit to investing in index funds that you might find enlightening. If you're interested, I'll have a link to that video in the description below. The number nine investment in the investment Spectrum. We're now getting into the form of investing I personally would not recommend. The first being investing in individual stocks. Pretty much all major Banks and investment firms allow you to trade individual stocks, and with the popularity of stock

trading platforms like Robin Hood weeo and trade station it's easy to believe that we need to trade stocks in order to make money in the market. I mean, just take a look at hot companies like Nvidia, Tesla, and Broadcom. If you bought any of these stocks 10 years ago, youed them really well. However, hindsight is 2020. For every Nvidia, Tesla, and Broadcom, there are thousands of other companies that never made it past the starting line. So, my recommendation is this: while it may be tempting to buy individual stocks in the hope of spectacular returns, don't, or at least until you built up a sizable portfolio made up of low-cost broad market index funds. Only then would I say it is okay to look at individual stocks, but only as small cheat meals, not as a significant portion of your investment. The number 10 investment in the investment Spectrum investing in alternative instruments in Commodities like gold, silver, and natural gas, currencies like Japanese Yen and British pound, cryptocurrencies, and even Collectibles like coins and rare books. This again is another form of investing.

I would not recommend unless you have very specialized knowledge and skills. For most people, this strategy is not worth it, given how complex and dangerous they are. For example, consider options. Options trading is tempting to retail investors because it offers high leverage. A few hundred in call options can lead to thousands in profits if everything works out. However, the options market, as well as other complex markets, are dominated by sophisticated professionals whose full-time job is knowing pretty much all minute details of their market. And these professionals don't just trade individual contracts. In order to mitigate risk, they tie together multiple contracts with different terms. Retail investors are like grasshoppers, literally at the bottom of the food chain, waiting to be eaten up by these professionals. My thought is, why waste your precious time and energy on something that has so little chance of success? All right, so we covered quite a bit in this video, wearing the whole gamut of investments available to us. So the question to ask yourself is this: where do you fit? Where is your sweet spot? Let me share with you

mine. I love simplicity, so I try to hold as little as possible. So, for me, my sweet spots primarily come down to these three: Cash, total market index fund, and direct real estate investing. Cash as my fuel for day-to-day living, 12 months in a simple checking and savings account does a job for me. Total market index fund as my core wealth building vehicle. I try to invest as much as possible into my favorite VTSAX or FSKAX in all my various tax-advantaged and taxable accounts. And direct real estate investing for additional diversification in cash flow, and it also sounds much cooler to say I'm a real estate investor versus an index fund investor. I do have a little bit in bonds and international, but not enough to make much of a difference. That's it, my sweet spots in my investment spectrum. So, my challenge to you is this: what are your personal sweet spots in this investment spectrum? Thank you, guys, for watching. In the line of simplicity, if you want to learn some of my favorite simple financial products worth every penny, please check out my

Video here. Until next time, all the best.

The Investment Spectrum // Find Your Sweet Spot

Tae Kim - Financial Tortoise

The Basics of Investment: Cash, Bonds, and Equities

Cash is a crucial part of day-to-day expenses, and there are various options for keeping it, including checking accounts, high-yield savings accounts, CDs, and money market accounts.

US bonds offer a stable investment with an average return of around 3.

22% and can help balance out a portfolio's volatility.

US large-cap stocks, represented by the S&P 500 Index, are essential for portfolio growth and are widely followed as a benchmark for the broader economy's performance.

The Importance of Online Security and Aura's Solutions

Three major index funds, VFAx, FXA, and SWPPX, are essentially the same as they all track the S&P 500 Index, so the choice depends on the preferred investment firm.

Aura, the sponsor, offers a solution for online security by helping users remove their data from brokers, providing identity and credit monitoring, password management, and VPN services.

The AT&T data breach highlights the importance of protecting personal information online, and Aura's comprehensive services aim to keep users safe from hacking and fraud.

Investing in US Stock Market: Large Cap, Midcap, and Small Cap Funds

Different sized US public companies, categorized as large cap, midcap, and small cap, offer varying growth opportunities and levels of stability for investors.

Vanguard, Fidelity, and Charles Schwab offer a range of small cap and midcap index funds for investment.

Alternatively, investing in a total market index fund allows for a comprehensive and affordable way to invest in the US stock market, with low expense ratios.

Investing in International Stocks and Real Estate

The US Equity Market represents about 43% of the global market, leaving 60% of the global market unrepresented when only investing in US stocks.

To gain exposure to the rest of the world, investors can focus on developed markets, emerging markets, or choose a total international market index fund.

Vanguard, Fidelity, and Charles Schwab offer options for total international market index funds.

Investing in real estate can provide a diversification beyond stocks, and one simple way to do this is by investing in a Real Estate Investment Trust (REIT).

REITs allow investors to access real estate without owning or managing properties themselves, and Vanguard offers a Real Estate Index Fund for those interested in this type of investment.

Diversifying Your Investment Portfolio Beyond Real Estate

Consider broad real estate index funds like Fidelity Real Estate Index Fund and Schwab U.

REIT ETF for a general real estate market exposure.

For more targeted real estate investments in specific assets like multifamily or commercial properties, explore online real estate crowdfunding platforms such as Fundrise, Crowdstreet, and RealtyMogul.

If you're willing to take on more risk and responsibility for potentially higher returns, think about direct real estate investing by owning and controlling single-family or multifamily properties.

The Complexity of Options Trading for Retail Investors

Options trading offers high leverage and the potential for significant profits, but it is dominated by sophisticated professionals, making it complex and dangerous for retail investors.

Instead, focusing on simple investments like cash, total market index funds, and direct real estate may be more worthwhile for the average person, offering a better chance of success.