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Reddit is fast becoming a gold mine for investing advice, with thousands of retail investors on the platform participating in discussions about dividends, retirement, stocks and cryptocurrencies daily. Recently, a young Reddit user asked for investing advice for long-term success, saying that at 18, he's putting small amounts of money into ETFs. The goal of the young Redditor is to one day start living off his investments. As always, Redditors were generous enough to pour their advice and criticism. In the discussion thread, a Redditor claiming to be a 28-year-old millionaire popped up with specific ETF recommendations and said he started investing at the age of 18 with just $500.
"My advice? Invest in ETFs that you can hold onto long-term, which pay dividends and can be borrowed against when needed," the Redditor said.
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Before we begin our list of ETFs recommended by this millionaire Redditor, an important concept from his advice needs some clarification. What does he mean by "can be borrowed against when needed?"
This means you should look for ETFs that you can use to secure a loan when needed. You can use some ETFs as collateral to secure a loan, so you don't need to sell them when you need money.
Now, let's examine the five ETFs recommended by this Redditor to an 18-year-old young investor seeking advice on long-term success.
Vanguard S&P 500 ETF
Vanguard S&P 500 ETF (NYSE:VOO) is one of the ETFs recommended by the 28-year-old millionaire Redditor. While VOO is a broader market ETF that exposes you to the top S&P 500 companies, investing in the fund would also make you eligible for quarterly dividends. The ETF has a 1.3% dividend yield and the last dividend payment was $1.783 per share. Some of the top holdings of the ETF include Microsoft, Nvidia, Amazon, Apple and Meta Platforms. VOO is considered one of the safest growth ETFs as it invests in mega- and large-cap tech names.
Schwab U.S. Dividend Equity ETF
With a 3.6% yield, Schwab U.S. Dividend Equity ETF (NYSE:SCHD) is one of the most popular dividend income ETFs in the list of fund recommendations from the Redditor. The ETF tracks the Dow Jones U.S. Dividend 100™ Index, and its top holdings include Lockheed Martin, Home Depot, AbbVie, Amgen, Coca-Cola, Cisco, Pfizer, and Chevron, among others. Over the past year, SCHD is up 9%. The ETF is invested in dividend-focused industries like energy, financials, health care and consumer staples.
Investors usually turn to high-dividend ETFs like SCHD for retirement or when the economy is volatile as the fund is heavily invested in conservative companies with strong fundamentals and resilient businesses.
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iShares U.S. Technology ETF
iShares U.S. Technology ETF (NYSE:IYW) is a very low-yield dividend ETF recommended by the 28-year-old millionaire on Reddit to beginner investors looking to increase their wealth over the long term. The ETF gives investors exposure to U.S. technology stocks. Some of the notable holdings of the fund include Apple, Microsoft, Nvidia, Broadcom, and Meta Platforms, among others. The ETF has a dividend yield of just 0.3% because it's a growth fund with technology companies having no or low dividend yields. The ETF is up about 20% so far this year. IYW has a relatively high expense ratio of 0.40%.
iShares Gold Trust
iShares Gold Trust (NYSE:IAU) is a gold ETF that tracks the precious metal by holding physical gold bullion. This ETF allows investors to gain gold exposure without holding the metal. The ETF is up about 15% so far this year. It has $29.24 billion worth of assets. Some investors, however, recommend against holding gold ETFs because they are treated as "collectibles" and their tax rates are higher than normal capital gains on stocks. However, investing in gold ETFs like IAU could be a suitable choice for those who want to avoid the risks of owning actual gold bars.
iShares Bitcoin Trust
The 28-year-old millionaire on Reddit also recommended iShares Bitcoin Trust (IBIT), an ETF offered by BlackRock for investors who want to gain exposure to Bitcoin. But why not own Bitcoin directly? ETFs like IBIT claim to remove the burdens of holding actual cryptocurrencies in digital wallets and other complexities including taxes.
IBIT was launched by BlackRock in January 2024. In May, it had $20 billion in total assets, becoming the biggest Bitcoin ETF.
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This article 28-Year-Old Redditor Who Became A Millionaire In 10 Years Shares 5 ETFs That Helped Him Get There originally appeared on Benzinga.com