The $50 ETF Strategy That Built My Six-Figure Portfolio

Did you know that over 90% of actively managed funds fail to beat the market over a 15-year period? I sure didn’t when I started investing back in 2008. Man, I wish someone had told me about low cost ETFs sooner!

I remember sitting at my kitchen table, staring at my first brokerage statement. The fees were eating me alive. Between the expense ratios, trading commissions, and that sneaky 12b-1 fee (yeah, I didn’t know what that was either), I was basically working for my broker instead of building wealth.

That’s when I discovered the magic of low cost ETFs for wealth building. These simple investment vehicles became my secret weapon for growing my nest egg without the Wall Street middleman taking their cut.

What Exactly Are Low Cost ETFs Anyway?

ETFs, or Exchange-Traded Funds, are basically baskets of stocks that trade like individual shares. Think of them as a buffet instead of ordering à la carte. You get variety without having to pick each dish yourself.

The “low cost” part is where things get really interesting. While your average mutual fund charges around 1-2% annually (some even more!), many ETFs charge less than 0.10%. That might not sound like much, but trust me, it adds up big time over the years.

I learned this the hard way when I calculated how much I’d lost to fees in my first five years of investing. Nearly $8,000! That’s a nice vacation or a decent emergency fund, just vanished into thin air.

My Favorite Low Cost ETF Strategies That Actually Work

After years of trial and error (mostly error), I’ve settled on a few approaches that consistently deliver results. The first one’s so simple it’s almost embarrassing.

The Three-Fund Portfolio

This is literally just three ETFs:

• A total stock market index ETF
• An international stock ETF
• A bond ETF

That’s it! I use Vanguard’s VTI for US stocks, VTIAX for international exposure, and BND for bonds. My total fees? About 0.05% per year.

Some folks think this is too simple. They want to tinker, to optimize, to beat the market. Been there, done that, got the losses to prove it doesn’t work.

Dollar-Cost Averaging Into Index ETFs

Every month, like clockwork, I throw money into my ETFs. Market up? I buy. Market down? I buy more!

This strategy saved my bacon during the COVID crash. While everyone else was panicking, I was actually excited because I was getting ETFs on sale. By staying consistent, I turned a 30% market drop into a 40% gain within a year.

The beauty is you don’t need to time the market. Actually, trying to time it usually backfires spectacularly (ask me about my Tesla puts sometime… or don’t).

Common Mistakes I Made (So You Don’t Have To)

Oh boy, where do I start? My investing journey reads like a “what not to do” manual.

First mistake: chasing performance. I’d see some sector ETF up 50% and jump in, only to watch it crash the next month. Technology ETFs in 2021, anyone?

Second mistake was overlooking expense ratios. I once bought an ETF with a 0.75% fee thinking it was “low.” Compared to the 0.03% alternatives available, I was basically lighting money on fire.

The worst mistake though? Not starting sooner because I thought I needed tons of money. You can literally start with $50 these days thanks to fractional shares at places like Fidelity or Robinhood.

Building Your Low Cost ETF Portfolio Step-by-Step

Ready to get started? Here’s exactly what I’d do if I was beginning today:

1. Open a brokerage account with zero commission trades (most major brokers offer this now)
2. Start with just one broad market ETF like VOO or SPY
3. Set up automatic monthly investments, even if it’s just $100
4. Once you hit $1,000, add an international ETF
5. At $5,000, consider adding bonds based on your age

The key is starting, not perfecting. I spent two years “researching” before I bought my first ETF. That procrastination probably cost me $20,000 in gains.

Manage Your Wealth Building

Look, I’m not gonna sugarcoat it – building wealth takes time. But low cost ETFs make it so much easier than the old ways our parents invested.

You don’t need a finance degree. You don’t need $10,000 to start. Heck, you don’t even need to know what P/E ratios are (though it helps).

What you need is to take action. Open that account, buy that first ETF, and let compound interest do its thing. Your future self will thank you, trust me on that one.

Remember, the best investment strategy is the one you’ll actually stick with. Keep it simple, keep costs low, and stay consistent. Before you know it, you’ll be the one writing about how ETFs changed your financial life!

Want more money-saving tips and investment strategies that actually work? Check out other posts on Budget Hackers where we break down complex financial topics into bite-sized, actionable advice. Your wallet will thank you!