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Index Funds and Real Estate

by Kianna Warburton

Tyler Wright, a former sales professional, made the decision early on in his corporate career that he didn’t want to be stuck in a typical 9-to-5 job for the rest of his life. The monotony of his day-to-day routine inspired him to increase his income, save aggressively, and ultimately achieve financial freedom.

From 2015 to 2021, Wright increased his income from $30,000 to an impressive $250,000 per year. He saved up to 80% of his paycheck and documented his financial journey on social media. In March 2022, he made the bold move to quit his day job and focus on building his personal finance brand and coaching business, called Defining Wealth, full-time.

Wright’s investment strategy is relatively simple. He mainly invests in two types of funds: a broad US fund and a broad international fund. By investing in low-cost index funds or ETFs from reputable firms like Vanguard, Fidelity, and Schwab, he gains exposure to the entire US equity market and international economies. For instance, he invests in the Vanguard S&P 500 ETF (VOO) and the Vanguard Total International Stock Index Fund ETF (VXUS).

Wright prefers to keep his investment portfolio streamlined and avoids getting caught up in numerous ticker symbols. He follows the three-fund portfolio approach, which consists of a domestic stock-index fund, an international stock-index fund, and a bond-index fund. At present, he owns the first two and plans to invest in bonds when he’s older and wants a more conservative portfolio.

When it comes to individual stocks, Wright owns a few shares of prominent tech companies like Amazon, Facebook, Google, and Apple. He also allocates a small portion of his portfolio to cryptocurrency. However, he adheres to the mantra of only investing what he’s willing to lose and limits his crypto exposure to no more than 2% of his entire portfolio.

Unlike many individuals who take full advantage of their employer’s 401(k) retirement plans, Wright chose to contribute a small amount early in his career but mainly focused on stock investing in brokerage accounts. He wanted the flexibility to use his money whenever he desired, without being subject to withdrawal restrictions or penalties.

Real estate plays a crucial role in Wright’s investment strategy. He wanted his savings to be easily accessible so that he could invest in properties. In 2018, he purchased his first property, a primary home, which he financed with a conventional loan. A few months later, he acquired his first investment property, a triplex, using cash from his stock market investments. Currently, he owns seven rental units across two investment properties in Orlando.

Wright appreciates the benefits of investing in real estate, particularly the consistent rental income it generates and the potential for property appreciation. He believes that rental properties provide multiple income streams and tax advantages. Instead of pursuing the flipping strategy, where one buys a property, renovates it, and sells it for a profit, Wright prefers the buy-and-hold approach, as it allows for long-term wealth accumulation and passive income.

While Wright is currently focused on growing his business, he plans to dive back into real estate in the future. He views real estate as a fantastic long-term investment due to the cash flow it provides, the mortgage payment being covered by tenants, and the potential for tax benefits. He intends to hold on to his rental properties indefinitely.

Tyler Wright’s financial journey is a testament to the power of disciplined saving, strategic investing, and diversification. By sticking to his investment strategy and focusing on income-producing assets like real estate, he achieved financial freedom and the flexibility to choose his own path in life.

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