Millennial Who Is Financially Free Explains How He Invested His Money

  • Grant Sabatier grew his net worth from $ 2.26 to over $ 1 million in five years.
  • He invested in index funds and individual companies, including Amazon, Apple, and Facebook.
  • He still invests in index funds today but has expanded his portfolio to include other asset classes.

When Grant Sabatier was 24, he decided he wanted to save $ 1 million and retire as early as possible.

It was an ambitious, and borderline unrealistic, goal. At the time, they didn’t have any money coming in – they had been laid off from his first job out of college – and had virtually nothing in savings. He was living at home with his parents while applying for jobs.

Five years later, in 2015, Sabatier hit his goal and retired at 30 with $ 1.25 million.

“I worked in a nine-to-five job for benefits and connections, but then launched two companies and started several side hustles to earn extra income,” he wrote in “Financial Freedom,” which he published in 2019. “I saved 25% , then 40%, then up to 80% of my income for a few months and put that money to work in the stock market so it could grow. ”

Here’s exactly how he invested his income between 2010 and 2015 to grow his


net worth

from a sea of ​​$ 2.26 to over $ 1 million.

Index funds

At the core of Sabatier’s investment strategy was


index-fund

investing.

“I started just like a lot of people who are pursuing financial independence with an index-first strategy,” Sabatier, now 37, told Insider. “I had read Jack Bogle’s work in early 2011 and was pretty convinced that the index funds were the way to go.”

Index-fund investing, which was invented by the late American investor Bogle, is a relatively low-risk and inexpensive way to put your money to work.

An index fund is essentially a basket of stocks that represents a broad market. For example, the S&P 500 holds 500 industry-leading US companies, so when you invest in this particular index fund, you’re buying a small piece of companies like Apple, Microsoft, and Amazon. The broad diversification eliminates the risk of huge losses from single stocks. These types of funds also tend to have low management fees since they’re passively managed.

Sabatier started investing in the Vanguard Total Stock Market Index Fund (VTSAX) in 2010. In his book, he broke down the exact number of shares he owned, price per share, and total value of his portfolio from 2010 to 2015. He also included his total income and savings rate for each year.

That first year, they made $ 43,000 and bought 520 shares for $ 16,416. By the end of 2011, he owned 4,894 shares and his portfolio was worth $ 153,182.

In 2012, he was making more than $ 200,000, thanks to side hustles like buying and selling website domains, flipping VW campers, building websites, and blogging. He spent nearly as much time on his side hustles, about 40 hours a week, as he did working his day job at a digital marketing agency. More income means more money to invest, and he started investing in the Vanguard Total International Stock Index Fund (VTSNX) in addition to the total stock market index fund. He bought 1,892 shares for $ 47,395 in 2012.

He continued investing in both index funds from 2012 to 2015. By 2015, he had a total of $ 825,951 stashed in index funds: $ 742,347 in the Vanguard Total Stock Market Index Fund and $ 83,604 in the Vanguard Total International Stock Index Fund.

“It’s not lost on me that I started investing in 2010,” Sabatier told Insider. “The returns over the past 12 years, minus this year, have been pretty much always up, so I was able to really benefit from a lot of that compounding.”

Individual stocks

Sabatier also bought individual stocks during this time period.

“While I strongly recommend investing mostly in index funds, there are some individual company stocks that you might believe in so strongly that you can’t invest in them,” he wrote. For Sabatier, those companies were Amazon, Apple, and Facebook.

Call him prescient or simply lucky, but those were just about the best stocks any investor could pick in 2010. The now-famous


FAANG

(Facebook, Apple, Amazon,


Netflix

and Google) stocks in the tech sector vastly outperformed and grew to a combined


market cap

of over $ 7 trillion during the historic bull market of the 2010s.

In 2010, they bought Amazon at $ 180 a share. He bought 30 shares for a total of $ 5,400. That same year, they bought 100 shares of Apple at $ 41.46, for a total of $ 4,146. By 2015, he owned 400 shares of both companies.

Grant Sabatier headshot

Sabatier achieved financial freedom by investing in index funds and individual stocks.

Courtesy of Grant Sabatier


Sabatier first bought Facebook in 2012. They were one of the first users of the social platform as a college student, they told Insider: “I was a student at the University of Chicago and we were the second school after Harvard to get Facebook. So I was one of the first 20,000 users in 2003. ”

They bought 800 shares of the company at $ 25.91 in 2012. By 2015, they owned 1,070 shares at $ 104.66 per share.

By 2015, Sabatier had $ 423,022 invested in individual stocks: $ 270,356 with Amazon, $ 111,986 with Facebook, and $ 40,680 with Apple. That, plus his money in index funds, put his net worth right around $ 1.25 million.

He did lose a little bit of money, less than $ 5,000, from a few other stocks he sold during this period, he noted. As for the three companies that did well for him, “I could never have anticipated the growth over the past seven years,” they said.

“The key is to use a total stock market index fund as the foundation of your portfolio and build from it based on the level of risk / reward you are willing to take,” emphasizes Sabatier. “This is all meant to say, be cautious with your individual stock investments, and if you’re just starting out, don’t invest more than 5% of your net worth into individual stocks.”

How he invests his money today

Sabatier has shifted his investment philosophy since becoming financially independent in 2015.

“At some point, when you hit a net worth of over $ 5 million dollars, let’s say it makes a lot more sense to increase your diversification, as well as start expanding your view of investing,” he told Insider. “I’ve actually taken money out of a total stock market index fund and started investing in other areas.”

He still invests the majority of his money in index funds and individual stocks, and he has about 2% of his net worth in crypto, but has expanded his portfolio to include other asset classes like real estate, collectibles, and start-ups.

They don’t want to rely on just stock market returns (which are historically about 10% per year before inflation) – and they don’t think others should either.

“Now the financial independence community puts as much money as they can into a Vanguard total stock market index fund or something similar,” he explained, the idea being that their money is going to continue to grow at a rate of 10% per year forever. “No one can predict the future, but it’s becoming more and more likely that the market – the American economy – can only grow so much. And I don’t believe it’s going to grow at the rate that it’s grown for the past 10 years, certainly for the past 30 years, into the future. “

For someone who is new to investing, “I still think an index fund is a great base to build upon,” he noted. That said, “I think the advice that you should just blindly invest in an index fund forever is really short-sighted. You should be looking for increased diversification over time.”

Above all, start investing today. “If you’re sitting on the sidelines because you’re afraid you don’t know enough about investing, don’t,” Sabatier wrote. “Getting started early is more important than waiting and making the perfect investment.”

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