29-Year-Old With $400K Inheritance Wants Over $2M In 20 Years – Reddit Debates His 4-ETF Plan And Whether To Save For A House Or Go All-In

Some people who inherit money choose to invest it in stocks to grow their wealth over time, while others think about using the sum to buy a house.

Investing can turn a significant amount of money into a much larger sum in time, but buying a property can provide stability and a place to live.

One well-known way to invest is through exchange-traded funds. Investors like these funds because they offer a straightforward method to buy a mix of stocks, lowering the risk compared to picking individual stocks.

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ETFs can monitor the whole market, specific industries, or dividend stocks, making them a popular choice for long-term investors.

A 29-year-old shared his investing dilemma on Reddit’s r/FinancialPlanning community after inheriting $400K. He has a full-time job, no debt and no need for the money, so he wants to invest it for 20 years or more as a way of turning it into at least $2 million.

“I don't need the money now (no debt, I work a full-time job and have never had issues financially) — so my plan is to invest it and not look at it for 20+ years and turn it into $2M+,” he wrote.

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However, he’s also planning to buy a house in the next couple of years and needs to keep some money available for the down payment. The investor has drafted an ETF investment plan but is seeking advice because he doesn’t know if the percentages make sense.

He plans to keep 30% in cash-like assets, such as Bondbloxx USD High Yield Bond Sector Rotation ETF HYSA and iShares 0-3 Month Treasury Bond ETF SGOV, 30% in Vanguard S&P 500 ETF VOO and Vanguard Total Stock Market Index Fund ETF Shares VTI, 15% in Vanguard Total International Stock Index Fund ETF Shares VXUS or Vanguard FTSE Developed Markets Index Fund ETF Shares VEA, and finally, 25% in dividend or growth stocks, so he’s thinking of investing in Sentinel One S, iShares Core Dividend Growth ETF (NYSE Arca: DGRO, and Invesco NASDAQ 100 ETF QQQM

The 29-year-old asked Reddit investors for thoughts, alternatives and whether his plan is the best way to grow his money. Let’s see what advice he received in the comments.

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How to Grow a $400K Inheritance to $2M? Reddit Advises the Young Investor

Investing in ETFs and Index Funds is a Smart Choice

Many Redditors agreed that investing in ETFs or index funds is a great way to grow the money since they spread the risk across many companies instead of just one.

“I’d set aside 20% for a down payment, based on home prices you are looking at. Then set aside a 6-month emergency fund. Put these both in a HYSA. Invest the balance in VOO + VTI,” a comment says.

This particular Reddit member seems certain that an index fund in the S&P 500 is the best choice the 29-year-old can make.

“Definitely do an index fund in the S&P 500. No need to ever have a look at it, and consistently the best long-term performer,” the Redditor wrote.

“S&P 500 index fund. Check it in 35 years,” another comment reads.

Avoid Overlapping ETFs

While a couple of the comments above recommended investing in both ETFs, some commenters pointed out that VOO and VTI overlap considerably because VOO is already included in VTI.

“Why both VOO and VTI? VOO is in VTI. Just go full VTI and call it a day. There’s no diversification coming from doing both,” a Redditor said.

“VOO & VTI have a huge amount of overlap, just go VOO,” reads another comment.

This Reddit member suggested the investor stick with VTI because although he thought of putting money into QQQM, they offer the same exposure.

“QQQM is fine, but you’re getting a lot of the same exposure from VTI,” he said.

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Consider a Smaller Down Payment and Invest the Rest

Several Redditors advised the investor to only put 20% down on a property and invest the rest of the sum.

“The house goes up in value whether it's paid in full or not. Having spare cash to invest increases your gain as long as it's earning more than the mortgage interest rate,” a Redditor suggested.

As part of a conversation in the thread, one Reddit member compared having a part of the money in stocks or the house and emphasized that investing the sum would bring him better returns.

“If you have $290k invested, that's a nice return. But, you can have a much greater return if only 20% of your money is in the house,” another comment reads.

Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

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