The 4 ETFs You Need to Hold Forever: Secrets from a Millionaire Stock Trader

Have you ever wondered how some traders manage to make millions and then keep those gains growing? Meet Jack Kellogg, a seasoned stock trader who made over $10.5 million in just four years. Kellogg's journey from a car valet to a millionaire trader is nothing short of inspiring.

While he has made significant gains through day trading, Kellogg has also discovered the value of long-term investments. In this article, we'll explore the four ETFs that Kellogg believes are essential for a solid, long-term investment strategy.

From Valet to Millionaire: Jack Kellogg’s Trading Journey

Jack Kellogg's story began in 2017 when he was just 19 years old. At that time, he was working as a valet, saving up his earnings and dreaming of financial success. A friend introduced him to stock trading, and Kellogg decided to give it a shot. He opened a brokerage account with $7,500, eager to turn his savings into a fortune. However, his initial foray into trading was anything but smooth. He quickly lost a few hundred dollars and realized that trading wasn't as easy as it seemed.

Rather than giving up, Kellogg embarked on a journey of learning and self-improvement. He spent countless hours listening to podcasts, following online trading coaches, and practicing on trading simulators. This dedication paid off when the bull markets of 2020 and 2021 arrived. Kellogg capitalized on the market's momentum, earning $1.6 million in 2020 and a staggering $6.5 million in 2021.

Adapting to Market Changes

The stock market is constantly evolving, and successful traders like Kellogg know the importance of adapting to these changes. In early 2022, after experiencing some steep losses, Kellogg decided to take a break from trading. He used this time to refine his strategies and learn how to navigate the AI-driven stock market.

By 2024, Kellogg had transitioned from day trading to swing trading. This shift meant holding positions for days or even weeks, which required a different approach and increased selectivity in stock picking. His ability to adapt kept him in the game, allowing him to continue generating impressive gains.

Embracing Long-Term Investments

While Kellogg enjoys the thrill of day trading, he also understands the importance of long-term investments. To balance his portfolio, he periodically allocates a portion of his day trading profits to index funds and ETFs. These investments offer broad market exposure, low expense ratios, and a set-it-and-forget-it approach, providing stability and growth potential.

1. S&P 500 ETFs: A Pillar of Stability

The S&P 500 Index is a cornerstone of Kellogg's investment strategy. This index includes 500 of the largest US companies across various sectors, making it a reliable indicator of the overall market. Kellogg's top ETF picks for tracking the S&P 500 are:

- SPDR S&P 500 ETF (SPY): With an expense ratio of 0.09%, SPY is a popular choice for its cost-effectiveness and market representation.

- Vanguard S&P 500 ETF (VOO): Offering an even lower expense ratio of 0.03%, VOO is ideal for investors seeking minimal fees.

- iShares Core S&P 500 ETF (IVV): Another excellent option with a 0.03% expense ratio, providing the same exposure to the S&P 500.

Kellogg emphasizes the stability and growth potential of these ETFs, stating, "The SPY is 500 of the best companies in the world." For new investors, these funds offer a diversified, low-risk entry into the market.

2. Small-Cap Growth and Value ETFs: High Risk, High Reward

Diversification is key to a successful long-term investment strategy, and small-cap growth and value ETFs play a crucial role in Kellogg's portfolio. These funds focus on smaller US companies with significant growth potential. Kellogg's preferred small-cap ETFs include:

- MainStay VP Small Cap Growth and DWS Small Mid Cap Value: These funds provide exposure to the Russell 2000 Index, which includes 2,000 small-cap stocks across various sectors.

- iShares Russell 2000 ETF (IWM): With an expense ratio of 0.19%, IWM offers a balanced mix of risk and reward.

- Vanguard Russell 2000 ETF (VTWO): A lower-cost option with a 0.10% expense ratio, VTWO is another great choice for small-cap exposure.

Small-cap stocks often outperform during economic recoveries due to their direct exposure to domestic consumers. Investing in these ETFs adds diversity and growth potential to Kellogg's long-term portfolio.

3. Growth-Oriented ETFs: Capitalizing on Innovation

Kellogg also invests in growth-oriented funds that target companies with strong revenue and market expansion potential. One of his top choices is the American Funds Growth Fund, which includes leading companies like Microsoft (MSFT), Meta (META), Amazon (AMZN), Broadcom (AVGO), and Nvidia (NVDA). These companies are at the forefront of technological innovation, particularly in the AI sector, positioning them for significant future growth.

4. International Exposure: Diversifying Beyond US Borders

To achieve a truly diversified portfolio, Kellogg invests in international markets through ETFs like the Fidelity VIP International Index. This fund includes some of the world's most renowned brands, offering exposure to global markets. Key holdings in this ETF are:

- Taiwan Semiconductor (TSM): A leading chip manufacturer supplying tech giants like Nvidia and AMD.

- ASML (ASML): A Netherlands-based company that produces lithography machines for semiconductor production.

- Nestlé (NSRGY): One of the largest food and beverage companies in the world, based in Switzerland.

- LVMH Moet Hennessy Louis Vuitton (LVMUY): A French luxury brands conglomerate known for its high-end products.

Investing in international ETFs allows Kellogg to diversify his holdings and reduce reliance on the US market, enhancing overall portfolio stability.

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Conclusion: Building a Balanced Portfolio for Long-Term Success

Jack Kellogg’s investment journey teaches us the importance of adapting to market changes and balancing short-term trading with long-term investments. By incorporating these four ETFs into his portfolio, Kellogg has created a robust strategy that provides stability, growth potential, and diversification. For anyone looking to build a solid long-term investment portfolio, these ETFs offer a reliable foundation.

FAQs

1. Why should I consider investing in ETFs for the long term?

ETFs offer diversified exposure to various market sectors with low expense ratios, making them ideal for long-term, stable growth.

2. What makes the S&P 500 ETFs a good investment?

S&P 500 ETFs track 500 of the largest US companies, providing broad market exposure and historically strong returns.

3. Are small-cap ETFs riskier than large-cap ETFs?

Yes, small-cap ETFs can be riskier due to higher volatility, but they also offer greater growth potential, especially during economic recoveries.

4. How do growth-oriented ETFs benefit my portfolio?

Growth-oriented ETFs target companies with high revenue and market expansion potential, positioning your portfolio for significant future gains.

5. Why is international exposure important in a portfolio?

International exposure diversifies your investments across global markets, reducing reliance on any single economy and enhancing growth opportunities.