How Couple With Seven-Figure Net Worth Invest Money in Index Funds

• Brennan and Erin Schlagbaum paid off more than $300,000 worth of debt before they got serious about investing.
• Once they were debt-free, they went all-in on index funds.
• The couple now has a net worth of nearly $2 million. Most of their money is in three index funds.

Brennan and Erin Schlagbaum like to keep things simple when it comes to stock market investing — and their approach has worked for them so far.

The couple spent five years paying off over $300,000 worth of debt, including a $234,000 mortgage, before they could focus on actually building wealth. But once they were debt-free and in the position to start investing, they went all-in on index funds. That was back in August 2021.

Their net worth crossed $1 million in October 2022, which Insider verified by looking at account screenshots, and is closer to $2 million today. A good chunk of their wealth is tied up in their new home in Arlington, Texas, which they bought for $495,000 in 2023 in cash so that they could continue living without a mortgage payment.

However, the majority of their net worth — more than 50% — is invested in the market. 

Insider spoke with Brennan, who has his CPA and runs his own financial literacy company called Budgetdog, about his investing strategy, exactly what investments he holds in his stock portfolio, and how he’s diversifying outside of the stock market.

Their stock portfolio: Index funds and Meta stock

The couple use a variety of investment vehicles — including four retirement-specific accounts, a health savings account (HSA), and a brokerage account — but the investments within each account look very similar, said Schlagbaum: “Within every one of those accounts, it’s pretty much the same mix.” 

When you open an investment account, you get to choose how to invest your money. You can buy and sell a variety of investments, from stocks and bonds to mutual funds and ETFs.

Schlagbaum likes index funds, which are a type of mutual fund that track a diversified range of stocks, often with a specific theme. They tend to have low management fees since they’re passively managed.

He selected three specific index funds to invest in: the Vanguard Total Stock Market Index Fund (VTSAX), the Vanguard Total International Stock Index Fund (VTIAX), and the Vanguard Emerging Markets Stock Index Fund (VEMAX). He likes the broad market indexes, he said, since they are inherently diverse. For example, VTSAX is built to give investors exposure to the entire US equity market. 

More than 95% of his and Erin’s stock market money is in one of these three funds.

As for the remaining small percentage, that’s in one stock: Meta Platforms (META).

“I don’t typically buy individual stocks,” noted Schlagbaum, who bought META at $97 in October 2022. “However, I’m very bullish on them long-term and when I saw them dip to $97, I thought it was a no-brainer.”

He didn’t pick this particular stock simply off of a gut feeling. 

“I did a lot of deep research. I read the 10-K inside and out,” he said, referring to the document the SEC requires all public companies to file annually that provides a financial overview of the company. “I figured it was a great time to buy based on the technical analysis and positioned it as 2.5% of my portfolio. That’s a great place to be — it’s not too risky, but you get that upside potential.”

Turns out, it was a good investment, he added: “Meta stock today is almost at $300 and I bought it at $97. That return is exactly what I wanted to happen. It doesn’t always work out like that. I don’t have a crystal ball.” 

He’s not planning on selling it anytime soon. The 31-year-old thinks long-term, even when it comes to individual stocks, he said: “I’m holding this for a decade plus.”

In general, “if you’re an investor and you’re just starting, individual stocks should not be on your radar,” Schlagbaum noted. “That gets people into so much trouble and it’s not necessary to build wealth. The best investors have the bulk of their portfolio in ETFs and index funds.” 

He’s comfortable taking on a little bit of risk now that his company has taken off and his income has increased significantly.

“The bulk of my portfolio is the three index funds, but as we hit higher numbers from a financial freedom perspective, we wanted to bring in a little bit of extra risk,” he explained. “It’s asymmetric reward to risk. So I wanted to bring in individual stocks, as well as crypto. I have bitcoin and ethereum.”

Crypto also represents a sliver of his overall portfolio. His philosophy when it comes to risky investments like crypto is to buy a small enough amount so that “if you lose 100% of it, it’s not going to hurt you.”

Diversifying their overall portfolio with real estate

Up until recently, the couple’s net worth was mostly tied up in the stock market and their primary home, which they own outright. 

After researching how the wealthiest people invest their money, Schlagbaum concluded that “there are three things that wealthy people invest in: the stock market, business, and real estate.”

“We have the stock market investment; I own my own business and eventually want to get into buying businesses down the road; the only thing we really were lacking was real estate, outside of our personal residence,” he said.

In 2023, Schlagbaum invested in his first real estate syndication, which is when investors pool together money to purchase a property. Once they contribute capital, their role in the deal becomes completely passive. It’s the real estate syndicator who is responsible for finding the deal, executing the transaction, and ultimately, delivering returns to the investors. 

There are three things that wealthy people invest in: the stock market, business, and real estate. Brennan Schlagbaum

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Schlagbaum, who runs his business full-time and is expecting a second kid in the fall, liked the idea of being a hands off investor.

“It’s a totally passive way of investing in real estate,” he said. “I don’t have to do anything. And that’s the approach I really wanted to take with real estate. As much as I wanted to get into rentals, it was just too much for our family to commit to.”

Besides the addition of the syndication deal, “a lot of the investment strategies I do stay the same,” he said. He believes that if you want to build wealth, at the end of the day, “you don’t have to get complicated. You don’t have to continue to switch it up.”