Brennan and Erin Schlagbaum crossed the coveted $1 million net worth threshold just 14 months after they started investing. And now, less than two years later, their net worth already tops $2 million.
So what’s the secret behind their rapid wealth buildup? As Brennan shared with Insider, it all comes down to keeping their investing strategy simple and sticking to low-cost index funds.
The Couple Went All-In on Index Funds Once They Were Debt-Free
The Schlagbaums’ money journey started with paying off over $300k in debt over a 5-year period. This included paying off their $234k mortgage.
Brennan explained that they had to become completely debt-free first before they could start investing and building wealth. Once they paid off their last debt in August 2021, that’s when their investing story began.
And they went all in on the stock market, using Brennan’s simple, three-fund portfolio approach:
- Vanguard Total Stock Market Index Fund (VTSAX)
- Vanguard Total International Stock Index Fund (VTIAX)
- Vanguard Emerging Markets Stock Index Fund (VEMAX)
Brennan shared that these three broad market index funds make up over 95% of their stock investments. This approach gave them wide diversification across US and international stocks while keeping costs low.
He Believes Individual Stocks Are Too Risky for Most Investors
While index funds make up most of the couple’s investments, Brennan did recently allocate about 2.5% of their portfolio to shares of Meta Platforms stock.
However, he cautioned that individual stocks should not be on the radar for most investors just starting out. Brennan shared that “the best investors have the bulk of their portfolio in ETFs and index funds.”
He only invested in Meta because he’s very bullish on it long-term after deep research and analysis. Brennan sees this individual stock pick as an “asymmetric reward to risk” play with huge upside potential.
Still, he reiterated that index funds form the core of his portfolio. Brennan said he only takes on some extra risk now because his income has increased substantially.
Small Crypto Allocation for Further Diversification
In addition to the three index funds and Meta stock, Brennan has also allocated a small portion of his portfolio to bitcoin and ethereum.
Like with Meta, cryptocurrencies represent only a sliver of his total net worth. Brennan’s crypto philosophy is to invest an amount that won’t hurt you even if it goes to zero.
So while crypto adds further diversification, index funds still reign supreme in his portfolio construction.
Venturing Into Real Estate Investing Through Syndications
More recently, Brennan has looked to diversify his assets outside of the stock market as well. He researched how the wealthiest investors allocate capital and found that they invest across three asset classes: stocks, businesses, and real estate.
While Brennan already had the first two covered between his index funds and owning his own financial literacy business, he was missing exposure to real estate.
So earlier this year, he passively invested in his first real estate syndication deal. Brennan explained that real estate syndications allow passive investors to pool capital together to invest in larger commercial or residential properties.
This new asset class rounds out his portfolio and provides further diversification beyond stocks. Between stocks, crypto, and real estate, Brennan now has his bases covered by investing across the three assets the ultra-wealthy use to build their fortunes.
His Straightforward Strategy Has Led to Rapid Wealth Creation
Brennan Schlagbaum’s simple yet effective investing approach emphasizes low-cost index funds, with modest allocations to selected individual stocks and crypto for added diversification and upside potential.
By sticking to this straightforward strategy focused predominantly on broad market index funds, he and his wife were able to accelerate their net worth to over $2 million in less than two years time after starting to invest.
Their story goes to show that you don’t need complex investing ideas or exotic assets to build life-changing wealth in the stock market. More often, keeping things simple and diversified is the key to long-term success.
So if you’re looking to grow your net worth substantially over time like the Schlagbaums, then modeling a simple index fund-focused portfolio could help pave your path to financial freedom.