the man from young to old
A number of people have asked me to share some different investment strategies for different life stages. What I’ll do is highlight the various investment strategies I think make sense for most people, discuss a couple more alternative investment strategies, and round up what strategy I think is most appropriate by life stage.
We all know that step one to building financial wealth starts with saving. What really widens the wealth gap over the years is HOW one invests. Before investing in anything, I encourage everyone to tell themselves five things out loud.
1) I will lose money.
2) I will feel like a complete idiot when I lose money.
3) Nothing goes up forever.
4) There are plenty of exogenous variables outside of my control.
5) No risk, no reward.
Now that you’re mentally set to invest your hard-earned savings in the stock market where one change in government law, a corrupt CEO, a terrorist attack, a natural disaster, or a declaration of war could instantly wipe out half your gains, let’s begin!
Various Investment Strategies To Consider
1) Indexing. A simple, low-cost strategy where you pick a particular stock index to purchase through an ETF or mutual fund. The most common US index to follow is the S&P 500 index. You can buy the ETF, SPY or buy a Vanguard S&P 500 Index fund, VFINX. Given its been shown that active fund management can’t outperform their index benchmarks over the long-term, saving on fees through an ETF or index fund is a prudent way to go for everyone. Wealthfront, the leading digital wealth manager is the best at investing idle cash at a low cost. The first $10,000 is free to manage, and it’s only 0.25% for every dollar afterward.
2) Smart Indexing. The S&P 500 is a market-cap weighted index. In other words, if we go through a three year bull market in technology, technology stocks will account for a greater weighting of the index than other sectors. This can be good for momentum investors, or bad as the tech sector tumbled by 80% in 2000, and the financial sector corrected by a similar amount in 2008-2009. Smart Indexing aims to keep all sector weightings equal, through constant rebalancing so that no one sector can dominate. Personal Capital is the leading hybrid digital wealth advisor who uses human advisors as well as technology to help manage your money. They are proponents of Smart Indexing. You can sign up to use all their financial tools for free if you don’t want to pay ~0.89% for them to manage your money.
3) Target Date Funds. Target date funds are a smart invention by the money management industry that allows retail customers to allocate all their money into one specific target-date fund and forget about things until they reach that target date for retirement. For example, you could be 40 years old and have a target date to retire in 20 years. You’d therefore choose the XYZ 2034 Target Date Fund. The fund will already be diversified for you in terms of stocks and bonds. It’s up to you to read the fund prospectus and understand the allocations, holdings, and decision making process. You should also examine the fund for fees, as they will be much higher than index funds.
4) Actively Managed Funds. As a whole, actively managed funds underperform index funds. That said, there will certainly be long term winners who do outperform. Otherwise, there wouldn’t be titans in the money management industry like Capital, Fidelity, Wellington, Dodge & Cox, Oakmark, Artisan, and so forth. I used to cover many of these fund managers in my previous life-time, and am friends with many of them now. What you need to watch out for is Portfolio Manager turnover. You’re really betting on the money management skills of the portfolio manager and his/her analysts. Many of these large money management firms will lose their PMs and analysts to competitors, and try to utilize their existing brand to prevent defection. To see how actively managed funds are rated, pick up your latest Money Magazine issue and look to the back, or check out MorningStar, whose business is to rate all different types of funds for performance.
5) Combination Index + Actively Managed. In general, you shouldn’t really be thinking about how to beat the markets, because it’ll cause you a lot of stress and you’ll probably lose in the long run. What you should be thinking about is market exposure, since we can get a good idea of future equity performance based off historical performance (6%-8%). Let’s say you are comfortable with a 100% equity exposed portfolio. You can consider allocating 70% of your portfolio in an Index fund, and allocate the rest of your money in your favorite actively managed funds. Many people will like this approach because people want to feel that they are making a positive difference with their investment choices.
Alternative Investment Strategies To Consider
The above five investment strategies are appropriate for everybody who wants to invest in the stock market. We are primarily talking about the domestic stock market, but you can clearly gain exposure to international stocks through international ETFs, international index funds, and international actively managed funds as well. The following investment strategies can be considered for people with different circumstances.
1) Hedge fund. A hedge fund is supposed to bring you absolute dollar returns in a bear market or a bull market. They are actively managed funds that use leverage to juice returns, and go short to hedge or make money on the downside. Some of the wealthiest people in the world are hedge fund managers due to their performance. Names like Ray Dalio, David Tepper, and Ken Griffin come to mind. The problem with hedge funds is that they often charge 1%-2% of assets under management, and 20% of profits. Furthermore, you often need at least $100,000 minimum, if not $1 million minimum to invest with the fund.
2) Do It Yourself Cowboy. If you just love investing your own money and picking stocks, you’re welcome to go through the entire stock picking process yourself. I just wouldn’t investment more than 25-50% of your net worth. Check out TD Ameritrade, a platform I’ve used to buy and sell stocks since 1998 when I first got started.
3) Private Equity Investments. Private equity investing is where you invest your money in private companies who you think will grow and either pay you a future dividend or have some liquidity event that will make you a solid return. Venture investing is investing in the earliest stages of company’s growth. Massive returns, but also much higher loss occurrences. Most private equity investments fail, so it’s best you really know what you’re investing in before cutting a check. 10 years ago I invested $75,000 in Bulldog Gin. I expected to lose 100% of my money until they finally announced a sale to Campari for about $50M plus an earn out in 2017. If you are going to invest in private equity, invest in a private equity or venture debt fund. Don’t bother investing in individual companies because you have zero edge. Related: Just Say No To Angel Investing
4) Hire A Financial Advisor. After you achieve a certain amount of wealth, there is this mental shift that occurs where you’re no longer seeking to make maximum returns on your money. Instead, you’re happy with more conservative returns because you want peace of mind and protection of principle. The point of having money is so that you have freedom to do something else more meaningful, like spending time with your family, traveling around the world, working on your business, or volunteering. The last thing you want is to get stressed out by having so much money. Hiring a financial advisor allows you to offload your money worries on someone else for a fee. Thanks to technology, fees are under 1% a year on assets managed, and the advisor is a Registered Investment Advisor who has a fiduciary duty to look out for your best interests, instead of trying to earn a commission by selling you products. Related: Get A Free Financial Consultation With Personal Capital)
5) Real Estate Crowdfunding. Beginning in 2016, I started investing in real estate crowdfunding with RealtyShares. Real estate is one of my favorite investment classes, and I wanted to diversify my real estate portfolio outside of expensive San Francisco and Honolulu. With real estate crowdfunding, I can invest as little as $5,000 – $10,000 in commercial real estate or multi-family properties in higher yielding places like Memphis or Austin. After doing a lot of research on the space and meeting the CEO from RealtyShares, I decided to invest $500,000 in RealtyShare’s Domestic Equity Fund that chooses the best deals from its platform to try and earn a 15% IRR over a five year holding period.
Investment Strategies At Different Life Stages
My philosophy is that one should be more risk-loving up to the age of 35, risk-neutral from ages 36-60, and risk-averse from ages 61-death. Of course everybody is going to live different types of lives and have different types of risk tolerances. But for the most part, I think it’s a good idea to think about our lives in three different segments of risk.
Risk-Loving Up To Age 35
When you graduate from college, you either have very little or are in debt with student loans. As a result, there’s really nothing to lose. You can afford to pick 100% of your stocks and allocate 100% of your money into equities. If you lose half of your $10,000 portfolio, you’ll likely make it up after several months of work. If you lose half of your $500,000 portfolio, you will probably start hitting the bottle.
People in this stage should feel free to take risks not only with their investments, but with their careers. The greatest asset you have here is time. Of course, someone who is 35-40 should be more conservative than someone who is 20-30. Related: Don’t Stop Fortune Hunting
Options: All of the above.
Risk-Neutral From Ages 36-60
This is a time where you might have dependents, a mortgage, and a lot of desires because you’re finally making decent money and accumulating a sizable amount of wealth. You don’t want to go back to living like a college student, so you tone down your risks so that you’re able to just rise and fall with the markets and the economy.
A stable job with a stable income becomes more important than ever. Losing a job is therefore more devastating due to a higher wage loss, and the need to start over to prove your abilities.
I’ve omitted DIY from this stage because of the risk of trading your now larger portfolios into money losers. It was OK to whip around your portfolio when they were smaller and when you had much less responsibility, but not now. Based on my own experience, the experience of many other personal finance consulting clients, and the fact it’s impossible to beat the markets consistently over time, I do not recommend DIY and trying to be a stock picker to fund your retirement. Focus on the idea of managing your stock market exposure through low cost index funds or ETFs instead. That way, you can spend your time enjoy life instead.
Options: Index investing, Smart Indexing, target date funds, hedge funds, hybrid, private equity, hire a financial advisor.
Risk-Averse From Ages 61-Death
Hopefully there’s no longer a need to work for a living once you’re in your 60s. You’ve either saved up a sizable nest egg in which you can comfortably withdraw funds indefinitely to survive. Or, you have Social Security or a pension.
There’s no need to risk anything at all because you’ve already made it. To lose everything now would be a disaster, so stay away from “hot investment opportunities” and investments that just seem too good to be true. You are a target for scammers galore, and your number one priority is to protect your money like Sparta!
Options: Index investing, Smart Indexing, hedge funds, hire a financial advisor.
Investment Strategy Conclusion
The only three really risky moves are: 1) Doing all the stock picking yourself, 2) Over allocating your net worth towards equities, and 3) Private equity investing / venture investing.
Investing in a hedge fund or hiring a financial advisor aren’t risky moves at all if you really think about it. A hedge fund is there to hedge against downturns and make you money in bad years and good years. You just have to choose the right hedge fund for you. A financial advisor is incentivized to do what’s best for you and grow your investments. If you start underperforming badly, clients will simply withdraw their funds and go somewhere else.
“The Proper Asset Allocation Of Stocks And Bonds By Age” provides a framework of what I think is an appropriate mix as we get older. The one thing we do know is that leaving all our savings in a money market account paying 0.1%-0.2% is not going to help us build wealth. At least keeping your money in savings won’t lose you any money. The only sure money maker is working for a living. But who wants to do that for the rest of their lives?
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About the Author: Sam began investing his own money ever since he opened an online brokerage account online in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at Goldman Sachs and Credit Suisse Group. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. He also became Series 7 and Series 63 registered. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $220,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies, and writing online to help others achieve financial freedom.
Updated for 2018 and beyond.
Nice post, Sam. Sums up the different investment options really well.
Question for you – I believe you’ve written about peer-to-peer lending at some point in the past (e.g. Prosper, Lending Club), but I’d like to get your thoughts on it, in the context of all of these more “traditional” investment strategies.
Where would you place it on the risk/reward scale? At what stage of life or in what mix do you find it to be appropriate?
(Obviously there’s not a definite right or wrong answer, but I’d like to get your thoughts.)
Thanks,
Eric
Eric,
I’m not Sam but do use Peer to Peer Lending. Some investors classify them as bonds (junk unsecured bonds) others (Personal Capital) call them cash.
I see it as high yield junk bonds with diversification. The only negative thing is that if you have Peer to Peer in retirement accounts you can harvest the losses which can make the risk taken on these loans more tolerable.
If you have read much about Peer to Peer lending selecting loans and spreading risk across a large number of loans is the only way to succeed long term. Playing with less than a 1,000 loans on Peer to Peer the volatility and losses can be tough to stomach. Once you reach over 1,000 loans the risk is spread well and the returns can level out more.
Hi Eric,
I’ll agree with Bryan here on classifying P2P close to the junk bond category. The only people I lend money to on Prosper.com are A rated borrowers who are looking to consolidate their debt into a lower interest rate. But the A-rated borrower on P2P is not the A-rated borrower according a traditional bank, b/c they likely couldn’t get the loan from the bank at a lower rate, hence why they are borrowing through P2P.
Here is my portfolio of main P2P related articles:
https://www.financialsamurai.com/tips-for-borrowers-of-peer-to-peer-lending-p2p/
https://www.financialsamurai.com/p2p-investor-returns-by-borrower-rating-and-credit-score/
https://www.financialsamurai.com/the-main-reasons-to-borrow-money-through-peer-to-peer-p2p-lending/
https://www.financialsamurai.com/investing-in-peer-to-peer-lending-with-prosper-com/
Can someone explain to me what ‘Alternatives” are on Personal Capital. My portfolio allocation says I should have more there, but I can’t figure out which funds in my 401k that would fall into. I have TR Price and my wife has Fidelity. We also have IRAs (from 401k roll over) in Vanguard.
thanks!
This is from Brendan Erne, Portfolio strategy team,
“Alternatives can be a lot of things, but the primary liquid investments we believe fall into this category are domestic REITs, foreign REITs, gold, and commodities (oil, non-precious metals, precious metals, agriculture, etc). However, these options won’t always be available in a 401k. The idea is that the bucket is made up of “alternatives” to traditional asset classes like domestic and foreign stocks, as well as domestic and foreign fixed income. And ideally, alternatives would be negatively or lowly correlated with the other asset classes.
Here is an old post on the subject: https://blog.personalcapital.com/whitepapers/the-benefit-of-alternatives/“
I am currently investing in index funds, but I’m debating whether I should spend some time actively investing. Mostly through a DRIP. My biggest issue with just having a Vanguard fund like VTI is the return. It only yields about 1.7% return. That’s nothing! I would really like a yield of 3%. What are your thoughts?
I would check out XLP. it’s focused on consumer goods stocks which are more “recession proof” and it also pays close to 3% dividend.
Hi FS,
What kind of risks should you take for careers? Can you elaborate on that? Thanks!
There are two types of hedge funds that return >15%, the lucky ones and the cheating ones.
Private equity is basically theft. There is one group that is certain to make ~10% in private equity and that is the firm itself.
Markets, today, are totally fed/hft driven non-sense.
If you can’t beat them, join them?
What brings about such a negative view on hedge funds and private equity funds Austin? There are certainly lots of honest funds that have shown more than a 15% annual increase. I hit with one of the managing principles of a large PE fund called GI Partners and Tomo Bravo, and those guys have been crushing it for 10 years.
Some of these people really are doing brilliant things; some are SAC. PE, in it’s traditional sense, is a viable source of capital.
What concerns me is the trend of activism I see. These guys can really throw their weight around to the detriment of shareholders and/or management. They can cram their LBO’s down institutional throats by bending every rule they can find. And, if it’s not behind the scenes engineering it’s extrinsic sensationalism, like Icahn and Ackman.
It is an interesting business model to be ON THE BOARD of a company and be a hedge fund. I’m not quite sure how this isn’t a type of insider trading, but perhaps it’s just promising not to sell or buy any shares in a certain window of time after a decision is made.
I’ve been toying with the idea of buying IEP. It’s like getting in on a hedge fund with no minimums. Icahn is more of a wild ride than Buffett, but IEP has outperformed Berkshire significantly over the last 10 years. So far I’ve been just selling naked puts on IEP… with the next dip in the stock i might get assigned.
I think you can guess my investing strategy. Real estate! I have so much more control over my investment and buying below market value is a huge advantage to me. Plus if I am getting cash flow on my rentals, I really don’t care if values drop. Usually rents don’t fluctuate as much as value and when the market crashed, many areas saw stable rents.
I stick to indexing for the majority of my investing. I do some individual stock picking with a small % of my portfolio but nothing that would devastate me if any one stock suddenly went to zero.
I invest in RE, index funds, div stocks.
I also have a financial adviser to manage part of my portfolio.
BTW, what is your opinion on the universal life insurance?
Jay, I’m not a big fan of universal/whole life insurance because of the cost. Best to just get cheaper term life insurance and invest the difference yourself.
However, if you have tons of liquidity and need a life insurance policy anyway, then having a universal life insurance policy is better than not having one. There’s good compounding and tax benefits for having one.
https://www.financialsamurai.com/cheap-health-insurance-options-for-the-unemployed-self-employed-or-early-retiree/
My financial adviser recommended it over the 529 for college funds, so we have been funding them (2 policy for 8 years now). However looking at the savings done, I don’t think it’s enough for my kids college fund by the time they enter college.
I’m curious would all of this drastically change for someone looking to retire early, retire at 40(less than 10 years), should the same middle ground be used from 35-40?
Good question
Probably not. In many ways, I am acting exactly like a traditional 65 year old retiree since I left Corporate America in 2012.
The three Life Stages are partly a function of tradition college graduation, work, and retirement. But it is also divided based on the median life expectancy of around 80-85 for men and women. As we get older, we feel the preciousness of time and life even more.
Right now I am focusing on working, increasing my income whilst tightening my budget so as I can save more. I did think about doing a PHD but the loss of income for at least 5 years is terrifying, and teaching is paying less than what I make now – so does not make sense. I switched to CNG (save 50% on gas), dumbed down my cell plan, got rid of cable and using Netflix, stopped eating out to 1x a week, and planning a blog :-) …Just cant seem to get a good topic or idea to get that started! I have thought art classes on weekends and I should get back to that.
I have some stocks invested for dividends too. That way I can have a guaranteed returns of at least 3%. My next plan is options trading – bought some books and a mentor to get myself started. Just opened an account at Interactive Brokers. All I can do now is try to earn more, spend less.
I went through the entire “Should I Get A PhD” phase after 2012, and my conclusion was: No.
There aren’t enough teaching jobs available, and like you say, the loss of income, or the tiny amount of income generated from being a teaching assistant is very hard to swallow. Read the post above if you have time on PhD. I tried to be pretty thorough.
Good luck with starting a blog! It’s been my biggest X factor that allowed me to break free, and my current largest existing financial buffer for financial security.
A PhD…. I have considered that too. I may do it just because I’m goal oriented; not because there is a financial advantage.
Life is about experience. At some point, watching your brokage account go up or down, is downright boring!
Cool. Let me know how it goes in 5-8 years after you get your dissertation approved!
Good post, I am looking forward to more responses from others. Personally I am a fan of Vanguard Index funds for the long haul. I just can’t seem to stomach owning single stocks right now… It’s just way to confusing for me. I rather just focus on my career and control what I can control and sleep at night. I can’t control what the market does, but I can control what I can make and invest.
As a 30 year old, that just hit the 400k net worth mark. All my assets are in cash, index funds and international ETFs/funds. Real estate is something I would like to get into, but right now it would be hard for me to manage. Since I work overseas and I am out of the US more than 90% out of the year. I could get into REITs as a alternative for now…
Good points. I think Sam, in various other posts, mentioned that his key to success was really his high savings (and thus investing) rate rather than squandering a high income on things that lose money.
Great progress, btw. $400k at 30 is nothing to sneeze at. Plus, at this level, your gains will start becoming a substantial portion of your overall growth compared to how much you contribute. It’s nice to have a big wind pushing you forward.
Thanks Ravi!
Just trying to see what I can do more if there is anything that is. Real estate would be tough for me to manage because of location issues, I have looked into property management companies also. Might be worth the management fee, might not. I suppose that’ll all depend on the company… but then again no one will care as much about your own investment than yourself of course.
Sam, by any chance do you have any experience with property management companies? Have you or know some one who has successfully used a management company, to deal with renting, finding tenants, collecting rent and all that on your behalf?
Nice work on 400K! Are you participating in the foreign tax exclusion or whatever it is that allows you to not pay taxes on the firs ~$96,000 in income? If so, I’m very envious!
What percentage of your NW is in cash?
Not too much cash right now, been very bullish on the market the past 1-2 years. So most my money is tied up in index funds and ETFs. I have roughly about 7k in cash currently, I used to keep 30k-50k in cash, but I felt that was a waste since even online banks pay no more than .20 to .40 interest, and I really do not need that large of a Emergency Fund… I have been thinking about trimming down and taking some profits off the table in my taxable brokerage accounts though, but the dilemma is were do I allocate it next?
Yes I do get the foreign tax exclusion and also the foreign tax credit too which can be better in some cases, especially if one makes over the 96k limit. Also the tax exclusion only is good if a person actually spends more than 330 days out of a 365 day period. Can’t use it say one is returning back to states any more than 35 days a year. For 2013 I paid practically zero in federal taxes. I benefit because I really do not pay the foreign tax either, since my company reimburses me any taxes I pay to the country I pay taxes in. The only thing I can not avoid is paying Social Security Tax and the Medfica Tax.
I am in a great position to save and invest as much as I can while I am out here. Because my expenses are extremely low since food and housing is also covered by my company. The only thing I spend my money is on extras, like my work out supplements and personal things which is not a whole lot per month. I pretty much save about 90% of all my income… the rest is spent on vacation time which I really go all out on! I have no debts, no bills, no loans, and living the single life!
Been doing some research on single stocks though, because I would like to possibly at least allocate 15 to 20 percent of my net worth to them. Just want to make a good educated and technical decision on why I will invest in say X stock, don’t really want to just pick some stocks because that’s what Cramer said today on Mad Money, or my buddy said so. That seems to end in disaster for most people. But most stocks that seem interesting to me seem very overvalued currently and of course I expect a correction in some of these high flyers sooner or later.
Parents live in Monterey, CA. I grew up in the Bay area also… left the Bay Area when I was 19 when I enlisted in the US Army and then been all over the States and the world since then. I’ll be back in the Bay Area for a few weeks in August though, to visit family since its been a while! Looking forward to it, especially the weather and food!
Investing is a personal choice! There are numerous choices including collectibles, art, classic cars, antiques, commodities etc. It gets back to your individual investment goals which is highly personal. The real issue is to start saving and investing in order to reach your investment goals.
I WISH I bought fine art to hang all over my walls 10 years ago. I love investments that provide joy and utility.
I love the old VFINX, which is available in my 401k!
With that said, my smaller portfolio outside of the 401k is where I “play” what-if scenarios when it will result in a positive growth of the portfolio. I generally choose dividend stocks and buy/sell them within ranges (i.e. buy low, sell high), and if I get a dividend it’s icing on the cake … or at least a good backup in case it goes down lower than the low I bought it at. Just sold a few hundred shares of SDRL after it went from $34.16 up to the $39 price I sold it for today, to lock in the gain. Did I hit the top? probably not, but I’ll take increases like that any time! :-)
If you are into dividends and like picking stocks then I recommend a newsletter called “the dividend machine”. I really enjoy the analysis and recommendations by Bill. I don’t buy every stock he recommends but use it as a springboard for ideas.
Thanks for the tip Julian!
Sam,
I’m generally in agreement with this post. I am a big fan of keeping things simple and low cost. I frequently recommend SPY for equity exposure, but if not possible, then low cost index mutual funds are best. Although, there are a few very excellent active fund managers whom are a worthwhile addition to a portfolio.
Also, call me old fashioned, but owning your own home is supported by much empirical evidence as a good way to build wealth (I can confirm this anecdotally). Everybody has to live somewhere. You may as well pay yourself instead of rent.
If a person has any real interest; I think DRIP plans in high quality blue chip companies are also an excellent option for longterm wealth. As I have said before: I don’t know if Twitter will exist 10 or 20 years from now, but I know a GE will still be here!
Don’t count out the Vaporware that’s being created in SF! This might be part of the reason why we are so frantically buying real estate – to convert vaporware into real assets.
Good point!
I saw a fun article about alternative ways of investing that could lead to huge payouts. One was investing in broadway shows. You never know if you are helping to get the next “Stomp” or “Rent” off the ground. The caveat is that 70%-80% of the time your investment winds up a huge loss. Another, way to invest outside the stock market is becoming a private lending partner.
I’m pretty sure there was a movie/show about this called The Producers… springtime for Hitler and germanyyyy. Too funny!
I don’t like taking massive risks and I’m not yet at the medium age band. I know that means I’ll never be a millionaire but I’m just not quite in the position to be playing the stock markets right now.
I do agree with this post and it is certainly very helpful and inciteful towards explaining the different styled risks.
Hiring a financial adviser could be a good thing to do but sometimes individual investors may not afford it.Learning some basics and taking the decisions by yourself should be the priority as nobody knows your risk profile better than you.Little homework before investing can make big difference.
Hey Sam,
I’ve been mostly looking into dividend growth investing lately, since my company matches at 5% for my Roth IRA. Since I already have my savings where I’d like it, my goal is to increase my passive income for the future when I retire in 20+ years. Besides this, I think real estate is a great way to increase passive income at a young age. I’ve dabbled in that a bit, and made plenty of mistakes on the way, but I’m always learning!
Hey Sam,
Wow that is very comprehensive on the investment strategies that are around. Was not aware of the smart indexing or target date funds.. There really is plenty of choice even in the options that are available..
What are your thoughts around investment properties? Here is Aus, a lot of people focus on investment property
what about the most exciting and biggest long trade bitcoin?
I’m glad to hear that cryptocurrencies weren’t mentioned.
Empirically, passive investing is the best way to accumulate wealth over time, thanks to the pure joy of compounding. Low-cost ETF is a good way to start.