- Grant Sabatier achieved financial independence by investing most of his money in index funds.
- His investing strategy has evolved as his net worth has increased.
- He’s diversified his portfolio in order to prepare for an uncertain future.
Grant Sabatier achieved financial independence at age 30 by sticking to a simple investing strategy: stashing as much money as he could into index funds.
“I started just like a lot of people who are pursuing financial independence with an index-first strategy,” Sabatier, now 37, told Insider. “I had read Jack Bogle’s work in early 2011 and was pretty convinced that index funds were the way to go.”
investing, which was invented by the late American investor Jack Bogle, is a relatively low-risk and inexpensive way to put your money to work.
An index fund is essentially a basket of stocks that represent a broad market. For example, the S&P 500 holds 500 industry-leading US companies, so when you invest in this particular index fund, you’re buying a small piece of companies like Apple, Microsoft, and Amazon. The broad diversification eliminates the risk of huge losses from single stocks although index funds might also limit outsized gains. A $10,000 investment in Vanguard’s S&P 500 index fund at its inception in November 2000 had grown more than fivefold to about $50,500 as of late April. Plus, these types of funds tend to be low-cost.
“I invested in a total stock market index fund right out the gate,” said Sabatier, who details his early investing strategy in his book, “Financial Freedom.” He focused on growing his income through various side hustles so that he had more money to save and invest. In his mid-20s, he was putting up to 80% of his earnings into index funds, he said.
“On the road to financial independence, I was trying to save and invest as much as I could as early as I could,” he said. “I understood compounding, and I understood that I could accelerate the rate of compounding if I front-loaded my savings. I knew that a dollar saved when I was 25 was worth more than a dollar saved when I was 35.”
His discipline and consistent index investing paid off: By age 30, he’d built up $1.25 million in investments.
I knew that a dollar saved when I was 25 was worth more than a dollar saved when I was 35.Grant Sabatier, author of “Financial Freedom”
“It’s not lost on me that I started investing in 2010,” he noted. “The returns over the past 12 years, minus this year, have been pretty much always up, so I was able to really benefit from a lot of that compounding.”
Sabatier also invested in individual stocks like Amazon and Facebook back in 2011 and 2012, he noted: “Thankfully, most of the stocks that I bought ended up going up in value — and, in some cases, pretty considerably over my financial independence journey.” Plus, he started investing in Bitcoin in 2013.
Shifting his philosophy after achieving financial independence
Since becoming financially independent in 2015, Sabatier’s wealth has continued to grow, thanks to compounding, or interest that was accruing to the interest his total investment was generating. “My portfolio now returns between $400,000 and $500,000 a year without me doing anything,” he said.
Sabatier’s investing strategy has changed as his portfolio has grown.
“At some point, when you hit aof over $5 million dollars, let’s say, it makes a lot more sense to increase your diversification, as well as start expanding your view of investing,” he said. “I’ve actually taken money out of a total stock market index fund and started to invest in other areas.”
He still invests the majority of his money in index funds and individual stocks, and he has about 2% of his net worth in crypto, but has expanded his portfolio to include other asset classes:
Real estate. Sabatier owns a home in Columbus, Ohio, where he lives primarily, and Indiana. He’s also currently looking at properties in Maine.
When it comes to investing in real estate, one of the main factors he considers is how much the area is projected to be impacted by climate change.
“Columbus is actually one of the best places to live based on the current climate models,” he explained. “Whereas, somewhere like Tucson, Houston, New Orleans, or much of the American South — which, ironically is where most of the real estate appreciation has happened over the past couple of years — are actually some of the worst places to live based on increased flooding, hurricanes, tornadoes, and wildfires.”
Collectibles. Sabatier has had a sports-card collection for the past six years. He doesn’t expect much in terms of returns from sports-card investing, but “it’s the investment that makes me the happiest,” he said. “By no means put more than 2 or 3% of your net worth into an asset class like that, but if you’re having fun doing it and you see value there, it can certainly be worth your time.”
He’s also been collecting vintage watches since 2017. “That’s a pretty interesting market with some really cool market dynamics, and some of those watches have appreciated pretty considerably,” he said. Again, you don’t want to bet your future on vintage watches, he emphasized: “It’s just a fun place to put your money, and can potentially make money over time.”
Start-ups. Sabatier recently started investing in start-ups, including an app called Topia that helps users achieve financial independence.
When it comes to investing in companies, “I’m not just thinking about what kind of financial return this can give me,” he said. “I’m thinking about how it can enrich my life. It’d be great if my money turned into more money over time — the chance of that happening, statistically, is quite low, given how many start-ups fail — but I’m thinking about this investment more as a way to add meaning to my life.”
Preparing for an uncertain future
When Sabatier first started investing in the stock market via index funds, he assumed it was a surefire path to wealth — and it essentially was. He achieved his financial independence goals by putting the majority of his money to work in index funds and watching it compound over time.
But he doesn’t want to rely on just stock market returns (which are historically about 10% per year before inflation) — and he doesn’t think others should either.
“Most of the financial independence community puts as much money as they can into a Vanguard total stock market index fund or something similar,” he explained, the idea being that their money is going to continue to grow at a rate of 10% per year forever. “No one can predict the future, but it’s becoming more and more likely that the market — the American economy — can only grow so much. And I don’t believe that it’s going to grow at the rate that it’s grown for the past 10 years, certainly for the past 30 years, into the future.”
He’s not incredibly optimistic about the future, and his investing strategy has evolved to reflect that. “What I’ve learned, especially over the past five years, is that we’re entering into a period of increased uncertainty, primarily driven by the unpredictability of climate change,” he said. “My idea of investing is much more rooted in, what do I think the future could look like? And then building as much flexibility and adaptability into my portfolio as possible.”
That’s why he considers climate change when investing in real estate, for example. And that’s why he’s diversified his portfolio, in preparation for potentially smaller stock market returns.
“For someone just starting out, I still think an index fund is a great base to build upon,” he noted. That said, “I think the advice that you should just blindly invest in an index fund forever really is short-sighted. You should be looking for increased diversification over time.”