A stock trader who made over $10.5 million in 4 years details 4 funds he invests in long-term

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Kellogg said he wanted to use his saved-up cash to buy a few stocks and see if he could grow his pot. It was a simple but unsuccessful start: He opened a brokerage account, deposited $7,500, and began trading. He lost a few hundred dollars and quickly realized it wasn’t as easy as his friend made it sound.

His immediate reaction was to step away and, instead, embark on a learning journey. He said he spent his days listening to podcasts as he valeted cars, following the teachings of various online coaches, and even using trading simulators to test any skills he learned.

It wasn’t until the bull markets of 2020 and 2021 that he tried again, this time reeling in seven-figure gains. In 2020, he made $1.6 million, which would catapult to another $6.5 million the following year, according to a tax document viewed by Business Insider.

It was thrilling to succeed at something he had previously failed at. But the stock market wouldn’t be as generous in the years that followed. While he didn’t stop generating gains, his strategy had to shift to consistently adapt to a changing economic environment. In the early months of 2022, he avoided making trades for a few months after taking in steep losses.

In 2023, he learned how to trade the concentrated AI-driven stock market and ride the momentum that came from hype. By 2024, the consistent uptrends on major indexes like the S&P 500 and the Nasdaq 100 caused him to switch from day to swing trading, which meant he went from holding for minutes to holding for days to weeks. Since the longer exposure period increased his risk, he became more selective of the stocks he picked, scanning for multi-day gainers while avoiding those with price spikes at hundreds of percentages.

The ability to adapt kept him in the game. According to tax documents viewed by BI, he recorded trading gains of $10.5 million from 2020 through 2023.

While he enjoys the fast-moving nature of day trading, he also understands the importance of allocating to long-term investments. Kellogg periodically shaves off gains from his day trades to buy index funds for stable returns. These funds provide broad exposure to US companies across multiple sectors. By doing this, he can take a set-it-and-forget-it approach to one part of his portfolio. It’s also a way to safely set aside some cash while continuing to let it grow.

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He invests through exchange-traded funds (ETFs), which track major US indexes and charge a very low expense ratio, which results in gains that are very close to the indexes they track since they don’t charge high fees. He also invests in a few mutual funds and index funds, according to records of his brokerage documents reviewed by Business Insider .

Long-term bets

His main go-to is the S&P 500 Index, a basket of large-cap stocks that holds 500 of the top US companies. He buys the MainStay VP S&P 500 Index Fund, which tracks the index. This grants him exposure to sectors that include information technology, financials, and health care, which are the highest weighted holdings in the index.

Similar ETFs are the SPDR S&P 500 ETF (SPY), which has an expense ratio of 0.09%. Other options with even lower expense ratios include the Vanguard S&P 500 ETF (VOO), which has an expense ratio of 0.03%, and the iShares Core S&P 500 ETF (IVV), which has an expense ratio of 0.03%.

“The SPY is 500 of the best companies in the world,” Kellogg said. “So I believe, especially people who don’t know too much about investing or trading, should never just pick one stock or read about one stock online or think they know what’s going to be the next stock. Because yes, they could pick a good stock, and it could work, but odds are you’re not going to pick the right stock for long-term investing.”

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Other funds he allocates to are the MainStay VP Small Cap Growth and the DWS Small Mid Cap Value that provide exposure to smaller US companies similar to the Russell 2000 Index, a basket of 2,000 US small-cap stocks across various sectors, with industrials, healthcare, and financials having the most weight. The Russell 2500 is another similar index that tracks small to mid-cap US stocks.

While smaller companies could pose a greater risk, they also present opportunities for more gains since many are newer and still growing. This type of exposure adds diversification to his long-term portfolio because certain sectors tend to outperform based on where along the business cycle the economy is. For example, small-cap stocks tend to outperform during an economic recovery period because they have more direct exposure to domestic consumers.

Other popular ETFs that track similar stocks include the iShares Russell 2000 ETF (IWM), which has an expense ratio of 0.19%. And the Vanguard Russell 2000 ETF (VTWO), at an expense ratio of 0.10%

He noted that Stan Druckenmiller, a billionaire investor and former hedge fund manager, recently shaved off some of his profits from Nvidia to buy shares of IWM. He believes the move is based on expectations of Fed rate cuts which will benefit small-cap companies that have higher exposure to debt.

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He also holds the American Funds Growth Fund, which pursues companies that have growth potential due to their ability to increase revenue by expanding market share and reinvesting profits in ways that could expand their operations. Currently, the top holdings in this fund are heavily tied to the development of AI and include Microsoft (MSFT), Meta (META), Amazon (AMZN), Broadcom (AVGO) and Nvidia (NVDA).

To gain exposure to stocks outside the US economy, he buys the Fidelity VIP International Index which is made up of some of the world’s most well-known international brands. Its biggest holdings include leading technology companies like Taiwan Semiconductor (TSM), a chip manufacturer that supplies Nvidia and AMD. It also holds Netherland-based ASML (ASML), which manufactures the lithography machines used to create chips. They sell these machines to semiconductor manufacturers. Other major holdings in the fund include popular brands like the Swiss company Nestlé (NSRGY), one of the world’s biggest food and beverage makers. It also holds LVMH Moet Hennessy Louis Vuitton (LVMUY), a leading French luxury brands company.