It’s satisfying to know that you’re playing the long game financially.
Retirement accounts are where all of your small investing decisions can potentially compound into life-changing outcomes over time.
This November, I am looking forward to bolstering my lineup with three exchange-traded funds (ETFs) in particular, each of which plays a different role that I want covered in my portfolio. Here’s what I’m going to be buying and why.
The iShares Bitcoin Trust ETF (IBIT 2.02%) is my chosen way to put Bitcoin (BTC +1.92%) into my retirement account, where it’s still too cumbersome to own cryptocurrencies directly. It’s a spot ETF that holds Bitcoin directly and charges a 0.25% expense ratio.
For me, Bitcoin’s appeal is that its supply is constrained by its protocol, not by policymakers like with a fiat currency. In theory, that makes the coin a long-term store of value and a hedge against future monetary or fiscal mistakes, and it could potentially behave as a hedge against inflation, too.
Buying IBIT makes it easy to express that investment thesis in a tax-advantaged account. For what it’s worth, I also regularly buy Bitcoin directly, and I’ll continue to do that as well.
The SPDR S&P 500 ETF Trust (SPY +1.00%) is a small but important pillar of my retirement investing that I’ll perpetually be adding to.
It tracks the S&P 500 index, which holds 500 leading large-cap U.S. companies and covers roughly 80% of the domestic equity market’s value. The fund only charges about 0.09% per year, which is extremely low for such broad exposure.
Over long periods, the S&P 500 has delivered on the order of 10% average annual returns when dividends are reinvested, despite recessions, inflation spikes, and market panics along the way. That makes it a fairly safe bet that’s ripe for dollar-cost averaging, and it also means that this ETF can effectively take your patience and turn it into future purchasing power.
I don’t expect that buying this ETF will make me rich. But, over the very long term, I have no doubt that it’ll leave me richer than before.
The brand new Canary XRP ETF (XRPC 3.09%) is the newest and riskiest of the three ETFs on this list. It began trading on Nov. 13 as the first U.S. spot ETF giving investors direct exposure to XRP (XRP +0.54%), the native token of the XRP Ledger (XRPL), and it charges an expense ratio of 0.5%.
XRP is a cryptocurrency designed for fast, low-cost payments, with transactions typically settling in three to five seconds and costing a fraction of a cent in fees. The thesis here is that if banks, payment processors, and other financial institutions increasingly choose to route their cross-border and on-chain asset management activity over the XRP Ledger, demand for XRP will grow, and XRPC will capture that upside. And, over the next 10 years or so, if XRP becomes a hub for tokenized real-world asset (RWA) management, the upside potential will be even higher.
While I’ve been bullish on XRP for some time, my reluctance to set up yet another crypto wallet to hold it in self-custody has held me back from buying it in any form until now. I plan to make my first purchase of XRPC soon, and buy it in small quantities over time after that, but I have not yet bought any shares because it just launched and I’ve been too busy writing about it.
