Austin Hankwitz, personal finance content creator
Austin Hankwitz set a retirement goal to reach $2 million in eight years.
He’s using a regular brokerage account and a solo 401(k) with pre- and after-tax advantages.
He has broken down his allocation to stocks to prioritize growth.
Austin Hankwitz went from being a financial analyst at a healthcare company to a personal finance content creator with over 700,000 followers on TikTok.
He began his journey in 2020 by sharing short videos on investing ideas like stocks to buy during a recession or news that could impact their stock prices. And while he enjoys scouring through company fundamentals, keeping up his momentum when tracking numerous stocks is difficult, he said.
Late last year, he decided he wanted to build a retirement portfolio worth $2 million that he could track and others could follow along. He gave himself eight years to achieve it. The dollar value was reached based on the 4% rule, which states that you can withdraw that percentage annually while allowing your portfolio to grow. That seven-figure number would enable him to withdraw $80,000 annually.
Hankwitz ideally wants to reach that number in eight years, but he’s open to the possibility that it could take up to 15 years. Even with the stretched timeframe, it still gives him the option to retire in his late 30s or early 40s. But in reality, he plans to continue working and investing even after that age. The additional time also factors in the market’s performance and his ability to continue meeting his monthly deposit requirement.
Reaching this amount in a shorter period would mean allocating $10,000 to $15,000 per month. Hankwitz realizes that his time frame and required monthly contributions are aggressive and most likely unattainable for the average person. He noted that setting up that goal was about demonstrating why having a trajectory is important.
Knowing what he needs to save and how much time he has to do it is half the battle because it keeps track of his progress. He added that someone’s end goal could be $200,000 or even $20,000.
“I have this awesome income that is going to allow me to achieve this number. But this number might be completely different for you,” Hankwitz said of anyone who wants to follow his example.
He continued, “You might have three kids, a mortgage, student loans, and a car payment you need to think about. You might have elderly parents who you’re taking care of. Personal finance is personal for that reason. And so this is what I’m doing to achieve that, and I hope to inspire others to give them the framework to achieve the same thing but within their own personal experience.”
He published his plan on December 23, 2022, on his Substack to put it into action in January. To date, he has $47,400 in a brokerage account and $72,774 in a retirement account, according to records viewed by Insider. Together they have a total value of $120,174. There was a $2,822 amount in his brokerage account before starting his challenge in January.
He’s splitting his contributions into two accounts:
The first is a regular brokerage account that allows him to contribute as much as he can. This account has four sections: dividend stocks, technology stocks, risky stocks, and the S&P 500.
The second is a retirement account which is a self-employed or solo 401(k), broken down into two sections: a Roth with an annual contribution limit of $22,500 and an after-tax account with no contribution limit.
Dividend-paying stocks are the first category that make up the majority of his holdings because he believes they can accelerate growth. These stocks account for 35% or about $17,000 in this account. He likes the idea of being passively paid for owning shares of a strong company.
While there’s no guarantee of future performance, the companies he picks for the most part have a history of increasing their dividend payments over time. He pointed to Lowe’s Companies (LOW) as a solid example of a company with a good track record. The home-improvement company has been paying dividends since 1995. Payouts began at $0.045 and are now at $1.10.
Another way he is using his dividend-paying stocks to accelerate his portfolio is by employing the DRIP method, which stands for dividend reinvestment plan. This is when quarterly payouts are reinvested to purchase more shares, accelerating the compounding effect.
To date, he is up 9.71% in this category, with an additional $224 earned from dividend payments.
Second, he has a basket of big-technology names, which he also believes will accelerate his returns. To date, they make up 25% of his exposure in this portfolio. They include names like Amazon (AMZN), Apple (AAPL), Microsoft (MSFT), Meta (META, Tesla (TSLA), Google (GOOGL), and Salesforce (CRM).
Being young and having many years to retire, Hankwitz says he can afford higher exposure to technology growth stocks because he can ride out the volatility.
Third, he has 25% of his exposure allocated to what he refers to as his riskiest stocks. These are names he is personally excited about.
“Essentially, this is just kind of those gut feelings,” Hankwitz said of his more speculative bets. “I really like cybersecurity. Therefore I’ve got Palo Alto Networks. I just got a Costco membership this year, and I really like Costco stock.”
These could be companies he uses or heard about from social media platforms like TikTok. One popular source he pulls ideas from is a YouTube channel called Dumb Money TV, which is based on arbitraging popular social media trends that could trickle into profits. For example, if Crocs begin to trend on social media and more people want them, it might be an investment opportunity.
And finally, he has 15% allocated to the S&P 500 through the Vanguard S&P 500 ETF.
Within his retirement account, the Roth already has $26,200, reaching 2023’s annual limit of $22,500, with the additional sum coming from this year’s gains. In this account, he has about 63% of his allocations in ETFs, and the remainder is in stocks similar to most of the ones in his brokerage account.
Then, his after-tax account is money he has already paid taxes on but can grow tax-free from there on. In this section, he has $46,574, with 44% of his allocation in ETFs, about 43% in stocks, and 13% in cash.
Holding cash keeps him from allocating a large sum of money at once. As a content creator, he doesn’t get a monthly fixed salary. Instead, he receives varying payouts that could be as large as $20,000. He breaks his contributions down and invests equal amounts over four weeks when that happens, a technique known as dollar-cost averaging. Since he can’t predict or time the market, splitting his contributions avoids entering when the stock market is too high and averages down the price he pays for shares.