Austin Hankwitz has always loved analyzing stocks. In 2020, he started posting TikTok videos on the side, sharing his knowledge of stocks while juggling his job as a financial analyst for a healthcare company,
His ability to explain investment concepts and break down stock picks helped his gig amass over 700,000 followers. His successful content led him to become a full-time personal finance content creator.
In December 2022, he wanted to take his content a step further by creating an investment challenge that others could track and follow. Simply put, it was building a portfolio worth $2 million in eight to 15 years. His ultimate goal by the end of it was to have enough dividend stocks that could pay $80,000 to $90,000 a year.
The 28-year-old began experimenting with different types of securities to achieve his goal. Being young meant he still had many years before retirement. This meant that he could afford to ride out the volatility of the market or make a few mistakes here and there, while his followers took cues from his experiences.
For the challenge, he uses a regular brokerage account and a retirement account. In mediation, he can contribute as much as he wants. There, he owns dividend stocks, tech stocks, several ETFs and the S&P 500. On the retirement side, he has a self-employed or single 401(k) that has a Roth with an annual contribution limit of $23,000 and a then- tax account with no contribution limit where you invest in Vanguard indexes and individual stocks. He has also added some bitcoins. His account is now worth more than $391,000, according to his brokerage records seen by Business Insider.
This year’s options ETF
Hankwitz likes to hunt for ETFs with a unique edge over their peers. He previously started investing in the NEOS Nasdaq-100 High Income ETF (QQQI) because it exposed him to stocks within the Nasdaq 100 while trading call options on the index. The second tranche allows the ETF to provide monthly payments that equate to an annual yield of 14.96% with an expense ratio of 0.68%.
He also started investing in a similar ETF for the S&P 500 called the NEOS S&P 500 High Income ETF ( SPYI ). He uses the same options strategy for the 500 largest US companies. It delivers a monthly yield for a total annual yield of 12.34% with an expense ratio of 0.68%.
Both ETFs were timely because they allowed Hankwitz to gain exposure to large-cap technology stocks, leading to market gains in 2023 and 2024. But as we near the end of the year, The Federal Reserve is expected to cut rates, which could cause a stock rotation.
As debt becomes cheaper, small-cap stocks that had largely lagged behind are expected to benefit from an easing economic environment. The Russell 2000 saw early signs of that as the small-cap index rose in July, initially boosted by weaker-than-expected CPI data, according to an Aug. 5 Bank of America note.
However, the index turned upside down shortly after a slew of negative economic data began to trickle in, including higher-than-expected unemployment and a slowdown in the manufacturing sector.
However, markets are predicting a high probability of the first rate cut this year in September, which could favor small caps again. With that in mind, Hankwitz began increasing his exposure to small caps. But instead of buying ETFs that simply track the Russell 2000, he invested in one with the same structure as SPYI and QQQI from the same firm: NEOS Russell 2000 High Income ETF (IWMI). The fund is actively managed with exposure to the Russell 2000 using options to take advantage of tax loss harvesting.
The ETF sells and buys options on the Russell 2000 in an attempt to capture the index’s edge.
It pays a monthly yield for a total annual yield of 14.03% with an expense ratio of .68%.
This bet has two advantages. The first is to pass on the potential advantage of small capital gains that he expects. The second is to earn a steady monthly salary while he waits for the small-cap rally to play out. This eases the tensions around investing in trying to time market swings.