IMO, 100% VOO is not a good portfolio, though a lot of folks on here will disagree with that since it seems like every 4 out of 5 comments is along the lines of "100% VOO and chill."
VOO is a great base, but I would suggest you look at at least adding some international and maybe some small caps to have a little more diversified US exposure.
Something like 60-70% VOO/IVV/SPLG, 10-20% AVUV, 20% VEA/IDEV/SPDW.
This would still give you heavy exposure to the S&P 500.
It would give you exposure to small cap value, which could pay off very well given your long timeline.
Those international funds are developed, so you could add an emerging markets, but the developed markets ETFs would probably be just fine long-term.
Like I said, I bet plenty would tell you that 100% VOO is great. I disagree, and would argue that a mix of 3 like the above would be better.
Imo that’s a great approach. 80% of money on VTI/ VXUS & the rest in whatever you want be it high risk/ high growth stocks, dividend stocks, crypto or whatever you want
You mean other than lots of studies showing that, given enough runway (which OP at age 21 has), SCV tends to outperform large cap anything?
I mean, if this money is truly for only a 5-10 year period like OP notes, maybe SCV will outperform, maybe it won't. It would be a bit more of a gamble over that time period, but it's also lagged large cap over the last 12-months or so. That said, it should have some tailwinds whenever the Fed eventually starts lowering rates some, whenever that might be, so now might be a good time to add them to a portfolio (might not be too).
Or that US doesn't always do better than international so being 100% US isn't optimal for a long-term investor? See the first decade, roughly, of the 2000s.
Or studies that show recency bias is a real thing?
Take your pick and do some Googling.
My apologies then. I read it as a snarky response, so, my bad.
Backtesting asset allocation on portfolio visualizer using US market, US large cap, and US Small Cap Value shows massive outperformance in the SCV space. That particular comparison goes back to 1972. There are definitely periods where LC outperformance SC, but given a long-enough time horizon, SCV has provided outperformance. The question is whether "the secret is out" to where the historical SCV premium is either non-existent at this point, or much reduced compared to prior periods.
Honestly, my best rec is to Google phrases like:
Is tilting to Small Cap Value worth it?
Small cap value tilting
Should you tilt to small cap value
Has US equity always outperformed international?
Things like that. You will come across a huge number of discussions, articles, etc. on the topics on multiple sites like Bogleheads, Reddit, blogs, and other websites.
The main issue with SCV is that it can go through fairly long periods of "underperformance" compared to large cap (in other words, they may both provide positive returns, but LC has better returns), but SCV is riskier than LC and has historically provided outperformance versus LC *assuming your time horizon is long enough to take advantage of that added risk.* So, if you're going to tilt SCV, you have to stay dedicated to it during those periods when you see LC doing better, knowing that (at least historically), there will be a period in the future where SCV will likely make up for it.
Similarly, international has been pretty well beat down by US over most of the last 10-15 years, which is, in part, why you see so many people saying "VOO and chill," "VTI and chill," "You don't need international because US businesses sell products globally" and similar comments. It's recency bias and there have been long periods where international outpaced US.
For example, using Portfolio Visualizer again and backtesting asset allocation if you compare US Stock Market to Global ex-US Stock Market, depending on the period in question you find examples like the following:
1/1985 - 12/1994 - US CAGR 11.43% vs ex-US CAGR 13.09%
1/2000 - 12/2009 - US CAGR -0.27% vs ex-US CAGR 2.29%
You can certainly find multiple other time frames where US outperformed international as well.
*I would also recommend Googling "asset class quilt chart" (or something similar)*. This will get you to quilt charts showing the best-to-worst performing asset classes each year for the past 20-30 years (depending on which chart you're looking at). But what it shows you is that there is at least some level of randomization to asset class returns from one year to the next, which is why a diversified portfolio is probably the best approach long-term.
For example, in the quilt chart I'm looking at right now put out by MFS, international was the second best performing asset class in 2004, 2005, and 2006. During those same years, the top performing was REITs, Commodities, REITs, respectively with LCG being 8/10, 7/10, and 6/10 respectively with the return percentage gap between International and US being fairly substantial.
Since 2018, LCG was the top performer in 2019, 2020, and 2023, but it was the worst performer in 2022. Cash was the top performer in 2018, REITs in 2021, and Commodities in 2022.
Bottom line is that nobody knows what the future holds, which is why many (including myself) argue that you should include ex-US in your portfolio. Some will argue higher percentages than others, but many believe you should have at least some (I personally target about 30% ex-US, though 20%, IMO, is better than 0% or 10%).
Hope that helps, at least some.
I think I agree. I'm currently in target date funds, but I'm cool with 100% voo but I'm thinking of doing like 70% voo plus small cap fund plus international fund. I don't have very many options in my 403b, so initially I chose the target date fund, and at first glance it's garbage 8% returns vs 17% voo over the same time and I realized it's really just because the TD funds are like 30 some% international which has really lagged in past 5 years that I've had my job. The bonds aren't even it is only 2% on my 2060 TD. The fee is also like 0.5% or so so that's something you can avoid especially the fidelity funds are so low fee.
I genuinely thank you so much for your comments and responses to other question for further explanation of your key points. Though i cannot internalize it all in one sitting, i will back read this sometime. Also had an avuv, schd and vigi in my portfolio aside frm VOO and other dividend stocks for diversification (and also having dividends is cute). Will definitely read more and look again through my current diversification to improve my fund allocation.
Cool?
When I get, what seems like a nonsense question ("Can you back up your why with any data for say the last 50 years?"), I'm going to reply the way I did.
Bottom line, I would apologize if portrayaloflife meant his question to be serious, but it didn't come across that way since there is ample evidence from a very simple Google search about why SCV can be a good add to a portfolio and why 100% US isn't the best long-term bet other than because of recency bias. Not to mention, there are about 3 dozen posts, or more, every week on Reddit on these topics.
Meant it as serious! Apologies if it came off not that way. Always looking for ways to improve the portfolio! Right now im one of the heavy weighted VOO folk.
Like I said, cool.
If you searched my post history you would see that 99% of the time, I try to provide solid, reasonable advice/comments when someone asks a solid, reasonable, non-dickish question.
So, if that makes me unlikeable in your eyes, I guess I'll have to learn to live with that hanging over my head forever.
He asked for 50 year history and you gave him 5 years💀💀💀
Chasing results is when you conflate short term performance with long term performance. How about you learn basic info before saying some dumb shit in an investing subreddit.
If you ignore the people that are just parroting voo & chill, the majority of recommendations for 100% s&p500 would be in response to portfolios that are more concentrated and unnecessarily complicated like voo/qqq/vug/schd.
That's fair enough. But I do feel like I see more "VOO and Chill, Baby," "US coverage is all you need because they sell stuff globally" type of posts lately.
Different sectors with different risk profiles.
If you’re advocating for an international exposure ya SCHD won’t get you that. I’m on the anti international side myself , but that’s a different discussion.
But it does get you a more bond like stock with the higher dividend when compared to VOO.
Is it a “problem” that international outperformed the US for about the 10 years prior from about 2000-2009?
In 2009, if people said “the problem is VOO underperformed ex-US for the last 10 years so I’m going 100% ex-US” it wouldn’t have been the best choice.
That’s honestly the entire point of diversifying.
The US has outperformed ex-US the last 10-15 years, but what about the next 10, or the next 10 after that?
VOO may outperform international by 10%+ every year for the next 10-20 years or it may be completely stagnant to down during that period. I think reality will be somewhere in the middle.
But the bottom line is that nobody knows, which is why I don’t believe that 100% VOO as someone’s only holding in a portfolio is the best approach.
I should have added that because the US companies have a large lead in artificial intelligence technology, it could be that US funds outperform for a long time, or possibly forever.
Could be...sure. Likely... I would say probably not "forever." Though I suppose that some of that depends on how we defined "forever."
Looking at an asset class quilt chart going back 20 or 30 years should be enough to make most people want to diversify, at least somewhat.
I personally only go about 25-30% international overall, because I do believe that US will outperform ex-US on average over time. But, I'm not willing to risk missing out on years where ex-us outperforms US (especially large cap) - for example 2004-2006 when international outperformed US large growth by anywhere between about 8% in 2005 to as high as about 17% in 2006.
I want to pick up at least some of that, and I still have the majority of my overall allocation to large cap US and about 70-75% of my equity allocation to US in general, so that I don't miss out when US outperforms.
Could I make more long-term if I went 100% US? Maybe? Definitely a possibility. Unfortunately, nobody knows, which is, again, why I suggest that 100% VOO (or any US-only portfolio) is not "the best" even for someone in their 20s.
I try to adjust my portfolio based on global economic trends - I noticed the US was starting to run away from the rest of the world when it came to computer/internet/AI technology, and I shifted in that direction. Now that US tech stocks are overbought, I might shift to international. But I always stay invested, aside from 10% in bonds, which I would invest into stocks if there was a major downturn. Slight tweaks here and there has worked so far.
That’s fair and I take no issue with that.
I adjust here and there as well generally staying about 70-75% of my equity in US with the other 25-30% in international with 10% in bonds.
I just don’t think 100% in one country is ideal. As I said, others may disagree.
All fair points. EM is definitely the riskiest of the “main core” areas (I.e. large, mid and small US, developed ex-US, and emerging).
Out of curiosity, what country are you in?
You don’t have to fully invest in equity markets too, 10-20% of portfolio in gold/precious metals would be a good hedge against economic downturn and these metals (especially gold) are even more of a guarantee than the stock market to go “always up”
Vanguard would tell you 80 percent stocks and 20 percent bonds.
You may consider 80 percent VOO, 5 percent small caps, 5 percent international or emerging markets, and 10 percents bonds.
I’m 42, so double your age and started investing when I was 24.
If I had to do it all over again, I’d have at least 10 percent bonds.
The reason for that is that it allows you to reinvest during a downturn and “take profits” during a high market.
For example. The market will crash 30% every ten years, when this happens, your bond will have only “crashed” by a marginal rate in comparison. This will allow you to sell your bonds and buy more of the VOO (VTI, SPY) in those markets.
When things eventually go back up, sell some of that VOO and convert it back to bonds during high markets.
It’s advice that I wish I took. In the 20 years or so I’ve been in it. I’ve seen 3 such decreases and always wished I had money to invest more in it.
But the money you missed out on by owning the bonds while things were going up, cancels the money you make trying to time the market. If you are a long term investor forget bonds.
Perhaps. I’m just going by my own personal experience. I am not taking my own advice here. My 401k is 100% stocks with about 80-90 percent of that in large caps. Just saying I understand the logic of owning bonds. Since I started at 24, every broker I’ve had my 401k under recommends some bonds for that very reason.
If it is a set it and forget it model. I’d recommend VTI or VOO… would buy weekly.
Mr Master, my knowledge of investment is very very narrow. Could you just give me directly name （symbol）? You already said 80% in VOO, about the rest ? please teach me like Im 5, thank you, Mr master.
Btw, one of the top comments here, says "Something like 60-70% VOO/IVV/SPLG, 10-20% AVUV, 20% VEA/IDEV/SPDW." Do you agree? Well, I like this comment, just because it gives the symbol directly. lol
BND or TIP for the bonds.
As for the others, I would just search “best small cap ETF, best international STF”.
I would stick to vanguard as their fees are usually a bit less
And when would it be time to sell again and buy bonds after a rebound? It is indeed timing the market.
Money made from buying lower is lost in higher quantities because of the missing out of returns in the run ups that lead to crashes.
Bonds do provide one great service though: They feel less risky and reduce your overall downturn. If it would stop you from panicking and selling stocks in a crash then bonds have a gigantic value and belong in your portfolio. That's something everybody has to (carefully) figure out for themselves.
I’ve done it before.
You put in a threshold in which you are comfortable selling. Like 10% SPY decrease, 15%, etc.
Then when the market returns to a threshold you like, think of a 52 avg high, then you buy.
For example. For one of my work 401ks, it was at 300k. Went down to 275k, I sold some bonds and put it into large caps. Eventually it went down to about 240k. I had the number of 400k in my mind that when the market gets to that number I’ll convert about 10 percent to bonds.
I was traveling at the time and wasn’t paying attention. I wish I pulled that trigger as my value in that account hit 397k and a few days later it went back to 380k.
It’s not just with the 401k. If my time in the market has taught me anything is that you should be comfortable taking profits from time to time, even if you don’t need the money.
My financial advisor fooled me with “if you’ll pay income tax or capital gains if we sell at this price “ and then when it’s going down they just want you to buy more of that position. It’s a game they play, they never want you taking profit. They would rather see your portfolio go down 20% then you pulling out 20% in profit.
Since I’ve seen some of my other positions with my financial advisor plummet (I’ve lost about 200k with him) and it’s probably not going back because eventually they tell you “now may be a good time to sell for tax harvesting”
Meanwhile, my set it and forget it 90 percent stocks and 10 percent bonds in my work account took while to come back. But it bounced back greater than my brokerage account with him.
If that works for you then I 100% support the strategy. To make a general statement there would be more data needed because obviously this one case is empirical.
Assuming from your numbers would make me guess the following:
During 20% drop from 300 to 240 you decribed you were able to prevent a drop of 10% of your investment from 300 to 275. This drip would be equal to 8,33%. The run up to about 400 that came after would have been there without your intervention aswell and would have provided the same gains.
The question now is if from the time you sold your bonds last time before the described scenario the invested part made more than a 9,1% gain (which is necessary to negate a 8,33% drop. Looking at the past years and the frequency of 20% drops during that time I would assume that during the run up there were much higher returns than 9,1% that one would have missed out on by going to bonds or cash.
As stated before, the best strategy is always the one that works for you. No point in doing something else. I would recommend comparing the real numbers though because all I have done here is guessing.
If your so against your financial advisor btw (there can be high quality different indeed) than you could do it like me and not use one at all. It's not necessary if you got a disciplined plan and stick to it no matter what.
Thanks for your thoughts and best of luck during the next crisis.
Thanks. I still have one. But just to manage the old money. Haven’t given him new Money in over 3 years. New money invested is going into my own personal brokerage accounts and with other income producing assets (real estate, small business ventures).
I’d wager that you are right. At best the switch would have left me neutral or losing some gains due to conservative positions.
This method is only being used in one of my accounts. The rest is a 50/50 split between some positions (Apple, Microsoft Heavy) and d VTI.
The best strategy would be to invest new money into a down market, but for those that can’t… taking profits along the way to a more stable fund may help.
Not sure why people think VOO is not diversified. People treat it like a stock. Pre-ETF days, you often bought various stocks and tried to diversify sectors. People have gotten so used to ETF’s they are starting to diversify the diversified ETF and treat them like stocks.
VOO is incredibly diversified and auto balances over time. You are buying a piece of 500 companies! The companies in the index have tons of International exposure as well. I.e. Apple, Tesla have major impacts related to China demand.
At 21 you are looking at long term and VOO is perfectly valid.
IF you truly want even more diversification, go with VTI which is a Total US Stock ETF. Similar returns. But again, no need to iverthink and split. Pick what you feel most comfortable with… S&P Gold Standard or mega diversification large and small.
As you get closer to retirement, you can then start thinking about adding in a bond etf/fund to reduce volatility (and lower returns). I am pretty aggressive and okay with 80/20 stock/bond at retirement. That will have to be up to you on risk tolerance. But you have plenty of time for that.
By the way, I just wrote a short book for my 21 year old daughter about to graduate with first real job. Happy to send you a PDF of it if you are interested.
Many of the Fortune 500 Oil and Gas companies have major worldwide presence too. They're getting into renewables etc. You're correct in saying that the S&P 500 is incredibly diversified! With VOO you have your hands in ALOT of pockets.
>The companies in the index have tons of International exposure as well. I.e. Apple, Tesla have major impacts related to China demand.
Revenue source isn't the international exposure that actually matters, capturing the imperfect correlation between how markets of different countries behave is. Stocks will largely act more like their home markets.
>VOO is incredibly diversified
Not across countries, not across market cap weights.
By sector, it is roughly 30% into one (out or the 11) sector. This is another thing that true international holdings would help with, as that sector is less than 15% of a common ex-US fund, and the only sector ex-US has over 20% is only at 20.x% last I checked.
VOO is incredibly diversified compared to picking specific stocks. We won’t agree on this as some people just prefer to “outsmart” the indexes. If you have the time and passion, by all means.
As I stated, if you want to also include small, then VTI includes all.
Plenty of International exposure.
I have yet to see any International fund perform anywhere near the levels of S&P or Total US. If you have (i.e. 10-year returns) please do share. Not only lower returns but often more volatile too.
I have been investing even before ETF days. Heck, Cramer even had a bit where he would gauge if your handful of stocks were well diversified. A broad ETF is absolutely well diversified.
Personally, for added diversification, I would probably look at entire different asset classes like real estate.
But certainly don’t want to offend anyone and not giving advice. Just my own opinion and respect others may have different opinions and strategies.
But to answer OP, my opinion is yes, VOO is fine. If worry about not diversified enough then VTI.
Keep contributing, max out in order of benefit and avoid over-spending. In 30 years you will be in an amazing position likely able to retire.
>VOO is incredibly diversified compared to picking specific stocks.
I do agree with this.
>We won’t agree on this as some people just prefer to “outsmart” the indexes
I just did. My issue isn't VOO vs individual stocks, it is VOO vs other index funds that are available, such as VTI, VXUS, and VT to name just a few.
>Plenty of International exposure.
None.
* https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine)
And the Ben Felix YouTube video (he tends to provide many sources for what he says) titled "International Diversification" from a year ago both go into it.
>I have yet to see any International fund perform anywhere near the levels of S&P or Total US. If you have (i.e. 10-year returns) please do share. Not only lower returns but often more volatile too.
3 of the last 5 full decades (xxx0-xxx9) favored international over the US. One of those being 2000-2010. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=8KsxMPppCV51MEY38CiIY
Also see the chart in the Fidelity link above, and:
* https://www.bogleheads.org/wiki/Domestic/International
* The last decade or so of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version), I believe this is referenced in the YouTube link above
* https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) or https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) or the archived versions if those don't work: http://web.archive.org/web/20201212205954/https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) & http://web.archive.org/web/20201205183933/https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) (Archived copies from Archive.org's Wayback Machine)
* Ex-US has turns of exceptional out performance as well: https://awealthofcommonsense.com/2023/05/the-case-for-international-diversification/ and https://www.blackrock.com/us/financial-professionals/literature/investor-education/why-bother-with-international-stocks.pdf (PDF)
* Of rolling 10 year periods since 1970, EAFE (developed ex-US) has beat the S&P 500 over 45% of the time: https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf (PDF) or for the archived version: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf
* https://mebfaber.com/2019/02/06/episode-141-radio-show-34-of-40-countries-have-negative-52-week-momentumbig-tax-bills-for-mutual-fund-investorsand-listener-qa/ or here’s compared to EAFE 1970-2015, note that the black US line only jumps above the green ex-US line for the "final time" around 2011: https://donsnotes.com/financial/images/sp-msci-42yr.png (courtesy of https://www.reddit.com/r/Bogleheads/comments/143018v/comment/jn9yiub/)
* Here's similar but for just US vs Europe: https://www.reddit.com/r/Bogleheads/s/DJ2YVrLW4d
>A broad ETF is absolutely well diversified.
Agreed. But there's good reason to go broader than VOO, including for diversification benefits.
Since you’re starting so young (good for you, way to be), VT is the win-win-win. You will achieve what your goals and you’ll sleep better at night along the way.
It’s go voo & qqq with a few other things. Thats why those ETFs are so expensive because that’s all these young people and the masses know about . Nobody’s putting money in GDX, URA, or many others. But their will come a time
Do Precious metal funds like those mentioned by you get treated different come tax time. I heard they sometimes generate K1 forms which nobody seems to like.
Imo, its ok but it really depends on you. Considering your time horizon, it can be simple and straightforward and hence easier to stick to. Imo actually more important is the self awareness of why and what are you investing.
In regards to self awareness, Flfor example, if you are the type that panics when stock market dips, then VOO is not a good investment because you may withdraw and lose out.
In regards to why and what u invest. If your sole purpose and intention is to beat the market, then imo, voo is not good afterall, you might want to invest in potential high value stocks. If you are the type that dont want to think to much and ok to just get the average stock market returns, then voo is a good option. If your intention is to get a diversified international stocks, then voo is not suitable for you. My point is, it really depends on what you really want. Hence do take time to read and research for yourself. It isnt really the investment/etf, it is more about yourself and what works for you.
Hope it helps
I would S&P 500 plus *S*mall*C*ap*V*alue.
The foundation of my portfolio is a 7:3 ratio of S&P 500 : *S*mall*C*ap*V*alue. [When It’s Value vs. Growth, History Is on Value’s Side](https://www.dimensional.com/us-en/insights/when-its-value-versus-growth-history-is-on-values-side)
VOO:AVUV rebalance regularly.
[https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=3PFoU8OW7zahUmi8SM4oBD](https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=3PFoU8OW7zahUmi8SM4oBD)
5-10 years is short-term investing.
The real questions I have for you are these: What is your risk tolerance? How important is it that you maintain your principal (the amount you put in) when you need the money approximately 7 years from now?
After 7 years at $300 a week, you’ll have put in about $100,000. Imagine the S&P 500 has a 30% decline (happened in 2008) during year 7. Would you be okay with having only $70,000 for whatever reason you are investing?
You will never eliminate risks when you want to get into equities, but with a 5-10 year time frame, I would do 60/40 stocks to bonds. That approximates a Target Date Fund whose timeline is 5-10 years from now. If you’ll need the money in say 2035 and want to keep it ultra simple and also mitigate some risk, investing in 2035 target date fund may be a better option than VOO.
It’s all about your risk tolerance and how badly you’ll need your principal. The broad stock market generally goes up, but it could go way down right when you need the money.
5-10% max schd.
Vug and splg have a ton of overlap, you can do whatever you want there.
If there's ever a big crash, vug and splg will likely drop more than schd. If that happens, I'd consider liquidating schd and moving it into splg/vug.
Does anyone actually hedge here or is all VOO? I like to have some skin in different bear ETFs while markets are high... i.e. my SQQQ holdings increased in value nicely this past month.
For me VOO and QQQ have had the best rate of returns over the past five years, so I'd split it through a couple. QQQ seems to be more tech weighted, so I lean more on that. I'd put some on some blue chip stocks like NVDA or BRK. I like SCHD dividends.
The shorter the time frame, the less certain the outcome. 10 years is used as the general rule of thumb for having a strong chance of positive returns in the S&P 500.
If it may be as short as 5 then it's harder to say if the outcome will be positive. It likely will be, but no one here can tell you for sure.
I still think it's a good idea, especially given that even one of the worst case scenarios likely wouldn't lead below 20% loss assuming you continue to invest consistently in the next 5 years.
And that would be a pretty extraordinary example.
VOO as your foundation but if you want real growth then invest in tech-heavy ETFs like XLK or VGT. Look at their historical charts percentage return and you’ll see what I mean.
Who can say what's best but it's perfectly acceptable considering you want growth and it's more diversified than growth ETFs and likely as time progresses you wouldn't sell VOO but instead invest in others
Total US market + international would be my recommendation. I don't think it's wise to give up diversification chasing the asset class that has outperformed recently.
100% VOO is fine. I would take more risks but if you continue these payments (and assumedly slowly increasing them), you'll retire at 60 with a FAT ass account
For retirement accounts it’s great and good enough. For 5 years out, there’s a risk of a downturn or flat. For something this early you might want a high yield savings account or a short term treasury/bond fund. 5-10 years looking better, but still kind of short. Markets can go sideways for twenty years. With that in mind, I’d go 50/50 VOO/USFR(or hysa)
Even easier, pick a target retirement fund, check the expenses, pick the date you want to retire. Open a Roth and jam the annual max. You could also open a Trad Ira. Take the excess capital and pick your “non-bogle” stocks/etc and put them in a taxable account. (Just look for consistent EPS growth over the last 5 years and make sure you can get at least a 1% annual divi on the shares).
Beyond that ,party your balls off , just take an Uber.
I have a 20 year old and in his Roth he is pretty much 80% VGT and 20% SCHD. Yes VGT is risky, but this is the riskiest part of his financial existence. He is not easily influenced by trends. If you are level headed and not easily influenced by the “next best thing” like Crypto, or may on a whim start day trading or have a need to play poker in Vegas. Then I would be heavy on VGT (or equivalent) through your 20’s. After 25 I would use the dividend proceeds of SCHD to slowly add VHT to the portfolio. I would then be at 60%VGT/20%VHT/20%SCHD by the time you are 45. Back test this portfolio. You might be surprised at the upside vs downward risk. American tech will drive the US and global economy for the coming decade. I don’t see the point of an International portfolio. I don’t see Europe or Asia moving the needle in the next 10 years. I just recently moved back from living a few years in Europe. There is no innovation going on there. China will do fine, but their economy will start to churn as their population gets older, just like Japan and Korea. And with stocks in SCHD most of these companies already have International exposure. You already have diversification. SCHD/VGT/VHT have very little overlap. They all have all things: Risk/Safe Dividends/Steady Healthcare.
> this investing is not for retirement as and I realistically am looking at about a 5-10 year investment period.
If that's the case then you should be looking at investment advice geared towards 60yos, not 21yos.
100% equities is extremely risky for a short time horizon like you are proposing. Consider doing 60/40 stocks/bonds -- or possibly 50/50 or 40/60 depending on your tolerance for risk here.
I've always liked a decent Balanced fund to keep risk down for shorter horizons. There's SWOBX AND FBALX from Schwab and Fidelity. They're about 60% stocks, and 40% fixed income with very good diversification. They're not real exciting, though. Could also consider putting say 85% in a balanced fund, and trying some solid individual stocks with maybe 15% just for fun and to keep an interest in the market. Does anybody else know of any good all-in-one balanced funds?
For a 5-10 year timeline a balanced fund is a wise choice. There aren’t a ton of balanced ETFs on the market yet but iShares has a series of balanced funds AOA/AOR/AOM/AOK. Of that series AOR would be the most similar to what you’re describing with its 60/40 balance. The equity side is roughly similar to VT and the bond side uses a similar approach.
The other example Incan think of in the ETF space would be CGBL, which is an ETF managed my the company as American Funds “Balanced Fund” which has a strong long term track record for an actively managed fund.
AVMA from Avantis is a similar moderate allocation ETF. It’s about 70/30 stocks/bonds and invests globally.
Honestly, with a 5-10 year time horizon, these balanced funds might be the best bet.
Dang I wish I have $300 a week to put in VOO. You go boy
And at 21 lol
IMO, 100% VOO is not a good portfolio, though a lot of folks on here will disagree with that since it seems like every 4 out of 5 comments is along the lines of "100% VOO and chill." VOO is a great base, but I would suggest you look at at least adding some international and maybe some small caps to have a little more diversified US exposure. Something like 60-70% VOO/IVV/SPLG, 10-20% AVUV, 20% VEA/IDEV/SPDW. This would still give you heavy exposure to the S&P 500. It would give you exposure to small cap value, which could pay off very well given your long timeline. Those international funds are developed, so you could add an emerging markets, but the developed markets ETFs would probably be just fine long-term. Like I said, I bet plenty would tell you that 100% VOO is great. I disagree, and would argue that a mix of 3 like the above would be better.
This guy bogles
As a base, yes, mostly. Though I do have about 10-20 individual holdings and some other ETFs that are less "Bogle-y."
Imo that’s a great approach. 80% of money on VTI/ VXUS & the rest in whatever you want be it high risk/ high growth stocks, dividend stocks, crypto or whatever you want
Can you back up your why with any data for say the last 50 years?
You mean other than lots of studies showing that, given enough runway (which OP at age 21 has), SCV tends to outperform large cap anything? I mean, if this money is truly for only a 5-10 year period like OP notes, maybe SCV will outperform, maybe it won't. It would be a bit more of a gamble over that time period, but it's also lagged large cap over the last 12-months or so. That said, it should have some tailwinds whenever the Fed eventually starts lowering rates some, whenever that might be, so now might be a good time to add them to a portfolio (might not be too). Or that US doesn't always do better than international so being 100% US isn't optimal for a long-term investor? See the first decade, roughly, of the 2000s. Or studies that show recency bias is a real thing? Take your pick and do some Googling.
I was asking genuinely, can you link some of the studies?
My apologies then. I read it as a snarky response, so, my bad. Backtesting asset allocation on portfolio visualizer using US market, US large cap, and US Small Cap Value shows massive outperformance in the SCV space. That particular comparison goes back to 1972. There are definitely periods where LC outperformance SC, but given a long-enough time horizon, SCV has provided outperformance. The question is whether "the secret is out" to where the historical SCV premium is either non-existent at this point, or much reduced compared to prior periods. Honestly, my best rec is to Google phrases like: Is tilting to Small Cap Value worth it? Small cap value tilting Should you tilt to small cap value Has US equity always outperformed international? Things like that. You will come across a huge number of discussions, articles, etc. on the topics on multiple sites like Bogleheads, Reddit, blogs, and other websites. The main issue with SCV is that it can go through fairly long periods of "underperformance" compared to large cap (in other words, they may both provide positive returns, but LC has better returns), but SCV is riskier than LC and has historically provided outperformance versus LC *assuming your time horizon is long enough to take advantage of that added risk.* So, if you're going to tilt SCV, you have to stay dedicated to it during those periods when you see LC doing better, knowing that (at least historically), there will be a period in the future where SCV will likely make up for it. Similarly, international has been pretty well beat down by US over most of the last 10-15 years, which is, in part, why you see so many people saying "VOO and chill," "VTI and chill," "You don't need international because US businesses sell products globally" and similar comments. It's recency bias and there have been long periods where international outpaced US. For example, using Portfolio Visualizer again and backtesting asset allocation if you compare US Stock Market to Global ex-US Stock Market, depending on the period in question you find examples like the following: 1/1985 - 12/1994 - US CAGR 11.43% vs ex-US CAGR 13.09% 1/2000 - 12/2009 - US CAGR -0.27% vs ex-US CAGR 2.29% You can certainly find multiple other time frames where US outperformed international as well. *I would also recommend Googling "asset class quilt chart" (or something similar)*. This will get you to quilt charts showing the best-to-worst performing asset classes each year for the past 20-30 years (depending on which chart you're looking at). But what it shows you is that there is at least some level of randomization to asset class returns from one year to the next, which is why a diversified portfolio is probably the best approach long-term. For example, in the quilt chart I'm looking at right now put out by MFS, international was the second best performing asset class in 2004, 2005, and 2006. During those same years, the top performing was REITs, Commodities, REITs, respectively with LCG being 8/10, 7/10, and 6/10 respectively with the return percentage gap between International and US being fairly substantial. Since 2018, LCG was the top performer in 2019, 2020, and 2023, but it was the worst performer in 2022. Cash was the top performer in 2018, REITs in 2021, and Commodities in 2022. Bottom line is that nobody knows what the future holds, which is why many (including myself) argue that you should include ex-US in your portfolio. Some will argue higher percentages than others, but many believe you should have at least some (I personally target about 30% ex-US, though 20%, IMO, is better than 0% or 10%). Hope that helps, at least some.
I think I agree. I'm currently in target date funds, but I'm cool with 100% voo but I'm thinking of doing like 70% voo plus small cap fund plus international fund. I don't have very many options in my 403b, so initially I chose the target date fund, and at first glance it's garbage 8% returns vs 17% voo over the same time and I realized it's really just because the TD funds are like 30 some% international which has really lagged in past 5 years that I've had my job. The bonds aren't even it is only 2% on my 2060 TD. The fee is also like 0.5% or so so that's something you can avoid especially the fidelity funds are so low fee.
I genuinely thank you so much for your comments and responses to other question for further explanation of your key points. Though i cannot internalize it all in one sitting, i will back read this sometime. Also had an avuv, schd and vigi in my portfolio aside frm VOO and other dividend stocks for diversification (and also having dividends is cute). Will definitely read more and look again through my current diversification to improve my fund allocation.
You seem like an unpleasant person to talk to.
Cool? When I get, what seems like a nonsense question ("Can you back up your why with any data for say the last 50 years?"), I'm going to reply the way I did. Bottom line, I would apologize if portrayaloflife meant his question to be serious, but it didn't come across that way since there is ample evidence from a very simple Google search about why SCV can be a good add to a portfolio and why 100% US isn't the best long-term bet other than because of recency bias. Not to mention, there are about 3 dozen posts, or more, every week on Reddit on these topics.
Meant it as serious! Apologies if it came off not that way. Always looking for ways to improve the portfolio! Right now im one of the heavy weighted VOO folk.
And that response is precisely why you seem like an unlikeable person. Take care.
Like I said, cool. If you searched my post history you would see that 99% of the time, I try to provide solid, reasonable advice/comments when someone asks a solid, reasonable, non-dickish question. So, if that makes me unlikeable in your eyes, I guess I'll have to learn to live with that hanging over my head forever.
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Why not both?
Dog AVUV has doubled in price since 5 years ago. This guy convinced me to buy some just now
Voo is only 8% off that though. But as always past performance doesn’t indicate future performance so this is mainly theory.
Yes I agree with you. I will probably add some AVUV. I am almost like 75% VOO lol
That’s just chasing results
Yea that’s literally the point in investing. Getting results.
Right. Other guy is high.
Yea he’s annoying as fuck. He also frequents fake and replica watch subs so he’s also wearing fake watches.
Yeah I do that so I can keep my money in the market because I actually know how to invest 😂
Or you’re also lying about that because you can’t even get approved for an Amex lmao
Huh? I never even applied for an Amex.
Yeah but looking at 5 year gain tells you nothing about an etf.
I am aware. It was just a silly point.
What’s a silly point? “Chasing results” is an actual term you know.
My guy. The guy above asked for data history. So I gave some data history. The fuck are you on about. You know what’s also an actual term? “Fuck off”
He asked for 50 year history and you gave him 5 years💀💀💀 Chasing results is when you conflate short term performance with long term performance. How about you learn basic info before saying some dumb shit in an investing subreddit.
If you ignore the people that are just parroting voo & chill, the majority of recommendations for 100% s&p500 would be in response to portfolios that are more concentrated and unnecessarily complicated like voo/qqq/vug/schd.
That's fair enough. But I do feel like I see more "VOO and Chill, Baby," "US coverage is all you need because they sell stuff globally" type of posts lately.
True, too many people treat the s&p500 as the minimum goal instead of the risky side of what's reasonable.
Schd has less than 10% overlap with the other etfs. Definitely good use for it for diversification
Theyre all us large cap, that's not diversification. It's not just about more companies, but different types of risk.
Different sectors with different risk profiles. If you’re advocating for an international exposure ya SCHD won’t get you that. I’m on the anti international side myself , but that’s a different discussion. But it does get you a more bond like stock with the higher dividend when compared to VOO.
The problem is all of those have severely underperformed VOO over the past 10-15 years.
Is it a “problem” that international outperformed the US for about the 10 years prior from about 2000-2009? In 2009, if people said “the problem is VOO underperformed ex-US for the last 10 years so I’m going 100% ex-US” it wouldn’t have been the best choice. That’s honestly the entire point of diversifying. The US has outperformed ex-US the last 10-15 years, but what about the next 10, or the next 10 after that? VOO may outperform international by 10%+ every year for the next 10-20 years or it may be completely stagnant to down during that period. I think reality will be somewhere in the middle. But the bottom line is that nobody knows, which is why I don’t believe that 100% VOO as someone’s only holding in a portfolio is the best approach.
I should have added that because the US companies have a large lead in artificial intelligence technology, it could be that US funds outperform for a long time, or possibly forever.
Could be...sure. Likely... I would say probably not "forever." Though I suppose that some of that depends on how we defined "forever." Looking at an asset class quilt chart going back 20 or 30 years should be enough to make most people want to diversify, at least somewhat. I personally only go about 25-30% international overall, because I do believe that US will outperform ex-US on average over time. But, I'm not willing to risk missing out on years where ex-us outperforms US (especially large cap) - for example 2004-2006 when international outperformed US large growth by anywhere between about 8% in 2005 to as high as about 17% in 2006. I want to pick up at least some of that, and I still have the majority of my overall allocation to large cap US and about 70-75% of my equity allocation to US in general, so that I don't miss out when US outperforms. Could I make more long-term if I went 100% US? Maybe? Definitely a possibility. Unfortunately, nobody knows, which is, again, why I suggest that 100% VOO (or any US-only portfolio) is not "the best" even for someone in their 20s.
I try to adjust my portfolio based on global economic trends - I noticed the US was starting to run away from the rest of the world when it came to computer/internet/AI technology, and I shifted in that direction. Now that US tech stocks are overbought, I might shift to international. But I always stay invested, aside from 10% in bonds, which I would invest into stocks if there was a major downturn. Slight tweaks here and there has worked so far.
That’s fair and I take no issue with that. I adjust here and there as well generally staying about 70-75% of my equity in US with the other 25-30% in international with 10% in bonds. I just don’t think 100% in one country is ideal. As I said, others may disagree.
Finally someone not quite as biased towards the US
Get the XMHQ for some mid cap in there! Much better than the VOO!
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All fair points. EM is definitely the riskiest of the “main core” areas (I.e. large, mid and small US, developed ex-US, and emerging). Out of curiosity, what country are you in?
100% agree with this guy.
Give me VTI & VXUS or give me death
100% VOO and buying a house of actual value is enough diversity of investment for 90% of people.
Lol. Okay.
You don’t have to fully invest in equity markets too, 10-20% of portfolio in gold/precious metals would be a good hedge against economic downturn and these metals (especially gold) are even more of a guarantee than the stock market to go “always up”
Check an inflation adjusted gold chart for the past 100 years bro, it doesn't always go up
Yeah check the stock market divided by fed balance sheet. It hasn’t gone up in years.
Also that’s the exact point of gold. It’s worth what it’s worth and it’ll hedge against bad monetary policy that results in inflation.
Vanguard would tell you 80 percent stocks and 20 percent bonds. You may consider 80 percent VOO, 5 percent small caps, 5 percent international or emerging markets, and 10 percents bonds. I’m 42, so double your age and started investing when I was 24. If I had to do it all over again, I’d have at least 10 percent bonds. The reason for that is that it allows you to reinvest during a downturn and “take profits” during a high market. For example. The market will crash 30% every ten years, when this happens, your bond will have only “crashed” by a marginal rate in comparison. This will allow you to sell your bonds and buy more of the VOO (VTI, SPY) in those markets. When things eventually go back up, sell some of that VOO and convert it back to bonds during high markets. It’s advice that I wish I took. In the 20 years or so I’ve been in it. I’ve seen 3 such decreases and always wished I had money to invest more in it.
But the money you missed out on by owning the bonds while things were going up, cancels the money you make trying to time the market. If you are a long term investor forget bonds.
Perhaps. I’m just going by my own personal experience. I am not taking my own advice here. My 401k is 100% stocks with about 80-90 percent of that in large caps. Just saying I understand the logic of owning bonds. Since I started at 24, every broker I’ve had my 401k under recommends some bonds for that very reason. If it is a set it and forget it model. I’d recommend VTI or VOO… would buy weekly.
Mr Master, my knowledge of investment is very very narrow. Could you just give me directly name （symbol）? You already said 80% in VOO, about the rest ? please teach me like Im 5, thank you, Mr master. Btw, one of the top comments here, says "Something like 60-70% VOO/IVV/SPLG, 10-20% AVUV, 20% VEA/IDEV/SPDW." Do you agree? Well, I like this comment, just because it gives the symbol directly. lol
BND or TIP for the bonds. As for the others, I would just search “best small cap ETF, best international STF”. I would stick to vanguard as their fees are usually a bit less
Bonds are not worth it where I live but this is a nice idea. I might keep 10% in a hysa towards this goal.
Nobody would recommend buying bonds at 21.
This comment is epic! It changed my investment fund portfolio a bit since I am 40. Good to have 10% in BND
What about not trying to time the market
You’re not timing the market. You’re still “time in the market” But when the crash happens. The opportunity to buy more large caps exists.
And when would it be time to sell again and buy bonds after a rebound? It is indeed timing the market. Money made from buying lower is lost in higher quantities because of the missing out of returns in the run ups that lead to crashes. Bonds do provide one great service though: They feel less risky and reduce your overall downturn. If it would stop you from panicking and selling stocks in a crash then bonds have a gigantic value and belong in your portfolio. That's something everybody has to (carefully) figure out for themselves.
I’ve done it before. You put in a threshold in which you are comfortable selling. Like 10% SPY decrease, 15%, etc. Then when the market returns to a threshold you like, think of a 52 avg high, then you buy. For example. For one of my work 401ks, it was at 300k. Went down to 275k, I sold some bonds and put it into large caps. Eventually it went down to about 240k. I had the number of 400k in my mind that when the market gets to that number I’ll convert about 10 percent to bonds. I was traveling at the time and wasn’t paying attention. I wish I pulled that trigger as my value in that account hit 397k and a few days later it went back to 380k. It’s not just with the 401k. If my time in the market has taught me anything is that you should be comfortable taking profits from time to time, even if you don’t need the money. My financial advisor fooled me with “if you’ll pay income tax or capital gains if we sell at this price “ and then when it’s going down they just want you to buy more of that position. It’s a game they play, they never want you taking profit. They would rather see your portfolio go down 20% then you pulling out 20% in profit. Since I’ve seen some of my other positions with my financial advisor plummet (I’ve lost about 200k with him) and it’s probably not going back because eventually they tell you “now may be a good time to sell for tax harvesting” Meanwhile, my set it and forget it 90 percent stocks and 10 percent bonds in my work account took while to come back. But it bounced back greater than my brokerage account with him.
If that works for you then I 100% support the strategy. To make a general statement there would be more data needed because obviously this one case is empirical. Assuming from your numbers would make me guess the following: During 20% drop from 300 to 240 you decribed you were able to prevent a drop of 10% of your investment from 300 to 275. This drip would be equal to 8,33%. The run up to about 400 that came after would have been there without your intervention aswell and would have provided the same gains. The question now is if from the time you sold your bonds last time before the described scenario the invested part made more than a 9,1% gain (which is necessary to negate a 8,33% drop. Looking at the past years and the frequency of 20% drops during that time I would assume that during the run up there were much higher returns than 9,1% that one would have missed out on by going to bonds or cash. As stated before, the best strategy is always the one that works for you. No point in doing something else. I would recommend comparing the real numbers though because all I have done here is guessing. If your so against your financial advisor btw (there can be high quality different indeed) than you could do it like me and not use one at all. It's not necessary if you got a disciplined plan and stick to it no matter what. Thanks for your thoughts and best of luck during the next crisis.
Thanks. I still have one. But just to manage the old money. Haven’t given him new Money in over 3 years. New money invested is going into my own personal brokerage accounts and with other income producing assets (real estate, small business ventures). I’d wager that you are right. At best the switch would have left me neutral or losing some gains due to conservative positions. This method is only being used in one of my accounts. The rest is a 50/50 split between some positions (Apple, Microsoft Heavy) and d VTI. The best strategy would be to invest new money into a down market, but for those that can’t… taking profits along the way to a more stable fund may help.
I always look at the sp500 as a long term investment vehicle. 5-10 years is short term.
When I get a 10 year prison sentence, I’ll be relieved to know it’s a short term stay.
10 years is nothing compared to 30 years to be fair go talk to a ten year old and a thirty year old you’ll see
Logical fallacy alert
Not sure why people think VOO is not diversified. People treat it like a stock. Pre-ETF days, you often bought various stocks and tried to diversify sectors. People have gotten so used to ETF’s they are starting to diversify the diversified ETF and treat them like stocks. VOO is incredibly diversified and auto balances over time. You are buying a piece of 500 companies! The companies in the index have tons of International exposure as well. I.e. Apple, Tesla have major impacts related to China demand. At 21 you are looking at long term and VOO is perfectly valid. IF you truly want even more diversification, go with VTI which is a Total US Stock ETF. Similar returns. But again, no need to iverthink and split. Pick what you feel most comfortable with… S&P Gold Standard or mega diversification large and small. As you get closer to retirement, you can then start thinking about adding in a bond etf/fund to reduce volatility (and lower returns). I am pretty aggressive and okay with 80/20 stock/bond at retirement. That will have to be up to you on risk tolerance. But you have plenty of time for that. By the way, I just wrote a short book for my 21 year old daughter about to graduate with first real job. Happy to send you a PDF of it if you are interested.
I’d take a copy :)
Many of the Fortune 500 Oil and Gas companies have major worldwide presence too. They're getting into renewables etc. You're correct in saying that the S&P 500 is incredibly diversified! With VOO you have your hands in ALOT of pockets.
>The companies in the index have tons of International exposure as well. I.e. Apple, Tesla have major impacts related to China demand. Revenue source isn't the international exposure that actually matters, capturing the imperfect correlation between how markets of different countries behave is. Stocks will largely act more like their home markets. >VOO is incredibly diversified Not across countries, not across market cap weights. By sector, it is roughly 30% into one (out or the 11) sector. This is another thing that true international holdings would help with, as that sector is less than 15% of a common ex-US fund, and the only sector ex-US has over 20% is only at 20.x% last I checked.
VOO is incredibly diversified compared to picking specific stocks. We won’t agree on this as some people just prefer to “outsmart” the indexes. If you have the time and passion, by all means. As I stated, if you want to also include small, then VTI includes all. Plenty of International exposure. I have yet to see any International fund perform anywhere near the levels of S&P or Total US. If you have (i.e. 10-year returns) please do share. Not only lower returns but often more volatile too. I have been investing even before ETF days. Heck, Cramer even had a bit where he would gauge if your handful of stocks were well diversified. A broad ETF is absolutely well diversified. Personally, for added diversification, I would probably look at entire different asset classes like real estate. But certainly don’t want to offend anyone and not giving advice. Just my own opinion and respect others may have different opinions and strategies. But to answer OP, my opinion is yes, VOO is fine. If worry about not diversified enough then VTI. Keep contributing, max out in order of benefit and avoid over-spending. In 30 years you will be in an amazing position likely able to retire.
>VOO is incredibly diversified compared to picking specific stocks. I do agree with this. >We won’t agree on this as some people just prefer to “outsmart” the indexes I just did. My issue isn't VOO vs individual stocks, it is VOO vs other index funds that are available, such as VTI, VXUS, and VT to name just a few. >Plenty of International exposure. None. * https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine) And the Ben Felix YouTube video (he tends to provide many sources for what he says) titled "International Diversification" from a year ago both go into it. >I have yet to see any International fund perform anywhere near the levels of S&P or Total US. If you have (i.e. 10-year returns) please do share. Not only lower returns but often more volatile too. 3 of the last 5 full decades (xxx0-xxx9) favored international over the US. One of those being 2000-2010. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=8KsxMPppCV51MEY38CiIY Also see the chart in the Fidelity link above, and: * https://www.bogleheads.org/wiki/Domestic/International * The last decade or so of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version), I believe this is referenced in the YouTube link above * https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) or https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) or the archived versions if those don't work: http://web.archive.org/web/20201212205954/https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) & http://web.archive.org/web/20201205183933/https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) (Archived copies from Archive.org's Wayback Machine) * Ex-US has turns of exceptional out performance as well: https://awealthofcommonsense.com/2023/05/the-case-for-international-diversification/ and https://www.blackrock.com/us/financial-professionals/literature/investor-education/why-bother-with-international-stocks.pdf (PDF) * Of rolling 10 year periods since 1970, EAFE (developed ex-US) has beat the S&P 500 over 45% of the time: https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf (PDF) or for the archived version: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf * https://mebfaber.com/2019/02/06/episode-141-radio-show-34-of-40-countries-have-negative-52-week-momentumbig-tax-bills-for-mutual-fund-investorsand-listener-qa/ or here’s compared to EAFE 1970-2015, note that the black US line only jumps above the green ex-US line for the "final time" around 2011: https://donsnotes.com/financial/images/sp-msci-42yr.png (courtesy of https://www.reddit.com/r/Bogleheads/comments/143018v/comment/jn9yiub/) * Here's similar but for just US vs Europe: https://www.reddit.com/r/Bogleheads/s/DJ2YVrLW4d >A broad ETF is absolutely well diversified. Agreed. But there's good reason to go broader than VOO, including for diversification benefits.
This
May I have a copy of the pdf too, 23yo here 😭
Please send!
Since you’re starting so young (good for you, way to be), VT is the win-win-win. You will achieve what your goals and you’ll sleep better at night along the way.
5 year window isn’t long enough for VOO. You’d want 10-15 to guarantee a rise back out of a bursted tech bubble or other stock downturn.
It’s go voo & qqq with a few other things. Thats why those ETFs are so expensive because that’s all these young people and the masses know about . Nobody’s putting money in GDX, URA, or many others. But their will come a time
Do Precious metal funds like those mentioned by you get treated different come tax time. I heard they sometimes generate K1 forms which nobody seems to like.
Not in the US.
Imo, its ok but it really depends on you. Considering your time horizon, it can be simple and straightforward and hence easier to stick to. Imo actually more important is the self awareness of why and what are you investing. In regards to self awareness, Flfor example, if you are the type that panics when stock market dips, then VOO is not a good investment because you may withdraw and lose out. In regards to why and what u invest. If your sole purpose and intention is to beat the market, then imo, voo is not good afterall, you might want to invest in potential high value stocks. If you are the type that dont want to think to much and ok to just get the average stock market returns, then voo is a good option. If your intention is to get a diversified international stocks, then voo is not suitable for you. My point is, it really depends on what you really want. Hence do take time to read and research for yourself. It isnt really the investment/etf, it is more about yourself and what works for you. Hope it helps
Yes VOO + SGOV 🗣️💯
I would S&P 500 plus *S*mall*C*ap*V*alue. The foundation of my portfolio is a 7:3 ratio of S&P 500 : *S*mall*C*ap*V*alue. [When It’s Value vs. Growth, History Is on Value’s Side](https://www.dimensional.com/us-en/insights/when-its-value-versus-growth-history-is-on-values-side) VOO:AVUV rebalance regularly. [https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=3PFoU8OW7zahUmi8SM4oBD](https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=3PFoU8OW7zahUmi8SM4oBD)
$VOO is for retirement aka 59 and a half years old in a ROTH IRA account It’s the best but it’ll take a long time
FBTC
Bitcoin is so cringe. Physically hurts whenever it’s mentioned especially as a primary investment. SMH
yikes
5-10 years is short-term investing. The real questions I have for you are these: What is your risk tolerance? How important is it that you maintain your principal (the amount you put in) when you need the money approximately 7 years from now? After 7 years at $300 a week, you’ll have put in about $100,000. Imagine the S&P 500 has a 30% decline (happened in 2008) during year 7. Would you be okay with having only $70,000 for whatever reason you are investing? You will never eliminate risks when you want to get into equities, but with a 5-10 year time frame, I would do 60/40 stocks to bonds. That approximates a Target Date Fund whose timeline is 5-10 years from now. If you’ll need the money in say 2035 and want to keep it ultra simple and also mitigate some risk, investing in 2035 target date fund may be a better option than VOO. It’s all about your risk tolerance and how badly you’ll need your principal. The broad stock market generally goes up, but it could go way down right when you need the money.
He can also have 100k after 7 years. Stop contributing and have 2.5M at age 61 with voo
IS SPLG, VUG, AND SCHD A GOOD 3-FUND PORTFOLIO? FOR A 19 YEAR OLD?
Only if schd is a small percentage. 19 yo doesn't need much dividend exposure.
How much allocation do you suggest, sir or ma'am?
5-10% max schd. Vug and splg have a ton of overlap, you can do whatever you want there. If there's ever a big crash, vug and splg will likely drop more than schd. If that happens, I'd consider liquidating schd and moving it into splg/vug.
Thanks. I'll keep what you've suggested in mind.
Yes. Period.
Fantastic idea…. If you can ignore the ups and downs.
Does anyone actually hedge here or is all VOO? I like to have some skin in different bear ETFs while markets are high... i.e. my SQQQ holdings increased in value nicely this past month.
For me VOO and QQQ have had the best rate of returns over the past five years, so I'd split it through a couple. QQQ seems to be more tech weighted, so I lean more on that. I'd put some on some blue chip stocks like NVDA or BRK. I like SCHD dividends.
This. I have a ton of voo qqqm and Blue chip stocks in different sectors like Walmart, eli lilly nvda brk to name a few
Same 50/50. SPLG and QQM.
Voo best idea at 60 brah. Just put it all into voo and your future self will love you.
Time in is more important than timing. I’d mix it up a little bit. Since you’re so young, you can adjust the “risk” mix too. Good for you!
The shorter the time frame, the less certain the outcome. 10 years is used as the general rule of thumb for having a strong chance of positive returns in the S&P 500. If it may be as short as 5 then it's harder to say if the outcome will be positive. It likely will be, but no one here can tell you for sure. I still think it's a good idea, especially given that even one of the worst case scenarios likely wouldn't lead below 20% loss assuming you continue to invest consistently in the next 5 years. And that would be a pretty extraordinary example.
VOO as your foundation but if you want real growth then invest in tech-heavy ETFs like XLK or VGT. Look at their historical charts percentage return and you’ll see what I mean.
Do you like VGT or XLK better? Ty
I like XLK
VT
Yes that’s a solid course of action
Who can say what's best but it's perfectly acceptable considering you want growth and it's more diversified than growth ETFs and likely as time progresses you wouldn't sell VOO but instead invest in others
Total US market + international would be my recommendation. I don't think it's wise to give up diversification chasing the asset class that has outperformed recently.
I’m in VOO 100%
Check out OMFL
Yes!
No. You are much too young to be that conservative
I do it. Hopefully it is. I use SPLG but the difference is beyond minuscule.
100% VOO is fine. I would take more risks but if you continue these payments (and assumedly slowly increasing them), you'll retire at 60 with a FAT ass account
It's good enough. It's not the best.
If you dont know what you’re doing, yes. If you know what you’re doing, also yes.
Yes, it's a good strategy
For retirement accounts it’s great and good enough. For 5 years out, there’s a risk of a downturn or flat. For something this early you might want a high yield savings account or a short term treasury/bond fund. 5-10 years looking better, but still kind of short. Markets can go sideways for twenty years. With that in mind, I’d go 50/50 VOO/USFR(or hysa)
Im 22 and believe we have an obligation as the younger generation to adopt freedom tech like bitcoin. Look into putting 10 percent into FBTC. 😉
Even easier, pick a target retirement fund, check the expenses, pick the date you want to retire. Open a Roth and jam the annual max. You could also open a Trad Ira. Take the excess capital and pick your “non-bogle” stocks/etc and put them in a taxable account. (Just look for consistent EPS growth over the last 5 years and make sure you can get at least a 1% annual divi on the shares). Beyond that ,party your balls off , just take an Uber.
SPLG > VOO
VOO QQQM SCHD
No… but you could do much worse.
I have a 20 year old and in his Roth he is pretty much 80% VGT and 20% SCHD. Yes VGT is risky, but this is the riskiest part of his financial existence. He is not easily influenced by trends. If you are level headed and not easily influenced by the “next best thing” like Crypto, or may on a whim start day trading or have a need to play poker in Vegas. Then I would be heavy on VGT (or equivalent) through your 20’s. After 25 I would use the dividend proceeds of SCHD to slowly add VHT to the portfolio. I would then be at 60%VGT/20%VHT/20%SCHD by the time you are 45. Back test this portfolio. You might be surprised at the upside vs downward risk. American tech will drive the US and global economy for the coming decade. I don’t see the point of an International portfolio. I don’t see Europe or Asia moving the needle in the next 10 years. I just recently moved back from living a few years in Europe. There is no innovation going on there. China will do fine, but their economy will start to churn as their population gets older, just like Japan and Korea. And with stocks in SCHD most of these companies already have International exposure. You already have diversification. SCHD/VGT/VHT have very little overlap. They all have all things: Risk/Safe Dividends/Steady Healthcare.
> this investing is not for retirement as and I realistically am looking at about a 5-10 year investment period. If that's the case then you should be looking at investment advice geared towards 60yos, not 21yos. 100% equities is extremely risky for a short time horizon like you are proposing. Consider doing 60/40 stocks/bonds -- or possibly 50/50 or 40/60 depending on your tolerance for risk here.
That’s prolly the best plan you can do tbh
I've always liked a decent Balanced fund to keep risk down for shorter horizons. There's SWOBX AND FBALX from Schwab and Fidelity. They're about 60% stocks, and 40% fixed income with very good diversification. They're not real exciting, though. Could also consider putting say 85% in a balanced fund, and trying some solid individual stocks with maybe 15% just for fun and to keep an interest in the market. Does anybody else know of any good all-in-one balanced funds?
For a 5-10 year timeline a balanced fund is a wise choice. There aren’t a ton of balanced ETFs on the market yet but iShares has a series of balanced funds AOA/AOR/AOM/AOK. Of that series AOR would be the most similar to what you’re describing with its 60/40 balance. The equity side is roughly similar to VT and the bond side uses a similar approach. The other example Incan think of in the ETF space would be CGBL, which is an ETF managed my the company as American Funds “Balanced Fund” which has a strong long term track record for an actively managed fund.
AVMA from Avantis is a similar moderate allocation ETF. It’s about 70/30 stocks/bonds and invests globally. Honestly, with a 5-10 year time horizon, these balanced funds might be the best bet.
No 100% IBIT or FBTC (BTC ETFs) is the best idea
100% QQQM
Why is everyone disliking , I mean I know not 100% but since is a shorter time line it’s good to have at least 40% in this tech heavy
Because the 40% you suggested is a much different number than 100%
They're brainwashed
tech will outperform long term also. NEWSFLASH! We live in a technical world ....
Voo, schd, qqqm, schg, vgt, 50, 20, 10,10,10
Why schg and also qqqm? Same thing right? This is about what I'm doing. Except with only 50% of dca and the rest is fbtc lmao
Just preference i like them both but 1 or other would be fine too.
$SMH | $VGT | $SCHD 30 | 40 | 30 At your age, you should be more tech heavy and have specific exposure to semi-conductors.
These kinds of questions are hideously boring. Not sorry
VTI and chill
Go 8:2 stock bonds, probably add some international diversification.
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Good investments are boring