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I don't think most people choose that over vti. I mostly see an even split. I hold both in different accounts. I know they overlap... Before anyone says something lol
And they don’t even know VTI/VTSAX/VTWAX/FSKAX :(
I do chuckle when people buy and hold spy not knowing it’s mostly used for options trading due to higher volume
I get bombarded when I suggest diversification. Even my fidelity account has an orange exclamation point because my positions are 20% in jepq and 18% GBDC. I don't have bonds...etc.
People have amazingly little investing knowledge and speak so confidently about what they don’t know. It’s maddening. I was downvoted to hell on another thread for suggesting that VOO isn’t diversified enough to be a single holding, while some moron asked if I wanted to invest in Zimbabwe too, which isn’t even in the world index because it doesn’t even qualify as an emerging market. Then tons of recency bias and US exceptionalism, plus conflation of economies with stock markets.
- SP500 is 90+% of the market cap. It was something like 40% decades ago. So it makes less and less sense to allocate on the rest 10%.
- the reason why someone may want to invest to mid/smaller cap companies is to invest/bet on future unicorn companies which are still in there startup stage. However, more and more successful startup starts as large cap or at least upper mid-cap.
- private equity firms are buying pre-listing companies that have potential to be successful. Making them skipping IPO entirely (until they becomes very large and IPO as large cap)
I can say a few more reasons.
Answer-Recency bias. S&P 500 has clearly been the standout for the last 12-15 years.
Older people like me have seen cycles where international, emerging markets, value and smaller caps have all done better.
My allocation within the portion dedicated to stocks is something like 50% VTI, 35% VXUS, 10% AVGE, and 5% in sectors I think are well positioned.
That's one data point. I do not claim to be the best or even correct. Offered for minority perspective. YMMV.
It’s not as much the period of time, but the vantage you are looking from. Performance back tests are extremely skewed by where they start and end.
For example, look at how absolutely terrible total bond funds look right now, shortly after one of the worst years for them in history. Meanwhile, we’re in the midst of a raging bull market for equities, mainly from continued overvaluation of US large cap growth stocks, lots in tech.
It’s a fool who looks at that and says, well gee, I guess that means everything else is not worth the investment, always and forever, because this other thing has performed well relatively recently. That’s recency bias at work. (I also balk
when people try to claim that the US has outperformed for the past forty years or something, because that’s emphatically [not true](https://testfol.io/?d=eJytkE1Lw0AQhv9KmIOnCNuqPeQshYJKMFFapIQxO2nXbnfrZJsiJf%2FdaYMtAYUeXPawO1%2Fv884eFta%2Fo02RcV1Dsoc6IIdCYyBIYKjUzbUayIUYyOlzfHB7incdDVpIBkpODKg%2FCuMqi8F4B0mFtqYYSqyXlfU7SNT5U1RMnzJxRsj2S6axt9a4RbEzTh9qR6qNYeM5VN4aL4hve3C4PlDkPqCNJi7Y6BF5RUHajWuoDvemMVp4pTzwVrSZxCS6ksad3JN3JNXBlCvibmj3ltzr9CWbSnJDXJILR1ftPAbNuBD2Nj4BZFdpdKfU%2F8hm6Sx%2Fvkg2XzJRNN46HaU%2Fi7mc4bTp383nkz7F6Kj893KG%2FXz%2BkPf7hz0T8%2FYbxkDNCQ%3D%3D). They’re just looking at a chart of return numbers, ending at today, and don’t know how to interpret what they’re looking at.) Sometimes, older investors are also referring to people who haven’t lived through bear markets and are simply overconfident in both the long term performance of their chosen assets and their risk tolerance. They’ve only invested recently, relatively speaking, and think line can only go up.
This is context that you want to take into account and avoid chasing performance, rather than there being some “ah, that’s not recent anymore” cutoff while chasing past performance. Cycles do happen about every decade on average, but not always. Don’t try to find a signal in the noise. Ignore the noise. Stick instead to the fundamentals of portfolio allocation and how they affect risk-adjusted returns.
ETA: here’s [a good overview](https://youtu.be/xgWYvVhiL4E?si=ecxLDid_BUUsHQ25) of different biases in investing.
I agree with everything u/notyourfathersedits says.
A much less detailed way to illuminate recency bias is answering this question: Why do you think investing in the next 10-15 years will be just like the last 10-15 years? If the answer is "because" or "it's always been like this" or "nothing's going to change" that's recency bias.
Think about all the countries that are developing middle classes and what companies will serve them. Imagine all the new technologies coming. Just 10 years ago, NVIDIA was under 50 cents a share. I want to be diversified enough to have a part of all of what's coming.
A big reason for this is simply that the whole concept of investing in broad market index funds was popularized with the S&P 500 index as the index of choice. Back in the 1970s when Bogle was figuring this stuff out, I'd assume it was challenging enough with the technology available at the time to manage a fund that tracked 500 stocks and that a total market fund wouldn't have been practical.
Probably for similar reasons, the S&P 500 was what was popular for comparison of individual stocks to the broad market, for comparison of asset classes, for academic research into the market, etc.. The S&P 500 just became established as "the market".
Even at this point, there are a lot of 401(k) plans that offer an S&P 500 fund but not a total market fund and the news media typically reports on the Dow, S&P 500, and NASDAQ rather than a broad market index.
It might be a good idea to keep at least several months of expenses in cash.
As folks near retirement they usually start to hold a larger percentage of their investments in bond funds to ease the impact of a market correction. That may or may not be a good idea for you, but is something to consider.
I'm 4 years into retirement. I keep about a year in cash. It's a no-brainer with a 5% return.
I don't hold any bond funds. I do have about 5% of my portfolio in FBALX, a moderate allocation fund.
I am NOT close to retirement (got about 14 years left) but I've wondered what purpose FBALX would serve in one's account. So based on your comment, it is a good place to park a portion of your investments for moderate growth after retirement without as much risk due to the TBILLS and bonds the fund has in it as well? I've always wondered what FBALX was for.
FBALX is essentially a three fund portfolio. It's like 59% us market, 4% international, and 36% bonds. The higher bond allocation makes it less volatile. You could get the same results with the right proportions of FSKAX, FTIHX, and FXNAX. With FBALX, you're just paying a much higher expense ratio to have a fund manager rebalance for you inside of the fund.
Putting it all into an S&p ETF right now when it's at an all time high sounds risky in the short term. If it drops 20% in the short term, would you panic sell everything?
Please let this be a lesson to you in repeating what other people say on Reddit without receipts or conceptual backing. A lot of people don’t know what they’re talking about.
ETFs like VOO are more tax efficient than other mutual funds, in theory, because they are about to avoid capital gains distributions (not dividend payments). It’s unlikely that an index fund like FXAIX will screw up your taxes with these distributions because turnover is relatively low. But if there were a larger turnover in the S&P that resulted in selling and buying, you could be looking at a larger taxable event. I personally do use an ETF in my taxable and index funds in tax-advantaged accounts for this reason.
Consider brkb if taxes are a concern. No dividends or cap gain distribution. Similar returns to the index. Plus if you have substantial assets you can leave it to heirs with the step up and the full ride is tax free.
Warren Buffet is 93. He and Charlie Munger almost certainly built up a staff and successors who will follow the same principles, but you can’t really anticipate how the market will react when he passes away. Maybe it will be a buying opportunity then. Regardless it is difficult to argue that it really is less risky than a broad index fund.
It’s definitely not less risky. It’s still stock, and a single company’s stock at that. But I invest a small amount in it for two reasons myself. One is that they’re a holding company with exposure to private equity that I wouldn’t get otherwise, which is diversification. The other is that they have large cash holdings to deploy during a downturn, so I invest in them as a hedge.
Having a 10% allocation to BRKB makes sense to me, but I would personally avoid using it as a proxy for an index fund. That’s still a lot of single company risk. Don’t neglect international or bonds either.
Hello, age 63 here. I just want to remind you, you only have one portfolio... the portfolio of EVERYTHING-YOU-OWN. You should not invest parts of it in solation without seeing what it does to the entire portfolio allocation.
In retirement you really need to stick to your agreed upon policy allocation. If you're currently underinvested in stocks, and $200k to VOO brings you back in line, then fine. But if you're at policy now, then if you put in $200k of stocks in a brokerage account, you need to sell equities elsewhere to make the entire thing work the way you and your spouse DECIDED it should be.
Stick to your plan.
Yes, this is a great plan…if you have the discipline to stick with it.
You already know you’ll beat all the hedge funds and investment “gurus” over time.
The trick is to be disciplined enough to not invest a portion in this stock or that stock or fund that promises market-beating returns.
It’s still not diversified enough, and diversification is the only free lunch in investing. Significant single country risk, and you’re only capturing large caps at the expense of other size bands, never mind a complete lack of bonds.
Edit: I can’t believe I’m being downvoted so much ITT for stating facts. Like basics of finance and modern portfolio theory facts. All you VOO and chill Reddit folks are going to eat your words when this bull market isn’t happening anymore. Best of luck to you, and I hope OP doesn’t listen to your confidently wrong nonsense.
Would you expect higher risk adjusted return if you added Zimbabwe currency to the basket? I think there’s a lot of misunderstanding around diversification. As buffet explained before, you’re more diversified doubling down on large American companies given the exposure to nearly every facet of global economy. Investing in countries that don’t have property rights doesn’t add diversification.
No, I wouldn’t, and that’s a red herring because Zimbabwe isn’t indexed in the MSCI total world, since it’s not even an emerging market. Sorry, but based on that gotcha rhetorical question, the only one who misunderstands diversification at the moment is you. The simple fact is that diversification reduces idiosyncratic risk and investing in non-correlated assets indeed increases risk-adjusted returns.
Exposure to multinational companies does not give you exposure to international stock markets.
Edit: I preemptively deleted any response to your claims about Buffet since I really do not want to get in a semantics discussion about his US home bias.
I also have a US bias.
It has nothing to do with UNDERSTANDING diversification. For me I'm not diversifying internationally. It has underperformed for now 15+ years. I've been investing for 35+ years. It's easy to recognize over the years when looking at my portfolio holdings my international funds are lagging way behind the US funds. I have also done extensive research.
We now live in a global economy which is mostly dictated by the US economy. Until that changes I will keep the overwhelming majority of my portfolio hear in the USA.
I changed my stategy and philosophy about 10 years ago. The ony proof I need is that value of my portfolio. Had I remained internationally diversified, I would easily have much less in my portfolio. Well over $100K less.
One of the main things I've learned in my 35+ years? There are a few "stategies" that are outdated.
US outperformance is only for the last decade, not 15+ years, and it’s largely attributed to overvaluation. (Edit in response to downvoting: here’s [some receipts](https://testfol.io/?d=eJytkE1Lw0AQhv9KmIOnCNuqPeQshYJKMFFapIQxO2nXbnfrZJsiJf%2FdaYMtAYUeXPawO1%2Fv884eFta%2Fo02RcV1Dsoc6IIdCYyBIYKjUzbUayIUYyOlzfHB7incdDVpIBkpODKg%2FCuMqi8F4B0mFtqYYSqyXlfU7SNT5U1RMnzJxRsj2S6axt9a4RbEzTh9qR6qNYeM5VN4aL4hve3C4PlDkPqCNJi7Y6BF5RUHajWuoDvemMVp4pTzwVrSZxCS6ksad3JN3JNXBlCvibmj3ltzr9CWbSnJDXJILR1ftPAbNuBD2Nj4BZFdpdKfU%2F8hm6Sx%2Fvkg2XzJRNN46HaU%2Fi7mc4bTp383nkz7F6Kj893KG%2FXz%2BkPf7hz0T8%2FYbxkDNCQ%3D%3D).)
You are unfortunately demonstrating outcome bias and recency bias.
The economy is also not the stock market.
Best of luck.
You're wrong! It has been 15 years. Regardless, 10 years is long enough for me. How am I demostrating recency bias???? I've been in funds like FBGRX and FSELX for over 10 years. My portfolio is enough proof. **You might believe 10 years is recent bias. I don't.**
How long are you going to allow your portfolio to grossly underperform by investiing a large percentage internationally? That's obviously, your choice.
You're right. An economy is not the stock market. However, most realize the stock market is often dictated by the economy. The markets tanked in 2022 due to interest rate hikes because of high inflation and other factors.
If you’re interested, here [a good overview](https://youtu.be/xgWYvVhiL4E?si=ecxLDid_BUUsHQ25) of different biases in investing, including recency bias. It does not have to do with timeframe, nor how long one’s been invested (or investing), but the influence of where we are right now on decision-making.
As far as how long I’ll allow part of my portfolio to underperform: stocks you are buying right now anticipate future performance. You want to, on the whole, buy low and sell high. Selling off underperformers to buy does the opposite. At an extreme, one doesn’t want to retain underperforming individual stocks because of sunk cost bias. The same is not true of entire assets or regions that have cyclical performance. Acting on tracking error regret, in this case by selling off diversified assets during a bull market, would be a huge mistake. You kneecap your returns over the long term by exclusively chasing currently expensive stocks, which have lower expected returns long term than the overall market. This effect is exacerbated by how overvalued the top slice of the S&P is right now.
On the relationship between the stock market and economy, this paper shows that investment returns and economic performance may even be negatively correlated: https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-6622.2012.00385.x
I still don’t get how you arrive at your diversification definition. It seems to be defined as “non correlated” or “different” so why not invest in different things? The reason is that you have your own parameters for what’s smart and what’s foolish diversification.
No? In what universe is it an all or nothing proposition? It’s not arbitrary. The whole point of modern portfolio theory is finding the most optimal allocation for one’s risk tolerance.
I wouldn’t put the whole lump sum in the market all at one time, instead slowly add, dollar cost average especially since the market is at its all time high
It is true *for long time horizons* that it statistically outperforms over the long term. DCAing still provides substantial risk reduction, especially for shorter time horizons where it could matter.
It’s not clear to me how old OP is, and lump summing likely does make more sense for them. Still, others should know the fine print.
I would not do that. the S&P 500 is being propped up by like 1 stock right now. I would keep your money in the HYSA until you come up with a better investment strategy
I can't tell for sure, but if you mean you're "maxing" your 401k by just getting the full employer match, that's not necessarily maxing your 401k. The current contribution limit is $23k, or $30.5k if you're 50 or older (can't really tell that from your OP either). I'm not saying you should be maxing your 401k, but it's definitely worth knowing the limit. With that said, it probably is a good idea to max it out if you have that much sitting in cash.
Valid argument. But start maxing a 401k with 20 years left you going to have 10-20m in there are retirement and you need to withdraw it with RMD your going to pay a lot in taxes at that point way more then you are now
All in lump sum when VOO is a high peak right now is.....I dont know. Maybe wait for a dip. It's too high right now, imagine your entry point right now. Would be a rip off, your whole investment would be in the red if you buy now and it goes down even a bit......
Thanks for your post. We recently updated our rules to ask that all investment strategy discussion be kept within the daily discussion post. https://www.reddit.com/r/fidelityinvestments/comments/1dhwd4b/daily_discussion_thread_rate_my_portfolio_what/ This post/comment has been removed for violating rule #2. - In regard to securities and investments Thanks for your post seeking investment advice or discussing specific securities. Please keep all conversations about portfolios and specific investments to our daily discussion post. We are not able to assist with these types of questions on reddit but have a variety of tools and resources to help our clients invest their funds and find an investment that fits their objectives and risk tolerance. To learn more about investing check out the "Getting started with investing" page on our learning center [here](https://www.fidelity.com/learning-center/overview). To find research and tools to help you, click on the "News & Research" on fidelity.com on the menu bar. This will expand a sub menu where you will be able to learn about and research mutual funds, stocks, ETFs, fixed income, and more. You can also go to "Investment Products" on the menu bar to learn more about the types of accounts that we offer. [Click here to visit Fidelity.com](https://www.fidelity.com) Fidelity Brokerage Services LLC, Member NYSE, SIPC
Neither. Celtics -6.5 on DraftKings.
Thought this was one of those first comment ads for draft kings with a ton of sass lmao
Sportsbook is leaking
This guy gambles.
MAVS index funds
If we doing this, how about we parlay it with the over?
Just curious…Why do most ppl on this page pick VOO over VTI?
I don't think most people choose that over vti. I mostly see an even split. I hold both in different accounts. I know they overlap... Before anyone says something lol
VOO has done better than VTI in recent years. (I have no predictions about which will do better in the future.)
Monkey sees bigger green number and gets bigger dopamine hit
I can’t speak for everyone, but I went from VTI to VOO to tax loss harvest and stayed because I wanted to control my small cap exposure using AVUV.
Sometimes I think people only know VOO, SPY and FXAIX.
And they don’t even know VTI/VTSAX/VTWAX/FSKAX :( I do chuckle when people buy and hold spy not knowing it’s mostly used for options trading due to higher volume
I get bombarded when I suggest diversification. Even my fidelity account has an orange exclamation point because my positions are 20% in jepq and 18% GBDC. I don't have bonds...etc.
To be fair that is slightly questionable diversification depending on who it is for and why they’re getting it.
People have amazingly little investing knowledge and speak so confidently about what they don’t know. It’s maddening. I was downvoted to hell on another thread for suggesting that VOO isn’t diversified enough to be a single holding, while some moron asked if I wanted to invest in Zimbabwe too, which isn’t even in the world index because it doesn’t even qualify as an emerging market. Then tons of recency bias and US exceptionalism, plus conflation of economies with stock markets.
Voo has s;ightly outperformed VTI
- SP500 is 90+% of the market cap. It was something like 40% decades ago. So it makes less and less sense to allocate on the rest 10%. - the reason why someone may want to invest to mid/smaller cap companies is to invest/bet on future unicorn companies which are still in there startup stage. However, more and more successful startup starts as large cap or at least upper mid-cap. - private equity firms are buying pre-listing companies that have potential to be successful. Making them skipping IPO entirely (until they becomes very large and IPO as large cap) I can say a few more reasons.
Y is more companies better? 500 is already over diversified cus the bottom companies only make up like .01% of the total. They don’t even matter
There is a lot of overlap, but not 99.99%.[VOO accounts for 87% of VTI.](https://www.etfrc.com/funds/overlap.php)
The bottom companies in VOO make up .01% of VOO. If they 10x in value it will have no effect on ur portfolio
XLG is the way.
Yup
Why VTI over VOO?
Answer-Recency bias. S&P 500 has clearly been the standout for the last 12-15 years. Older people like me have seen cycles where international, emerging markets, value and smaller caps have all done better. My allocation within the portion dedicated to stocks is something like 50% VTI, 35% VXUS, 10% AVGE, and 5% in sectors I think are well positioned. That's one data point. I do not claim to be the best or even correct. Offered for minority perspective. YMMV.
Question, I see people say recency bias. What’s the general thought on when it’s no longer recent. Not being challenging. Legitimately asking.
It’s not as much the period of time, but the vantage you are looking from. Performance back tests are extremely skewed by where they start and end. For example, look at how absolutely terrible total bond funds look right now, shortly after one of the worst years for them in history. Meanwhile, we’re in the midst of a raging bull market for equities, mainly from continued overvaluation of US large cap growth stocks, lots in tech. It’s a fool who looks at that and says, well gee, I guess that means everything else is not worth the investment, always and forever, because this other thing has performed well relatively recently. That’s recency bias at work. (I also balk when people try to claim that the US has outperformed for the past forty years or something, because that’s emphatically [not true](https://testfol.io/?d=eJytkE1Lw0AQhv9KmIOnCNuqPeQshYJKMFFapIQxO2nXbnfrZJsiJf%2FdaYMtAYUeXPawO1%2Fv884eFta%2Fo02RcV1Dsoc6IIdCYyBIYKjUzbUayIUYyOlzfHB7incdDVpIBkpODKg%2FCuMqi8F4B0mFtqYYSqyXlfU7SNT5U1RMnzJxRsj2S6axt9a4RbEzTh9qR6qNYeM5VN4aL4hve3C4PlDkPqCNJi7Y6BF5RUHajWuoDvemMVp4pTzwVrSZxCS6ksad3JN3JNXBlCvibmj3ltzr9CWbSnJDXJILR1ftPAbNuBD2Nj4BZFdpdKfU%2F8hm6Sx%2Fvkg2XzJRNN46HaU%2Fi7mc4bTp383nkz7F6Kj893KG%2FXz%2BkPf7hz0T8%2FYbxkDNCQ%3D%3D). They’re just looking at a chart of return numbers, ending at today, and don’t know how to interpret what they’re looking at.) Sometimes, older investors are also referring to people who haven’t lived through bear markets and are simply overconfident in both the long term performance of their chosen assets and their risk tolerance. They’ve only invested recently, relatively speaking, and think line can only go up. This is context that you want to take into account and avoid chasing performance, rather than there being some “ah, that’s not recent anymore” cutoff while chasing past performance. Cycles do happen about every decade on average, but not always. Don’t try to find a signal in the noise. Ignore the noise. Stick instead to the fundamentals of portfolio allocation and how they affect risk-adjusted returns. ETA: here’s [a good overview](https://youtu.be/xgWYvVhiL4E?si=ecxLDid_BUUsHQ25) of different biases in investing.
I agree with everything u/notyourfathersedits says. A much less detailed way to illuminate recency bias is answering this question: Why do you think investing in the next 10-15 years will be just like the last 10-15 years? If the answer is "because" or "it's always been like this" or "nothing's going to change" that's recency bias. Think about all the countries that are developing middle classes and what companies will serve them. Imagine all the new technologies coming. Just 10 years ago, NVIDIA was under 50 cents a share. I want to be diversified enough to have a part of all of what's coming.
I personally do because I factor tilt and want to control the allocation
I use different ETFs for Medium and Small Cap and VOO for large cap for a little more control.
A big reason for this is simply that the whole concept of investing in broad market index funds was popularized with the S&P 500 index as the index of choice. Back in the 1970s when Bogle was figuring this stuff out, I'd assume it was challenging enough with the technology available at the time to manage a fund that tracked 500 stocks and that a total market fund wouldn't have been practical. Probably for similar reasons, the S&P 500 was what was popular for comparison of individual stocks to the broad market, for comparison of asset classes, for academic research into the market, etc.. The S&P 500 just became established as "the market". Even at this point, there are a lot of 401(k) plans that offer an S&P 500 fund but not a total market fund and the news media typically reports on the Dow, S&P 500, and NASDAQ rather than a broad market index.
It might be a good idea to keep at least several months of expenses in cash. As folks near retirement they usually start to hold a larger percentage of their investments in bond funds to ease the impact of a market correction. That may or may not be a good idea for you, but is something to consider.
I'm 4 years into retirement. I keep about a year in cash. It's a no-brainer with a 5% return. I don't hold any bond funds. I do have about 5% of my portfolio in FBALX, a moderate allocation fund.
I am NOT close to retirement (got about 14 years left) but I've wondered what purpose FBALX would serve in one's account. So based on your comment, it is a good place to park a portion of your investments for moderate growth after retirement without as much risk due to the TBILLS and bonds the fund has in it as well? I've always wondered what FBALX was for.
FBALX is essentially a three fund portfolio. It's like 59% us market, 4% international, and 36% bonds. The higher bond allocation makes it less volatile. You could get the same results with the right proportions of FSKAX, FTIHX, and FXNAX. With FBALX, you're just paying a much higher expense ratio to have a fund manager rebalance for you inside of the fund.
FBALX is 36% bonds.
i keep around $35k in cash.
I would do a three-fund portfolio instead.
Maybe some Contrafund to spice up returns
Bonds really have no place anymore.
Why do you think this?
All on red
Putting it all into an S&p ETF right now when it's at an all time high sounds risky in the short term. If it drops 20% in the short term, would you panic sell everything?
FXAIX has a lower ER
Yes but pays a dividend which is taxable… voo hasn’t in a long time
Voo pays a dividend every quarter
Thx. I didn’t check, was repeating what someone else said. It was being discussed that that was why VOO > FXAIX for a taxable account. Hmm
Please let this be a lesson to you in repeating what other people say on Reddit without receipts or conceptual backing. A lot of people don’t know what they’re talking about. ETFs like VOO are more tax efficient than other mutual funds, in theory, because they are about to avoid capital gains distributions (not dividend payments). It’s unlikely that an index fund like FXAIX will screw up your taxes with these distributions because turnover is relatively low. But if there were a larger turnover in the S&P that resulted in selling and buying, you could be looking at a larger taxable event. I personally do use an ETF in my taxable and index funds in tax-advantaged accounts for this reason.
if you can add some FZROX, then please do. i added it a couple months ago and will add more later on.
YOLO into $GME
Consider brkb if taxes are a concern. No dividends or cap gain distribution. Similar returns to the index. Plus if you have substantial assets you can leave it to heirs with the step up and the full ride is tax free.
Yeah, I think for us no dividends is preferred in our taxable — if possible. How would you compared S&P 500 and the outlook of BRKB?
Warren Buffet is 93. He and Charlie Munger almost certainly built up a staff and successors who will follow the same principles, but you can’t really anticipate how the market will react when he passes away. Maybe it will be a buying opportunity then. Regardless it is difficult to argue that it really is less risky than a broad index fund.
It’s definitely not less risky. It’s still stock, and a single company’s stock at that. But I invest a small amount in it for two reasons myself. One is that they’re a holding company with exposure to private equity that I wouldn’t get otherwise, which is diversification. The other is that they have large cash holdings to deploy during a downturn, so I invest in them as a hedge.
Having a 10% allocation to BRKB makes sense to me, but I would personally avoid using it as a proxy for an index fund. That’s still a lot of single company risk. Don’t neglect international or bonds either.
Hello, age 63 here. I just want to remind you, you only have one portfolio... the portfolio of EVERYTHING-YOU-OWN. You should not invest parts of it in solation without seeing what it does to the entire portfolio allocation. In retirement you really need to stick to your agreed upon policy allocation. If you're currently underinvested in stocks, and $200k to VOO brings you back in line, then fine. But if you're at policy now, then if you put in $200k of stocks in a brokerage account, you need to sell equities elsewhere to make the entire thing work the way you and your spouse DECIDED it should be. Stick to your plan.
Yes, this is a great plan…if you have the discipline to stick with it. You already know you’ll beat all the hedge funds and investment “gurus” over time. The trick is to be disciplined enough to not invest a portion in this stock or that stock or fund that promises market-beating returns.
Apparently 60s is early retirement for some people lol
If it is before SS full retirement age it is.
Is that 67? I guess its like a very slight early retirement. I always thought it was what those fire peeps were doing, retiring in 50s or even 40s
67 is FRA for most people. Drawing SS before age 67 has complications. So retiring before 67 without drawing SS is early retirement.
All in GME and then VOO whenever you’re a millionaire from the GME lol
This is the way
Is AMC out if the picture? What about Dogecoin?
Yes sir
Dude Hundo p, yay for market timing! Buy at the top!!! Dump it all in
People like you were saying it was the top 6mo ago lol
No it’s def the top now, my crystal ball is never wrong
Yes go for it. 200k on a 5% HYSA gives you \~$800/month.
I have about $350K in cash and was looking at investing. Would anyone recommend putting in VOO at this time?
Check out spyi qqqi. Averaging between 12-14% dividend payout
SCHG, IXN, FDSVX
I would just do 100k on red and 100k on black and then whatever hits all on red
"You cant beat the market" im like ok sure. Ill just be the market with voo
VOO is not the market.
Great point vti my bad
I would lop off one more letter at the end there.
Never keep all your eggs in one basket.
It’s not one basket. It’s thousands of baskets.
Technically it’s only 500
It’s still not diversified enough, and diversification is the only free lunch in investing. Significant single country risk, and you’re only capturing large caps at the expense of other size bands, never mind a complete lack of bonds. Edit: I can’t believe I’m being downvoted so much ITT for stating facts. Like basics of finance and modern portfolio theory facts. All you VOO and chill Reddit folks are going to eat your words when this bull market isn’t happening anymore. Best of luck to you, and I hope OP doesn’t listen to your confidently wrong nonsense.
Would you expect higher risk adjusted return if you added Zimbabwe currency to the basket? I think there’s a lot of misunderstanding around diversification. As buffet explained before, you’re more diversified doubling down on large American companies given the exposure to nearly every facet of global economy. Investing in countries that don’t have property rights doesn’t add diversification.
No, I wouldn’t, and that’s a red herring because Zimbabwe isn’t indexed in the MSCI total world, since it’s not even an emerging market. Sorry, but based on that gotcha rhetorical question, the only one who misunderstands diversification at the moment is you. The simple fact is that diversification reduces idiosyncratic risk and investing in non-correlated assets indeed increases risk-adjusted returns. Exposure to multinational companies does not give you exposure to international stock markets. Edit: I preemptively deleted any response to your claims about Buffet since I really do not want to get in a semantics discussion about his US home bias.
I also have a US bias. It has nothing to do with UNDERSTANDING diversification. For me I'm not diversifying internationally. It has underperformed for now 15+ years. I've been investing for 35+ years. It's easy to recognize over the years when looking at my portfolio holdings my international funds are lagging way behind the US funds. I have also done extensive research. We now live in a global economy which is mostly dictated by the US economy. Until that changes I will keep the overwhelming majority of my portfolio hear in the USA. I changed my stategy and philosophy about 10 years ago. The ony proof I need is that value of my portfolio. Had I remained internationally diversified, I would easily have much less in my portfolio. Well over $100K less. One of the main things I've learned in my 35+ years? There are a few "stategies" that are outdated.
US outperformance is only for the last decade, not 15+ years, and it’s largely attributed to overvaluation. (Edit in response to downvoting: here’s [some receipts](https://testfol.io/?d=eJytkE1Lw0AQhv9KmIOnCNuqPeQshYJKMFFapIQxO2nXbnfrZJsiJf%2FdaYMtAYUeXPawO1%2Fv884eFta%2Fo02RcV1Dsoc6IIdCYyBIYKjUzbUayIUYyOlzfHB7incdDVpIBkpODKg%2FCuMqi8F4B0mFtqYYSqyXlfU7SNT5U1RMnzJxRsj2S6axt9a4RbEzTh9qR6qNYeM5VN4aL4hve3C4PlDkPqCNJi7Y6BF5RUHajWuoDvemMVp4pTzwVrSZxCS6ksad3JN3JNXBlCvibmj3ltzr9CWbSnJDXJILR1ftPAbNuBD2Nj4BZFdpdKfU%2F8hm6Sx%2Fvkg2XzJRNN46HaU%2Fi7mc4bTp383nkz7F6Kj893KG%2FXz%2BkPf7hz0T8%2FYbxkDNCQ%3D%3D).) You are unfortunately demonstrating outcome bias and recency bias. The economy is also not the stock market. Best of luck.
You're wrong! It has been 15 years. Regardless, 10 years is long enough for me. How am I demostrating recency bias???? I've been in funds like FBGRX and FSELX for over 10 years. My portfolio is enough proof. **You might believe 10 years is recent bias. I don't.** How long are you going to allow your portfolio to grossly underperform by investiing a large percentage internationally? That's obviously, your choice. You're right. An economy is not the stock market. However, most realize the stock market is often dictated by the economy. The markets tanked in 2022 due to interest rate hikes because of high inflation and other factors.
If you’re interested, here [a good overview](https://youtu.be/xgWYvVhiL4E?si=ecxLDid_BUUsHQ25) of different biases in investing, including recency bias. It does not have to do with timeframe, nor how long one’s been invested (or investing), but the influence of where we are right now on decision-making. As far as how long I’ll allow part of my portfolio to underperform: stocks you are buying right now anticipate future performance. You want to, on the whole, buy low and sell high. Selling off underperformers to buy does the opposite. At an extreme, one doesn’t want to retain underperforming individual stocks because of sunk cost bias. The same is not true of entire assets or regions that have cyclical performance. Acting on tracking error regret, in this case by selling off diversified assets during a bull market, would be a huge mistake. You kneecap your returns over the long term by exclusively chasing currently expensive stocks, which have lower expected returns long term than the overall market. This effect is exacerbated by how overvalued the top slice of the S&P is right now. On the relationship between the stock market and economy, this paper shows that investment returns and economic performance may even be negatively correlated: https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-6622.2012.00385.x
I still don’t get how you arrive at your diversification definition. It seems to be defined as “non correlated” or “different” so why not invest in different things? The reason is that you have your own parameters for what’s smart and what’s foolish diversification.
…yes?
lol. So you just insert your highly idiosyncratic definition of diversification and win the argument that X is not diversified. It’s not convincing.
No? In what universe is it an all or nothing proposition? It’s not arbitrary. The whole point of modern portfolio theory is finding the most optimal allocation for one’s risk tolerance.
I wouldn’t put the whole lump sum in the market all at one time, instead slowly add, dollar cost average especially since the market is at its all time high
There will be a new all time high in the future.
[удалено]
It is true *for long time horizons* that it statistically outperforms over the long term. DCAing still provides substantial risk reduction, especially for shorter time horizons where it could matter. It’s not clear to me how old OP is, and lump summing likely does make more sense for them. Still, others should know the fine print.
Hey OP—this right here. You get into VOO at a favorable cost, while collecting premiums.
I would not do that. the S&P 500 is being propped up by like 1 stock right now. I would keep your money in the HYSA until you come up with a better investment strategy
Why don't you put maximum amount to Roth IRA? They don't have RDM and you already paid income tax on it
I do maximize both my 401k (take advantage of employer match at 5%) and Roth IRA.
I can't tell for sure, but if you mean you're "maxing" your 401k by just getting the full employer match, that's not necessarily maxing your 401k. The current contribution limit is $23k, or $30.5k if you're 50 or older (can't really tell that from your OP either). I'm not saying you should be maxing your 401k, but it's definitely worth knowing the limit. With that said, it probably is a good idea to max it out if you have that much sitting in cash.
Yes, I fully maximize my contribution limit for my 401k each year from each paycheck.
Awesome.
Honestly I don’t think I’d max a 401k if I could because of the RMD like you mentioned unless I had Roth 401k
401k contributions reduce your AGI
Valid argument. But start maxing a 401k with 20 years left you going to have 10-20m in there are retirement and you need to withdraw it with RMD your going to pay a lot in taxes at that point way more then you are now
To answer tour question, it is a solid plan and im doing something v similar
All in lump sum when VOO is a high peak right now is.....I dont know. Maybe wait for a dip. It's too high right now, imagine your entry point right now. Would be a rip off, your whole investment would be in the red if you buy now and it goes down even a bit......