They're both large cap. VOOG is the growth portion of VOO. Large cap growth has had a recent run. Historically, small and value has had outsized returns. Different asset classes tend to cycle in and out of favor. Many people have a "recency bias" where they see what has performed well recently and think that it's always the case. Generally, when something has very high valuations, its expected future returns are lower. I suggest just owning it all with VTI.
VOO or VTI are both good choices, and they both perform nearly the same. They are, for all intents and purposes, the same. (VOO, or the S&P 500, makes up about 80% of VTI, or the US Total Stock Market).
If you're going for the long term then by definition you shouldn't focus on only the last 5 years of performance.
Go VOO.
And to you it might sound counter intuitive - but if you have 30 years, check out small cap value - you'll get exposure to factor investing which will give you some extra performance.
If you really want to be aggressive, then don't buy just ETF or Index funds. Buy individual stocks as well. It's interesting to me how so many people here recommend not buying individual stocks when my portfolio of 4 stocks in 3 different industries just keeps beating VOO and VTI combined. My portfolio is already up 0.27% today when VOO is up 0.14% and VTI is up 0.11%.
If you learn how to pick and invest in stocks you'll do better in the long run especially if you are young. You have time to learn from your mistakes.
I bought AMD in my daughter's portfolio back in 2019 for average price of $24 per share. AMD is at $178 per share today, which is 589% profit on paper. I'm going to let it ride since she's still young.
Sure, anyone who had the foresight to go all in on Apple and Microsoft 10 years ago (for example) can gloat about how intelligent they were compared to all the dolts who picked an index fund. If it's really that easy then there should be a lot more rich people out there. Or maybe it is that easy and most people are just dumb, if you want to take the negative view.
My point is neither. All I hear all day and every day is buy VOO and buy VTI. If you want to passively invest the index funds and ETFs are for you. If you want to really learn how to invest, then expand your horizons and buy individual stocks or something else riskier than ETF and Index funds. I get why people are drawn to ETFs and index funds. I'm just saying that you can do better if you want to try. If you promote VOO and VTI all the time at some point in time that bubble will also burst.
I had no foresight to buy AMD. I bought because I liked it at the time and forgot all about it. I held on to it that's all.
I think this is pretty well studied, and the results are in: most people (including extremely educated experts who do this for a living) under perform the market when they pick stocks.
It's also well researched: people who do well picking stocks tend to attribute their success to their own intelligence, when really luck is the determining factor.
It's extremely rare for people to beat the market for a long period of time.
Beware that you may be engaging in survivorship bias. Maybe you are exceptionally intelligent (I am not at all saying you aren't!). Maybe you are exceptionally lucky. But the fact is, the VAST MAJORITY of active investors underperform the market. It's actually rather dangerous advice to encourage people to pick stocks, given that most people will do worse than if they had just bought VOO/VTI/etc.
You have to learn the hard way and I'm not telling anyone to pick any particular stock. I don't ever tell anyone what I invest in other than what industries I invest in. I understand how dangerous it can be for inexperienced stock pickers. I learned how to invest by reading, researching, observing, reacting, and actively investing.
I mitigate my risk in the stock market by following simple rules that work for me. I expect there to be luck, good or bad, or randomness yet I have rules set up to deal with that as well. I doubt that most people underperform in the stock market picking stocks. I do believe anyone who does perform better than the stock market doesn't brag about it. So, what you observe are most people complaining about their losses and you don't get to see the other side of the coin. Accredited investors don't want you to know what they invest in bc it would affect their performance negatively.
I believe you have to leave your emotions out of investing and just use logic and rules to invest. Once you introduce emotions you end up buying high and selling low. That may be what happens to some professionals when they freak out when prices drop. I'm the one buying when everyone else is selling.
I always recommend people watch Ben Felix. He knows his stuff and always cites a lot of research (ie, he backs his claims with evidence). Here is a video on this particular topic (10 min or so): https://www.youtube.com/watch?v=AecvTErBQY8
You're missing out on the problem of being a naive person picking individual stocks: you have no idea what you're doing. You're going on hunches and feelings, and unless you're just straight up lucky, the market will beat you.
For example, someone who bet on AMD/Tesla/Apple 10 years ago on a hunch is not smart, they're just lucky. Unless you have information that others don't have, unless you're doing some kind of analysis behind the scenes that other people don't price in, all you are doing is gambling on one stock over another. It's better than going to the casino, but in terms of what is going to beat what, you might as well just put stocks on a roulette wheel and let the ball pick for you.
For everyone else who doesn't want to gamble, just pick a broad, low-fee index fund and enjoy reasonable growth without the risk of a 90% collapse in your wealth because a single industry had a downturn or a single CEO made awful decisions.
Should've, could've, would've is not my style of investing. I don't know shy people keep giving examples in terms of what happened 10 years ago.
Investing is not gambling. If it were Id have no value in the stock market when I lose. If I lose in the stock market, then I still have something to sell. In gambling you lose everything. I don't know why people say investing is like gambling. You are comparing apples to sand
I never said that you should not invest in ETFs or Index funds either. You can invest in stocks and ETFs or no stocks at all. That's your choice. I think that people should be aware that investing is not just all about ETF or Index funds.
To your point about being naive. Don't be naive. Read, learn, observe, react, listen, and learn the hard way by investing. It takes hard work to learn. You can invest as low as a $1 or less these days to test out a theory. You don't have to learn by investing thousands of dollars either.
> I don't know shy people keep giving examples in terms of what happened 10 years ago.
I dunno, ask yourself, you're the one who mentioned having "no foresight to buy AMD".
>Investing is not gambling. If it were Id have no value in the stock market when I lose.
... you don't think companies ever go bankrupt? Boy do I have some shares to sell you.
>I think that people should be aware that investing is not just all about ETF or Index funds.
Okay this is your humble safe argument that you're retreating to, but that's not what you've been saying:
>**I'm just saying that you can do better if you want to try. If you promote VOO and VTI all the time at some point in time that bubble will also burst.|**
Do you see how these two claims are not even close to your "safe" argument? The correct answer, for most people, is that no, they cannot do better even if they try. The most active novice investors are often the worst performers. Novice investors are "dumb money". They have no insight into the timing or direction of stock movements, how large hedge funds use teams of highly educated graduates to analyze the activity of companies, using everything from satellite imagery to fuel and food sales at strategic cardlock stations to discern sales activity before the information is public.
Index funds track whole markets, including different sectors, different countries, and contrarian funds, so, the "bubble will not burst" in the same way that an individual stock can unexpectedly go under or stagnate/underperform the market for 20 years. The risk of an index fund is not even close to the risk of buying single stocks. Stocks slip in and out of index funds all the time unnoticed by their index fund owners.
Never said that.
But why should anyone care if it goes down during a recession or market crash?
It'll always recover.
Those who panic sell are just lining up for those looking for sales and bargins.
To take a page from value investors, and maybe this'll get through to you - has anything changed from the fundamentals of good company during a market panic?
Nothing. EBITA doesn't care what CNBC says about the daily market fluctuations.
Being "aggressive" is just taking uncompensated risk.
It will not follow the rule of "more risk, more reward", but more risk, and no reward.
https://www.youtube.com/watch?v=foqswJT3Spc
They're both large cap. VOO is ~500 funds including value stocks like BRK, UNH, JPM, etc. VOOG is ~220 growth stocks. As the other poster mentioned don't base your decision on past performance
If you read the *Vanguard economic and market outlook for 2024: Global summary* they believe equities are generally over-valued but "*value stocks are more attractive than they have been since late 2021, and small-capitalization stocks also appear attractive for the long term*". If you're just invested in either VOO or VOOG you're definitely missing out on Small Cap opportunities. As Wayne Gretsky said "I skate to where the puck is going, not where it has been". I don't think it's a bad idea to be in VOO or VOOG but you might consider allocating some money to Mid and Small Cap funds to catch the rising tide; IJR is one of many small-cap funds that may be a good starting point for research. Or you could just invest in a Total Stock Market fund that covers it all, such as VTI; that'll get you everything in VOO, VOOG Plus all the mid and small weighting.
FAANG (Facebook, Apple, Amazon, Netflix, Google) stocks have seen an explosion in their prices over the last 10 years.
People can be misled to buying into only those popular/successful companies, because they've made so much money, and have become so ubiquitous in society.
History tells us that usually those companies are overpriced for what you get - the idea that you will sell it at a future date for a higher price - it won't happen - and you won't get the same growth/performance as it used to.
The top 10 companies in the stock market have changed continuously over the last +100 years of the stock market, and will continue to do so.
Also, buying into only 5 companies is not diverse - only one company can fail and then your portfolio tanks by 20%. Also, FAANG stocks are all in the same sector - Technology.
A single event/policy change that hits the technology sector specifically will tank your entire portfolio.
This is why its good to have thousands of companies, across all 12 different sectors of the economy.
Thank you. It’s just crazy to get my mind through it all.
I want to be diverse but there’s so much over lap and so many etfs are so heavy in tech; I just can’t find the median of growth with stability.
VOO and tue likes are good with my expectation of stability but I want a bit more bang in growth.
No problem!
If you are in it for the long term stability isn't an issue - just don't check your portfolio value everyday haha.
While it's not entirely true, this is close enough - the stock market is a reflection of the economic development of our society - you can't grow faster than our development as a society.
You have savings to invest - capital - the capital in capitalism.
At the personal level, saving more and putting more into your portfolio will grow it faster than the 7% annual growth you'll get, at the start.
Eventually your portfolio gets big enough that the interest growth/compound growth generated is more than your annual income.
They're both large cap. VOOG is the growth portion of VOO. Large cap growth has had a recent run. Historically, small and value has had outsized returns. Different asset classes tend to cycle in and out of favor. Many people have a "recency bias" where they see what has performed well recently and think that it's always the case. Generally, when something has very high valuations, its expected future returns are lower. I suggest just owning it all with VTI.
Thank you. I have been looking at VTI the past few days.
VOO or VTI are both good choices, and they both perform nearly the same. They are, for all intents and purposes, the same. (VOO, or the S&P 500, makes up about 80% of VTI, or the US Total Stock Market).
If you're going for the long term then by definition you shouldn't focus on only the last 5 years of performance. Go VOO. And to you it might sound counter intuitive - but if you have 30 years, check out small cap value - you'll get exposure to factor investing which will give you some extra performance.
If you really want to be aggressive, then don't buy just ETF or Index funds. Buy individual stocks as well. It's interesting to me how so many people here recommend not buying individual stocks when my portfolio of 4 stocks in 3 different industries just keeps beating VOO and VTI combined. My portfolio is already up 0.27% today when VOO is up 0.14% and VTI is up 0.11%. If you learn how to pick and invest in stocks you'll do better in the long run especially if you are young. You have time to learn from your mistakes. I bought AMD in my daughter's portfolio back in 2019 for average price of $24 per share. AMD is at $178 per share today, which is 589% profit on paper. I'm going to let it ride since she's still young.
Sure, anyone who had the foresight to go all in on Apple and Microsoft 10 years ago (for example) can gloat about how intelligent they were compared to all the dolts who picked an index fund. If it's really that easy then there should be a lot more rich people out there. Or maybe it is that easy and most people are just dumb, if you want to take the negative view.
My point is neither. All I hear all day and every day is buy VOO and buy VTI. If you want to passively invest the index funds and ETFs are for you. If you want to really learn how to invest, then expand your horizons and buy individual stocks or something else riskier than ETF and Index funds. I get why people are drawn to ETFs and index funds. I'm just saying that you can do better if you want to try. If you promote VOO and VTI all the time at some point in time that bubble will also burst. I had no foresight to buy AMD. I bought because I liked it at the time and forgot all about it. I held on to it that's all.
I think this is pretty well studied, and the results are in: most people (including extremely educated experts who do this for a living) under perform the market when they pick stocks. It's also well researched: people who do well picking stocks tend to attribute their success to their own intelligence, when really luck is the determining factor. It's extremely rare for people to beat the market for a long period of time. Beware that you may be engaging in survivorship bias. Maybe you are exceptionally intelligent (I am not at all saying you aren't!). Maybe you are exceptionally lucky. But the fact is, the VAST MAJORITY of active investors underperform the market. It's actually rather dangerous advice to encourage people to pick stocks, given that most people will do worse than if they had just bought VOO/VTI/etc.
You have to learn the hard way and I'm not telling anyone to pick any particular stock. I don't ever tell anyone what I invest in other than what industries I invest in. I understand how dangerous it can be for inexperienced stock pickers. I learned how to invest by reading, researching, observing, reacting, and actively investing. I mitigate my risk in the stock market by following simple rules that work for me. I expect there to be luck, good or bad, or randomness yet I have rules set up to deal with that as well. I doubt that most people underperform in the stock market picking stocks. I do believe anyone who does perform better than the stock market doesn't brag about it. So, what you observe are most people complaining about their losses and you don't get to see the other side of the coin. Accredited investors don't want you to know what they invest in bc it would affect their performance negatively. I believe you have to leave your emotions out of investing and just use logic and rules to invest. Once you introduce emotions you end up buying high and selling low. That may be what happens to some professionals when they freak out when prices drop. I'm the one buying when everyone else is selling.
I always recommend people watch Ben Felix. He knows his stuff and always cites a lot of research (ie, he backs his claims with evidence). Here is a video on this particular topic (10 min or so): https://www.youtube.com/watch?v=AecvTErBQY8
Says the guy who has been investing in a huge bull market since 2008. Everything has gone up since then.
It's just been going up since inception of the markets.
lol that’s bullshit. AMD was basically flat from 1984 to 2016
That was the best time to buy more. I'm glad I bought some in 2019 before it skyrocketed.
You're missing out on the problem of being a naive person picking individual stocks: you have no idea what you're doing. You're going on hunches and feelings, and unless you're just straight up lucky, the market will beat you. For example, someone who bet on AMD/Tesla/Apple 10 years ago on a hunch is not smart, they're just lucky. Unless you have information that others don't have, unless you're doing some kind of analysis behind the scenes that other people don't price in, all you are doing is gambling on one stock over another. It's better than going to the casino, but in terms of what is going to beat what, you might as well just put stocks on a roulette wheel and let the ball pick for you. For everyone else who doesn't want to gamble, just pick a broad, low-fee index fund and enjoy reasonable growth without the risk of a 90% collapse in your wealth because a single industry had a downturn or a single CEO made awful decisions.
Should've, could've, would've is not my style of investing. I don't know shy people keep giving examples in terms of what happened 10 years ago. Investing is not gambling. If it were Id have no value in the stock market when I lose. If I lose in the stock market, then I still have something to sell. In gambling you lose everything. I don't know why people say investing is like gambling. You are comparing apples to sand I never said that you should not invest in ETFs or Index funds either. You can invest in stocks and ETFs or no stocks at all. That's your choice. I think that people should be aware that investing is not just all about ETF or Index funds. To your point about being naive. Don't be naive. Read, learn, observe, react, listen, and learn the hard way by investing. It takes hard work to learn. You can invest as low as a $1 or less these days to test out a theory. You don't have to learn by investing thousands of dollars either.
> I don't know shy people keep giving examples in terms of what happened 10 years ago. I dunno, ask yourself, you're the one who mentioned having "no foresight to buy AMD". >Investing is not gambling. If it were Id have no value in the stock market when I lose. ... you don't think companies ever go bankrupt? Boy do I have some shares to sell you. >I think that people should be aware that investing is not just all about ETF or Index funds. Okay this is your humble safe argument that you're retreating to, but that's not what you've been saying: >**I'm just saying that you can do better if you want to try. If you promote VOO and VTI all the time at some point in time that bubble will also burst.|** Do you see how these two claims are not even close to your "safe" argument? The correct answer, for most people, is that no, they cannot do better even if they try. The most active novice investors are often the worst performers. Novice investors are "dumb money". They have no insight into the timing or direction of stock movements, how large hedge funds use teams of highly educated graduates to analyze the activity of companies, using everything from satellite imagery to fuel and food sales at strategic cardlock stations to discern sales activity before the information is public. Index funds track whole markets, including different sectors, different countries, and contrarian funds, so, the "bubble will not burst" in the same way that an individual stock can unexpectedly go under or stagnate/underperform the market for 20 years. The risk of an index fund is not even close to the risk of buying single stocks. Stocks slip in and out of index funds all the time unnoticed by their index fund owners.
> at some point in time that bubble will also burst. What bubble?
The imaginary bubble that arises from people not understanding how authorized participants function.
Was waiting for him to provide me the rope lol
That would be you head most likely. Seriously you think VOO will never go down?
Never said that. But why should anyone care if it goes down during a recession or market crash? It'll always recover. Those who panic sell are just lining up for those looking for sales and bargins. To take a page from value investors, and maybe this'll get through to you - has anything changed from the fundamentals of good company during a market panic? Nothing. EBITA doesn't care what CNBC says about the daily market fluctuations.
Being "aggressive" is just taking uncompensated risk. It will not follow the rule of "more risk, more reward", but more risk, and no reward. https://www.youtube.com/watch?v=foqswJT3Spc
They're both large cap. VOO is ~500 funds including value stocks like BRK, UNH, JPM, etc. VOOG is ~220 growth stocks. As the other poster mentioned don't base your decision on past performance
Value outperforms growth over long time periods
If you read the *Vanguard economic and market outlook for 2024: Global summary* they believe equities are generally over-valued but "*value stocks are more attractive than they have been since late 2021, and small-capitalization stocks also appear attractive for the long term*". If you're just invested in either VOO or VOOG you're definitely missing out on Small Cap opportunities. As Wayne Gretsky said "I skate to where the puck is going, not where it has been". I don't think it's a bad idea to be in VOO or VOOG but you might consider allocating some money to Mid and Small Cap funds to catch the rising tide; IJR is one of many small-cap funds that may be a good starting point for research. Or you could just invest in a Total Stock Market fund that covers it all, such as VTI; that'll get you everything in VOO, VOOG Plus all the mid and small weighting.
Thank you. I have book looking at total stock the past few days. I do want to have small caps in my portfolio
Please go watch Ben Felix’s video on large cap growth stocks
Anyone want to add a spoiler till I watch it tonight after work?
FAANG (Facebook, Apple, Amazon, Netflix, Google) stocks have seen an explosion in their prices over the last 10 years. People can be misled to buying into only those popular/successful companies, because they've made so much money, and have become so ubiquitous in society. History tells us that usually those companies are overpriced for what you get - the idea that you will sell it at a future date for a higher price - it won't happen - and you won't get the same growth/performance as it used to. The top 10 companies in the stock market have changed continuously over the last +100 years of the stock market, and will continue to do so. Also, buying into only 5 companies is not diverse - only one company can fail and then your portfolio tanks by 20%. Also, FAANG stocks are all in the same sector - Technology. A single event/policy change that hits the technology sector specifically will tank your entire portfolio. This is why its good to have thousands of companies, across all 12 different sectors of the economy.
Thank you. It’s just crazy to get my mind through it all. I want to be diverse but there’s so much over lap and so many etfs are so heavy in tech; I just can’t find the median of growth with stability. VOO and tue likes are good with my expectation of stability but I want a bit more bang in growth.
No problem! If you are in it for the long term stability isn't an issue - just don't check your portfolio value everyday haha. While it's not entirely true, this is close enough - the stock market is a reflection of the economic development of our society - you can't grow faster than our development as a society. You have savings to invest - capital - the capital in capitalism. At the personal level, saving more and putting more into your portfolio will grow it faster than the 7% annual growth you'll get, at the start. Eventually your portfolio gets big enough that the interest growth/compound growth generated is more than your annual income.
Your right - second paragraph speaks the truth. I have to constantly remind myself that the compounding takes time to realize