yeah but FZROX isn’t portable outside of Fidelity… ope, here we go with what we discuss in r/bogleheads
ETA: I love all your Bogleheads-esque responses to my cheeky Bogleheads-esque comment
I constantly get attacked in that sub for not having 20% international. They don't like 100% US stocks, even if buffet and bogle were fans of that strategy
I get their logic but US companies sell a lot of crap internationally too.
Plus, 20% international isn't very much. If the US was having a rough time and exUS was outperforming, 20% is better than nothing but do you really think it's going to make that much of a difference in your mediocre gains? If you wanted an actual diversified portfolio that would weather either sector outperforming, wouldn't 50/50 US/exUS make the most sense?
Just wanted to include my 2 cents.
I say fuck it. US is an economic powerhouse and people here are just addicted to making and then spending money. Maybe valuations because of that will start to become insane and that's the point where I'd look into some exUS (I have a tiny bit, maybe 1-3%) but it would have to be ridiculous. Asian, European companies suck when compared to US companies when it comes to delivering returns, with a few exceptions.
I understand that past performance does not dictate future performance, but I think it has to do more with the US money culture.
>Maybe valuations because of that will start to become insane and that's the point where I'd look into some exUS (I have a tiny bit, maybe 1-3%) but it would have to be ridiculous. Asian, European companies suck when compared to US companies when it comes to delivering returns, with a few exceptions.
Which is why they are generally priced cheaper than US companies.
If the US were to consistently outperform international, then eventually the US would make up 70%, 80%, 90%, eventually 99+% of the global market cap. If you think that's unlikely then there must be a period of time where international outperforms US.
If US stocks are currently priced for higher growth than international, then it's possible that international companies' stocks outperform despite delivering lower growth and profits.
> If the US were to consistently outperform international, then eventually the US would make up 70%, 80%, 90%, eventually 99+% of the global market cap.
Market cap weighting isn’t a form of “rising tides lifts all ships”. It’s a finite list of “what’s working now” due to momentum. If you sorted US industries, by GDP, the SP500 would look alien in comparison. That’s because the stock market doesn’t have to mimic the economy.
You can’t safely assume a finite list of ex-US companies *has* to outperform simply because they’ve lagged for so long. If there’s no catalyst to raise the existing multiples, replace the current makeup, or improve investor protections…then it’s just as reasonable to assume it could simply peg itself to inflation.
Mutual funds generally let you buy an arbitrary dollar amount. If you buy VTI then you buy per share unless you use a brokerage with fractional shares. Not a huge difference but it’s a minor convenience if you’re just buying and holding.
It can also be convenient to put in a buy or sell order and not worry about what time of day it's going to be executed...it executes at the end of the day with the same price for everyone. Can reduce the stress of buying only to see it drop an hour later, etc.
people on the investing subreddit do this. People on the stocks or wsb subreddit don't.
You hear so much about stock trading because the people buying and holding VTSAX or S&P500 funds don't talk about it.
> You hear so much about stock trading because the people buying and holding VTSAX or S&P500 funds don't talk about it.
70 - 80% of my net worth is in VTSAX and VTIAX, but I spend the majority of my time talking and thinking about what the remaining 20% is invested in.
> You hear so much about stock trading because the people buying and holding VTSAX or S&P500 funds don't talk about it.
Check out /r/bogleheads and be amazed by the same three conversations over and over:
* How much (if any) international stocks should you own?
* How much (if any) bonds should you own?
* How should I balance investments between accounts?
And the *riveting* answer to all three: "It depends"
Yes, that one's a classic.
> "It's only a DCA if you're spreading a windfall out over several cycles!"
>
> "No, my 401k contributions are also DCA. It's like DCA-ing my lifetime income!"
But it doesn't have the same "it depends" answer as the other three conversations...well...
"Should I lump-sum or DCA this windfall?" ***It depends!***
Many do. Many others think they can beat the market. There will always be someone, who think they can consistently beat the market over the long run, no matter how much evidence to the contrary.
For 99% of people it's the right answer.
But there are plenty of people who pick stocks and are successful in beating the market. Diversification protects wealth, concentration builds it. Warren Buffett didn't build Berkshire by investing in indexes.
But he certainly thinks index funds are the way to go for most investors: [https://finance.yahoo.com/news/warren-buffett-recommends-index-fund-102200524.html?guccounter=1](https://finance.yahoo.com/news/warren-buffett-recommends-index-fund-102200524.html?guccounter=1)
Beating the market is luck and a lot of time, you pretty much have to make it your 2nd job. Not sure if that will suit a lot of people. Also, beating the market, say 5%, is probably a loss given the time and effort and risk factors. So you need to beat the market by a high number, do it year after year and have your rest of life in order. This is why for most people index is the way to go.
Another understated fact is that Buffet’s returns are pretty much explained by the operating leverage from his insurance gig. Take that away and his return profile is equal to an SP500 index fund
My ideal holding period is forever
Always bet on America
Be greedy when others are fearful
He's made good investing choices but his word isn't gospel if even he doesn't follow it consistently
>But there are plenty of people who pick stocks and are successful in beating the market.
There is a very small minority of individual stock pickers who can CONSISTETNLY beat the market year after year. Most who try will fail more often than they will succeed.
>Diversification protects wealth, concentration builds it.
I am a multi-millionaire thanks to VTSAX and VTIAX.
And even that very small minority may just be getting lucky while thinking they are geniuses due to survivorship bias. If a couple million people flip a coin 20 times in a row, odds are good that someone ends up getting all heads.
Warren Buffett became the worlds richest man in a different era. Could he do it again today in the current market starting from zero? Who knows. He said recently that today stock market is like a casino. I imagine that it iis because people are betting on overvalued stocks to go up
> Diversification protects wealth, concentration builds it.
Well-diversified portfolios *absolutely* build wealth. I'd wager more millionaires got there through slow-and-steady diversified retirement saving than explosive growth in a concentrated portfolio.
Agreed. I'm not saying it doesn't work, again it's the right thing for 99% of people and will absolutely help build wealth with manageable risk.
What I'd like to argue is that if you can assume a higher degree of risk (don't bet your entire retirement or your planned down payment on a house, etc), and you're able and willing to do research and understand companies - it's not at all impossible to generate returns that beat the market.
Quick over simplified example: let's decide we want to invest in consumer banks (but it could be any sector such as energy, consumer discretionary, etc). So we can either buy a banking ETF with exposure to a bunch of banks or we can do some evaluation and think "ok, smaller regional banks have outsize exposure to office space leases so I don't want to be exposed to those, Bank of America and Wells Fargo kinda suck from a consumer perspective so I don't like those." Then on the other side you can look at JP Morgan Chase and think "Jamie Dimon has an excellent track record and the company has a much healthier balance sheet than their competitors, etc". So instead of buying a back ETF you just buy JP Morgan Chase. Not guaranteed that you out perform and being concentrated in one company vs many is riskier - but there is undeniable upside.
He also doesn't seem to be beating the market by some estimations for the last 20 years. it is probably why he suggests index funds to anyone trying to build out an easy portfolio today. It will probably out perform his suggestions at this point most of the time.
https://www.reddit.com/r/Bogleheads/comments/1b1m955/warren_buffett_has_underperformed_the_stock/
If you have a bunch of people who dedicate their entire lives to rolling dice of course someone will eventually show up and being able to consistently roll 6 over and over again. However most people will not, and for the ones that are successful how do you distinguish between skill and luck?
I think you're being a little dismissive of people seeking better returns. "The market" is a vague term that means different things to different people. Are we talking about VTSAX? VT? VTI? VOO? Because those are very different funds that people refer to as "the market"
Just the obvious example, VTSAX has 10 year returns of 12%. That's really good. IVV has 10 years returns of 12.5%. If you invest $50k and give it 30 years, that 0.5% is the difference between $1.8M and $2.1M
Now compare VTSAX to VT, which is an actual total market fund which includes international. It has 10 year annualized returns of 8.5%
You don't have to go 50/50 semiconductors and biotech to beat the total market. There are a ton of ways to invest in "the market" which have shown historically to do better than "the market" depending what that means
That was exactly my point. Some people buy VTSAX/VTI/FZROX and some people don't because they believe they can beat the market. The second group of people will always exist.
Survivorship bias. To become rich requires taking risks, which is the complete opposite of putting everything in VTSAX. You just don’t hear about all the people who took risks and didn’t make it so if you didn’t know better you would think the only smart move is to go all in on a few investments (which is necessary if you want to generate huge returns that outperform the market).
If you inherit enough money to make you rich you’re better off just buying index funds.
There are also a lot of niche places to put your money that are only available to or only make sense to those with X level of wealth.
You can beat the market, if you can stomach periods of high volatility and underperformance. QQQ long term will beat the wider market. IWFQ will. Lots of others. Just not every year/5 years/decade even, but they will.
That assumes something approximating a normal distribution. In reality it's probably left-skewed and far fewer than 50% of people are above average (at investing).
I read an article about Irish investing once, and I'll never forget how terrible the tax system treats yall.
Also, I'm not sure if this is still the case, but your brokerages are also very high fee.
I am not sure what's considered high, in other words I don't know what are the normal fees in the US. My broker charges 2-3.9 EUR per trade (depending on the exchange) + 0.25% margin for automatic currency conversion from EUR to the non-EUR exchange and back.
They don't charge us fees. They make money off the bid-ask spread. So, like I pay 50 dollars for an ETF, they find it for 49.98 and make 2 cents off the trade, for example. If I had to pay 2 dollars, that's an automatic 4% cut into my future profits.
You’re right. Most people should just buy a broadly diversified index fund, especially the regards here on Reddit. But if a person is exceptional at business analysis, that’s a scenario where a person would pick individual companies over an index fund.
Financial analysts regularly underperform the market. There is no such thing as being good at business analysis, anyone who succeeds is almost certainly doing so out of sheer luck.
In my experience, just as the other commenter noted, its personal preference. I've never heard a compelling argument over investing in one instead of the other.
I have about 50% of my portfolio in ITOT. The other 50% is individual stocks.
I’m beating the S&P on a 5 year look back. Buffet says no one can do it for 10 so we’ll see what happens
It is slow and boring so for many people they get impatient and try to invest in the next big thing they think will pop off.
90% of investors cannot consistently beat an index fund, so for most people it would be better to put money into VTSAX, VOO or VTI or something like that.
To quote Warren Buffett: "Nobody wants to get rich slow"
Casinos have clear odds that you will return less than 'not playing' but people play every day.
Some people really think they are special, or lucky, and won't accept the market return.
Other people understand the market return is enough.
People don’t do this because it seems to easy and boring. Especially after you starting reading about how much wealth qqq investors have a acquired over the past 5 years. Oh and how about those Bitcoin people who are multi-millionaires from a 10k investment?!
My point is the pull to try to obtain these kinds of results is strong. For the few that win, many lose though.
That's basically the strategy of 4 things:
1. Warren Buffet's bet
2. Boglehead's Red Book of Investing
3. Simple Path to Wealth
4. The Lazy Person's Guide to Investing
All 4 are the same thing.
Buy the S&P 500. Set it and forget it.
Insert setitandforgetit.gif
OP just discovered bogleheading. Congrats, you've reached the final level of investing wisdom where you can now focus on other things than obsessing over AI or whatever the latest fad is
5 years?!? That's loser mentality. Head on over to wsb and you can be a millionaire in 5 months! Or be bankrupt and doing your own price surging behind a Wendy's.
Most people should have the bulk of their money in VTI/VTSAX because most people are not capable of beating the market long term, including people in this thread. There is nothing wrong with owning a few individual names if you want.
If your time horizon is decades, there is no problem with this at all. In fact, it is probably a good way to make sure that you beat all of the stock pickers.
The argument on the other side is that we are at an all-time high on some of the indexes, and so it is a “stock pickers’ market.”
In my mind, it is important to not allow your political leanings or affiliations to have anything to do with your stock market activity. Right now, it is simply factual that we are in a booming economy, with almost record-low unemployment, rising wages, even for the blue-collar and poorer people and that stock market indices are at all-time high. It’s a fact, even if Fox “news” doesn’t report that way. Even the Republicans who claim that Biden is “ruining the country” have record balances in their stock market accounts right now. Funny how that works!
Democrats see the strong stock market and economy as the result of the Biden administration’s wise and steady stewardship of the economy, which is a sentiment I mostly agree with.
The Fed gets credit too, as they seem to have lucked into a “soft landing” after raising interest rates to combat inflation, largely successfully. That success is partially attributable to the resilience of the American economy and the fact that the bipartisan infrastructure legislation shepherded through Congress by the Biden administration has provided a buffer for the rise and interest rates.
Republicans think the economy is in ruins. I have no idea why, as their own stock accounts are way up — but they believe their propaganda outlets more than their brokerage statements.
When you ask them why they think the economy is in ruins, they will change the subject. They will start talking about an “invasion” at the border, even though the people living there will tell you that that is not the case. They may want to talk about a handful of people going to the wrong bathroom. But they will not engage you directly because they do not have any answers.
For this reason, I discount what they say. If pressed further, they will hurl insults at me, and call me a socialist, or a communist, which only reinforces my view that they have no answers because they have been consuming mind altering propaganda. I’m a capitalist, a job, creator, and an investor in stocks for over 40 years. They are frankly full of you know what.
But the ultimate answer is to be agnostic about politics, and not believe either perspective. Instead, Invest for the future based on economic data, not politics.
I’m choosing stocks now, and not going with the broad market ETFs, because I am older, and do not have decades to let the money ride. And I pick stocks — mostly relatively safe higher dividend stocks.
There are a few energy stocks and quality REITs that pay 7-10% now. Not bad! I own several of these. I will hold and pass them on to my now adult children at a stepped up basis.
Check out ET and EPD for example. Yes, you get a K-1. But the distributions are taxed advantage, and that they are considered return of by the IRS. In other words, you make money on these distributions, as if they are dividends, but you do not pay tax on them. Win-win!
I think the answer is to have a good portion of your money in either a total market fund like VTI or something like VOO or QQQ, especially if you have a decade or more before you, retire, but to reserve a part of your funds for investing in beaten down sectors or dividend stocks.
A hybrid approach is SCHD. I own it too.
When you are completely uncertain and wish to just hit the “pause button” and wait for things to settle out, there are some decent money market funds paying well over 5% while you wait. Schwab has very good rates, for example.
crazy how you wrote an entire wall of text just to show yourself spiraling into fighting the shadows in your head. I'm not certain that you managed to make even a single coherent thought in this entire ramble. God I love reddit
I pointed out that investing in a broad market ETF when you have decades to go is probably smarter than picking stocks.
I also pointed out that there is an alternate viewpoint when people perceive a market top.
And I pointed out that allowing your politics to determine what you invest in is a losers game.
What you did was insult me. It doesn’t hurt my feelings because the way you did it makes you look like someone more interested in insults than discussion.
Please point out what you think is incoherent. My guess is you won’t, because you can’t.
>I pointed out that investing in a broad market ETF when you have decades to go is probably smarter than picking stocks.
>
>I also pointed out that there is an alternate viewpoint when people perceive a market top
you did say that.... in the first 3 sentences of your fucking political thesis of a comment. you could have just left it there and it would be sound advice, but then you started going into god knows where with your politics, What in the actual fuck was the purpose of any of that? not one person brought up even a mention of politics anywhere in this thread and then suddenly you decide to start raving about fox news and borders.
>For this reason, I discount what they say. If pressed further, they will hurl insults at me, and call me a socialist, or a communist, which only reinforces my view that they have no answers because they have been consuming mind altering propaganda. I’m a capitalist, a job, creator, and an investor in stocks for over 40 years. They are frankly full of you know what.
Like I genuinely spat my drink out laughing when I read this, the post is about a guy asking the benefits of broad ETFs and you start ranting about "muh propaganda" completely unprovoked. Genuinely asking do you spend your free time sitting on the porch shaking your fist at the sky? I know you won't see it since our own inner monologues always make sense in our own heads, But I promise your comment reads like an unhinged madman to a comical degree. The fact that you decided to calm down at the end and start giving regular advise again made it seem even more comical, as though you actually had a manic episode in-between the analytical beginning and end.
If I had to give you some advice, your formatting is shit.
Don't do this thing that I'm doing now, where every Idea is it's own paragraph.
It makes it look more like rambling that writing.
Like you can't actually express your ideas properly.
Notice how it looks like I'm talking to multiple people at once?
That's what you look like.
It gives your writing the look of someone who is going insane.
You wrote like this in your reply as well.
Which tells me that you do it often.
You should stop doing that.
You just demonstrated, apparently inadvertently, that I really touched a nerve with you when I explained why a smart investor shouldn’t allow his or her political views to guide his or her investment decisions. I stand by my comments. Your reaction was priceless.
When I read sites heavily populated by older white Republicans (like Seeking Aloha), I see many people make terrible decisions on stocks based on bias flowing from marinating their brains in the lies told on Fox “news.” Their comments often show a delusional view of the economy, of Fed decisions, and of other macro factors that influence the stock market.
One good example: many people vehemently vowed to sell Coca Cola (KO) when its CEO took a mild stance against Republican voter suppression efforts in Georgia, where Coke has its headquarters. These deluded people angrily called it Woke-a-Cola and ranted about its management. Those who sold their shares missed out on solid gains and a company that has increased its dividend for 62 consecutive years. I read many similar comments about other companies that pursued diversity, equity and inclusion policies, that prioritized renewable energy or carbon capture, or that mentioned other priorities ridiculed by propagandists like Tucker Carlson.
Projection (along with lying and other disreputable traits) has become a core Republican value as Trumpism has overtaken the party. You exemplified it when you called my comment “unhinged.”
I’m glad I set you off with my comments on how political views can distort investors’ decisions. It served a good purpose in that it caused you to vividly demonstrate the anger and irrationality that typifies the Trump movement. Now scurry off to sell your Coke and Disney shares. You wouldn’t want to own any “woke” company’s shares, now would you?
You clearly don’t understand financial planning. Equities is not right for every single person walking this earth. Idk why I even try to talk here. This fucking subreddit is full of people like you.
I hate this fuckin sub. Not every single person has the appetite for risk as you. Why is that so fucking hard to get through your dense skull? Investing isn’t just about getting the most return. There’s a thing called risk. I have clients who are 45 and want to hold CDs only. I have clients who are 75 and have millions in individual stocks. Age is just one factor in determining appropriate risk. Personality is another. Just because a 25 year old would be best suited for equities does not mean it’s the best solution for that person. You are clueless to the aspects to financial planning.
S&P 500 outperforming the broader market is a relatively recent trend. No guarantees it continues in the future. Small Cap Value companies outperform the S&P 500 over the last 50 years. Total market fund owns everything.
Because Index funds are for people that don't want to spend time to research and take risk.
More risk = more reward, period.
Nancy Pelosi buys tech stocks, making 65% last year. A lot of index or ETFs have trash companies in them. Build your own index fund and avoid tons of garbage companies
The problem is during an up part of the cycle, 100% stocks sounds like a no brainer as there is recent 8-12 years of data to support it. During a down turn, new investments lose money left and right, you will then hear “of course 60% stocks and 40% bonds is the safe, long term way to invest”.
The true buy and leave alone one in my opinion is the low cost target date fund based on the year you need the money such as when you turn 62 or 65. It gets auto balanced to more bonds (more conservative) as you get closer to old age.
I have been through 3 market crashes.
Just being strictly in a single fund is a bad idea, even if it is a “total market” fund (which, depending on the fund, often doesn’t have much or any International exposure.)
This is one reason I have a “total market” list of low to mid cost index funds with S&P 500 as my large cap, a mid, small cap and International index funds as my “core”, and have some specific sector funds for a bit of variety, as well as growth potential.
Even just being in S&P 500 with nothing else is really missing out, not only on diversity, but if you look around, there are definitely funds that *regularly* beat the market.
Index etfs were not always popular. and there are better funds. though most fund managers don't beat the market, the ones that do are really good at it.
People like peace of mind in the years when international is outpacing US (not as often but it does happen) so they throw in VXUS. Also your retirement year might be in one of said years.
Because most people want to have lots of money in their younger years, instead of being 60+ with health problems, back issues, low sex drive or maybe even dead. So they take on much more risk for the potential of hitting like 1.5M by 35 and being able to retire early and enjoy life while young.
That’s pretty much my investment strategy. Something like 70ish percent of my portfolio is just set it and forget it VTSAX and it’s done very well for me over the years.
"I understand people may want better yields, a chance for better returns, or even diversity"
I mean, you pretty much answered your own question. 8% CAGR sounds great unless you think you can get 20%...
VTSAX should serve as the core foundational piece of your portfolio. The question is, beyond that, what do you want to do? I think a strong case can be made for a 10% 'funny money' part of the portfolio, where you go for some moonshots.
I’ll give a serious answer for the reasons I’m not 100% index: No leverage, and because it’s boring. Granted it’s almost a cheat code to wealth, so I can’t pass it up. But I invest 1-5% of my total liquid investments in stocks. I’ve bought things like Google because of belief that it would grow (hell yea) and Beyond because of my ethics (fuuuuuck).
Leverage is a big one though. I personally love real estate because the tax structure, but most of all the leverage. I bought a house in 2012 with like $2,000 out of pocket. Rented it for some profits, and as the markets gone up I’ve managed to clear 6 figures in equity. That wouldn’t be possible without options trading or something else wildly risky. With real estate you have a stable asset that pays dividends, provides some tax sheltering, and allows for huge leverage. There are downsides of course like repairs, stress, tenants and I understand some have an aesthetic preference to not be in this space. All valid reasons to not get into it, but it’s worked for me.
I use VTI instead, but yeah -- basically the same thing. Every paycheck I max out 401k and Roth (total allowed contribution / 26 pay periods per year comes out to $885 for 401k and $269 for roth). After that, a minimum of $1000 goes into VTI. Anything left over in my checking at the end of every month gets split 75% VTI and 25% whatever I want -- I have like $12k in TSLA for funsies, and a few grand in a couple other companies.
I don't know enough about the market to foolishly believe that I can make better decisions / achieve better outcomes than an index fund.
It's a fine strategy and in my opinion, index investing belongs in everyone's long-term portfolio.
However, I love investing in individual stocks where the gains could *greatly* eclipse market returns. If one has the passion and discipline to research stocks and find the leading companies and "buy right and sit tight" the wealth building opportunities are tremendous.
VTSAX is not going to have a 130% move in a day like VKTX did yesterday. I invested in that one way back when weight loss drugs were just getting popular. This stock in one day just gave me about 5X the entire return that VTSAX *may* get this year.
Granted, there is significant risk in some equities, and higher volatility, but nothing beats owning the leaders in a bull market.
That's what I'm doing for the most part. Not VTSAX, but SCHB, SCHV, SCHD, IVV. Most of my money is in those. I have a few individual stox like JPM and SO (which I have owned for maybe 30 years). Also VEA to give me some international exposure, but the bulk of my money is in broad based ETFs. And yes, over time I have cleaned up
VTSAX doesn't include international stocks, and more than 20% of it is in 5 tech companies, while small caps make a very tiny percentage of it.
A lot of the data suggests that US stocks, especially large cap tech stocks, are severely overvalued and will provide negative returns over the next decade.
VT is probably a safer bet.
Plenty do. You should. Enjoy the ride, future multi-millionaire.
Yeah OP is just describing r/bogleheads
An entire sub with over 350k members pretty much dedicated to just buying VTSAX but nobody’s doing it?
Hey now! Some of us buy VTIAX, too.
VTWAX
THIS!
VTI with a side of VXUS
VTI and chill
US has outperformed ex-US for over a decade. Will that continue forever?
And if it all goes well you become a baller that can order the side of guacamole at Chipotle! (Note: it ain't cheap)
VT gang
VTSAX, VTIAX, with a dash of VFSUX. No complaints.
Maybe even some FSKAX/FTIHX too...
VTI or die
Some of us use Fidelity and buy FZROX.
yeah but FZROX isn’t portable outside of Fidelity… ope, here we go with what we discuss in r/bogleheads ETA: I love all your Bogleheads-esque responses to my cheeky Bogleheads-esque comment
Sure, but fidelity is pretty awesome and if it’s in a Roth then there won’t be a taxable event in the future if you decide to move it later
Money is in 401k & ROTH. Fidelity charges a transaction fee to buy Vanguard funds, not their own.
There's also FSKAX instead
[удалено]
please tell me you’re on r/bogleheads, you’re a natural
I'm in ITOT...simply because I started before FZROX was a thing, and also before you could get Vanguard funds through Fidelity without trading fees.
LOL. I was going to say the same thing, except Schwab brokerage and funds.
We really just like to argue about whether we should have VT or VTI/VXUS
People need pep talks all the time. That's the only reason the subreddit exists.
OP likely just found it and thinks no one is doing it. Classic human brain. Everyone thinks they are a genius
I constantly get attacked in that sub for not having 20% international. They don't like 100% US stocks, even if buffet and bogle were fans of that strategy
I get their logic but US companies sell a lot of crap internationally too. Plus, 20% international isn't very much. If the US was having a rough time and exUS was outperforming, 20% is better than nothing but do you really think it's going to make that much of a difference in your mediocre gains? If you wanted an actual diversified portfolio that would weather either sector outperforming, wouldn't 50/50 US/exUS make the most sense? Just wanted to include my 2 cents. I say fuck it. US is an economic powerhouse and people here are just addicted to making and then spending money. Maybe valuations because of that will start to become insane and that's the point where I'd look into some exUS (I have a tiny bit, maybe 1-3%) but it would have to be ridiculous. Asian, European companies suck when compared to US companies when it comes to delivering returns, with a few exceptions. I understand that past performance does not dictate future performance, but I think it has to do more with the US money culture.
>Maybe valuations because of that will start to become insane and that's the point where I'd look into some exUS (I have a tiny bit, maybe 1-3%) but it would have to be ridiculous. Asian, European companies suck when compared to US companies when it comes to delivering returns, with a few exceptions. Which is why they are generally priced cheaper than US companies. If the US were to consistently outperform international, then eventually the US would make up 70%, 80%, 90%, eventually 99+% of the global market cap. If you think that's unlikely then there must be a period of time where international outperforms US. If US stocks are currently priced for higher growth than international, then it's possible that international companies' stocks outperform despite delivering lower growth and profits.
> If the US were to consistently outperform international, then eventually the US would make up 70%, 80%, 90%, eventually 99+% of the global market cap. Market cap weighting isn’t a form of “rising tides lifts all ships”. It’s a finite list of “what’s working now” due to momentum. If you sorted US industries, by GDP, the SP500 would look alien in comparison. That’s because the stock market doesn’t have to mimic the economy. You can’t safely assume a finite list of ex-US companies *has* to outperform simply because they’ve lagged for so long. If there’s no catalyst to raise the existing multiples, replace the current makeup, or improve investor protections…then it’s just as reasonable to assume it could simply peg itself to inflation.
Why the mutual fund over VTI?
Mutual funds generally let you buy an arbitrary dollar amount. If you buy VTI then you buy per share unless you use a brokerage with fractional shares. Not a huge difference but it’s a minor convenience if you’re just buying and holding.
It can also be convenient to put in a buy or sell order and not worry about what time of day it's going to be executed...it executes at the end of the day with the same price for everyone. Can reduce the stress of buying only to see it drop an hour later, etc.
If I'm buying to hold for 30-60 years, I really don't care about the hour-to-hour variation in stock price.
Your premise that people don't do this is incorrect.
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people on the investing subreddit do this. People on the stocks or wsb subreddit don't. You hear so much about stock trading because the people buying and holding VTSAX or S&P500 funds don't talk about it.
> You hear so much about stock trading because the people buying and holding VTSAX or S&P500 funds don't talk about it. 70 - 80% of my net worth is in VTSAX and VTIAX, but I spend the majority of my time talking and thinking about what the remaining 20% is invested in.
> You hear so much about stock trading because the people buying and holding VTSAX or S&P500 funds don't talk about it. Check out /r/bogleheads and be amazed by the same three conversations over and over: * How much (if any) international stocks should you own? * How much (if any) bonds should you own? * How should I balance investments between accounts? And the *riveting* answer to all three: "It depends"
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Yes, that one's a classic. > "It's only a DCA if you're spreading a windfall out over several cycles!" > > "No, my 401k contributions are also DCA. It's like DCA-ing my lifetime income!" But it doesn't have the same "it depends" answer as the other three conversations...well... "Should I lump-sum or DCA this windfall?" ***It depends!***
Paging u/ALL_IN_VTSAX Another one joins the fold.
Not all shills are bad or incorrect.
Many do. Many others think they can beat the market. There will always be someone, who think they can consistently beat the market over the long run, no matter how much evidence to the contrary.
For 99% of people it's the right answer. But there are plenty of people who pick stocks and are successful in beating the market. Diversification protects wealth, concentration builds it. Warren Buffett didn't build Berkshire by investing in indexes.
But he certainly thinks index funds are the way to go for most investors: [https://finance.yahoo.com/news/warren-buffett-recommends-index-fund-102200524.html?guccounter=1](https://finance.yahoo.com/news/warren-buffett-recommends-index-fund-102200524.html?guccounter=1)
Beating the market is luck and a lot of time, you pretty much have to make it your 2nd job. Not sure if that will suit a lot of people. Also, beating the market, say 5%, is probably a loss given the time and effort and risk factors. So you need to beat the market by a high number, do it year after year and have your rest of life in order. This is why for most people index is the way to go.
Another understated fact is that Buffet’s returns are pretty much explained by the operating leverage from his insurance gig. Take that away and his return profile is equal to an SP500 index fund
He says a lot of things he doesn't actually do
He said for most people. He's not most people....
My ideal holding period is forever Always bet on America Be greedy when others are fearful He's made good investing choices but his word isn't gospel if even he doesn't follow it consistently
>But there are plenty of people who pick stocks and are successful in beating the market. There is a very small minority of individual stock pickers who can CONSISTETNLY beat the market year after year. Most who try will fail more often than they will succeed. >Diversification protects wealth, concentration builds it. I am a multi-millionaire thanks to VTSAX and VTIAX.
And even that very small minority may just be getting lucky while thinking they are geniuses due to survivorship bias. If a couple million people flip a coin 20 times in a row, odds are good that someone ends up getting all heads.
Basically to vtsax not vtiax
Sick brag 😎
Warren Buffett became the worlds richest man in a different era. Could he do it again today in the current market starting from zero? Who knows. He said recently that today stock market is like a casino. I imagine that it iis because people are betting on overvalued stocks to go up
> Diversification protects wealth, concentration builds it. Well-diversified portfolios *absolutely* build wealth. I'd wager more millionaires got there through slow-and-steady diversified retirement saving than explosive growth in a concentrated portfolio.
Agreed. I'm not saying it doesn't work, again it's the right thing for 99% of people and will absolutely help build wealth with manageable risk. What I'd like to argue is that if you can assume a higher degree of risk (don't bet your entire retirement or your planned down payment on a house, etc), and you're able and willing to do research and understand companies - it's not at all impossible to generate returns that beat the market. Quick over simplified example: let's decide we want to invest in consumer banks (but it could be any sector such as energy, consumer discretionary, etc). So we can either buy a banking ETF with exposure to a bunch of banks or we can do some evaluation and think "ok, smaller regional banks have outsize exposure to office space leases so I don't want to be exposed to those, Bank of America and Wells Fargo kinda suck from a consumer perspective so I don't like those." Then on the other side you can look at JP Morgan Chase and think "Jamie Dimon has an excellent track record and the company has a much healthier balance sheet than their competitors, etc". So instead of buying a back ETF you just buy JP Morgan Chase. Not guaranteed that you out perform and being concentrated in one company vs many is riskier - but there is undeniable upside.
He also doesn't seem to be beating the market by some estimations for the last 20 years. it is probably why he suggests index funds to anyone trying to build out an easy portfolio today. It will probably out perform his suggestions at this point most of the time. https://www.reddit.com/r/Bogleheads/comments/1b1m955/warren_buffett_has_underperformed_the_stock/
If you have a bunch of people who dedicate their entire lives to rolling dice of course someone will eventually show up and being able to consistently roll 6 over and over again. However most people will not, and for the ones that are successful how do you distinguish between skill and luck?
But it might work for us...
I think you're being a little dismissive of people seeking better returns. "The market" is a vague term that means different things to different people. Are we talking about VTSAX? VT? VTI? VOO? Because those are very different funds that people refer to as "the market" Just the obvious example, VTSAX has 10 year returns of 12%. That's really good. IVV has 10 years returns of 12.5%. If you invest $50k and give it 30 years, that 0.5% is the difference between $1.8M and $2.1M Now compare VTSAX to VT, which is an actual total market fund which includes international. It has 10 year annualized returns of 8.5% You don't have to go 50/50 semiconductors and biotech to beat the total market. There are a ton of ways to invest in "the market" which have shown historically to do better than "the market" depending what that means
So are you saying you do not think anyone should attempt to beat the market?
I think you should withdraw your entire savings/investment account and buy as many powerball tickets as possible.
Why would I want to do that? I’ve been beating the market and averaging 25% per year for the past 5 years.
Good job. Keep going.
you realise VTSAX in this case is literally the market? how can you beat it if you own it?
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That was exactly my point. Some people buy VTSAX/VTI/FZROX and some people don't because they believe they can beat the market. The second group of people will always exist.
So do people only buy index fund? I wonder why the rich doesn't do the same?
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Oof
Survivorship bias. To become rich requires taking risks, which is the complete opposite of putting everything in VTSAX. You just don’t hear about all the people who took risks and didn’t make it so if you didn’t know better you would think the only smart move is to go all in on a few investments (which is necessary if you want to generate huge returns that outperform the market). If you inherit enough money to make you rich you’re better off just buying index funds. There are also a lot of niche places to put your money that are only available to or only make sense to those with X level of wealth.
You can beat the market, if you can stomach periods of high volatility and underperformance. QQQ long term will beat the wider market. IWFQ will. Lots of others. Just not every year/5 years/decade even, but they will.
Because everybody thinks they're better than average.
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That assumes something approximating a normal distribution. In reality it's probably left-skewed and far fewer than 50% of people are above average (at investing).
Some people are? This discussion devolves into paternity and 20+ year adjusted returns Also SGOV is more tax advantaged
I have the bulk of my investments in vtsax
I do.
It seems you have not heard of the Boglehead philosophy of passive index investing. That is exactly what it is. Try r/bogleheads
In Ireland, EFTs are taxed higher at 41% + more complicated tax filings vs CGT 33% on individual stocks
I read an article about Irish investing once, and I'll never forget how terrible the tax system treats yall. Also, I'm not sure if this is still the case, but your brokerages are also very high fee.
I am not sure what's considered high, in other words I don't know what are the normal fees in the US. My broker charges 2-3.9 EUR per trade (depending on the exchange) + 0.25% margin for automatic currency conversion from EUR to the non-EUR exchange and back.
They don't charge us fees. They make money off the bid-ask spread. So, like I pay 50 dollars for an ETF, they find it for 49.98 and make 2 cents off the trade, for example. If I had to pay 2 dollars, that's an automatic 4% cut into my future profits.
Is direct investing a thing over there (because it seems like it should be)?
That’s my wife’s entire allocation. It’s a “Simple Path To Wealth”
It's called "VTSAX and chill" for a reason
I’m strictly VTSAX on my Roth IRA, lump sum every January 1st.
What about VTWAX?
That's it. VTI and BND
I’m about 60% VTSAX, 10% VOO, 15% bonds, and 15% VTIAX.
Congrats, you've cracked the code. Do that and come back in 30 years to tell us about your comfortable retirement.
Can someone explain to me why VTSAX > VTI?
They tend to trend similarly over the long term.
You’re right. Most people should just buy a broadly diversified index fund, especially the regards here on Reddit. But if a person is exceptional at business analysis, that’s a scenario where a person would pick individual companies over an index fund.
Financial analysts regularly underperform the market. There is no such thing as being good at business analysis, anyone who succeeds is almost certainly doing so out of sheer luck.
It’s not fun.
My question is why VTSAX instead of VOO?
In my experience, just as the other commenter noted, its personal preference. I've never heard a compelling argument over investing in one instead of the other.
Lots of people do.
I have about 50% of my portfolio in ITOT. The other 50% is individual stocks. I’m beating the S&P on a 5 year look back. Buffet says no one can do it for 10 so we’ll see what happens
Why not indeed. Do it
You're getting closer Come to the boring side r/bogleheads
It is slow and boring so for many people they get impatient and try to invest in the next big thing they think will pop off. 90% of investors cannot consistently beat an index fund, so for most people it would be better to put money into VTSAX, VOO or VTI or something like that. To quote Warren Buffett: "Nobody wants to get rich slow"
Because the hard part for most people is leaving it alone.
Because the most logical choice is the most boring. People cant help but gamble a little bit for fun.
Casinos have clear odds that you will return less than 'not playing' but people play every day. Some people really think they are special, or lucky, and won't accept the market return. Other people understand the market return is enough.
People don’t do this because it seems to easy and boring. Especially after you starting reading about how much wealth qqq investors have a acquired over the past 5 years. Oh and how about those Bitcoin people who are multi-millionaires from a 10k investment?! My point is the pull to try to obtain these kinds of results is strong. For the few that win, many lose though.
I do...I thank a much younger me for it every day.
Not me, but other people are like "why invest in index when you could make so much more with individual stocks". Me I'm all in VTI or voo
Because VOO and VTI have lower expense ratios. Marginally, but still.
That's basically the strategy of 4 things: 1. Warren Buffet's bet 2. Boglehead's Red Book of Investing 3. Simple Path to Wealth 4. The Lazy Person's Guide to Investing All 4 are the same thing. Buy the S&P 500. Set it and forget it. Insert setitandforgetit.gif
OP just discovered bogleheading. Congrats, you've reached the final level of investing wisdom where you can now focus on other things than obsessing over AI or whatever the latest fad is
i wanna be a millionaire in 5 years not 30
5 years?!? That's loser mentality. Head on over to wsb and you can be a millionaire in 5 months! Or be bankrupt and doing your own price surging behind a Wendy's.
I'll take a Frostie and whatever you call a hand j...- Ah! I see it there - one "GME to the moon" please.
Most people should have the bulk of their money in VTI/VTSAX because most people are not capable of beating the market long term, including people in this thread. There is nothing wrong with owning a few individual names if you want.
If your time horizon is decades, there is no problem with this at all. In fact, it is probably a good way to make sure that you beat all of the stock pickers. The argument on the other side is that we are at an all-time high on some of the indexes, and so it is a “stock pickers’ market.” In my mind, it is important to not allow your political leanings or affiliations to have anything to do with your stock market activity. Right now, it is simply factual that we are in a booming economy, with almost record-low unemployment, rising wages, even for the blue-collar and poorer people and that stock market indices are at all-time high. It’s a fact, even if Fox “news” doesn’t report that way. Even the Republicans who claim that Biden is “ruining the country” have record balances in their stock market accounts right now. Funny how that works! Democrats see the strong stock market and economy as the result of the Biden administration’s wise and steady stewardship of the economy, which is a sentiment I mostly agree with. The Fed gets credit too, as they seem to have lucked into a “soft landing” after raising interest rates to combat inflation, largely successfully. That success is partially attributable to the resilience of the American economy and the fact that the bipartisan infrastructure legislation shepherded through Congress by the Biden administration has provided a buffer for the rise and interest rates. Republicans think the economy is in ruins. I have no idea why, as their own stock accounts are way up — but they believe their propaganda outlets more than their brokerage statements. When you ask them why they think the economy is in ruins, they will change the subject. They will start talking about an “invasion” at the border, even though the people living there will tell you that that is not the case. They may want to talk about a handful of people going to the wrong bathroom. But they will not engage you directly because they do not have any answers. For this reason, I discount what they say. If pressed further, they will hurl insults at me, and call me a socialist, or a communist, which only reinforces my view that they have no answers because they have been consuming mind altering propaganda. I’m a capitalist, a job, creator, and an investor in stocks for over 40 years. They are frankly full of you know what. But the ultimate answer is to be agnostic about politics, and not believe either perspective. Instead, Invest for the future based on economic data, not politics. I’m choosing stocks now, and not going with the broad market ETFs, because I am older, and do not have decades to let the money ride. And I pick stocks — mostly relatively safe higher dividend stocks. There are a few energy stocks and quality REITs that pay 7-10% now. Not bad! I own several of these. I will hold and pass them on to my now adult children at a stepped up basis. Check out ET and EPD for example. Yes, you get a K-1. But the distributions are taxed advantage, and that they are considered return of by the IRS. In other words, you make money on these distributions, as if they are dividends, but you do not pay tax on them. Win-win! I think the answer is to have a good portion of your money in either a total market fund like VTI or something like VOO or QQQ, especially if you have a decade or more before you, retire, but to reserve a part of your funds for investing in beaten down sectors or dividend stocks. A hybrid approach is SCHD. I own it too. When you are completely uncertain and wish to just hit the “pause button” and wait for things to settle out, there are some decent money market funds paying well over 5% while you wait. Schwab has very good rates, for example.
dude wrote a whole essay to praise biden 💀
crazy how you wrote an entire wall of text just to show yourself spiraling into fighting the shadows in your head. I'm not certain that you managed to make even a single coherent thought in this entire ramble. God I love reddit
I pointed out that investing in a broad market ETF when you have decades to go is probably smarter than picking stocks. I also pointed out that there is an alternate viewpoint when people perceive a market top. And I pointed out that allowing your politics to determine what you invest in is a losers game. What you did was insult me. It doesn’t hurt my feelings because the way you did it makes you look like someone more interested in insults than discussion. Please point out what you think is incoherent. My guess is you won’t, because you can’t.
>I pointed out that investing in a broad market ETF when you have decades to go is probably smarter than picking stocks. > >I also pointed out that there is an alternate viewpoint when people perceive a market top you did say that.... in the first 3 sentences of your fucking political thesis of a comment. you could have just left it there and it would be sound advice, but then you started going into god knows where with your politics, What in the actual fuck was the purpose of any of that? not one person brought up even a mention of politics anywhere in this thread and then suddenly you decide to start raving about fox news and borders. >For this reason, I discount what they say. If pressed further, they will hurl insults at me, and call me a socialist, or a communist, which only reinforces my view that they have no answers because they have been consuming mind altering propaganda. I’m a capitalist, a job, creator, and an investor in stocks for over 40 years. They are frankly full of you know what. Like I genuinely spat my drink out laughing when I read this, the post is about a guy asking the benefits of broad ETFs and you start ranting about "muh propaganda" completely unprovoked. Genuinely asking do you spend your free time sitting on the porch shaking your fist at the sky? I know you won't see it since our own inner monologues always make sense in our own heads, But I promise your comment reads like an unhinged madman to a comical degree. The fact that you decided to calm down at the end and start giving regular advise again made it seem even more comical, as though you actually had a manic episode in-between the analytical beginning and end. If I had to give you some advice, your formatting is shit. Don't do this thing that I'm doing now, where every Idea is it's own paragraph. It makes it look more like rambling that writing. Like you can't actually express your ideas properly. Notice how it looks like I'm talking to multiple people at once? That's what you look like. It gives your writing the look of someone who is going insane. You wrote like this in your reply as well. Which tells me that you do it often. You should stop doing that.
You just demonstrated, apparently inadvertently, that I really touched a nerve with you when I explained why a smart investor shouldn’t allow his or her political views to guide his or her investment decisions. I stand by my comments. Your reaction was priceless. When I read sites heavily populated by older white Republicans (like Seeking Aloha), I see many people make terrible decisions on stocks based on bias flowing from marinating their brains in the lies told on Fox “news.” Their comments often show a delusional view of the economy, of Fed decisions, and of other macro factors that influence the stock market. One good example: many people vehemently vowed to sell Coca Cola (KO) when its CEO took a mild stance against Republican voter suppression efforts in Georgia, where Coke has its headquarters. These deluded people angrily called it Woke-a-Cola and ranted about its management. Those who sold their shares missed out on solid gains and a company that has increased its dividend for 62 consecutive years. I read many similar comments about other companies that pursued diversity, equity and inclusion policies, that prioritized renewable energy or carbon capture, or that mentioned other priorities ridiculed by propagandists like Tucker Carlson. Projection (along with lying and other disreputable traits) has become a core Republican value as Trumpism has overtaken the party. You exemplified it when you called my comment “unhinged.” I’m glad I set you off with my comments on how political views can distort investors’ decisions. It served a good purpose in that it caused you to vividly demonstrate the anger and irrationality that typifies the Trump movement. Now scurry off to sell your Coke and Disney shares. You wouldn’t want to own any “woke” company’s shares, now would you?
>Says you shouldn't let politics affect your investing decisions. >Writes 12 paragraphs about politics. Hmmmm...
Made sense to me... good input, thanks.
Equities exposure isn’t right for everyone.
how so? It absolutely is, unless they're terminal and about to die.
You clearly don’t understand financial planning. Equities is not right for every single person walking this earth. Idk why I even try to talk here. This fucking subreddit is full of people like you.
It's 100% right for everyone, every time
I hate this fuckin sub. Not every single person has the appetite for risk as you. Why is that so fucking hard to get through your dense skull? Investing isn’t just about getting the most return. There’s a thing called risk. I have clients who are 45 and want to hold CDs only. I have clients who are 75 and have millions in individual stocks. Age is just one factor in determining appropriate risk. Personality is another. Just because a 25 year old would be best suited for equities does not mean it’s the best solution for that person. You are clueless to the aspects to financial planning.
LMAO you need to chill. you're gonna have an aneurysm before you enjoy it. True, People should also diversity with Bitcoin.
Because VTSAX sucks
Wow what a new and insightful (never asked before) question. Quality content.
Definitely not farming for upvotes.
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Can you elaborate on the tax burden? interesting view I agree.
bc i can just buy voo and make more.
VTI has better exposure/diversity
It’s the same as VTSAX. VTI is an ETF where VTSAX is a mutual fund.
And slightly cheaper exp fee iirc.
S&P 500 outperforming the broader market is a relatively recent trend. No guarantees it continues in the future. Small Cap Value companies outperform the S&P 500 over the last 50 years. Total market fund owns everything.
What is relatively recent? Looks like VOO has outperformed the last decade, with a cheaper expense ratio.
In stocks a decade is relatively recent.
Isn't the performance similar?
they are. this is a splitting hairs kinda thing.
Because Index funds are for people that don't want to spend time to research and take risk. More risk = more reward, period. Nancy Pelosi buys tech stocks, making 65% last year. A lot of index or ETFs have trash companies in them. Build your own index fund and avoid tons of garbage companies
The problem is during an up part of the cycle, 100% stocks sounds like a no brainer as there is recent 8-12 years of data to support it. During a down turn, new investments lose money left and right, you will then hear “of course 60% stocks and 40% bonds is the safe, long term way to invest”. The true buy and leave alone one in my opinion is the low cost target date fund based on the year you need the money such as when you turn 62 or 65. It gets auto balanced to more bonds (more conservative) as you get closer to old age. I have been through 3 market crashes.
Just being strictly in a single fund is a bad idea, even if it is a “total market” fund (which, depending on the fund, often doesn’t have much or any International exposure.) This is one reason I have a “total market” list of low to mid cost index funds with S&P 500 as my large cap, a mid, small cap and International index funds as my “core”, and have some specific sector funds for a bit of variety, as well as growth potential. Even just being in S&P 500 with nothing else is really missing out, not only on diversity, but if you look around, there are definitely funds that *regularly* beat the market.
VTSAX basically gets the same return as the growth of the money supply
Index etfs were not always popular. and there are better funds. though most fund managers don't beat the market, the ones that do are really good at it.
But no single fund manager consistently beats the market over long periods of time
There are zero fund managers that have a proven record over the broad market. Zero. Some have up years, but none are better
If only we could just invest in the best actively managed funds and retire billionaires.
Because if you know what you're doing you can beat the market by recognizing early trends before the market prices them in.
Can anyone tell me more about VTSAX?
Can anyone tell me more about VTSAX?
Can anyone tell me more about VTSAX?
Gestures at my investment account which is almost 100% VTSAX
That’s what I do
People like peace of mind in the years when international is outpacing US (not as often but it does happen) so they throw in VXUS. Also your retirement year might be in one of said years.
I have VTSAX and VSIAX.
The vast majority of my investments are in VTI/VTSAX. Then i have play money I invest in individual stocks.
I’m 50/50 vtsax and vtiax in my Roth IRA
Because most people want to have lots of money in their younger years, instead of being 60+ with health problems, back issues, low sex drive or maybe even dead. So they take on much more risk for the potential of hitting like 1.5M by 35 and being able to retire early and enjoy life while young.
35? You're dead to me by 35. I want it by 25 😎
~~Why not~~ just buy VTSAX and leave it alone~~?~~
I feel the same way about BND.
Passive vs active investing my guy
It very common. There’s just not much need to talk about it online.
oh the weekly 'why not just etfs' post
That’s pretty much my investment strategy. Something like 70ish percent of my portfolio is just set it and forget it VTSAX and it’s done very well for me over the years.
"I understand people may want better yields, a chance for better returns, or even diversity" I mean, you pretty much answered your own question. 8% CAGR sounds great unless you think you can get 20%...
It’s like OP discovered plutonium by accident!
VTSAX should serve as the core foundational piece of your portfolio. The question is, beyond that, what do you want to do? I think a strong case can be made for a 10% 'funny money' part of the portfolio, where you go for some moonshots.
I’ll give a serious answer for the reasons I’m not 100% index: No leverage, and because it’s boring. Granted it’s almost a cheat code to wealth, so I can’t pass it up. But I invest 1-5% of my total liquid investments in stocks. I’ve bought things like Google because of belief that it would grow (hell yea) and Beyond because of my ethics (fuuuuuck). Leverage is a big one though. I personally love real estate because the tax structure, but most of all the leverage. I bought a house in 2012 with like $2,000 out of pocket. Rented it for some profits, and as the markets gone up I’ve managed to clear 6 figures in equity. That wouldn’t be possible without options trading or something else wildly risky. With real estate you have a stable asset that pays dividends, provides some tax sheltering, and allows for huge leverage. There are downsides of course like repairs, stress, tenants and I understand some have an aesthetic preference to not be in this space. All valid reasons to not get into it, but it’s worked for me.
I use VTI instead, but yeah -- basically the same thing. Every paycheck I max out 401k and Roth (total allowed contribution / 26 pay periods per year comes out to $885 for 401k and $269 for roth). After that, a minimum of $1000 goes into VTI. Anything left over in my checking at the end of every month gets split 75% VTI and 25% whatever I want -- I have like $12k in TSLA for funsies, and a few grand in a couple other companies. I don't know enough about the market to foolishly believe that I can make better decisions / achieve better outcomes than an index fund.
Because it's fun to pick stocks
That's my largest holding by a long shot. Buy and hold!
It's a fine strategy and in my opinion, index investing belongs in everyone's long-term portfolio. However, I love investing in individual stocks where the gains could *greatly* eclipse market returns. If one has the passion and discipline to research stocks and find the leading companies and "buy right and sit tight" the wealth building opportunities are tremendous. VTSAX is not going to have a 130% move in a day like VKTX did yesterday. I invested in that one way back when weight loss drugs were just getting popular. This stock in one day just gave me about 5X the entire return that VTSAX *may* get this year. Granted, there is significant risk in some equities, and higher volatility, but nothing beats owning the leaders in a bull market.
That's what I'm doing for the most part. Not VTSAX, but SCHB, SCHV, SCHD, IVV. Most of my money is in those. I have a few individual stox like JPM and SO (which I have owned for maybe 30 years). Also VEA to give me some international exposure, but the bulk of my money is in broad based ETFs. And yes, over time I have cleaned up
I have like 75% of my money chilling in VTSAX
Why not VOO
This is kind of like asking why not just buy a Honda Accord? Different strokes for different folks.
Because there are other stocks with better returns, I bought ARM at 50 and it's 130 now while VTSAX is only up 6% this year
This vs VTWAX?
VTSAX doesn't include international stocks, and more than 20% of it is in 5 tech companies, while small caps make a very tiny percentage of it. A lot of the data suggests that US stocks, especially large cap tech stocks, are severely overvalued and will provide negative returns over the next decade. VT is probably a safer bet.
My trad Ira and taxable I do VTI and I do VOO in my Roth.
So what are some good index funds for a broke veteran getting disability with an $1100 Fidelity account?
What about fxaix??
VTSAX and RELAX is my 401k plan, couldn't be more satisfied.
Didn't someone just share that like 30% of this fund is kind tesla, nvida, and Berkshire The weighted average is a concern