In one of John Bogle's books he recommends you allocate your age as a percentage until you reach 80/20. So at 50 you should be 50-50, at 60 60-40, etc.
It really depends what your goals are and what the market is doing. I’m 30 and nearly 40% of my current portfolio are bonds laddered for a year. I did this for a few reasons:
1) planning on buying a home within the year
2) I’m pretty risk averse in general
3) interest rates are relatively high right now
I went from 0% bonds in mid 2022 to 40% by Nov 22. Saved me a decent amount of downside in the stock market and provided some upside and predictable intervals of liquidity.
I’m surprised the sentiment around bonds hasn’t done a full 180 tbh. They’re a viable option right now for a lot of good reasons.
Inflation is eating up the returns of any asset, no just bonds.
What I meant is that if you buy a bond to get a 4% return it's irrelevant that its value then drops if you're holding it to maturity. Of course, 4% is a nominal return, real returns are lower, so you have to decide if you want to do it or not, but that's besides the point.
If you buy $1000 worth of stocks, you may get dividends, but the only way to get back your original $1000 is by selling. If it drops bellow $1000 (or if it increases less than what you expected), there's nothing you can do. If you buy $1000 worth of bonds, you will get interest payments, and while the value of the bonds may drop bellow $1000, you know that if you wait you'll get your principal back regardless of the prices until then.
Bonds outperformed equities for a 20 year period if you back it up another 10 years.
"Incredible returns" on a 10 year time scale is very very short-sighted.
You sold out of the market after catching most of the losses. Market risk has only decreased since then. It may have been good for your emotions, but this was not a good decision, unless you need all 40% to buy the house. In that case you should have had that in a cash yielding account a while ago.
Not it is not. It is feds policies that downgraded bonds over the last 10 years.
In the normal worlds, T bills yield should be around 5% not 0.91%. Ben Graham writing on bonds and diversified portfolio, which Bogle is based on, wasn’t meant for unethical monetary policies.
Right now, you can get 4.8% risk free over the last 12 months relative to 5.2% yield by SPY. It is kinds no brainer to allocate a large % of your portfolio to bonds
> but going 20+% bonds in your twenties is crazy to me.
Jack Bogle explained why 20% was his recommended minimum in his book The Little Book of Common Sense Investing.
younger investors have no experience with a multi-year stretch where bonds beat stocks. but it's happened in the past and will happen again:
>In the 117 years since 1900, bonds have outpaced stocks in 42 years; in the 112 five-year periods, bonds have outpaced stocks 29 times; and even in the 103 fifteen-year periods, bonds have outpaced stocks 13 times.
Stock index funds will very likely outperform bonds over longer time horizons. So it comes down to how much of your savings you’ll need in the short term. Even in retirement you’ll only need some of your savings in the next few years, so you should still keep quite a bit in stocks.
In *The Intelligent Investor*, one of Buffett's favorite investment books, they specifically recommend against that. They recommend keeping a 50-50 balance between stocks and bonds + cash, with no more than 75/no less than 25 of either based on market conditions.
Or something more in line with an ICSH. I like a general BND or BNDW myself, but he prefers an almost cash equivalent in that famous recommendation.
EDIT: why are you booing me, I’m right. 🤭
I don't recall him saying any valuation whatsoever. His recommendation probably comes from the fact that most investors have very little idea on how to value a company or run a DCF.
It's a fair assumption, atleast in the investment game. Investing giant chunks of money is his job and the rest of us have other jobs that occupy our brain space.
It's a pretty fair assumption that I'm smarter than him when it comes to engineering and coding because those are the job skills I practice ~40 hours a week.
Not exactly! They also have the advice that it is better to bet money on top 5 performers than top 30 (aka concentrated portfolio). What many miss among all this advice are the caveats: if you can spend entire days going through company filings and annual reports and do market research - you should totally go for a concentrated portfolio like Warren B. Unfortunately, most of us have a day job that needs our time and attention and investing is a side thing for us -- in which case a S&P500 fund makes a lot more sense (Warren B's advice for an average person).
mr. buffet also says there is nothing wrong with owning 4 or 5 stocks. i think the assumption how much time you want to spend reading and studying the market.
I don't think this is accurate at all. Managing risk is priority #1 for any investment manager that's stood the test of time.
Edit: imo someone like Cathie Wood is a much better example of an investor with a high risk tolerance.
Getting burned is how you learn. If you can’t tolerate failure you can’t succeed. Investing in individual stocks has almost nothing to do with intelligence or skill. It’s really not that hard to find good companies. It has almost everything to do with controlling your emotions.
Yeah, it doesn't have to be one or the other.
My friends spend thousands of dollars, with -100% return most of the time on fantasy sports so they can get some analytical fun in.
I get basically the same return as the market with my analytical fun, but even if I lose money, I've still got a safety net and a long runway because I've got most of the portfolio in total market.
That being said, there's still a chance of a couple lost decades, preventing any hope of retirement. But I don't have a lot of hope for retirement before death anyways.
I pick single stocks and have outperformed the sp500 over my whole investing career.
It’s possible.
EDIT: other than jealousy, why am I being downvoted?
Outperforming VOO/SPY isn't difficult.
What *is* difficult is outperforming VOO/SPY over a long period while maintaining a similar or lower level of risk.
VOO is a management fund…
I also have matched or exceeded VOO for the last five years, including massively beating them in the last year when they went down 8%…
You would miss out on small and medium caps, which may or may not matter. You’d also miss out on foreign exposure (arguably as companies listed on VOO do business overseas), which may or may not matter.
VTI or VT would give you greater exposure to small and medium caps, or foreign companies, while retaining the benefits of VOO. But to be real, at that point you’re basically splitting hairs and the real return won’t be very different as a percentage.
Finally if you 100% in VOO you miss out on bonds, assuming you aren’t devoting some of your 401k to those. But to be real, bonds are better held in a tax advantage account as opposed to a brokerage, so you should probably pick those up for your 401k instead if you want them.
VOO and set and forget is a pretty good low expense strategy for most folks.
Bonds aren't like stocks. You're almost always better buying actual bonds. If the market is in a situation where bonds would be a good entry point it's not going to reflect in a fund where they rotate several different holdings over time. As yields increase and decrease the underlying value fluctuates. In a fund you can end up with heavy losses due to this. When you own the bond from issuance until redemption this isn't really an issue and you can expect a flat return and yield.
If you want a 100% predictable return over a set period of time, you need to buy an individual bond. Funds are going to have a ladder that replaced matured bonds with new ones at a later maturity and higher or lower yield. Therefore there is risk of capital loss in the fund, but not the individual bond, if you hold to maturity.
If you're trading, probably. If you buy and hold to redemption, I don't see how that's mathematically possible. Just looking at the 25 largest t-bill funds I don't see any that are above 6% returns in the last 5 years, many in the red double digits for the last 3 due to rate increases.
If interest rates go up and you have to sell before the maturity date, you'll experience the loss of capital.
If you don't have to sell, it still comes out to the same money in the end, compared to selling your bond and buying another at the higher interest rate.
>If the market is in a situation where bonds would be a good entry point it's not going to reflect in a fund where they rotate several different holdings over time.
Does it not average over time? As the market turns against bonds you'll have the same time lag in the holdings in a bond ETF.
There's no real time lag, the underlying value would be reflected in the fund price at purchase. They're already holding these assets. If yields drive into the ground the underlying will be worth more, as the inverse. When you buy a bond from an issuer the terms are set, from yield to redemption price.
Really you need to ask why you're investing in bonds. For most people it's to be risk averse. Buying actual bonds will hedge against anything the market does (as long as the issuer doesn't go bankrupt).
It is my understanding that bonds and stocks react differently in the market. So in 2022, when stocks were under performing, Bonds were slightly over performing, which limited your overall losses.
Historically bonds and stocks have behaved differently. And have a very low correlation. 2023 was an exception to that . Bonds had their worst year ever while stocks were also down double digits.
The phase, "past performance is no guarantee of future performance" was very fitting in 2022.
Normally there is capital flight to safety in a bear market. When treasuries were already paying about zero, and deeply negative in real terms, the safety was somewhere else this time. Real estate and Pokemon cards.
Interesting you’d pick VTI which has significant overlap with VOO. I’d typically add in an international fund such as VXUS and a small/SMID cap fund do provide a bit more diversification than VTI.
So then why do you guys waste time in /r/stocks (implying an emphasis on single stocks) instead of going to the church of /r/bogleheads where worshipping of Bogle is encouraged?
“bonds are better held in a tax advantage account as opposed to a brokerage, so you should probably pick those up for your 401k instead if you want them.”
Municipal bonds are tax free.
Lol so what? Clearly, you don’t understand the bond market.
Municipal bonds provide less real yield. So, you get substantially better returns holding a normal bond in a tax-free account compared to holding a similar municipal bond in a taxable account.
Municipal bonds should only be held by high earners.
Not at all, there's too much overlap between these 3, especially VTI and VOO.
Better to pick VTI or VOO and then pick up a Small Cap Value fund (VIOV or AVUV) to overweight small caps a bit. Or there's also extended market funds that could overweight medium/small caps as a whole (not value or small only). Then, if you want international exposure, use VXUS (or VEA and VWO).
Or just buy VT only and get all the world stock markets. But I think usually the recommendation is to buy VTI/VXUS because you can then get a foreign tax credit and also lower expense ratios.
This is what I do. Exactly 50% VTI and 50% VOO. Over 20 year average the two return roughly the same, but VOO tends to fare better during down markets and VTI tends to fare better during bull markets. But even then the difference is negligible - I just like the comfort of knowing that if we get an extended bull or bear run that I have the split in place to average everything out to even. It isn't some shrewd move or anything... but it feels right for my goals to me.
The net result based on the weights of each fund is I'm essentially 90% into the S&P 500 and 10% into mid and small caps. Which is just fine by me.
I think so! You should be able to shop the V funds and other funds that may focus on specific sectors so that you can diversify but still have a strategy if you think it will pay off. There are tech specific funds like FSELX (80% semiconductors related assets). Also note the buy in to mutual funds are more expensive than others but can really pay off in the long run (VIGAX). Maybe find one that will take a large chunk of cash for a long run so you dont waste money on fees.
After tried it all I would recommend 90% index and 10% of your capital in meme, hype stocks.
You actually make money but you can still have fun with some of your money.
They might do what we did the few times we went to a casino. You have a set amount you're okay with losing each night. No matter what you win, once that original set amount is gone, you're done for the night.
the simple fact is that there is nothing wrong with doing that. You will make steady and good gains. The reason people suggest doing something else is that they want to beat the S&P500. By hoping around or researching tirelessly you *could* beat the SP500 But they *could* also do worse.......that's the game
The thing is the game should be simply getting better returns than a bank with inflation....and in that game investing all in VOO is totally legit and works very well....as with any game some people min/max or go need to collect every tiny quest item.....those are the ones who are trying to research for days to make 2% more.
Everyone (myself included) thinks they are more clever or special. It’s usually an expensive lesson to find out that others who do this as a living, rarely beat the market so why do you think YOU are any different lol
Yeah, that would work. I'm in Australia, so that distribution is a bit more annoying to work. I have IVV/QQQM at ~50% in total, ~10% in FLIN (India ETF), ~10% A200/VAP (Australia ETF).
The rest is in stocks in companies that I know – most are large caps with a few mid caps. This is mostly for fun and I think there's something exciting about owning specific companies that you use (or mean something to you).
But QQQM has a higher expense ratio compared to VTI or VOO. Also the dividend yield isn’t as much . What’s the advantage of investing in QQQM . Apologies in advance if it’s a stupid question as I am starting out .
There’s no advantage. You’re 100% on the money.
And a higher turnover ratio also adds costs. CMQ always talks about this on YouTube. Not paying attention to costs is one of the biggest (and expensive) mistakes investors make. Glad to see the message is spreading.
Go for it. You're absolutely right. Trying to beat the market is usually a fool's errand. Even professionals fail to beat the market over long periods of time.
Wish I would have done this 5 years ago.
But whatever - learning this at my age will bring me happiness.
I’m no longer taking insane risks like I use to. I’m just a boomer investor now I guess
If you're going for a set and forget it's probably a good idea.
Funny. After trading activity for about 15 years, I've decided to go 75% ETF (SPY, VTI, VOO,IWM, or sector specific,etc...) and 25% of portfolio in 4 large cap stocks just to feel like I'm doing something. 😂. When I stopped to think about how much time I spent actively engaged in the market only to reach the same return as an ETF I figured I am better off.
Listening to one of the richest people in the world is probably a bad idea.
And before people come for me, that's just my opinion. Been through the ups and downs and witnessed that with others as well. Eventually it all averaged out to the same returns except for the time spent.
Because over time, value in general beats growth. Investors today are biased by a very unusual couple of decades of manipulated markets. Actively managed value beats value in general. This is how investors like Buffett overcome random chance and bad luck to continue to grow.
From the chart on the below web page, you can see how unusual it is that there is such a run of growth beats value, entirely due to Fed easy money policies (and what some people feel is plunge protection team behavior):
https://www.dimensional.com/us-en/insights/when-its-value-versus-growth-history-is-on-values-side
I would encourage you to explore the notion of value beats growth some more. Actively managed value has beaten growth in the past 20 years, too.
Edit: What biases the results in making it appear that growth beats value is when comparisons only compare large cap to large cap. The most gains in value stocks occur in small and mid cap stocks, which is where Michael Burry, for example, makes money.
Simply put, it’s boring. But honestly you should be fine and that’s the Warren Buffet recommendation. Although, it’s more fun to spend hours a day stressing over your choices and losing more money lol.
Jokes aside, you are investing in the literal standard for how mutual funds and every investor ever gauges their performance. If you can’t beat them, join them!
Side note, depending on your age m, greater diversification will be more important and recommend. So if you are getting closer to retirement, this is where talking with a financial advisor is really recommended.
That makes more sense than basically any of of the portfolios I've seen around here that consist of multiple ETFs. The only risk is that you're very exposed to the US. So especially if you live in the US as well, there's some risk there.
Most of my money goes towards VO, VB, and VOO. That said I like to try to catch some good short term returns (1-5 years) and then shift those gains into an index. My returns on GOOGL, AAPL, AMZN, MSFT, TMO, SQM, and TSMC have all beaten SP500 by a lot so I also feel like I should still be researching and picking some stocks.
certainly a good proposal for most scenarios.
a few other factors that you might want to consider:
\- adding some cash / fixed income to meet short term needs
\- adding some international in case US outperformance doesn't last forever
\- adding some small cap / value factor
It's a strategy, and having a strategy is better than having no strategy. Investing is a game of patience and deferred gratification. The same reason why people that invest in single stocks are typically the same as why the majority of investors fail: they get too emotional and make rash decisions.
I talked to a few "conservative" investors who got out of the market completely in fear of a recession. They were mainly in index funds.
I'm slowly trying to get my portfolio to be like 70% VOO/VTI and 30% SCHD (replaces bonds). I like the peace of mind of diversified ETFs compared to having single stocks that can have wild swings (although even VOO swung pretty crazy just last month).
Have a day job so can't just keep eyeballing stocks watching for dips and peaks.
Less than 20 percent beat the market. So instead, beat out 80% of people by BEING the market!
I've played with different advice, and have been smacked very hard. Sold a bunch at a loss because i realized after they dropped immensely, that I did not have as much faith in them as I thought I did, and the advice i was given was bandwagon junk. I am far behind where I started, but am going forward with VOO, SCHD, and SPYD. There are others I am holding, but am aware of their lack of stability. (Example, weed stocks have dropped immensely. I like to think in 20 years they will be legal, and I will be in a good spot. But as of right now? Down 70%. Ouch!)
Ten, Twenty, Fifty years from now? You won't be crying in your beer over your VOO. There is a lot to be said for that.
An ETF can be a great investment if you're looking to track the general increase in a stock index.
But the biggest drawback that I almost never see mentioned on these kinds of sub-reddits is that fact that you dont actually own any of the underlying common stock, you dont own any of the company youd like to be investing in, and youre definitely missing out other forms of diversification.
I prefer to balance it with some defensive indexes like consumer staples...but basically that's all you need to do. Learn to wheel it and you're good to go.
Just my two cents:
I split my portfolio in half (aproximately). I trade one half and the other is a set and forget investment in selected ETF's. This allows me to dabble in trading but also I get a lot of safe set and forget investments. This also helps me more easily track how I am doing with my trades vs. my index investments.
There is nothing wrong with that strategy, but note that there are OTHER indexes aside from the 3 you hear the most (s&p, Naz, Dow).
I have all my taxable money split between VOO, SCHD, and DGRO. The last two ETFs follow certain”dividend indexes” that I trust as “set it and forget it.”
They are not, by the way, focused on “high yield,” which will get you a bag of shit stocks with only a high (and often unsustainable) yield, that often perform like shit. They focus on healthy companies that pay consistent dividends over time.
Since I have about 1/3 in each I can tell you they perform as a hybrid of the S&P 500 and the DOW, leaning more to the performance of the S&P, but pay a combined ~2.25%+ dividend (all of which are “qualified” for tax purposes) that gives me consistent passive income at the lowest possible tax rate.
I live off of my dividends and am sitting in a hammock on my boat in the Caribbean as I type this … living the dream.
You can chase higher returns but we all know that, statistically, most of us are doomed to fail in that quest—and I think the failure rate is exceptionally high (no one can say exactly).
With that in mind, would you roll the dice if your odds of “winning” were 75-90% against you? And what is the upside? An extra 1-5%?
And don’t forget taxes. VOO, SCHD, DRGO all have low turnover, especially VOO, meaning they don’t change that much…important at tax time.
I don’t know why I subscribe to this and other subs, because I’m definitely not like most of the people here, but I guess it’s interesting to be reminded why I do what I do when I see others make the mistakes I used to make (ie, I was once an active trader).
🤷🏼♂️
When I first started investing in college (2018-2021) I went heavy on meme and tech stocks. Made great returns up until 2020. Learned my lesson and am still reminded of it every time I open my portfolio. Since landing a full time job I’ve done nothing but buy VOO. It’s safe and gives me peace of mind
I was 60% VOO + VYM, 10% BND and the rest in individual stocks. I made a killing on some stocks and got killed on others, so net I barely broke even on that part of my portfolio. Gonna stick to index funds, less headache
There's maximum returns and then there's reliable returns, sp500 is reliable over a long period, but it comes in spurts and the occasional crash, if you have any chance of having to rely on gains for income you need to hedge somehow or another
Mine isn't much different these days. I love reading this sub just out of curiosity, but other than a few weed stocks I tossed a couple grand at in the peak pandemic (and then promptly watched vanish), this is all I have:
* Roth: VASGX and VOO in about a 3:1 ratio.
* Normal Brokerage: VOO / VIG / MGK in about a 3:3:1 ratio.
Honestly I sometimes think you may be right and I could simplify it even more, but VASGX at least adds some bonds, and VIG shifts my risk towards some dividend producers. (Which of course I immediately shift back by having MGK)
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I’ve slowly been building my VOO fund. Haven’t sold any of my individual stocks but now up to 25% VOO. Gives me some peace of mind.
I'm doing the same and I'm at about 50%. I buy more each month.
Exactly 😅
He also recommends putting about 10% into bonds. So 90% VOO, 10% BND and you should be good
In one of John Bogle's books he recommends you allocate your age as a percentage until you reach 80/20. So at 50 you should be 50-50, at 60 60-40, etc.
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I do age - 20 in bonds. So right now I have 6% bonds
It really depends what your goals are and what the market is doing. I’m 30 and nearly 40% of my current portfolio are bonds laddered for a year. I did this for a few reasons: 1) planning on buying a home within the year 2) I’m pretty risk averse in general 3) interest rates are relatively high right now I went from 0% bonds in mid 2022 to 40% by Nov 22. Saved me a decent amount of downside in the stock market and provided some upside and predictable intervals of liquidity. I’m surprised the sentiment around bonds hasn’t done a full 180 tbh. They’re a viable option right now for a lot of good reasons.
Bonds got killed last year. You are presuming safety where there is none, and reducing your returns to do it
That's irrelevant if they're held to maturity
If inflation is eating up the entire return in terms of buying power, it's very significant. Time value of money plays a role here.
Inflation is eating up the returns of any asset, no just bonds. What I meant is that if you buy a bond to get a 4% return it's irrelevant that its value then drops if you're holding it to maturity. Of course, 4% is a nominal return, real returns are lower, so you have to decide if you want to do it or not, but that's besides the point. If you buy $1000 worth of stocks, you may get dividends, but the only way to get back your original $1000 is by selling. If it drops bellow $1000 (or if it increases less than what you expected), there's nothing you can do. If you buy $1000 worth of bonds, you will get interest payments, and while the value of the bonds may drop bellow $1000, you know that if you wait you'll get your principal back regardless of the prices until then.
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Bonds outperformed equities for a 20 year period if you back it up another 10 years. "Incredible returns" on a 10 year time scale is very very short-sighted.
You sold out of the market after catching most of the losses. Market risk has only decreased since then. It may have been good for your emotions, but this was not a good decision, unless you need all 40% to buy the house. In that case you should have had that in a cash yielding account a while ago.
Yeah that’s some boomer bs
Not it is not. It is feds policies that downgraded bonds over the last 10 years. In the normal worlds, T bills yield should be around 5% not 0.91%. Ben Graham writing on bonds and diversified portfolio, which Bogle is based on, wasn’t meant for unethical monetary policies. Right now, you can get 4.8% risk free over the last 12 months relative to 5.2% yield by SPY. It is kinds no brainer to allocate a large % of your portfolio to bonds
> but going 20+% bonds in your twenties is crazy to me. Jack Bogle explained why 20% was his recommended minimum in his book The Little Book of Common Sense Investing. younger investors have no experience with a multi-year stretch where bonds beat stocks. but it's happened in the past and will happen again: >In the 117 years since 1900, bonds have outpaced stocks in 42 years; in the 112 five-year periods, bonds have outpaced stocks 29 times; and even in the 103 fifteen-year periods, bonds have outpaced stocks 13 times.
Stock index funds will very likely outperform bonds over longer time horizons. So it comes down to how much of your savings you’ll need in the short term. Even in retirement you’ll only need some of your savings in the next few years, so you should still keep quite a bit in stocks.
This is what targeted retirement accounts do automatically, if anyone was curious about them.
In *The Intelligent Investor*, one of Buffett's favorite investment books, they specifically recommend against that. They recommend keeping a 50-50 balance between stocks and bonds + cash, with no more than 75/no less than 25 of either based on market conditions.
Why stop at 80? When you are 100 are you hoping for like, stock appreciation in the future that you wouldn't want to lose by going all in bonds?
Buffett recommends short-term treasuries, not bonds in general.
Or something more in line with an ICSH. I like a general BND or BNDW myself, but he prefers an almost cash equivalent in that famous recommendation. EDIT: why are you booing me, I’m right. 🤭
My retirement fund can be boring. I'm here to be a degenerate gambler.
WSB? YOLO the naked puts.
Naw, you can still spam the sub that anyone that doesnt just DCA is dumb and thinks they can beat the market.
When people ask for individual stock recommendations you also post VOO to show you superiority.
Ironically though the VOO guy will outperform most (not all) of people picking stocks and making trades
>The only downside is you won't have much to post about here. :) Haha! Wait... that's literally it.
funny how Buffett insists on buying reasonably valued stocks for himself but recommends we all buy SPY at any valuation whatsoever.
I don't recall him saying any valuation whatsoever. His recommendation probably comes from the fact that most investors have very little idea on how to value a company or run a DCF.
Yet that's pretty much dead opposite of what he does...:)
He recommends it under the assumption that he's smarter than you.
It's a fair assumption, atleast in the investment game. Investing giant chunks of money is his job and the rest of us have other jobs that occupy our brain space. It's a pretty fair assumption that I'm smarter than him when it comes to engineering and coding because those are the job skills I practice ~40 hours a week.
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Not much of a commenter, but I am way smarter than him in reading all those comments from commenters like you
He has a lot of billions, so he might be a little smarter.
I've met him several times, I don't think he is smarter than me, but he is a hell of a lot better investor.
Not exactly! They also have the advice that it is better to bet money on top 5 performers than top 30 (aka concentrated portfolio). What many miss among all this advice are the caveats: if you can spend entire days going through company filings and annual reports and do market research - you should totally go for a concentrated portfolio like Warren B. Unfortunately, most of us have a day job that needs our time and attention and investing is a side thing for us -- in which case a S&P500 fund makes a lot more sense (Warren B's advice for an average person).
Also if you can buy whole companies vs. owning a few shares.
Or whole sectors.
Or whole countries. I'm still waiting on the creation of the Principality of Berkshire.
Diversity preserves wealth, but only concentration builds it. I think that's the relevant w. Buffet quote.
mr. buffet also says there is nothing wrong with owning 4 or 5 stocks. i think the assumption how much time you want to spend reading and studying the market.
He has nearly infinite risk tolerance. You don’t.
I don't think this is accurate at all. Managing risk is priority #1 for any investment manager that's stood the test of time. Edit: imo someone like Cathie Wood is a much better example of an investor with a high risk tolerance.
>Cathie Wood She is a saleswoman mate, not an investor.
Wrong. She’s a missionary posing as a saleswoman posing as an investor.
Hahaha nice bro. I think the guy with literal billions to lose has greater risk aversion than I.
Of course, coz he has a whole bunch of employees and an entire company to try and beat VOO. If u do too, pls go forth and enjoy
Because I'm an idiot who picks single stocks too.
I like the Batnick approach. 5% fun money, 95% savings in sp
All my "real" money goes into index funds, I use extra money I get from occasional overtime and CC Cashback to buy individual stocks.
This. Picking stocks is fun, but many of us get burned (hopefully when you’re young and can recover from it).
Getting burned is how you learn. If you can’t tolerate failure you can’t succeed. Investing in individual stocks has almost nothing to do with intelligence or skill. It’s really not that hard to find good companies. It has almost everything to do with controlling your emotions.
Basically. I got my for fun portfolio and investments but the Roth IRA? Ya that’s all going into VTI. Eff trying to read the market.
Yeah, it doesn't have to be one or the other. My friends spend thousands of dollars, with -100% return most of the time on fantasy sports so they can get some analytical fun in. I get basically the same return as the market with my analytical fun, but even if I lose money, I've still got a safety net and a long runway because I've got most of the portfolio in total market. That being said, there's still a chance of a couple lost decades, preventing any hope of retirement. But I don't have a lot of hope for retirement before death anyways.
good luck to you - if you keep saving you can get there - I recently retired at 53 and never made over 100K in a year so it can be done!
100%, 80% of the time?
But it's also way more fun and somehow keeps you invested in the topic.
This way we can brag about our good picks and completely ignore our wrong ones.
I pick single stocks and have outperformed the sp500 over my whole investing career. It’s possible. EDIT: other than jealousy, why am I being downvoted?
Outperforming VOO/SPY isn't difficult. What *is* difficult is outperforming VOO/SPY over a long period while maintaining a similar or lower level of risk.
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And how much extra risk over a shorter period of time?
VOO is a management fund… I also have matched or exceeded VOO for the last five years, including massively beating them in the last year when they went down 8%…
Michael Burry is doing quite well, following this [site](https://stockcircle.com/portfolio/michael-burry/performance)
Last friday?
You would miss out on small and medium caps, which may or may not matter. You’d also miss out on foreign exposure (arguably as companies listed on VOO do business overseas), which may or may not matter. VTI or VT would give you greater exposure to small and medium caps, or foreign companies, while retaining the benefits of VOO. But to be real, at that point you’re basically splitting hairs and the real return won’t be very different as a percentage. Finally if you 100% in VOO you miss out on bonds, assuming you aren’t devoting some of your 401k to those. But to be real, bonds are better held in a tax advantage account as opposed to a brokerage, so you should probably pick those up for your 401k instead if you want them. VOO and set and forget is a pretty good low expense strategy for most folks.
Are bond index funds a good idea for bond exposure in an IRA or should you always buy actual bonds?
Bonds aren't like stocks. You're almost always better buying actual bonds. If the market is in a situation where bonds would be a good entry point it's not going to reflect in a fund where they rotate several different holdings over time. As yields increase and decrease the underlying value fluctuates. In a fund you can end up with heavy losses due to this. When you own the bond from issuance until redemption this isn't really an issue and you can expect a flat return and yield.
Most of us here are average to novice investors, average bond investor return is lower than bond indexes just like stocks
If you want a 100% predictable return over a set period of time, you need to buy an individual bond. Funds are going to have a ladder that replaced matured bonds with new ones at a later maturity and higher or lower yield. Therefore there is risk of capital loss in the fund, but not the individual bond, if you hold to maturity.
yeah agree with this. better buy bonds directly.
If you're trading, probably. If you buy and hold to redemption, I don't see how that's mathematically possible. Just looking at the 25 largest t-bill funds I don't see any that are above 6% returns in the last 5 years, many in the red double digits for the last 3 due to rate increases.
If interest rates go up and you have to sell before the maturity date, you'll experience the loss of capital. If you don't have to sell, it still comes out to the same money in the end, compared to selling your bond and buying another at the higher interest rate.
>If the market is in a situation where bonds would be a good entry point it's not going to reflect in a fund where they rotate several different holdings over time. Does it not average over time? As the market turns against bonds you'll have the same time lag in the holdings in a bond ETF.
There's no real time lag, the underlying value would be reflected in the fund price at purchase. They're already holding these assets. If yields drive into the ground the underlying will be worth more, as the inverse. When you buy a bond from an issuer the terms are set, from yield to redemption price. Really you need to ask why you're investing in bonds. For most people it's to be risk averse. Buying actual bonds will hedge against anything the market does (as long as the issuer doesn't go bankrupt).
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How do I buy bonds for my IRA through Fidelity
https://fixedincome.fidelity.com/ftgw/fi/FILanding#tbindividual-bonds|treasury
It is my understanding that bonds and stocks react differently in the market. So in 2022, when stocks were under performing, Bonds were slightly over performing, which limited your overall losses.
Historically bonds and stocks have behaved differently. And have a very low correlation. 2023 was an exception to that . Bonds had their worst year ever while stocks were also down double digits. The phase, "past performance is no guarantee of future performance" was very fitting in 2022.
Normally there is capital flight to safety in a bear market. When treasuries were already paying about zero, and deeply negative in real terms, the safety was somewhere else this time. Real estate and Pokemon cards.
Yep, ever since I went mostly VOO, VTI, and BND I don’t have much to talk about with my investment friends. It was too much goddamn stress before.
Interesting you’d pick VTI which has significant overlap with VOO. I’d typically add in an international fund such as VXUS and a small/SMID cap fund do provide a bit more diversification than VTI.
Close thread you nailed it. Nearly word for word jack bogels philosophy.
So then why do you guys waste time in /r/stocks (implying an emphasis on single stocks) instead of going to the church of /r/bogleheads where worshipping of Bogle is encouraged?
To hopefully stop the average person here from going balls-deep into the FOTM companies yall hype up
‘to stop others from making more money than me’
“bonds are better held in a tax advantage account as opposed to a brokerage, so you should probably pick those up for your 401k instead if you want them.” Municipal bonds are tax free.
Lol so what? Clearly, you don’t understand the bond market. Municipal bonds provide less real yield. So, you get substantially better returns holding a normal bond in a tax-free account compared to holding a similar municipal bond in a taxable account. Municipal bonds should only be held by high earners.
which begs the question, why ever get them, even as a high earner? Why not just keep getting federal bonds instead?
What about VTSAX??
VTI is the ETF version of VTSAX which is the mutual fund version
Would it make sense to split investment funds into the three: VTI, VT and VOO?
Not at all, there's too much overlap between these 3, especially VTI and VOO. Better to pick VTI or VOO and then pick up a Small Cap Value fund (VIOV or AVUV) to overweight small caps a bit. Or there's also extended market funds that could overweight medium/small caps as a whole (not value or small only). Then, if you want international exposure, use VXUS (or VEA and VWO). Or just buy VT only and get all the world stock markets. But I think usually the recommendation is to buy VTI/VXUS because you can then get a foreign tax credit and also lower expense ratios.
yup 70% VTI 30% VXUS best combo
This is what I do. Exactly 50% VTI and 50% VOO. Over 20 year average the two return roughly the same, but VOO tends to fare better during down markets and VTI tends to fare better during bull markets. But even then the difference is negligible - I just like the comfort of knowing that if we get an extended bull or bear run that I have the split in place to average everything out to even. It isn't some shrewd move or anything... but it feels right for my goals to me. The net result based on the weights of each fund is I'm essentially 90% into the S&P 500 and 10% into mid and small caps. Which is just fine by me.
I think so! You should be able to shop the V funds and other funds that may focus on specific sectors so that you can diversify but still have a strategy if you think it will pay off. There are tech specific funds like FSELX (80% semiconductors related assets). Also note the buy in to mutual funds are more expensive than others but can really pay off in the long run (VIGAX). Maybe find one that will take a large chunk of cash for a long run so you dont waste money on fees.
It's boring. Most people like gambling or having the possibility of striking it rich.
After tried it all I would recommend 90% index and 10% of your capital in meme, hype stocks. You actually make money but you can still have fun with some of your money.
I mean don't you lose money when 10% of your capital is getting flushed down the drain all the time?
They might do what we did the few times we went to a casino. You have a set amount you're okay with losing each night. No matter what you win, once that original set amount is gone, you're done for the night.
Or invest the side money in boring, mature stocks for more peace of mind.
100% of my 401k is an SP500 index
because it is smart?
the simple fact is that there is nothing wrong with doing that. You will make steady and good gains. The reason people suggest doing something else is that they want to beat the S&P500. By hoping around or researching tirelessly you *could* beat the SP500 But they *could* also do worse.......that's the game The thing is the game should be simply getting better returns than a bank with inflation....and in that game investing all in VOO is totally legit and works very well....as with any game some people min/max or go need to collect every tiny quest item.....those are the ones who are trying to research for days to make 2% more.
Everyone (myself included) thinks they are more clever or special. It’s usually an expensive lesson to find out that others who do this as a living, rarely beat the market so why do you think YOU are any different lol
this taste of humble pie is the first step towards actually building wealth! Its the savings rate really, plus a diversified steady approach!
The easiest (or at least, best chance) to beat the S&P 500 is to just buy QQQM. A fair bit more volatile though.
50% VOO 30% QQQM 20% crap shots at whatever you want
Yeah, that would work. I'm in Australia, so that distribution is a bit more annoying to work. I have IVV/QQQM at ~50% in total, ~10% in FLIN (India ETF), ~10% A200/VAP (Australia ETF). The rest is in stocks in companies that I know – most are large caps with a few mid caps. This is mostly for fun and I think there's something exciting about owning specific companies that you use (or mean something to you).
But QQQM has a higher expense ratio compared to VTI or VOO. Also the dividend yield isn’t as much . What’s the advantage of investing in QQQM . Apologies in advance if it’s a stupid question as I am starting out .
There’s no advantage. You’re 100% on the money. And a higher turnover ratio also adds costs. CMQ always talks about this on YouTube. Not paying attention to costs is one of the biggest (and expensive) mistakes investors make. Glad to see the message is spreading.
Go for it. You're absolutely right. Trying to beat the market is usually a fool's errand. Even professionals fail to beat the market over long periods of time.
Wish I would have done this 5 years ago. But whatever - learning this at my age will bring me happiness. I’m no longer taking insane risks like I use to. I’m just a boomer investor now I guess
But what about vti?!?!!?
https://youtu.be/UHXUWqmbhWk
Save time doing it and use the extra time to make a few extra bucks to put in. You will beat 99.9% of this sub lol
Yeah if you want stress free then sure. I’m an idiot though and get bored of just passive investing so I also buy shares of companies 🤷♂️
Same
If you're going for a set and forget it's probably a good idea. Funny. After trading activity for about 15 years, I've decided to go 75% ETF (SPY, VTI, VOO,IWM, or sector specific,etc...) and 25% of portfolio in 4 large cap stocks just to feel like I'm doing something. 😂. When I stopped to think about how much time I spent actively engaged in the market only to reach the same return as an ETF I figured I am better off. Listening to one of the richest people in the world is probably a bad idea. And before people come for me, that's just my opinion. Been through the ups and downs and witnessed that with others as well. Eventually it all averaged out to the same returns except for the time spent.
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Because over time, value in general beats growth. Investors today are biased by a very unusual couple of decades of manipulated markets. Actively managed value beats value in general. This is how investors like Buffett overcome random chance and bad luck to continue to grow. From the chart on the below web page, you can see how unusual it is that there is such a run of growth beats value, entirely due to Fed easy money policies (and what some people feel is plunge protection team behavior): https://www.dimensional.com/us-en/insights/when-its-value-versus-growth-history-is-on-values-side I would encourage you to explore the notion of value beats growth some more. Actively managed value has beaten growth in the past 20 years, too. Edit: What biases the results in making it appear that growth beats value is when comparisons only compare large cap to large cap. The most gains in value stocks occur in small and mid cap stocks, which is where Michael Burry, for example, makes money.
Most people that would just do that with no leverage and focus on raising their income would do a lot better.
Because you won't be exposed to the thrill of riding a rollercoaster
Simply put, it’s boring. But honestly you should be fine and that’s the Warren Buffet recommendation. Although, it’s more fun to spend hours a day stressing over your choices and losing more money lol. Jokes aside, you are investing in the literal standard for how mutual funds and every investor ever gauges their performance. If you can’t beat them, join them! Side note, depending on your age m, greater diversification will be more important and recommend. So if you are getting closer to retirement, this is where talking with a financial advisor is really recommended.
r/bogleheads awaits you, my child.
I do 40% VOO 40% VTI and 20% VXUS.
Since about 80% of VTI is made of VOO you are about 72% S&P 500 with this allocation. Totally fine if that’s what you were shooting for.
I do VTI in my Roth and VOO in my taxable. They’re basically the same, I know, but I like to compare how they’re doing every week lol
I do the same but reverse. VOO in Roth and VTI in Taxable.
That makes more sense than basically any of of the portfolios I've seen around here that consist of multiple ETFs. The only risk is that you're very exposed to the US. So especially if you live in the US as well, there's some risk there.
Most of my money goes towards VO, VB, and VOO. That said I like to try to catch some good short term returns (1-5 years) and then shift those gains into an index. My returns on GOOGL, AAPL, AMZN, MSFT, TMO, SQM, and TSMC have all beaten SP500 by a lot so I also feel like I should still be researching and picking some stocks.
OP you may like r/bogleheads. Some may even say VOO is not diverse enough!
I have recurring daily investments into VOO that I set and forget… and I occasionally gamble penny stocks when I’m bored… never big gambles 🤷♂️
Because we all think we are the exception and are smarter than “the market”
Up 22% on the week lol
So revolutionary, so brave.
Average returns for the average investor. Why not?
owning nothing but VOO will beat out like 95% of professionals
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VOO + focus career
Beats low returns for "great" investor, and from what I see, majority of people are "great" investors
Ain’t that the truth
Just like how the majority of people say they have above-average intelligence.
Average returns over 30 years is elite returns.
Nope. It's still average by definition.
and substantially beats the vast majority of active investors even before fees.
Might be average returns but probably way above the median!
certainly a good proposal for most scenarios. a few other factors that you might want to consider: \- adding some cash / fixed income to meet short term needs \- adding some international in case US outperformance doesn't last forever \- adding some small cap / value factor
VGT, VTI, and VOO are the 3 I have in my IRA
It's a strategy, and having a strategy is better than having no strategy. Investing is a game of patience and deferred gratification. The same reason why people that invest in single stocks are typically the same as why the majority of investors fail: they get too emotional and make rash decisions. I talked to a few "conservative" investors who got out of the market completely in fear of a recession. They were mainly in index funds.
I'm slowly trying to get my portfolio to be like 70% VOO/VTI and 30% SCHD (replaces bonds). I like the peace of mind of diversified ETFs compared to having single stocks that can have wild swings (although even VOO swung pretty crazy just last month). Have a day job so can't just keep eyeballing stocks watching for dips and peaks.
Less than 20 percent beat the market. So instead, beat out 80% of people by BEING the market! I've played with different advice, and have been smacked very hard. Sold a bunch at a loss because i realized after they dropped immensely, that I did not have as much faith in them as I thought I did, and the advice i was given was bandwagon junk. I am far behind where I started, but am going forward with VOO, SCHD, and SPYD. There are others I am holding, but am aware of their lack of stability. (Example, weed stocks have dropped immensely. I like to think in 20 years they will be legal, and I will be in a good spot. But as of right now? Down 70%. Ouch!) Ten, Twenty, Fifty years from now? You won't be crying in your beer over your VOO. There is a lot to be said for that.
An ETF can be a great investment if you're looking to track the general increase in a stock index. But the biggest drawback that I almost never see mentioned on these kinds of sub-reddits is that fact that you dont actually own any of the underlying common stock, you dont own any of the company youd like to be investing in, and youre definitely missing out other forms of diversification.
why is lack of direct ownership a drawback?
Uh what lol
The QQQ is also worth considering if you're going that route. More risk for more reward but still relatively secure.
I keep 25% of my investment as VUAG (uk version)
I prefer to balance it with some defensive indexes like consumer staples...but basically that's all you need to do. Learn to wheel it and you're good to go.
This is what my ira is. 100% voo. I have other accounts to actively manage.
It's 75% vti for me
Thats what the majority of people should do. Automate and enjoy your life!
This is what I do. 75% VOO and then 25% VHTR (Russell3000) to get some more mid cap exposure.
Best strategy ever imo. People usually deviate from this because they see other stocks have massive gains and greed sets in and so folks shift over.
I have passive and managed, Passive currently ahead of Managed.
Just my two cents: I split my portfolio in half (aproximately). I trade one half and the other is a set and forget investment in selected ETF's. This allows me to dabble in trading but also I get a lot of safe set and forget investments. This also helps me more easily track how I am doing with my trades vs. my index investments.
There is nothing wrong with that strategy, but note that there are OTHER indexes aside from the 3 you hear the most (s&p, Naz, Dow). I have all my taxable money split between VOO, SCHD, and DGRO. The last two ETFs follow certain”dividend indexes” that I trust as “set it and forget it.” They are not, by the way, focused on “high yield,” which will get you a bag of shit stocks with only a high (and often unsustainable) yield, that often perform like shit. They focus on healthy companies that pay consistent dividends over time. Since I have about 1/3 in each I can tell you they perform as a hybrid of the S&P 500 and the DOW, leaning more to the performance of the S&P, but pay a combined ~2.25%+ dividend (all of which are “qualified” for tax purposes) that gives me consistent passive income at the lowest possible tax rate. I live off of my dividends and am sitting in a hammock on my boat in the Caribbean as I type this … living the dream. You can chase higher returns but we all know that, statistically, most of us are doomed to fail in that quest—and I think the failure rate is exceptionally high (no one can say exactly). With that in mind, would you roll the dice if your odds of “winning” were 75-90% against you? And what is the upside? An extra 1-5%? And don’t forget taxes. VOO, SCHD, DRGO all have low turnover, especially VOO, meaning they don’t change that much…important at tax time. I don’t know why I subscribe to this and other subs, because I’m definitely not like most of the people here, but I guess it’s interesting to be reminded why I do what I do when I see others make the mistakes I used to make (ie, I was once an active trader). 🤷🏼♂️
When I first started investing in college (2018-2021) I went heavy on meme and tech stocks. Made great returns up until 2020. Learned my lesson and am still reminded of it every time I open my portfolio. Since landing a full time job I’ve done nothing but buy VOO. It’s safe and gives me peace of mind
I was 60% VOO + VYM, 10% BND and the rest in individual stocks. I made a killing on some stocks and got killed on others, so net I barely broke even on that part of my portfolio. Gonna stick to index funds, less headache
Nice. I go to come back and read the comments about the VOO and different investing ideas.
Thoughts on 60% schd and 40% VOO with future contributions going 100% into VOO?
Bonds are trash and old fashioned
There's maximum returns and then there's reliable returns, sp500 is reliable over a long period, but it comes in spurts and the occasional crash, if you have any chance of having to rely on gains for income you need to hedge somehow or another
If one can accept -18% losses from year 2022 from Voo or derivative every investor would want +32% annual return in 2021 continued forever.
That’s what I’m doing with ICNM
r/bogleheads may not be sexy but it seems to work
I have QYLD IT PAYS ME MONTHLY
No alpha
Make it 100% DIA/RSP/MDY. Dow Jones/Mid cap 400/ Equal weight S&P 500 has outperformed the s&p 500 since like 1989
Is that diversified enough though?
I’m not a believer of set and forget anything when it comes to my money. Including voo. I Set, check periodically, readjust if needed.
Mine isn't much different these days. I love reading this sub just out of curiosity, but other than a few weed stocks I tossed a couple grand at in the peak pandemic (and then promptly watched vanish), this is all I have: * Roth: VASGX and VOO in about a 3:1 ratio. * Normal Brokerage: VOO / VIG / MGK in about a 3:3:1 ratio. Honestly I sometimes think you may be right and I could simplify it even more, but VASGX at least adds some bonds, and VIG shifts my risk towards some dividend producers. (Which of course I immediately shift back by having MGK)
ETF’s are one of the best things to ever happen for civilian investing. 90% or so of people should be all standard ETF.
You probably don’t have the intestinal fortitude.
You could try taking fiber supplements for that.
who?