Is it fine to have 100% of portfolio in VTSAX

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santosh
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Is it fine to have 100% of portfolio in VTSAX

Post by santosh » Sun Jun 03, 2018 6:19 pm

I recently learned about investing and index funds. Read the book https://www.amazon.com/Simple-Path-Weal ... +to+wealth
and I am planning to invest a major chunk of my salary on a monthly bases into index funds.

I am in my early 30s and don't plan to retire anytime soon, so I will be going 100% equity for at least 10 years before I add any bond in the portfolio.

Is it fine to have 100% of the portfolio in VTSAX?
Do I need VTIAX? Because I do that know that most of the VTSAX companies are international companies.

By having 100% VTSAX portfolio will avoid me yearly balancing and I can automate the money going to the brokerage account and forget about it.

cutterinnj
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by cutterinnj » Sun Jun 03, 2018 6:25 pm

It is fine to have 100% in VTSAX with your time horizon.

If you're going to do that, I recommend NOT checking your account or reading the news for the next 20 years, though...

telecaster
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by telecaster » Sun Jun 03, 2018 6:32 pm

cutterinnj wrote:
Sun Jun 03, 2018 6:25 pm
It is fine to have 100% in VTSAX with your time horizon.

If you're going to do that, I recommend NOT checking your account or reading the news for the next 20 years, though...
Damn that's good advice. I should follow it ...

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vineviz
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by vineviz » Sun Jun 03, 2018 6:37 pm

100% in VTSAX is great.

100% in VLXVX might be even better. Still a low-cost single fund, a true “set it and forget it” strategy, but with better diversification.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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stemikger
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by stemikger » Mon Jun 04, 2018 7:28 am

Sounds like a good plan to me. Like another poster said take Jack's advice and Don't Peek!!
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

PFInterest
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by PFInterest » Mon Jun 04, 2018 7:34 am

santosh wrote:
Sun Jun 03, 2018 6:19 pm
I recently learned about investing and index funds. Read the book https://www.amazon.com/Simple-Path-Weal ... +to+wealth
and I am planning to invest a major chunk of my salary on a monthly bases into index funds.

I am in my early 30s and don't plan to retire anytime soon, so I will be going 100% equity for at least 10 years before I add any bond in the portfolio.

Is it fine to have 100% of the portfolio in VTSAX?
Do I need VTIAX? Because I do that know that most of the VTSAX companies are international companies.

By having 100% VTSAX portfolio will avoid me yearly balancing and I can automate the money going to the brokerage account and forget about it.
fine, yes. there are many worse portfolios.
but like all things, 100% of something is rarely the best option. even 10% FI can help emotionally but also to rebalance come the next crash.
i hold intl because while a lot of companies are internationally linked, not all of them are.

Tamalak
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by Tamalak » Mon Jun 04, 2018 7:38 am

Seems fine to me, except it's all U.S. stocks. That's okay NOW because U.S. is 50% of world cap and very correlated with international stocks. But if that changes, and U.S. shrinks to 20% of world cap - which could easily happen in the many decades the OP has in his horizon - that would be a little more problematic as a "forever plan"
Because I do that know that most of the VTSAX companies are international companies.
No.. they are ALL U.S. companies, but that has a lot of international exposure, because we do a lot of business overseas!
Last edited by Tamalak on Mon Jun 04, 2018 7:44 am, edited 1 time in total.

asif408
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by asif408 » Mon Jun 04, 2018 7:42 am

It is fine, just don't come back here in a few years and post that you are thinking about adding international because it has performed better over the last few years. Make sure your decision is something you will stick with for the long haul. Otherwise, go with Vanguard Total World Stock Market.

digit8
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by digit8 » Mon Jun 04, 2018 7:53 am

Over the next 10 years? Sure, you're fine, better than the average investor in fact.
I would say, make a plan for yourself over the 10 years before you think about adding bonds- read up on Bogleheadism and investing in general. Be open to other equities at that time as well.

But 30's to 40's just in VTSAX? I kind of wish I'd done that. That was right about the time I started getting into investing, and I was pulling the trigger on trading every time I found a new book or convincing theory. One fund while I learned would have gotten me to the same place with a lot less hemming and hawing.
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Ron Scott
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by Ron Scott » Mon Jun 04, 2018 7:55 am

Not the best strategy.

The general approach, Bogle/Graham, is to maintain 25-75% in American equities, with a more aggressive posture in your early years. That’s the best advice be heard.

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Re: Is it fine to have 100% of portfolio in VTSAX

Post by dbr » Mon Jun 04, 2018 8:20 am

What need do you have that requires 100% stocks? That is, what is the specific objective that can only be reached by being 100% stocks and not at least some allocation (25%) to bonds? Also, why would you eschew the extra diversification available from some allocation to international stock markets. Note an international corporation is not necessarily an international stock.

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Re: Is it fine to have 100% of portfolio in VTSAX

Post by midareff » Mon Jun 04, 2018 8:25 am

cutterinnj wrote:
Sun Jun 03, 2018 6:25 pm
It is fine to have 100% in VTSAX with your time horizon.

If you're going to do that, I recommend NOT checking your account or reading the news for the next 20 years, though...
LOL.... GREAT advice.

Glockenspiel
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by Glockenspiel » Mon Jun 04, 2018 8:35 am

I'd argue that with a portfolio of 100% VTSAX, you're in a better allocation than probably 90-95% of all Americans.

Bogleheads and others like us (with strong knowledge of investing, allocations, etc.) are a very small minority of the population.

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Re: Is it fine to have 100% of portfolio in VTSAX

Post by KlangFool » Mon Jun 04, 2018 8:38 am

santosh wrote:
Sun Jun 03, 2018 6:19 pm
I recently learned about investing and index funds. Read the book https://www.amazon.com/Simple-Path-Weal ... +to+wealth
and I am planning to invest a major chunk of my salary on a monthly bases into index funds.

I am in my early 30s and don't plan to retire anytime soon, so I will be going 100% equity for at least 10 years before I add any bond in the portfolio.

Is it fine to have 100% of the portfolio in VTSAX?
Do I need VTIAX? Because I do that know that most of the VTSAX companies are international companies.

By having 100% VTSAX portfolio will avoid me yearly balancing and I can automate the money going to the brokerage account and forget about it.
santosh,

<<Is it fine to have 100% of the portfolio in VTSAX? >>

1) No.

A) It is 100% stock. A correct AA is between 70/30 to 30/70.

B) It is 100% US Stock. You should add the International stock.

<<I am in my early 30s and don't plan to retire anytime soon, so I will be going 100% equity for at least 10 years before I add any bond in the portfolio.>>

2) Unless you can see the future, how do you know that you will be fully employed over next X years?

3) How do you know you do not need the money over the next 10 years? Do you have an emergency fund? There will be at least one or more recession over the next 10 years.

4) 100/0 has a very lousy risk-adjusted return. You are taking extra risk and but not getting a great additional return.

KlangFool

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Cycle
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by Cycle » Mon Jun 04, 2018 8:51 am

I balance my own funds to get a lower expense ratio. I had better than 10% average annual returns on my 401k from 2005 to now. But I think I would have been a few percent higher if I did Target funds the whole time since there was a year where I had some portion of my funds sitting in cash (market timer...).

I know better now wrt market timing.

I think there is a strong case to be made for just doing Target funds until u get 500k in your accounts. The fees aren't that bad if the account balance isnt huge.

I'd be fine doing 100% stocks, but I'm not in practice. I'm only 85%. I'm just following the advice of others by having a bond allocations, as I tend to make poor financial decisions. Well, not that bad since I'm FI at 34.

birdog
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by birdog » Mon Jun 04, 2018 1:53 pm

I think it is fine and so does JL Collins. (It would also be fine, in my opinion, to allocate 90-10 stocks to bonds.) If I had it to do all over again I would follow Collins advice and go all VTSAX. I would have much more money today if I had.

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Earl Lemongrab
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by Earl Lemongrab » Mon Jun 04, 2018 2:55 pm

cutterinnj wrote:
Sun Jun 03, 2018 6:25 pm
It is fine to have 100% in VTSAX with your time horizon.

If you're going to do that, I recommend NOT checking your account or reading the news for the next 20 years, though...
Then the OP checks it after 20 years, and finds out it was looted by Roosian hackers 19 years earlier.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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ruralavalon
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by ruralavalon » Mon Jun 04, 2018 4:18 pm

Welcome to the forum :) .

santosh wrote:
Sun Jun 03, 2018 6:19 pm
I recently learned about investing and index funds. Read the book https://www.amazon.com/Simple-Path-Weal ... +to+wealth
and I am planning to invest a major chunk of my salary on a monthly bases into index funds.

I am in my early 30s and don't plan to retire anytime soon, so I will be going 100% equity for at least 10 years before I add any bond in the portfolio.

Is it fine to have 100% of the portfolio in VTSAX?
No.

In my opinion 100% in Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is not a good idea. In my opinion 100% in anything is not a good idea.

Even in your early 30s, with a long time until retirement, please consider about 20% in bonds or other fixed income. This is expected to substantially reduce portfolio volatility (risk), with only a relatively slight decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk", and "Asset allocation".




santosh wrote:
Sun Jun 03, 2018 6:19 pm
Do I need VTIAX? Because I do that know that most of the VTSAX companies are international companies.
You don't "need" Vanguard Total International Stock Index Fund Admiral Shares (VTIAX), but it would be a good idea in my opinion.

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box (upper right, this page).

That would work out to about 20% bonds, 20% international stocks, and 60% domestic stocks. Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.

I suggest that you read one or two good books on general investing and asset allocation. Wiki article, "Books: recommendations and reviews". When I first stated managing my own investments, I found this tutorial very helpful in learning investing terminology/jargon and some of the investing basics. Morningstar, "Investing Classroom". Also take a look at the Boglehead’s wiki, the "getting started" link I give below.



santosh wrote:
Sun Jun 03, 2018 6:19 pm
By having 100% VTSAX portfolio will avoid me yearly balancing and I can automate the money going to the brokerage account and forget about it.

Rebalancing is simple and infrequent. Because the funds will grow at different and unpredictable rates, it may be necessary every few years to rebalance in order to maintain the desired asset allocation. Wiki article, "Rebalancing". You simply exchange between funds inside a tax-advantaged account.

You can still automate contributions to a brokerage account.

(Which raises the question, what use are you making of a 401k or other tax-advantaged accounts? It is very important to use the tax-advantaged accounts available to you. You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place. Please see this for format: "Asking Portfolio Questions".)

.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

WhiteMaxima
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by WhiteMaxima » Mon Jun 04, 2018 4:31 pm

Only time will prove.

retiredjg
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by retiredjg » Mon Jun 04, 2018 5:04 pm

There have been many events in my lifetime that I NEVER THOUGHT I'D SEE. I won't list them because it does not matter. The message is that things often turn out very differently from what was expected or even thought of or considered possible.

I can imagine there will be a time period when foreign stocks will just kick the pants off of US stocks for years. The only way to take full advantage of that is to hold the foreign stocks BEFORE they start outperforming. If you buy in after it all starts, you don't get the full ride. And you may not get any ride at all. You may just miss it completely.

So I hold some foreign stocks.

I also hold some bonds. There are times - even a decade or more - when bonds outperform stocks. I was glad to have an allocation to bonds in the "lost decade" - at least something in my portfolio was making some money.

So no, I don't think holding only the US stock market is a great idea. Might work out. Might not. Nobody knows. I'd rather diversify.

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Re: Is it fine to have 100% of portfolio in VTSAX

Post by WhiteMaxima » Mon Jun 04, 2018 5:24 pm

If you want a single fund, you can just do a Vanguard balanced index admiral fund VBIAX (30/30/40 US/Int'l/Bond) or ETF. It will give you much smoother sail than VTSAX and will do automatic balanced for you. 10 year performance is 7.3% ER 0.07%. Compare VTSAX 9.3% ER 0.04%. The 100% stock is 2% ahead balanced during last 10 years of bull market. What's happening next 10 years, no one will know. It might be fine to hold 100% equity if you don't plan to touch it for 20 years or more. You have to stick with your plan no matter what happen in wall street. If I were you, I would do 80/20 which is less aggressive than 100/0 but more aggressive than 60/40.

bubbadog
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by bubbadog » Mon Jun 04, 2018 5:31 pm

Both of my children's portfolios, ages 17 and 20, are 100% in VTSAX. At your age, it seems OK to me.

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Alexa9
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by Alexa9 » Mon Jun 04, 2018 5:32 pm

No bonds, no international, and no small value tilt. It's higher risk than I'd want but it's better than most people picking stocks I suppose.

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Re: Is it fine to have 100% of portfolio in VTSAX

Post by mortfree » Mon Jun 04, 2018 5:35 pm

WhiteMaxima wrote:
Mon Jun 04, 2018 5:24 pm
If you want a single fund, you can just do a Vanguard balanced index admiral fund VBIAX (30/30/40 US/Int'l/Bond) or ETF. It will give you much smoother sail than VTSAX and will do automatic balanced for you. 10 year performance is 7.3% ER 0.07%. Compare VTSAX 9.3% ER 0.04%. The 100% stock is 2% ahead balanced during last 10 years of bull market. What's happening next 10 years, no one will know. It might be fine to hold 100% equity if you don't plan to touch it for 20 years or more. You have to stick with your plan no matter what happen in wall street. If I were you, I would do 80/20 which is less aggressive than 100/0 but more aggressive than 60/40.
Even in a taxable account?

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Re: Is it fine to have 100% of portfolio in VTSAX

Post by 3funder » Mon Jun 04, 2018 5:53 pm

dbr wrote:
Mon Jun 04, 2018 8:20 am
What need do you have that requires 100% stocks? That is, what is the specific objective that can only be reached by being 100% stocks and not at least some allocation (25%) to bonds? Also, why would you eschew the extra diversification available from some allocation to international stock markets. Note an international corporation is not necessarily an international stock.
+1

WhiteMaxima
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by WhiteMaxima » Mon Jun 04, 2018 6:30 pm

if you are not willing to pay dividend tax, buy BRKA/B in taxable account.

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Re: Is it fine to have 100% of portfolio in VTSAX

Post by H-Town » Mon Jun 04, 2018 6:38 pm

santosh wrote:
Sun Jun 03, 2018 6:19 pm
I recently learned about investing and index funds. Read the book https://www.amazon.com/Simple-Path-Weal ... +to+wealth
and I am planning to invest a major chunk of my salary on a monthly bases into index funds.

I am in my early 30s and don't plan to retire anytime soon, so I will be going 100% equity for at least 10 years before I add any bond in the portfolio.

Is it fine to have 100% of the portfolio in VTSAX?
Do I need VTIAX? Because I do that know that most of the VTSAX companies are international companies.

By having 100% VTSAX portfolio will avoid me yearly balancing and I can automate the money going to the brokerage account and forget about it.
yeah sure why not... but life happens though. so it may work for a few earlier years then you'll have to adjust and adapt.

jeffh19
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by jeffh19 » Mon Jun 04, 2018 7:09 pm

I'm also in my younger 30's, I'm 100% stocks. I started off doing SP500 ETF/MF, and then realized VTSAX was a little better, So I started exclusively doing that. Then I realized its a good idea to do some international, so after having a decent chunk in the market, I now have about 20% of my auto investments buy International total market too.As of right now, International is still less than 10% of my total holdings but that will slowly change over time.

I hold zero bonds as I said as I want to be extremely aggressive early on, and right now I dont have any great/cheaper bond choices in my 401k, and I've read that bonds are very tax inefficient so they aren't great to hold in taxable accounts. I plan on getting in some bonds when I'm 40 or so and adjusting my AA as needed as I age and what my life/work is like.

longinvest
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by longinvest » Mon Jun 04, 2018 7:17 pm

santosh wrote:
Sun Jun 03, 2018 6:19 pm
By having 100% VTSAX portfolio will avoid me yearly balancing and I can automate the money going to the brokerage account and forget about it.
A better solution would be a one-fund portfolio. I would suggest:
  • Vanguard Target Retirement 2055 Fund (VFFVX) which is targeted at people of age 29-33 and has a high stock allocation that will decline over time, or
  • Vanguard LifeStrategy Moderate Growth Fund (VSMGX) which as a constant target 60/40 stocks/bonds allocation.
Bogleheads investment philosophy | Lifelong Portfolio: 25% each of (domestic/international)stocks/(nominal/inflation-indexed)bonds | VCN/VXC/VLB/ZRR

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Re: Is it fine to have 100% of portfolio in VTSAX

Post by dogagility » Mon Jun 04, 2018 7:26 pm

santosh wrote:
Sun Jun 03, 2018 6:19 pm
Is it fine to have 100% of the portfolio in VTSAX?
Sure it's fine, if you don't divest any of it to "safety" under any market circumstances.

I was 100% equity funds for the first 25 years of my investing life. Went well for me as I had other things to think about, trusted the markets, and trusted my long time horizon to make back any short-term loss (like that of 2007/8). That's the psychological part of investing everyone talks about on this forum.

jeffh19
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by jeffh19 » Mon Jun 04, 2018 7:31 pm

Fees are a little higher with the Target Date Funds. Still cheap, but still enough of a difference over the course of 20+ years, it'll certainly add up....

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Re: Is it fine to have 100% of portfolio in VTSAX

Post by Ben Mathew » Mon Jun 04, 2018 7:55 pm

100% equity is fine, as long as you are confident you won't panic in a downturn. (I'm early 40s and still 100% equity.)

But your portfolio should contain international stocks as well. There's never a good reason to leave diversification on the table when it's cheap and easy. If you don't want to hold separate domestic and international funds, you can do it through Vanguard Total World Stock Index Fund.

Less importantly, consider tilting towards value and small cap as well.

Rebalancing is no big deal. First, it doesn't take long. And second, it's not that important to be on top of it. Even if you ignore it for a few years, it's fine. You're a bit off your desired allocation, but so what? Worries about rebalancing is not a reason to avoid holding multiple funds. That's kind of like saying you won't exercise at all because you can't train full time. It's better to get close to your desired allocation with a few funds that you don't rebalance religiously, than to be far from your desired allocation with a single fund.

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Re: Is it fine to have 100% of portfolio in VTSAX

Post by ETadvisor » Mon Jun 04, 2018 7:57 pm

jeffh19 wrote:
Mon Jun 04, 2018 7:09 pm
I'm also in my younger 30's, I'm 100% stocks. I started off doing SP500 ETF/MF, and then realized VTSAX was a little better, So I started exclusively doing that. Then I realized its a good idea to do some international, so after having a decent chunk in the market, I now have about 20% of my auto investments buy International total market too.As of right now, International is still less than 10% of my total holdings but that will slowly change over time.

I hold zero bonds as I said as I want to be extremely aggressive early on, and right now I dont have any great/cheaper bond choices in my 401k, and I've read that bonds are very tax inefficient so they aren't great to hold in taxable accounts. I plan on getting in some bonds when I'm 40 or so and adjusting my AA as needed as I age and what my life/work is like.
This is similar except I knew nothing so I did a Target date fund initially then after learning about expense ratios switched to index equity funds consisting of large/mid/small all blended. Always had some international and was 100% stocks. Did not hold bonds until 40 at 10% and now I hold 15%. Next adjustment is increase to 20% bonds. My 401k does not have any Total Market funds.

So I would hold both Total Stock Market and Total International with 20 to 30 percent in international. In time, adjust stock/bond ratio.
Last edited by ETadvisor on Mon Jun 04, 2018 8:04 pm, edited 1 time in total.

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ruralavalon
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Re: Is it fine to have 100% of portfolio in VTSAX

Post by ruralavalon » Mon Jun 04, 2018 8:03 pm

mortfree wrote:
Mon Jun 04, 2018 5:35 pm
WhiteMaxima wrote:
Mon Jun 04, 2018 5:24 pm
If you want a single fund, you can just do a Vanguard balanced index admiral fund VBIAX (30/30/40 US/Int'l/Bond) or ETF. It will give you much smoother sail than VTSAX and will do automatic balanced for you. 10 year performance is 7.3% ER 0.07%. Compare VTSAX 9.3% ER 0.04%. The 100% stock is 2% ahead balanced during last 10 years of bull market. What's happening next 10 years, no one will know. It might be fine to hold 100% equity if you don't plan to touch it for 20 years or more. You have to stick with your plan no matter what happen in wall street. If I were you, I would do 80/20 which is less aggressive than 100/0 but more aggressive than 60/40.
Even in a taxable account?
If the tax bracket warrants a concern, for the simplicity of a single fund consider Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX) ER 0.09%.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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