The new 1 fund portfolio

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Topic Author
jmaga1
Posts: 16
Joined: Tue Jun 18, 2019 10:45 pm

Re: The new 1 fund portfolio

Post by jmaga1 » Mon Jul 29, 2019 11:46 pm

jibantik wrote:
Sun Jul 28, 2019 11:09 am
Everyone suggesting that a 23yr old should hold 100% VTSAX instead of the global market (on a Bogleheads forum no less) should be absolutely ashamed of themselves. Very dangerous advice for someone with a 60 year investment horizon. I am sorry but you do not have a crystal ball that will tell you what is going to happen with tens of thousands of companies 60 years from now.

Also, the people trying to justify such a decision (probably as much to themselves as everyone else) using past performance shouldn't be allowed to call themselves a Boglehead.

Do whatever you want in your portfolio, speculate all you want, but to suggest it to a young person with such a long investment horizon is irresponsible.
What would you recommend?

Topic Author
jmaga1
Posts: 16
Joined: Tue Jun 18, 2019 10:45 pm

Re: The new 1 fund portfolio

Post by jmaga1 » Mon Jul 29, 2019 11:47 pm

pokebowl wrote:
Sat Jul 27, 2019 9:39 am
jmaga1 wrote:
Sat Jul 27, 2019 1:19 am
Hello,

I have about 20k in cash and about 60k in my brokerage account in which I've picked individual stocks. I want to do 1 fund portfolio as I can simply just add money monthly, currently 23 years of age. The real question is should it be invested in VTSAX or VTWAX. I've come upon the new VTWAX fund, and would like to see if you think its soon to replace VTSAX as the top performing index.


Thank you!!
If your choices are only between those two funds, then VTWAX total world would be the better of the two options. A counter argument however, is if you will be making regular recurring contributions to this fund, it may make more sense to split VTWAX into its sub-components (VTSAX/VTIAX) for better tax loss harvesting opportunities. Regardless VTWAX is a great fund, for long term holding. In terms of top performing, no one knows the future.
They are not the only ones, but I am attempting to have a smart and simple formula.

Silence Dogood
Posts: 1240
Joined: Tue Feb 01, 2011 9:22 pm

Re: The new 1 fund portfolio

Post by Silence Dogood » Tue Jul 30, 2019 7:31 am

jmaga1 wrote:
Mon Jul 29, 2019 11:41 pm
No longer have credit card debt and only have the loan, but I want to use it to build my credit.
Fortunately, you don't need an auto loan to have good credit. My FICO score is 795 and I've never had an auto loan (although I do have a student loan).

Use a credit card, but pay it off in full each month. Also, keep your utilization ratio low. This is the best way to build credit, since it doesn't require you to pay interest.

Do you have any student loans?

User avatar
9-5 Suited
Posts: 423
Joined: Thu Jun 23, 2016 12:14 pm

Re: The new 1 fund portfolio

Post by 9-5 Suited » Tue Jul 30, 2019 12:55 pm

David Jay wrote:
Sat Jul 27, 2019 8:14 pm
9-5 Suited wrote:
Sat Jul 27, 2019 3:28 pm
Right and wrong isn’t a helpful framework for investing choices...
Can we carve out an exception for Variable Annuities inside an IRA? :annoyed
I think the full quotation helps solve that one. "Right and wrong isn’t a helpful framework for investing choices like that so long as the person understands the trade off."

Typically a set up like that one is done by an unscrupulous financial adviser on an unsuspecting mark. Kind of like Whole Life policies for unmarried 21 year olds.

jibantik
Posts: 225
Joined: Fri Nov 24, 2017 1:05 pm

Re: The new 1 fund portfolio

Post by jibantik » Tue Jul 30, 2019 6:25 pm

jmaga1 wrote:
Mon Jul 29, 2019 11:46 pm
jibantik wrote:
Sun Jul 28, 2019 11:09 am
Everyone suggesting that a 23yr old should hold 100% VTSAX instead of the global market (on a Bogleheads forum no less) should be absolutely ashamed of themselves. Very dangerous advice for someone with a 60 year investment horizon. I am sorry but you do not have a crystal ball that will tell you what is going to happen with tens of thousands of companies 60 years from now.

Also, the people trying to justify such a decision (probably as much to themselves as everyone else) using past performance shouldn't be allowed to call themselves a Boglehead.

Do whatever you want in your portfolio, speculate all you want, but to suggest it to a young person with such a long investment horizon is irresponsible.
What would you recommend?
VTWAX.

The null position is to invest at market cap. Any deviation of that strategy is requires some assertion or speculation. I personally believe that I am not smart enough to predict how thousands upon thousands of global companies all around the world are going to perform decades into the future, and I don't think anyone else is smart enough to do that either.

Shockingly, some people in this thread seem to be suggesting that you base your decision on past performance. That is EXTREMELY dangerous. Should we invest all our money into AAPL? I will refer you to this thread about past performance. One of my personal favorite quotes is the following:
Bill Schultheis, adviser and author of The Coffeehouse Investor: "Using past performance numbers as a method for choosing mutual funds is such a lousy idea that mutual fund companies are required by law to tell you it is a lousy idea."
At the end of the day, when we share a beer 60 years from now, I can all but guarantee you we can look back and say holding X would have been better than holding VTWAX. But, since we don't know the future, VTWAX is the best we can do today. That is, unless we delude ourselves into thinking we are smarter than everyone else and can somehow predict the unpredictable (something which countless "professionals" continue to fail at).

You will find some people on this forum have a secret magic 8 ball. They are able to predict decades into the future and somehow know which companies will outperform others AND know it better than the market currently knows it. For a young person with a 60+ year investment horizon, the advice that kind of person can give you is extremely dangerous.

If you want to see how dangerous putting all your marbles into one basket is, just look at Japan, who once had the highest market cap of all countries. This is why Bogle's philosophy is so important... BUY THE HAYSTACK, NOBODY KNOWS NOTHING.

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ruralavalon
Posts: 17121
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: The new 1 fund portfolio

Post by ruralavalon » Tue Jul 30, 2019 7:19 pm

Sandtrap wrote:
Sat Jul 27, 2019 7:34 am
jmaga1 wrote:
Sat Jul 27, 2019 1:19 am
Hello,

I have about 20k in cash and about 60k in my brokerage account in which I've picked individual stocks. I want to do 1 fund portfolio as I can simply just add money monthly, currently 23 years of age. The real question is should it be invested in VTSAX or VTWAX. I've come upon the new VTWAX fund, and would like to see if you think its soon to replace VTSAX as the top performing index.


Thank you!!
Options:

1. Pick a Lifestrategy Fund and stick with it.
2. Pick a Target Retirement Fund and stick with it.
3. Pick Balanced Index Fund at 60/40 and stick with it.

All would do well.
However, what is "top performing" is a myth. At any one period of time certain funds and allocations will do well, other times not so. Over the long haul, not a huge difference.

j
+ 1, look for a combination of broad diversification (to decrease risk) and low expense ratios (to increase your net return), and stay the course. Stop looking for the mythical "top performing" fund, they are as rare as unicorns.

We will be switching to a one fund portfolio for ultra simplicity and to eliminate the need for portfolio management as we get older. I am torn between Vanguard LifeStrategy Moderate Growth Fund (VSMGX) and Vanguard Balanced Index Fund (VBINX), both 60/40 equities/fixed income.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

lostdog
Posts: 2118
Joined: Thu Feb 04, 2016 2:15 pm

Re: The new 1 fund portfolio

Post by lostdog » Tue Jul 30, 2019 8:35 pm

jibantik wrote:
Tue Jul 30, 2019 6:25 pm
jmaga1 wrote:
Mon Jul 29, 2019 11:46 pm
jibantik wrote:
Sun Jul 28, 2019 11:09 am
Everyone suggesting that a 23yr old should hold 100% VTSAX instead of the global market (on a Bogleheads forum no less) should be absolutely ashamed of themselves. Very dangerous advice for someone with a 60 year investment horizon. I am sorry but you do not have a crystal ball that will tell you what is going to happen with tens of thousands of companies 60 years from now.

Also, the people trying to justify such a decision (probably as much to themselves as everyone else) using past performance shouldn't be allowed to call themselves a Boglehead.

Do whatever you want in your portfolio, speculate all you want, but to suggest it to a young person with such a long investment horizon is irresponsible.
What would you recommend?
VTWAX.

The null position is to invest at market cap. Any deviation of that strategy is requires some assertion or speculation. I personally believe that I am not smart enough to predict how thousands upon thousands of global companies all around the world are going to perform decades into the future, and I don't think anyone else is smart enough to do that either.

Shockingly, some people in this thread seem to be suggesting that you base your decision on past performance. That is EXTREMELY dangerous. Should we invest all our money into AAPL? I will refer you to this thread about past performance. One of my personal favorite quotes is the following:
Bill Schultheis, adviser and author of The Coffeehouse Investor: "Using past performance numbers as a method for choosing mutual funds is such a lousy idea that mutual fund companies are required by law to tell you it is a lousy idea."
At the end of the day, when we share a beer 60 years from now, I can all but guarantee you we can look back and say holding X would have been better than holding VTWAX. But, since we don't know the future, VTWAX is the best we can do today. That is, unless we delude ourselves into thinking we are smarter than everyone else and can somehow predict the unpredictable (something which countless "professionals" continue to fail at).

You will find some people on this forum have a secret magic 8 ball. They are able to predict decades into the future and somehow know which companies will outperform others AND know it better than the market currently knows it. For a young person with a 60+ year investment horizon, the advice that kind of person can give you is extremely dangerous.

If you want to see how dangerous putting all your marbles into one basket is, just look at Japan, who once had the highest market cap of all countries. This is why Bogle's philosophy is so important... BUY THE HAYSTACK, NOBODY KNOWS NOTHING.
+100000000000
VTWAX and chill.

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Sandtrap
Posts: 8684
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: The new 1 fund portfolio

Post by Sandtrap » Tue Jul 30, 2019 8:47 pm

ruralavalon wrote:
Tue Jul 30, 2019 7:19 pm
Sandtrap wrote:
Sat Jul 27, 2019 7:34 am
jmaga1 wrote:
Sat Jul 27, 2019 1:19 am
Hello,

I have about 20k in cash and about 60k in my brokerage account in which I've picked individual stocks. I want to do 1 fund portfolio as I can simply just add money monthly, currently 23 years of age. The real question is should it be invested in VTSAX or VTWAX. I've come upon the new VTWAX fund, and would like to see if you think its soon to replace VTSAX as the top performing index.


Thank you!!
Options:

1. Pick a Lifestrategy Fund and stick with it.
2. Pick a Target Retirement Fund and stick with it.
3. Pick Balanced Index Fund at 60/40 and stick with it.

All would do well.
However, what is "top performing" is a myth. At any one period of time certain funds and allocations will do well, other times not so. Over the long haul, not a huge difference.

j
+ 1, look for a combination of broad diversification (to decrease risk) and low expense ratios (to increase your net return), and stay the course. Stop looking for the mythical "top performing" fund, they are as rare as unicorns.

We will be switching to a one fund portfolio for ultra simplicity and to eliminate the need for portfolio management as we get older. I am torn between Vanguard LifeStrategy Moderate Growth Fund (VSMGX) and Vanguard Balanced Index Fund (VBINX), both 60/40 equities/fixed income.
I have a substantial sum in Balanced Index with instructions to my successor trustee and DW to move the rest into Balanced Index when I move on to greener pastures.

DW's father, (passed away last year, career military WWII vet, Arlington,etc) had put in $40k when Balanced Index first came out. Over time, it grew to well over $400k and supplements MIL care to this day. So, that fund has a great track record in our household.

j
Wiki Bogleheads Wiki: Everything You Need to Know

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