All in on VT?

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generallyspeaking
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Joined: Wed May 16, 2018 12:57 pm

All in on VT?

Post by generallyspeaking » Sat Oct 05, 2019 2:58 pm

Hi everyone,

I've posted a couple of times before, shortly after moving to the US. My wife and I are well settled now and I'm looking for some specific advice/thoughts.

I'm building up my taxable brokerage account (it's at about $250k now) and I am curious what the opinions are around putting 100% of these funds into VT (Vanguard Total World Stock, ER 0.09%). My question isn't about what this fund is or about how to allocate US vs ex-US, instead I am looking for advice on what high net worth individuals feel about putting hundreds of thousands of dollars and eventually multiple millions into one single fund.

Is this something others do? Or after putting in a portion do you look at more niche investments? Interested in hearing other folks' thoughts on the matter.

MotoTrojan
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Re: All in on VT?

Post by MotoTrojan » Sat Oct 05, 2019 3:03 pm

Biggest drawback in taxable is less ability to tax-loss harvest, especially if one region is up and the other down (lots of opportunistic recently to harvest Total Int.).

sf_tech_saver
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Re: All in on VT?

Post by sf_tech_saver » Sat Oct 05, 2019 3:27 pm

I have over $1M in VTI alone and couldn't be happier about it! Remember these dollar amounts seem huge to us but they are a blip to Vanguard.

To me, something like VT or VTI is the PERFECT place for 7-8 figure sums (with a long term investment horizon).

I hope to grow my VTI total to over $10M and just live off the dividend checks. Simple, effective and as diversified as equity investments gets in the US.

There is more to life than worrying about investing. VTI is my solution.

I keep my CA municipal bonds separate. Because I live in California the blended tax-managed fund isn't as effective as specific CA Munis.
VTI is a modern marvel

Goal33
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Re: All in on VT?

Post by Goal33 » Sat Oct 05, 2019 3:37 pm

I would be all in except I have other funds due to tax loss harvesting. Other than that I would be fine with my entire equity allocation being in VT
A man with one watch always knows what time it is; a man with two watches is never sure.

zlandar
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Re: All in on VT?

Post by zlandar » Sat Oct 05, 2019 3:50 pm

My brokerage is >95% in two funds (VTI and VXUS) and it's over $2 million.

The issue I have with VT is that it's 9 basis points compared to 3 for VTI and 9 for VXUS. VT is 60% US/40% international.

I would rather save 6 basis points on the US side and forego the convenience of just one fund. At $1 million each basis point is $100/year in expense.

theplayer11
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Re: All in on VT?

Post by theplayer11 » Sat Oct 05, 2019 4:17 pm

thought you were moving to Vermont..

Northern Flicker
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Re: All in on VT?

Post by Northern Flicker » Sat Oct 05, 2019 4:38 pm

Loss of flexibility to tax-loss harvest is one drawback, but VT is less tax-efficient than holding a combination of US and non-US index funds in a variety of ways. You can do a search on here to find the discussion of that.

If you want a world market cap allocation, just hold VTI and IXUS or VXUS in market cap proportion. You won’t have to rebalance between them if you want a market cap allocation (like VT has).

Otherwise there is nothing wrong with holding just VT. In fact, if you wanted a world market cap portfolio in a tax-qualified account, it would be an excellent choice.
Last edited by Northern Flicker on Sat Oct 05, 2019 6:07 pm, edited 1 time in total.
Index fund investor since 1987.

Prettyfrtnt
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Re: All in on VT?

Post by Prettyfrtnt » Sat Oct 05, 2019 5:47 pm

Northern Flicker wrote:
Sat Oct 05, 2019 4:38 pm
Loss of flexibility to tax-loss harvest is one drawback, but VT is less tax-efficient than holding a combination of US and non-US index funds in a variety of ways. You can do a search on her me to find the discussion of that.

If you want a world market cap allocation, just hold VTI and IXUS or VXUS in market cap proportion. You won’t have to rebalance between them if you want a market cap allocation (like VT has).

Otherwise there is nothing wrong with holding just VT. In fact, if you wanted a world market cap portfolio in a tax-qualified account, it would be an excellent choice.

I have VT in tax advantaged and VTI and VXUS in brokerage. VTI/VXUS lets me set the international ratio. And would I be comfortable having 9 figures of this or even 10 figures... yes yes I would.

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Wiggums
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Re: All in on VT?

Post by Wiggums » Sat Oct 05, 2019 5:50 pm

I would invest 250k in a heartbeat! I don’t have any issues with that fund. I personally prefer two funds, but I’m not against one fund for a lot of people.

bgf
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Re: All in on VT?

Post by bgf » Sat Oct 05, 2019 6:56 pm

zlandar wrote:
Sat Oct 05, 2019 3:50 pm
My brokerage is >95% in two funds (VTI and VXUS) and it's over $2 million.

The issue I have with VT is that it's 9 basis points compared to 3 for VTI and 9 for VXUS. VT is 60% US/40% international.

I would rather save 6 basis points on the US side and forego the convenience of just one fund. At $1 million each basis point is $100/year in expense.
your tracking error, good or bad, will swamp $100 per year. its a nonissue.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

nix4me
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Re: All in on VT?

Post by nix4me » Sat Oct 05, 2019 8:00 pm

International is terrible. Use VTi instead.

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asset_chaos
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Re: All in on VT?

Post by asset_chaos » Sun Oct 06, 2019 2:37 am

generallyspeaking wrote:
Sat Oct 05, 2019 2:58 pm
I am looking for advice on what high net worth individuals feel about putting hundreds of thousands of dollars and eventually multiple millions into one single fund.

Is this something others do?
This is what total market type funds are made for. My net worth is middlin for bogleheads but probably high enough compared to the general population, and for what it's worth, total world is my core stock holding.
Or after putting in a portion do you look at more niche investments? Interested in hearing other folks' thoughts on the matter.
That seems a matter of taste and interest. I believe all you need are total market type funds, but if you want to dabble in overweighting reits or value or whatever else in the pool of reasonable investments strikes your fancy, than go ahead.
Regards, | | Guy

HawkeyePierce
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Location: Colorado

Re: All in on VT?

Post by HawkeyePierce » Sun Oct 06, 2019 3:07 am

There's $16 billion in VT/VTWAX. I would have zero qualms putting hundreds of thousands or millions of dollars into that fund.

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Rainier
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Re: All in on VT?

Post by Rainier » Sun Oct 06, 2019 6:32 am

Are there any other low cost alternatives to VT (from Fidelity, Schwab, iShares, etc.)?

I'm searching, but not seeing any other total world funds outside Vanguard.

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vineviz
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Re: All in on VT?

Post by vineviz » Sun Oct 06, 2019 6:49 am

Rainier wrote:
Sun Oct 06, 2019 6:32 am
Are there any other low cost alternatives to VT (from Fidelity, Schwab, iShares, etc.)?

I'm searching, but not seeing any other total world funds outside Vanguard.
The only close alternative is SPDR Portfolio MSCI Global Stk Mkt ETF (SPGM). The other ETFs are more expensive.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Cash
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Re: All in on VT?

Post by Cash » Sun Oct 06, 2019 8:21 am

vineviz wrote:
Sun Oct 06, 2019 6:49 am
Rainier wrote:
Sun Oct 06, 2019 6:32 am
Are there any other low cost alternatives to VT (from Fidelity, Schwab, iShares, etc.)?

I'm searching, but not seeing any other total world funds outside Vanguard.
The only close alternative is SPDR Portfolio MSCI Global Stk Mkt ETF (SPGM). The other ETFs are more expensive.
Yeah ACWI is the iShares alternative, but has a .32% expense ratio. Just buy VT for free at Schwab or $4.95 (for now) at Fidelity. I will note that ITOT/IXUS is probably a more tax-efficient combination, but I also like the simplicity of VT.

lostdog
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Re: All in on VT?

Post by lostdog » Sun Oct 06, 2019 8:24 am

MotoTrojan wrote:
Sat Oct 05, 2019 3:03 pm
Biggest drawback in taxable is less ability to tax-loss harvest, especially if one region is up and the other down (lots of opportunistic recently to harvest Total Int.).
SPGM and VT are good TLH partners if he wants to keep things simple with 1 fund.
Total World Stock and Total World Bond. The simple two fund diversified portfolio. "Simplicity is the master key to financial success."

bogledogle87
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Re: All in on VT?

Post by bogledogle87 » Sun Oct 06, 2019 9:31 pm

For simplicity, you can’t beat it. I would do it myself in taxable if not for wanting some flexibility with tax gain / loss harvesting, and a slight edge in qualified dividend tax efficiency with VTI + IXUS. It does require a bit more work to track the up-to-date market cap at the correct weights with the purchase of new shares. Honestly, If I didn’t somewhat enjoy “doing something” I would probably just go with VT and call it a day
VTWAX and chill

Cycle
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Re: All in on VT?

Post by Cycle » Sun Oct 06, 2019 10:07 pm

I do vtwax (VT) in everything but 401k. In 401k I do a target fund.

I put ~100k into the brokerage VT per year. It's simple.
Never look back unless you are planning to go that way

pascalwager
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Re: All in on VT?

Post by pascalwager » Mon Oct 07, 2019 1:47 am

I do the "50/50 version" using total US and total non-US index funds. Total world index won't work for my accounts. I could, of course, just set my two funds to world market ratio, but I've always been roughly 50/50 and probably shouldn't change now. But total world index is a simple, easy, and sensible way to invest and avoids rebalancing decisions.

Grasshopper
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Re: All in on VT?

Post by Grasshopper » Mon Oct 07, 2019 6:53 am

I am 100% VT in my taxable account, and 100% Wellington VWENX in my tax advantaged, for my bond allocation. Easy peasy.

nolesrule
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Re: All in on VT?

Post by nolesrule » Mon Oct 07, 2019 7:29 am

I'm using VT in my kids' UTMA brokerage accounts, because the goal is to tax gain harvest. I will likely convert it to a split of total stock and total international (in some ratio TBD) as we approach the time when the accounts will be turned over and/or tax loss harvesting becomes a consideration.

Topic Author
generallyspeaking
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Re: All in on VT?

Post by generallyspeaking » Mon Oct 07, 2019 11:37 am

Thanks all for the great advice!

It sounds like the pros and cons of owning all VT are as follows:

Pros:
- One single fund
- No need to think about rebalancing

Cons:
- No tax loss harvesting
- Cannot decide US/Int'l weighting
- Higher overall expense ratio

With all that in mind, I'll stick to VT for the time being.

WhiteMaxima
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Re: All in on VT?

Post by WhiteMaxima » Mon Oct 07, 2019 5:51 pm

seems like an idiot but it works.

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aj76er
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Re: All in on VT?

Post by aj76er » Mon Oct 07, 2019 10:07 pm

generallyspeaking wrote:
Mon Oct 07, 2019 11:37 am
Thanks all for the great advice!

It sounds like the pros and cons of owning all VT are as follows:

Pros:
- One single fund
- No need to think about rebalancing

Cons:
- No tax loss harvesting
- Cannot decide US/Int'l weighting
- Higher overall expense ratio

With all that in mind, I'll stick to VT for the time being.
Make sure you do accurate accounting of the cost of holding the single fund vs two separate funds. The most tax efficient and lowest cost method of implementing world equities is to hold xUS with ixus and US with vti. Depending on your tax bracket, ixus could have about a 20bps advantage. In terms of E/R, vti has about 5bps advantage. So let’s say roughly 12.5bps savings (for ~50% xUS). On a $1million portfolio, that’s $1250 a year in savings. Assume it takes an extra 2mins to rebalance two funds (vs one fund), and that’s an equivalent salary of $37500/hour!
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle

Topic Author
generallyspeaking
Posts: 48
Joined: Wed May 16, 2018 12:57 pm

Re: All in on VT?

Post by generallyspeaking » Mon Oct 07, 2019 10:15 pm

aj76er wrote:
Mon Oct 07, 2019 10:07 pm
generallyspeaking wrote:
Mon Oct 07, 2019 11:37 am
Thanks all for the great advice!

It sounds like the pros and cons of owning all VT are as follows:

Pros:
- One single fund
- No need to think about rebalancing

Cons:
- No tax loss harvesting
- Cannot decide US/Int'l weighting
- Higher overall expense ratio

With all that in mind, I'll stick to VT for the time being.
Make sure you do accurate accounting of the cost of holding the single fund vs two separate funds. The most tax efficient and lowest cost method of implementing world equities is to hold xUS with ixus and US with vti. Depending on your tax bracket, ixus could have about a 20bps advantage. In terms of E/R, vti has about 5bps advantage. So let’s say roughly 12.5bps savings (for ~50% xUS). On a $1million portfolio, that’s $1250 a year in savings. Assume it takes an extra 2mins to rebalance two funds (vs one fund), and that’s an equivalent salary of $37500/hour!
What are the tax benefits of holding ixus?

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abuss368
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Re: All in on VT?

Post by abuss368 » Mon Oct 07, 2019 10:21 pm

theplayer11 wrote:
Sat Oct 05, 2019 4:17 pm
thought you were moving to Vermont..
:oops:
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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abuss368
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Re: All in on VT?

Post by abuss368 » Mon Oct 07, 2019 10:23 pm

What about Total Stock and Total International? Or perhaps just Total Stock?
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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aj76er
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Re: All in on VT?

Post by aj76er » Mon Oct 07, 2019 10:42 pm

generallyspeaking wrote:
Mon Oct 07, 2019 10:15 pm
aj76er wrote:
Mon Oct 07, 2019 10:07 pm
generallyspeaking wrote:
Mon Oct 07, 2019 11:37 am
Thanks all for the great advice!

It sounds like the pros and cons of owning all VT are as follows:

Pros:
- One single fund
- No need to think about rebalancing

Cons:
- No tax loss harvesting
- Cannot decide US/Int'l weighting
- Higher overall expense ratio

With all that in mind, I'll stick to VT for the time being.
Make sure you do accurate accounting of the cost of holding the single fund vs two separate funds. The most tax efficient and lowest cost method of implementing world equities is to hold xUS with ixus and US with vti. Depending on your tax bracket, ixus could have about a 20bps advantage. In terms of E/R, vti has about 5bps advantage. So let’s say roughly 12.5bps savings (for ~50% xUS). On a $1million portfolio, that’s $1250 a year in savings. Assume it takes an extra 2mins to rebalance two funds (vs one fund), and that’s an equivalent salary of $37500/hour!
What are the tax benefits of holding ixus?
take a look at the spreadsheet posted in this thread:
viewtopic.php?f=10&t=242137

It will depend on your state & federal tax brackets
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle

Topic Author
generallyspeaking
Posts: 48
Joined: Wed May 16, 2018 12:57 pm

Re: All in on VT?

Post by generallyspeaking » Mon Oct 07, 2019 11:32 pm

aj76er wrote:
Mon Oct 07, 2019 10:42 pm
generallyspeaking wrote:
Mon Oct 07, 2019 10:15 pm
aj76er wrote:
Mon Oct 07, 2019 10:07 pm
generallyspeaking wrote:
Mon Oct 07, 2019 11:37 am
Thanks all for the great advice!

It sounds like the pros and cons of owning all VT are as follows:

Pros:
- One single fund
- No need to think about rebalancing

Cons:
- No tax loss harvesting
- Cannot decide US/Int'l weighting
- Higher overall expense ratio

With all that in mind, I'll stick to VT for the time being.
Make sure you do accurate accounting of the cost of holding the single fund vs two separate funds. The most tax efficient and lowest cost method of implementing world equities is to hold xUS with ixus and US with vti. Depending on your tax bracket, ixus could have about a 20bps advantage. In terms of E/R, vti has about 5bps advantage. So let’s say roughly 12.5bps savings (for ~50% xUS). On a $1million portfolio, that’s $1250 a year in savings. Assume it takes an extra 2mins to rebalance two funds (vs one fund), and that’s an equivalent salary of $37500/hour!
What are the tax benefits of holding ixus?
take a look at the spreadsheet posted in this thread:
viewtopic.php?f=10&t=242137

It will depend on your state & federal tax brackets
Thanks! This is helpful, but I can't make sense of what "Tax Efficency" means. Is lower better?

GoldenFinch
Posts: 1972
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Re: All in on VT?

Post by GoldenFinch » Tue Oct 08, 2019 5:01 am

generallyspeaking wrote:
Mon Oct 07, 2019 11:32 pm
aj76er wrote:
Mon Oct 07, 2019 10:42 pm
generallyspeaking wrote:
Mon Oct 07, 2019 10:15 pm
aj76er wrote:
Mon Oct 07, 2019 10:07 pm
generallyspeaking wrote:
Mon Oct 07, 2019 11:37 am
Thanks all for the great advice!

It sounds like the pros and cons of owning all VT are as follows:

Pros:
- One single fund
- No need to think about rebalancing

Cons:
- No tax loss harvesting
- Cannot decide US/Int'l weighting
- Higher overall expense ratio

With all that in mind, I'll stick to VT for the time being.
Make sure you do accurate accounting of the cost of holding the single fund vs two separate funds. The most tax efficient and lowest cost method of implementing world equities is to hold xUS with ixus and US with vti. Depending on your tax bracket, ixus could have about a 20bps advantage. In terms of E/R, vti has about 5bps advantage. So let’s say roughly 12.5bps savings (for ~50% xUS). On a $1million portfolio, that’s $1250 a year in savings. Assume it takes an extra 2mins to rebalance two funds (vs one fund), and that’s an equivalent salary of $37500/hour!
What are the tax benefits of holding ixus?
take a look at the spreadsheet posted in this thread:
viewtopic.php?f=10&t=242137

It will depend on your state & federal tax brackets
Thanks! This is helpful, but I can't make sense of what "Tax Efficency" means. Is lower better?
Google ‘Tax Efficiency‘ and read up on it. Read what the Boglehead Wiki has to say about it. Tax efficiency is something you want to understand if you are managing your own finances.

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