All in VTSAX, probably not the smartest move I've made, seeking advice

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Topic Author
seekingcounsel
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All in VTSAX, probably not the smartest move I've made, seeking advice

Post by seekingcounsel »

Hi there,

I posted on here a few months back about getting into investing. I decided to go very aggressive with my portfolio and instead of allocating 10% bonds, i went 100% VTSAX. Seems absolutely insane now that I think about it. With my luck, I managed to invest half at the peak of the market, then half at a dip last week. I'm kicking myself for dollar-cost averaging but I went into this without fully informing myself, so I just have to eat that mistake.

Well, this whole market hysteria doesn't seem to let up anytime soon. I have 90k (down from 110k) in VTSAX at the moment in a taxable brokerage account.

I'm debating on selling this and taking a loss now, or really riding this out through the unknown. I know none of us have a crystal ball, but I feel that some of yours may be less clouded than mine. Any advice on what to do?

I'm 27, no debt, no dependents, ~20k emergency fund, own a house (paid off worth ~260k), still employed (thankfully)~35k yearly.

Considering my situation, any advice on what to do? Stay the course or jump ship and risk a loss? I wouldn't be touching this money for a few decades.

Cheers
BoggledHead2
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by BoggledHead2 »

Buy more
mega317
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by mega317 »

1. What made you decide 100% VTSAX in the first place? Have any of those factors changed?
2. There isn't much difference between 100/0 and 90/10. Just imagine your portfolio now had you started at 90/10, would you feel any different? Still thinking about selling?

With no dependents, paid off house, healthy emergency fund, I'd say you're in a good position to stay the course. A completely separate question is whether the course was the right one to start with. It's going to be hard for anyone
to answer that one for themselves right now.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
Topic Author
seekingcounsel
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by seekingcounsel »

BoggledHead2 wrote: Mon Mar 16, 2020 4:38 pm Buy more
this is so counter-intuitive to my caveman brain that it is almost short-circuiting but... you have a point.
mega317 wrote: Mon Mar 16, 2020 4:39 pm 1. What made you decide 100% VTSAX in the first place? Have any of those factors changed?
2. There isn't much difference between 100/0 and 90/10. Just imagine your portfolio now had you started at 90/10, would you feel any different? Still thinking about selling?

With no dependents, paid off house, healthy emergency fund, I'd say you're in a good position to stay the course. A completely separate question is whether the course was the right one to start with. It's going to be hard for anyone
to answer that one for themselves right now.
As far as investing goes, investing in the market was the only thing that made relative sense to me. I read about crashes before and it all seemed so far off and abstract. Little did I know that I would be investing right as we entered one of those crashes.

My only other option was to sell and buy back in DCA, but I have no idea what this could sell for at the end of tomorrow. Could be the same, could be a huge cut.
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Teriyaki
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by Teriyaki »

You're 27, you've got decades left in your investing life. This is just a momentary blip. Pick an asset allocation you can stick with and keep regularly buying at that. :beer
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Cheez-It Guy
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by Cheez-It Guy »

Yes, get mad and buy more. Most likely, in 20 years, even your peak of market buy will seem cheap, and you'd wish you could buy more at the prices you currently regret.
gabedavis
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by gabedavis »

seekingcounsel wrote: Mon Mar 16, 2020 4:35 pm Well, this whole market hysteria doesn't seem to let up anytime soon. I have 90k (down from 110k) in VTSAX at the moment in a taxable brokerage account.

I'm 27, no debt, no dependents, ~20k emergency fund, own a house (paid off worth ~260k), still employed (thankfully)~35k yearly.

Considering my situation, any advice on what to do? Stay the course or jump ship and risk a loss? I wouldn't be touching this money for a few decades.

Cheers
I notice that you are very concerned about the $90k that you currently have in stocks but your real estate holding is also effected and you're not even mentioning that.
Reits are down 35% in the past month. How are you estimating the value of your property? If it was worth $260k a month ago, I'm sure if you tried to sell it now it would be worth 10-20% less than a month ago. Maybe more. So you lost about $25-$50k of value in that property. are you considering selling that? Bogleheads would encourage you to have the same attitude about your equity holdings as you do about your real estate investment.
InvestingGeek
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by InvestingGeek »

Too late to jump ship imo. Just grin and bear it instead of taking a such an expensive haircut. It'll be fine. If you're 27, this will just be a blip in your investing career.
Topic Author
seekingcounsel
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by seekingcounsel »

gabedavis wrote: Mon Mar 16, 2020 4:48 pm
seekingcounsel wrote: Mon Mar 16, 2020 4:35 pm Well, this whole market hysteria doesn't seem to let up anytime soon. I have 90k (down from 110k) in VTSAX at the moment in a taxable brokerage account.

I'm 27, no debt, no dependents, ~20k emergency fund, own a house (paid off worth ~260k), still employed (thankfully)~35k yearly.

Considering my situation, any advice on what to do? Stay the course or jump ship and risk a loss? I wouldn't be touching this money for a few decades.

Cheers
I notice that you are very concerned about the $90k that you currently have in stocks but your real estate holding is also effected and you're not even mentioning that.
Reits are down 35% in the past month. How are you estimating the value of your property? If it was worth $260k a month ago, I'm sure if you tried to sell it now it would be worth 10-20% less than a month ago. Maybe more. So you lost about $25-$50k of value in that property. are you considering selling that? Bogleheads would encourage you to have the same attitude about your equity holdings as you do about your real estate investment.
Great point. I know this will affect the housing market, potentially even with a housing crash that'll devalue my property, but since I have tenants in there, I don't have plans on selling it anytime soon. Now with this, I might not be collecting monthly rent checks if they're laid off so that's a whole other issue that I have to figure out.
InvestingGeek wrote: Mon Mar 16, 2020 4:48 pm Too late to jump ship imo. Just grin and bear it instead of taking a such an expensive haircut. It'll be fine. If you're 27, this will just be a blip in your investing career.

Seems like it really is too late. Hindsight is 20/20 huh? Time to really ride this one out.
whereskyle
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by whereskyle »

seekingcounsel wrote: Mon Mar 16, 2020 4:39 pm
BoggledHead2 wrote: Mon Mar 16, 2020 4:38 pm Buy more
this is so counter-intuitive to my caveman brain that it is almost short-circuiting but... you have a point.
mega317 wrote: Mon Mar 16, 2020 4:39 pm 1. What made you decide 100% VTSAX in the first place? Have any of those factors changed?
2. There isn't much difference between 100/0 and 90/10. Just imagine your portfolio now had you started at 90/10, would you feel any different? Still thinking about selling?

With no dependents, paid off house, healthy emergency fund, I'd say you're in a good position to stay the course. A completely separate question is whether the course was the right one to start with. It's going to be hard for anyone
to answer that one for themselves right now.
As far as investing goes, investing in the market was the only thing that made relative sense to me. I read about crashes before and it all seemed so far off and abstract. Little did I know that I would be investing right as we entered one of those crashes.

My only other option was to sell and buy back in DCA, but I have no idea what this could sell for at the end of tomorrow. Could be the same, could be a huge cut.
Now is the time to buy, not sell. I'm sure no one here has told you to buy high, sell low. You feel bad that you bought high. I also bought high. So did virtually every investor. No one saw the impact of Coronavirus coming. If they tell you they did they're selling you something. I imagine you made a plan when you bought into VTSAX. I imagine that plan was to keep investing into the future. That is exactly what you should be doing now. Every time you buy now the "price" you have paid for VTSAX lowers, and your returns once the market reaches new heights will be higher because you kept buying now. The reason investors make $ buying equities is because we do not know when the market will reach its new heights. We are paid later for one simple thing: we accepted the risk that the market would go down before it would go back up. The market has gone down and now you get to prove whether or not you have what it takes to be a successful investor. You are a successful investor if you hold onto your purchase until it is worth more than what you paid for it. You are a wealthier investor if you keep building your investment so you have more of your investment than when you first bought it when the market comes back up. I, like you, am young and bought into the market substantially before it fell. I am now making purchases at lower prices, which is bringing my cost per share down with every purchase. This means I'll be in the black earlier when the market comes back, and I'll be richer when it reaches new heights. I invite you to do the same. If you didn't expect the market to go down at some point after you bought in, then I don't know what to tell you. Now that you are here, I have identified the strategy that I believe Jack Bogle and Warren Buffett would follow.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Topic Author
seekingcounsel
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by seekingcounsel »

whereskyle wrote: Mon Mar 16, 2020 4:56 pm
seekingcounsel wrote: Mon Mar 16, 2020 4:39 pm
BoggledHead2 wrote: Mon Mar 16, 2020 4:38 pm Buy more
this is so counter-intuitive to my caveman brain that it is almost short-circuiting but... you have a point.
mega317 wrote: Mon Mar 16, 2020 4:39 pm 1. What made you decide 100% VTSAX in the first place? Have any of those factors changed?
2. There isn't much difference between 100/0 and 90/10. Just imagine your portfolio now had you started at 90/10, would you feel any different? Still thinking about selling?

With no dependents, paid off house, healthy emergency fund, I'd say you're in a good position to stay the course. A completely separate question is whether the course was the right one to start with. It's going to be hard for anyone
to answer that one for themselves right now.
As far as investing goes, investing in the market was the only thing that made relative sense to me. I read about crashes before and it all seemed so far off and abstract. Little did I know that I would be investing right as we entered one of those crashes.

My only other option was to sell and buy back in DCA, but I have no idea what this could sell for at the end of tomorrow. Could be the same, could be a huge cut.
Now is the time to buy, not sell. I'm sure no one here has told you to buy high, sell low. You feel bad that you bought high. I also bought high. So did virtually every investor. No one saw the impact of Coronavirus coming. If they tell you they did they're selling you something. I imagine you made a plan when you bought into VTSAX. I imagine that plan was to keep investing into the future. That is exactly what you should be doing now. Every time you buy now the "price" you have paid for VTSAX lowers, and your returns once the market reaches new heights will be higher because you kept buying now. The reason investors make $ buying equities is because we do not know when the market will reach its new heights. We are paid later for one simple thing: we accepted the risk that the market would go down before it would go back up. The market has gone down and now you get to prove whether or not you have what it takes to be a successful investor. You are a successful investor if you hold onto your purchase until it is worth more than what you paid for it. You are a wealthier investor if you keep building your investment so you have more of your investment than when you first bought it when the market comes back up. I, like you, am young and bought into the market substantially before it fell. I am now making purchases at lower prices, which is bringing my cost per share down with every purchase. This means I'll be in the black earlier when the market comes back, and I'll be richer when it reaches new heights. I invite you to do the same. If you didn't expect the market to go down at some point after you bought in, then I don't know what to tell you. Now that you are here, I have identified the strategy that I believe Jack Bogle and Warren Buffett would follow.
Wise words. Thank you friend. I'll stay the course.
InvestingGeek
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by InvestingGeek »

Yeah. I think you're actually very lucky to have gotten this lesson so early. Now you'll always keep best and worst-case scenarios in mind when allocating assets. Imagine instead turning 50 with a million dollar nest egg built up all in VTSAX and then having that crash in this environment.
MishkaWorries
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by MishkaWorries »

Nothing to do but ride it out. It'll be good practice for when you experience the next 3-4 stock shocks you'll experience in your life.

But my question is about tax advantaged accounts. Do you have any? If not why not? If so, are you thinking of selling them too? I guess I don't understand what your plan is.
We plan. G-d laughs.
MotoTrojan
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by MotoTrojan »

The only thing I would advice is that you do an exchange in to VFIAX or VLCAX in order to harvest your current losses and save on some future income taxes (tax-loss harvest or TLH, LOTS of threads on the topic).

Both those funds have near-identical exposure to VTSAX so it isn't really a sale, just realizing a loss to save $3K/year of taxable income.

Your networth is fantastic for your age and relatively low income. Keep investing what you can, and consider some international equities while you are at it.
Young Boglehead
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by Young Boglehead »

If you don't need the money for decades, and you shouldn't if it's all invested in stocks, then it makes 0% to sell and guarantee a loss. Even with this painful contraction you're going to come out ahead. Read about our friend Bob (https://awealthofcommonsense.com/2014/0 ... ket-timer/), and chuck some more money into the market when you can to take advantage of this dip and hysteria.

I'm in the exact same boat as you and actually did most of my investment right before the dip in 2018 and literally the day before the market crashed this time. It's annoying as hell but we got time on our side, we'll do just fine!
Last edited by Young Boglehead on Mon Mar 16, 2020 5:04 pm, edited 1 time in total.
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UpsetRaptor
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by UpsetRaptor »

Tax loss harvest and keep buying. You're 27.
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FelixTheCat
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by FelixTheCat »

BoggledHead2 wrote: Mon Mar 16, 2020 4:38 pm Buy more
You have 40 years until retirement. +1 on Buy More.
Felix is a wonderful, wonderful cat.
fwellimort
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by fwellimort »

I look at stocks as a 30+ year bond.

The only real difference being:
Bonds have a set 'return rate' shown in advance.

Other than that, stocks honestly behave very similarly to bonds.
In between maturity dates, bond takes interest rate risk. Bond prices go up and down from the risk.
In between maturity dates, stock takes market rate risk. Stock prices go up and down from the risk.

If you held onto the stock, you probably care about the 'end' product. Not the passage in between.
Ignore all the noise in the market. You got a 30+ year bond without an explicit coupon rate shown to you.

Just keep buying.
Look. I'm all about VTSAX / VTIAX (close to market cap).

I had (and still have) faith that when I bought this "bond", this "bond" had a coupon rate much higher than that of a 30 year treasury.
If you too believe so, just keep buying. Don't think too much.
I lost a lot more trying to market time / be greedy and all with leverages/options, but I am not fretting over such mistakes: those mistakes have all been learning lessons for me. I came to understand I'm worse than 'average'.

Have faith in your 30+ year bond. And keep buying. Ignore what your brain tells you. Follow what research papers say.
Unless you know how to calculate the price of stocks like Lynch or Buffett or Munger, be content with getting an average 30+ year coupon rate.

We all wish here we could get a super deal for a 30+ year coupon rate stock but the reality is .. we probably won't. I thought maybe I could as someone who works in Wall Street but I came to admit.. I know nothing.
Don't fret too much about the journey. Just know what you are holding. You are holding a 30+ year 'bond' that had a historic 6% (+ inflation) real return. I bought my 30+ year 'bond' thinking of it as 3% real return. What did you buy the 30+ year 'bond' for? What was your expectation of the coupon rate? And is that coupon rate higher than the current 30 year treasury? If yes, then hold.
Last edited by fwellimort on Mon Mar 16, 2020 5:12 pm, edited 4 times in total.
Topic Author
seekingcounsel
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by seekingcounsel »

MishkaWorries wrote: Mon Mar 16, 2020 4:59 pm Nothing to do but ride it out. It'll be good practice for when you experience the next 3-4 stock shocks you'll experience in your life.

But my question is about tax advantaged accounts. Do you have any? If not why not? If so, are you thinking of selling them too? I guess I don't understand what your plan is.
I have a roth IRA that's maxed out for this year. I was planning on maxing that out yearly going forward. That's also in VTSAX.

Thank you all for the kind words. This is legitimately helpful and making me feel better. I just need to calm down and look at the big picture. I had no clue my "test" of nerves would happen so fast, just a month after getting in.
Chip Shot
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by Chip Shot »

Actually, a very smart move for someone your age. Don't even think about selling. Keep adding to it. I would advise you to add some bonds down the road a bit. Read up about setting a comfortable asset allocation. You are doing great!
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1789
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by 1789 »

You are doing great. Keep doing same for years.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
miket29
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by miket29 »

InvestingGeek wrote: Mon Mar 16, 2020 4:59 pm Yeah. I think you're actually very lucky to have gotten this lesson so early. Now you'll always keep best and worst-case scenarios in mind when allocating assets. Imagine instead turning 50 with a million dollar nest egg built up all in VTSAX and then having that crash in this environment.
+1

In 2008 my portfolio was 100% stock because I was young enough to wait decades for the market to recover. I wasn't happy when it fell, so I stopped looking at the financial news. I kept investing thru my 401K and just let things ride. A few years later when I checked things were fine again.

All selling now will do is lock in your loss. Will the market drop more? I don't know, but it might. On the other hand if you don't need this money for years, which is the only money you should have been investing in the market anyway, then odds are very good it will have recovered and then some by 2040. And you'll still ony be 47 (I'm jealous!)
kareysue
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by kareysue »

You are down very little. I am down almost 50%. I invested some in individual stocks and cruise stocks
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eye.surgeon
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by eye.surgeon »

Stay the course. You're young.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett
jibantik
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by jibantik »

You 100% made the right decision to be all stocks if you can just stay the course.

The only mistake you made was buying vtsax instead of vtwax, you should seriously reconsider that.
ScubaHogg
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by ScubaHogg »

seekingcounsel wrote: Mon Mar 16, 2020 4:35 pm
I'm 27, no debt, no dependents, ~20k emergency fund, own a house (paid off worth ~260k), still employed (thankfully)~35k yearly.
To poorly paraphrase William Bernstein, fall down on your knees and pray for a 50% crash that stays down for 10-20 years then shoots up after you’ve had two decades to buy shares on the cheap.

(I’m being facetious, but I bet you get the point. Don’t sell.)
“Unexpected Returns dominate the Expected Returns” - Ken French
Topic Author
seekingcounsel
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by seekingcounsel »

jibantik wrote: Mon Mar 16, 2020 7:10 pm You 100% made the right decision to be all stocks if you can just stay the course.

The only mistake you made was buying vtsax instead of vtwax, you should seriously reconsider that.
Thank you for the reassurance. I wonder if it's too late to swap over? I just have no clue how the market will react by the time the trade goes through at market close (if i understand correctly how mutual fund trading goes).
jibantik
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by jibantik »

seekingcounsel wrote: Mon Mar 16, 2020 7:19 pm
jibantik wrote: Mon Mar 16, 2020 7:10 pm You 100% made the right decision to be all stocks if you can just stay the course.

The only mistake you made was buying vtsax instead of vtwax, you should seriously reconsider that.
Thank you for the reassurance. I wonder if it's too late to swap over? I just have no clue how the market will react by the time the trade goes through at market close (if i understand correctly how mutual fund trading goes).
It's no big deal. You can swap it (exchange the funds) whenever you want. No immediate rush but I see no downside doing it sooner rather than later.
Topic Author
seekingcounsel
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by seekingcounsel »

jibantik wrote: Mon Mar 16, 2020 7:26 pm
seekingcounsel wrote: Mon Mar 16, 2020 7:19 pm
jibantik wrote: Mon Mar 16, 2020 7:10 pm You 100% made the right decision to be all stocks if you can just stay the course.

The only mistake you made was buying vtsax instead of vtwax, you should seriously reconsider that.
Thank you for the reassurance. I wonder if it's too late to swap over? I just have no clue how the market will react by the time the trade goes through at market close (if i understand correctly how mutual fund trading goes).
It's no big deal. You can swap it (exchange the funds) whenever you want. No immediate rush but I see no downside doing it sooner rather than later.
What's your call on why to be all in on VTWAX in this scenario?
Rudedog
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by Rudedog »

Selling now is not a good move.
TheDDC
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by TheDDC »

I am 37 and staying 100% VTSAX. Let me tell you a little story.

In 2018 I decided to open a taxable account at Vanguard. 100% VTSAX with some VTIAX thrown in for kicks. Well then stocks sank and I decided to pull out. I was only down $2k but it hurt. I wrote off losses.

Then the market hit big highs to the tune of 20% above where I sold in one years time.

I hustled the $2k back again, not at a pool hall, but bank bonuses

I am now 100% VTSAX and I’m not selling. I’m buying as normal. Not any larger than normal, but it’s worth riding out. Look at the amount of shares you can buy now versus a month ago with the same amount. That should balance out the loss at your young age.

Take this as a lesson that you only die on a roller coaster if you jump out. We’re just starting around the first loop.

-TheDDC
Rules to wealth building: 75-80% VTSAX piled high and deep, 20-25% VTIAX, 0% given away to banks, minimize amount given to medical-industrial complex
spidercharm01
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by spidercharm01 »

I am down close to 400k, mostly index funds but some individual stocks as well. I am staying the course...added additional money I had waiting on the sidelines during the last few days. Your % loss seems very small compared to mine. This is temporary hysteria in my opinion and I think government and CDC are bit overreacting with all the closures, but things will come back to normal at some point.

My international allocation for last 10+ years has done horribly. But, oh well I am sticking to AA. Because I have no idea what future will be like.
Last edited by spidercharm01 on Mon Mar 16, 2020 7:57 pm, edited 4 times in total.
fwellimort
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by fwellimort »

seekingcounsel wrote: Mon Mar 16, 2020 7:29 pm What's your call on why to be all in on VTWAX in this scenario?
I'm more of a fan of VTSAX/VTIAX than VTWAX. VTWAX is great on tax advantaged like IRA but VTWAX on regular account (taxable) does not always have international tax credit.

Try to follow the ratio of VTSAX and VTIAX closer to the market cap of the world. This way if either stagnates in your investing horizon (look at Japan or Korea or China, etc. in recent years), the other will hopefully be doing better.
Markets can stay flat for a long time. No one knows. And unless one knows what one is doing, it's not bad to diversify as much as possible in an attempt to hopefully avoid such issue.

It's easy to chase returns (US after all has had an incredible bull market for the past 10 years) but unless you are absolutely confident, you don't want to go through what the Japanese (Nikkei 225) had gone through in the past. Especially when ex-Japan has performed so well in the stock market in the meantime.
Considering back a few months ago, people thought it was 'impossible' for US to ever consider negative interest rates and now many people worry/accept the potential for negative interest rates, I wouldn't bet my entire retirement on just a single country's stock market (no matter how much I support the country).

Now, the more you diversify, the more 'potential' you do give up.
Returns will be worse than US if US continues to outperform international in our lifetime. It is something you might 'sacrifice' for the extra diversification.

Most professionals recommend anywhere between 20% to market cap of International. Market Cap of US: International is currently about 55 US:45 International.
Many Target Date Funds have about 60% US, 40% International.

Who knows. Maybe US is just blessed and diversifying to International is actually di-worse-ifying. But then again, what if it's not and just like Japan, you see US stock market climb much slower than the rest of the world?
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by jibantik »

seekingcounsel wrote: Mon Mar 16, 2020 7:29 pm
jibantik wrote: Mon Mar 16, 2020 7:26 pm
seekingcounsel wrote: Mon Mar 16, 2020 7:19 pm
jibantik wrote: Mon Mar 16, 2020 7:10 pm You 100% made the right decision to be all stocks if you can just stay the course.

The only mistake you made was buying vtsax instead of vtwax, you should seriously reconsider that.
Thank you for the reassurance. I wonder if it's too late to swap over? I just have no clue how the market will react by the time the trade goes through at market close (if i understand correctly how mutual fund trading goes).
It's no big deal. You can swap it (exchange the funds) whenever you want. No immediate rush but I see no downside doing it sooner rather than later.
What's your call on why to be all in on VTWAX in this scenario?
It's nothing about this scenario particular. I'd tell you the same thing no matter when you asked me.

VTWAX invests in the entire market, no reason to slice and dice and overweight US equities.
BoggledHead2
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by BoggledHead2 »

seekingcounsel wrote: Mon Mar 16, 2020 4:39 pm
BoggledHead2 wrote: Mon Mar 16, 2020 4:38 pm Buy more
this is so counter-intuitive to my caveman brain that it is almost short-circuiting but... you have a point.
mega317 wrote: Mon Mar 16, 2020 4:39 pm 1. What made you decide 100% VTSAX in the first place? Have any of those factors changed?
2. There isn't much difference between 100/0 and 90/10. Just imagine your portfolio now had you started at 90/10, would you feel any different? Still thinking about selling?

With no dependents, paid off house, healthy emergency fund, I'd say you're in a good position to stay the course. A completely separate question is whether the course was the right one to start with. It's going to be hard for anyone
to answer that one for themselves right now.
As far as investing goes, investing in the market was the only thing that made relative sense to me. I read about crashes before and it all seemed so far off and abstract. Little did I know that I would be investing right as we entered one of those crashes.

My only other option was to sell and buy back in DCA, but I have no idea what this could sell for at the end of tomorrow. Could be the same, could be a huge cut.
Buying more is counterintuitive to a lot of people ... when in reality it’s the best thing someone with 10+ years can do

This situation is also a lovely reminder of why I will never be anywhere near my equity allocation in retirement

I can’t imagine watching portfolios plummet so rapidly right before needing the money

I’ll be 50% equity at most in 20 years
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by z3r0c00l »

seekingcounsel wrote: Mon Mar 16, 2020 4:35 pm
I'm debating on selling this and taking a loss now, or really riding this out through the unknown. I know none of us have a crystal ball, but I feel that some of yours may be less clouded than mine. Any advice on what to do?
Absolutely not. Why would you buy high and sell low? Say that phrase out-loud a few times to be reminded of how silly it is. You made good choices, don't ruin that by making bad choices now.

27 is way young, you have 40 years to hold on to these stocks. Keep earning, saving, and investing. 100% stocks should be fine at your age. Come back at 35 and think about buying bonds then.

Echo what others say about maybe buying some international stock too. I keep market cap so about 50/50 between international and domestic.
Last edited by z3r0c00l on Tue Mar 17, 2020 7:57 am, edited 1 time in total.
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by Sandtrap »

seekingcounsel wrote: Mon Mar 16, 2020 7:19 pm
jibantik wrote: Mon Mar 16, 2020 7:10 pm You 100% made the right decision to be all stocks if you can just stay the course.

The only mistake you made was buying vtsax instead of vtwax, you should seriously reconsider that.
Thank you for the reassurance. I wonder if it's too late to swap over? I just have no clue how the market will react by the time the trade goes through at market close (if i understand correctly how mutual fund trading goes).
A careful way to do your exchanges is to look at the "cost basis" of your VTSAX purchases. Try to exchange out the shares that have the least difference to current values (older purchases, maybe back to 2018 or so). This is one way of doing it.

j :happy
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by Ramjet »

Bad luck, but buy more. I thought it was a good time to finally add some international right before all this happened :oops:
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by BoggledHead2 »

Ramjet wrote: Tue Mar 17, 2020 7:59 am Bad luck, but buy more. I thought it was a good time to finally add some international right before all this happened :oops:
Glass half full: INT is insanely cheap and really helping get me to my 60/40 “World” allocation
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by panhead »

Sandtrap wrote: Tue Mar 17, 2020 7:55 am
seekingcounsel wrote: Mon Mar 16, 2020 7:19 pm
jibantik wrote: Mon Mar 16, 2020 7:10 pm You 100% made the right decision to be all stocks if you can just stay the course.

The only mistake you made was buying vtsax instead of vtwax, you should seriously reconsider that.
Thank you for the reassurance. I wonder if it's too late to swap over? I just have no clue how the market will react by the time the trade goes through at market close (if i understand correctly how mutual fund trading goes).
A careful way to do your exchanges is to look at the "cost basis" of your VTSAX purchases. Try to exchange out the shares that have the least difference to current values (older purchases, maybe back to 2018 or so). This is one way of doing it.

j :happy
Since it sounds like all of your purchases came in the last few days or weeks, your cost basis probably shows all red. You should check it though if you are going to swap funds. Here is what you are considering for options:

1) Stick with your VTSAX
2) Swap to VTWAX

(1) has the advantage that you don't have to do anything. You don't even have to look should you not want to
(2) has the advantage that it should create some losses while still keeping you invested. You can use $3k of these against your income, which isn't super helpful at $35k as you are in the $12% income bracket, but could be used against future gains.

I seriously don't think it matters much either way.

If you are going to swap, just do it toward the end of the day so you have an idea of where things are going to be with respect to each other as mutual fund purchases are logged at end of trading day.

Me? At your age and situation, I wouldn't sell anything, and I would likely buy more. Easy to say I know. Should you just sit tight and not sell anything, I would say that is good enough.
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by panhead »

Ramjet wrote: Tue Mar 17, 2020 7:59 am Bad luck, but buy more. I thought it was a good time to finally add some international right before all this happened :oops:
Hah! me too. In fact all of my international was in the red back to 2012. I swapped it all for FTSE all world except US for a nice tax loss harvesting opportunity. I held my nose the whole time lol!
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by whereskyle »

:sharebeer
fwellimort wrote: Mon Mar 16, 2020 7:47 pm
seekingcounsel wrote: Mon Mar 16, 2020 7:29 pm What's your call on why to be all in on VTWAX in this scenario?
I'm more of a fan of VTSAX/VTIAX than VTWAX. VTWAX is great on tax advantaged like IRA but VTWAX on regular account (taxable) does not always have international tax credit.

Try to follow the ratio of VTSAX and VTIAX closer to the market cap of the world. This way if either stagnates in your investing horizon (look at Japan or Korea or China, etc. in recent years), the other will hopefully be doing better.
Markets can stay flat for a long time. No one knows. And unless one knows what one is doing, it's not bad to diversify as much as possible in an attempt to hopefully avoid such issue.

It's easy to chase returns (US after all has had an incredible bull market for the past 10 years) but unless you are absolutely confident, you don't want to go through what the Japanese (Nikkei 225) had gone through in the past. Especially when ex-Japan has performed so well in the stock market in the meantime.
Considering back a few months ago, people thought it was 'impossible' for US to ever consider negative interest rates and now many people worry/accept the potential for negative interest rates, I wouldn't bet my entire retirement on just a single country's stock market (no matter how much I support the country).

Now, the more you diversify, the more 'potential' you do give up.
Returns will be worse than US if US continues to outperform international in our lifetime. It is something you might 'sacrifice' for the extra diversification.

Most professionals recommend anywhere between 20% to market cap of International. Market Cap of US: International is currently about 55 US:45 International.
Many Target Date Funds have about 60% US, 40% International.

Who knows. Maybe US is just blessed and diversifying to International is actually di-worse-ifying. But then again, what if it's not and just like Japan, you see US stock market climb much slower than the rest of the world?
I like VTWAX, but I think it makes sense to have different markets in different baskets. I like owning different funds even if they overlap, and I do own a few shares of VT because I like how it will adjust to global market cap automatically over the course of my lifetime without my doing anything. But before you buy VTWAX, consider how you would use/sell the funds you own in retirement. If during your retirement, as in this bull market, the US is outperforming and you need to sell equities, but you own only VTWAX, then you will have to sell your ex-us holdings at a lower price than you might otherwise. If you hold your markets separately, and VXUS or VWO is outperforming U.S. during, say, year 6 of your retirement, you can pick and choose which to sell to maximize your gains from each market (or subset thereof), while holding the other until it is outperforming again. The simplicity benefit of VTWAX is unmistakable, but in retirement it's wise to hold different assets in different baskets that are not directly correlated to one another, and you cannot do that by holding only one fund.

As for my take, VTSAX is the perfect investment and it forms the backbone of my portfolio. I do hold international funds skewed towards emerging markets composing around 15% of my portfolio. Consider adding holdings in VXUS/ VWO, just so you have some funds that are not always perfectly correlated with one another. (You can achieve that with other sector/asset class funds as well). All that said, Jack Bogle and Warren Buffett would advise you that VTSAX is quite simply the perfect investment in nearly all cases. I agree with them. That's why it's most of my portfolio.

As for Tax Loss Harvesting, there is no worthwhile reason to do that in your tax bracket.
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bog419
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by bog419 »

I'm going to go ahead and disagree with all the saying here, regarding as far as we went for now in the market.
The bottom is nowhere to be found and those levels, I understand the Bogle Bible but sometimes investing takes more than a gospel.
We are down about 30% from now, from an overly inflated market which might someday be accounted for a bubble in the light of history, so to this point let say we have only accounted for the deflate of markets, still not priced the virus impact for sure.

So basically, if you think market is still overpriced in light of a complete world shutdown for months, you can just sell a portion of your holding at loss, then re-enter at lower level, this would qualify as a smart move. This is not too late for this, wait for the US population to be quarantined as in Europe and you'll see 75% of all business going to $0 sales overnight for at least 2 weeks, potentially 6 weeks.

I wonder if there is any non US resident in this forum. I understand you can't really assess the situation from now, in Europe we are 2 weeks ahead. But this is not rocket science, watch us right now, this is going to be a blood bath in the economy, countless jobloss and business bankrupt for sure, and don't expect activity to skyrocket after shutdown, scares will be here, money will be lost, vacations canceled, home and car purchase abandonned.

I had to create an account today and to tell you about this. In France, till last week we were reasonably "meh" for the virus, I mean we did not understand clearly what was coming and we possibly could not as it was only theory. Was even thinking about "buying the dip" LOL. Fast forward last week end and nationwide shutdown, monday morning was SURREAL, you'll have to live it to understand it.

I'm a small business owner (services). Last week was business as usual. Monday was 0 EUR. ZERO. Next 2 weeks forecast : ZERO. Possibly month : ZERO.

Till you are not in shutdown in US, you won't realize how bad it is, it is difficult to understand. Wait for a $0 overnight for 75% of small business and you'll understand immediately [Deleted -- moderator oldcomputerguy]. I mean, no way a -30% is sustainable, this is going way down. You totally can sell today and re enter lower in a few weeks, it is written on the wall.

I'm not talking about word end or zombie apocalypse, just more than -30% post bublle, for sure.

Feel free to ask question of what a real shutdown mean on every day life and business.
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by Mindblown »

seekingcounsel wrote: Mon Mar 16, 2020 4:35 pm Hi there,

I posted on here a few months back about getting into investing. I decided to go very aggressive with my portfolio and instead of allocating 10% bonds, i went 100% VTSAX. Seems absolutely insane now that I think about it. With my luck, I managed to invest half at the peak of the market, then half at a dip last week. I'm kicking myself for dollar-cost averaging but I went into this without fully informing myself, so I just have to eat that mistake.

Well, this whole market hysteria doesn't seem to let up anytime soon. I have 90k (down from 110k) in VTSAX at the moment in a taxable brokerage account.

I'm debating on selling this and taking a loss now, or really riding this out through the unknown. I know none of us have a crystal ball, but I feel that some of yours may be less clouded than mine. Any advice on what to do?

I'm 27, no debt, no dependents, ~20k emergency fund, own a house (paid off worth ~260k), still employed (thankfully)~35k yearly.

Considering my situation, any advice on what to do? Stay the course or jump ship and risk a loss? I wouldn't be touching this money for a few decades.

Cheers
You are 27. Relax and take a deep breath. You obviously don’t need the money and hopefully you won’t until you’re at least 55. BUY more. That’s what everyone said in 2008....wishing they had bought low .
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by Prahasaurus »

Buy. You are 27, almost 40 years from retirement. Sorry, don’t mean to be flippant, but you have no issues.
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by LadyGeek »

bog419 wrote: Tue Mar 17, 2020 8:41 am I wonder if there is any non US resident in this forum.
Welcome! We have an entire forum for non-US investors: Non-US Investing

We have to focus this discussion on the stock market. Your experience in France can be completely discussed in this thread: Bogleheads community discussion - Coronavirus
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by Illegal Carrot »

I'm in a very similar boat, and I'll be DCAing through the dip and eventual recovery. The market has already crashed, you can't go back and keep that from happening. So now that you're on this rollercoaster your best bet is to ride it through.
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by seekingcounsel »

bog419 wrote: Tue Mar 17, 2020 8:41 am I'm going to go ahead and disagree with all the saying here, regarding as far as we went for now in the market.
The bottom is nowhere to be found and those levels, I understand the Bogle Bible but sometimes investing takes more than a gospel.
We are down about 30% from now, from an overly inflated market which might someday be accounted for a bubble in the light of history, so to this point let say we have only accounted for the deflate of markets, still not priced the virus impact for sure.

So basically, if you think market is still overpriced in light of a complete world shutdown for months, you can just sell a portion of your holding at loss, then re-enter at lower level, this would qualify as a smart move. This is not too late for this, wait for the US population to be quarantined as in Europe and you'll see 75% of all business going to $0 sales overnight for at least 2 weeks, potentially 6 weeks.

I wonder if there is any non US resident in this forum. I understand you can't really assess the situation from now, in Europe we are 2 weeks ahead. But this is not rocket science, watch us right now, this is going to be a blood bath in the economy, countless jobloss and business bankrupt for sure, and don't expect activity to skyrocket after shutdown, scares will be here, money will be lost, vacations canceled, home and car purchase abandonned.

I had to create an account today and to tell you about this. In France, till last week we were reasonably "meh" for the virus, I mean we did not understand clearly what was coming and we possibly could not as it was only theory. Was even thinking about "buying the dip" LOL. Fast forward last week end and nationwide shutdown, monday morning was SURREAL, you'll have to live it to understand it.

I'm a small business owner (services). Last week was business as usual. Monday was 0 EUR. ZERO. Next 2 weeks forecast : ZERO. Possibly month : ZERO.

Till you are not in shutdown in US, you won't realize how bad it is, it is difficult to understand. Wait for a $0 overnight for 75% of small business and you'll understand immediately [Deleted -- moderator oldcomputerguy]. I mean, no way a -30% is sustainable, this is going way down. You totally can sell today and re enter lower in a few weeks, it is written on the wall.

I'm not talking about word end or zombie apocalypse, just more than -30% post bublle, for sure.

Feel free to ask question of what a real shutdown mean on every day life and business.

My initial thought was to do exactly this. I was going to sell off, then buy back in DCA (like i should have originally done) because I'm fairly confident that this is not ending anytime soon (even if a cure was found the ripple effect has begun) and I feel that the profit of buying all the way down would outweigh my losses that I currently have. Unfortunately, those losses are at about 19k right now. I can't time the market, I have no idea if there will be a cure tomorrow and I royally screw myself, but my gut feeling tells me that this will have a long lasting affect on the US economy and on the world.

My only problem (aside from not being able to predict the future), is not being able to approximate the math on how profitable buying shares on the way down would be, compounded with my ~19k+/- loss from selling, versus staying in now.

Assuming I did sell off tomorrow at close, take a ~19k+/- a few thousand hit, then buy back in slowly by DCA'ing over the long-term, I wonder if that would eventually exceed my short-term loss of selling.

I'm very new to this and this is all speculative, but I wonder if anyone has insight on my specific situation and how it might be a good idea, although it seems to deviate from traditional Bogleheads principles.
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by liynus »

Either 1) stay the course - best advice by far
2) realize that the asset allocation you chose was personally for you too risky - you can then proceed to only buy bonds now and get back to an asset allocation that is right for you.
A 100% asset allocation for someone young is appropriate for many, but not all.

It's important to find the asset allocation for you, one that will let you sleep at night without worrying about the market.

Best piece of advice I received from the board was to write myself an investor policy statement, look up examples, it really forces you to examine you short and long term goals and realize why you are investing. We all have difference tolerances for risk. It also prevents you from doing idiotic things in the heat of the moment, since everything you wrote on paper was during a while thought out time.

In the end you, even if you are conservative you will make it to the finish line.

Remember "Bears make money, bulls make money, pigs get slaughtered." Don't be a pig - use this time to find out if you are a bull or a bear and be comfortable with it. Good lesson while you are young. Don't find out you were a pig, when you are < 5 years from retirement, the time to find that out is when you are young.
phantom0308
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Re: All in VTSAX, probably not the smartest move I've made, seeking advice

Post by phantom0308 »

In x years the price of stocks a couple months ago will seem cheap just like 2007 stocks seem cheap today.

The people who bailed out on the way down never made their money back and then some. The people who stuck it through have made a lot.

The better question is do you think that this shock will have a lasting impact longer than the time you’re planning to invest (40 years if retirement, fewer if some other goal in mind)
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