Roth IRA 100% stocks Betterment or VTWAX Vanguard?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
passive101
Posts: 54
Joined: Tue May 05, 2020 2:47 pm

Roth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by passive101 » Fri May 22, 2020 1:36 pm

Betterment lets you choose how aggressive you want your account and it looks like they use Vanguard funds. Would it be better to use the full market with Vanguard in VTWAX or let Betterment's robo computers do the most aggressive investing they can?

I'm not sure if Betterment charges more then the .25% they advertise or if that includes the fund fees.

Is the old school mutual fund as good as the new AI's in performance? I've been listening to financial podcasts and people seem to recommend Vanguard, Fidelity, and Schwab much more often then Betterment and Wealthfront.
Last edited by passive101 on Sat May 23, 2020 4:18 am, edited 2 times in total.

annu
Posts: 704
Joined: Mon Nov 04, 2019 7:55 pm

Re: 100% stocks Betterment or VTWAX Vanguard?

Post by annu » Fri May 22, 2020 1:47 pm

VTWAX in taxable does not offer Foreign tax credit, this is the only thing I will like to share as negative, where if you do something similar using VTSAX/VTIAX(Us total market and Total International), you will get the credit.

Tax loss harvest is simpler with other funds as well, but that is separate topic altogether.

Topic Author
passive101
Posts: 54
Joined: Tue May 05, 2020 2:47 pm

Re: 100% stocks Betterment or VTWAX Vanguard?

Post by passive101 » Fri May 22, 2020 1:59 pm

annu wrote:
Fri May 22, 2020 1:47 pm
VTWAX in taxable does not offer Foreign tax credit, this is the only thing I will like to share as negative, where if you do something similar using VTSAX/VTIAX(Us total market and Total International), you will get the credit.

Tax loss harvest is simpler with other funds as well, but that is separate topic altogether.
I'm sorry. I edited my first comment. This is for a Roth IRA.

dru808
Posts: 839
Joined: Sat Oct 15, 2011 2:42 pm
Location: mid pac

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by dru808 » Fri May 22, 2020 2:05 pm

passive101 wrote:
Fri May 22, 2020 1:36 pm
Betterment lets you choose how aggressive you want your account and it looks like they use Vanguard funds. Would it be better to use the full market with Vanguard in VTWAX or let Betterment's robo computers do the most aggressive investing they can?

I'm not sure if Betterment charges more then the .25% they advertise or if that includes the fund fees.

Is the old school mutual fund as good as the new AI's in performance? I've been listening to financial podcasts and people seem to recommend Vanguard, Fidelity, and Schwab much more often then Betterment and Wealthfront.
While I don’t have any issue with betterment or their fee like many others do, their portfolios imo are just overly slice n diced, I feel as if you’d have the same portfolio (minus the value tilt) with vanguard total world vt or the mutual fund counterpart. Betterment has to put people into multiple funds to make it look like they’re customizing portfolios for clients. I actually signed up just to get into their ui and check out the tools they offer. I do think they provide a great service for someone who does not want to diy or a tinkerer trying to quit the tinkering addiction.
60% US equity | 25% International equity | 15% US Treasury bonds

whereskyle
Posts: 884
Joined: Wed Jan 29, 2020 10:29 am

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by whereskyle » Fri May 22, 2020 2:13 pm

passive101 wrote:
Fri May 22, 2020 1:36 pm
Betterment lets you choose how aggressive you want your account and it looks like they use Vanguard funds. Would it be better to use the full market with Vanguard in VTWAX or let Betterment's robo computers do the most aggressive investing they can?

I'm not sure if Betterment charges more then the .25% they advertise or if that includes the fund fees.

Is the old school mutual fund as good as the new AI's in performance? I've been listening to financial podcasts and people seem to recommend Vanguard, Fidelity, and Schwab much more often then Betterment and Wealthfront.
VTWAX is the superior choice in my view. I ditched betterment and have devoted most of my new contributions to VT (Vanguard Total World ETF, ER .08). VT costs one-third of the price of Betterment, and it gives you pretty much the most aggressive Betterment option: a global market-cap all-equity portfolio at 1/3 of the cost. Betterment's portfolio does also tilt towards US value stocks of all sizes in addition to the near-global-market-cap core of its portfolio. I was not interested in the value tilt, holding bonds, or the extra cost, so VT is the answer for me.

Betterment's portfolio is basically a global market cap portfolio plus a tilt towards US value stocks. If that's the portfolio you want, you can build it yourself for cheaper than the betterment service but betterment is probably worth it if you want them to rebalance it for you in a taxable account (which you don't). If you don't want to tilt your US holdings toward value, I think VT or VTWAX is the way to go. If you want to overweight the US like I do, just also hold VTI. Or you can look at the two, three, or four-fund portfolios here. All of these options are cheaper than Betterment. My personal all equity two-fund portfolio of VT+VTI is not a conventional two-fund portfolio, but I'm happy with it. Check out the options in the wiki on this site, and you will see how easy it is to customize a simple portfolio that does what betterment's does for less.

Just let us know if you have questions if you choose to do it yourself. If you don't want to think about it, Betterment's portfolio and advice is not far off the Boglehead block. You would do fine sticking with that. Of course, I think just buying VT (or VTWAX) and contributing to that will accomplish your goal for less.
Last edited by whereskyle on Fri May 22, 2020 5:01 pm, edited 2 times in total.
"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

whereskyle
Posts: 884
Joined: Wed Jan 29, 2020 10:29 am

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by whereskyle » Fri May 22, 2020 4:30 pm

dru808 wrote:
Fri May 22, 2020 2:05 pm
passive101 wrote:
Fri May 22, 2020 1:36 pm
Betterment lets you choose how aggressive you want your account and it looks like they use Vanguard funds. Would it be better to use the full market with Vanguard in VTWAX or let Betterment's robo computers do the most aggressive investing they can?

I'm not sure if Betterment charges more then the .25% they advertise or if that includes the fund fees.

Is the old school mutual fund as good as the new AI's in performance? I've been listening to financial podcasts and people seem to recommend Vanguard, Fidelity, and Schwab much more often then Betterment and Wealthfront.
While I don’t have any issue with betterment or their fee like many others do, their portfolios imo are just overly slice n diced, I feel as if you’d have the same portfolio (minus the value tilt) with vanguard total world vt or the mutual fund counterpart. Betterment has to put people into multiple funds to make it look like they’re customizing portfolios for clients. I actually signed up just to get into their ui and check out the tools they offer. I do think they provide a great service for someone who does not want to diy or a tinkerer trying to quit the tinkering addiction.
+1
"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
passive101
Posts: 54
Joined: Tue May 05, 2020 2:47 pm

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by passive101 » Sat May 23, 2020 12:20 am

whereskyle wrote:
Fri May 22, 2020 2:13 pm
passive101 wrote:
Fri May 22, 2020 1:36 pm
Betterment lets you choose how aggressive you want your account and it looks like they use Vanguard funds. Would it be better to use the full market with Vanguard in VTWAX or let Betterment's robo computers do the most aggressive investing they can?

I'm not sure if Betterment charges more then the .25% they advertise or if that includes the fund fees.

Is the old school mutual fund as good as the new AI's in performance? I've been listening to financial podcasts and people seem to recommend Vanguard, Fidelity, and Schwab much more often then Betterment and Wealthfront.
VTWAX is the superior choice in my view. I ditched betterment and have devoted most of my new contributions to VT (Vanguard Total World ETF, ER .08). VT costs one-third of the price of Betterment, and it gives you pretty much the most aggressive Betterment option: a global market-cap all-equity portfolio at 1/3 of the cost. Betterment's portfolio does also tilt towards US value stocks of all sizes in addition to the near-global-market-cap core of its portfolio. I was not interested in the value tilt, holding bonds, or the extra cost, so VT is the answer for me.

Betterment's portfolio is basically a global market cap portfolio plus a tilt towards US value stocks. If that's the portfolio you want, you can build it yourself for cheaper than the betterment service but betterment is probably worth it if you want them to rebalance it for you in a taxable account (which you don't). If you don't want to tilt your US holdings toward value, I think VT or VTWAX is the way to go. If you want to overweight the US like I do, just also hold VTI. Or you can look at the two, three, or four-fund portfolios here. All of these options are cheaper than Betterment. My personal all equity two-fund portfolio of VT+VTI is not a conventional two-fund portfolio, but I'm happy with it. Check out the options in the wiki on this site, and you will see how easy it is to customize a simple portfolio that does what betterment's does for less.

Just let us know if you have questions if you choose to do it yourself. If you don't want to think about it, Betterment's portfolio and advice is not far off the Boglehead block. You would do fine sticking with that. Of course, I think just buying VT (or VTWAX) and contributing to that will accomplish your goal for less.
Thanks for explaining this to me. I'm coming from having things completely automated, so I'm trying to learn as much as I can.

I see VTI is the Total US stock market. How much do you put in VT/VTI to meet that mix you are looking for? Do you mind if I ask your age and how many years to retirement you are at?

annu
Posts: 704
Joined: Mon Nov 04, 2019 7:55 pm

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by annu » Sat May 23, 2020 12:34 am

passive101 wrote:
Sat May 23, 2020 12:20 am
whereskyle wrote:
Fri May 22, 2020 2:13 pm
passive101 wrote:
Fri May 22, 2020 1:36 pm
Betterment lets you choose how aggressive you want your account and it looks like they use Vanguard funds. Would it be better to use the full market with Vanguard in VTWAX or let Betterment's robo computers do the most aggressive investing they can?

I'm not sure if Betterment charges more then the .25% they advertise or if that includes the fund fees.

Is the old school mutual fund as good as the new AI's in performance? I've been listening to financial podcasts and people seem to recommend Vanguard, Fidelity, and Schwab much more often then Betterment and Wealthfront.
VTWAX is the superior choice in my view. I ditched betterment and have devoted most of my new contributions to VT (Vanguard Total World ETF, ER .08). VT costs one-third of the price of Betterment, and it gives you pretty much the most aggressive Betterment option: a global market-cap all-equity portfolio at 1/3 of the cost. Betterment's portfolio does also tilt towards US value stocks of all sizes in addition to the near-global-market-cap core of its portfolio. I was not interested in the value tilt, holding bonds, or the extra cost, so VT is the answer for me.

Betterment's portfolio is basically a global market cap portfolio plus a tilt towards US value stocks. If that's the portfolio you want, you can build it yourself for cheaper than the betterment service but betterment is probably worth it if you want them to rebalance it for you in a taxable account (which you don't). If you don't want to tilt your US holdings toward value, I think VT or VTWAX is the way to go. If you want to overweight the US like I do, just also hold VTI. Or you can look at the two, three, or four-fund portfolios here. All of these options are cheaper than Betterment. My personal all equity two-fund portfolio of VT+VTI is not a conventional two-fund portfolio, but I'm happy with it. Check out the options in the wiki on this site, and you will see how easy it is to customize a simple portfolio that does what betterment's does for less.

Just let us know if you have questions if you choose to do it yourself. If you don't want to think about it, Betterment's portfolio and advice is not far off the Boglehead block. You would do fine sticking with that. Of course, I think just buying VT (or VTWAX) and contributing to that will accomplish your goal for less.
Thanks for explaining this to me. I'm coming from having things completely automated, so I'm trying to learn as much as I can.

I see VTI is the Total US stock market. How much do you put in VT/VTI to meet that mix you are looking for? Do you mind if I ask your age and how many years to retirement you are at?
One way to cheat and find what is recommended is using a target date fund. For e.g. for 2065 retirement age, for funds based on retirement age, but they will include bonds and will increase bonds as you get close to retirement age, https://investor.vanguard.com/mutual-fu ... file/VLXVX

And to find how vt is setup, https://investor.vanguard.com/mutual-fu ... file/vtwax

It looks like 60% us and 40% international

Topic Author
passive101
Posts: 54
Joined: Tue May 05, 2020 2:47 pm

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by passive101 » Sat May 23, 2020 12:54 am

annu wrote:
Sat May 23, 2020 12:34 am
passive101 wrote:
Sat May 23, 2020 12:20 am
whereskyle wrote:
Fri May 22, 2020 2:13 pm
passive101 wrote:
Fri May 22, 2020 1:36 pm
Betterment lets you choose how aggressive you want your account and it looks like they use Vanguard funds. Would it be better to use the full market with Vanguard in VTWAX or let Betterment's robo computers do the most aggressive investing they can?

I'm not sure if Betterment charges more then the .25% they advertise or if that includes the fund fees.

Is the old school mutual fund as good as the new AI's in performance? I've been listening to financial podcasts and people seem to recommend Vanguard, Fidelity, and Schwab much more often then Betterment and Wealthfront.
VTWAX is the superior choice in my view. I ditched betterment and have devoted most of my new contributions to VT (Vanguard Total World ETF, ER .08). VT costs one-third of the price of Betterment, and it gives you pretty much the most aggressive Betterment option: a global market-cap all-equity portfolio at 1/3 of the cost. Betterment's portfolio does also tilt towards US value stocks of all sizes in addition to the near-global-market-cap core of its portfolio. I was not interested in the value tilt, holding bonds, or the extra cost, so VT is the answer for me.

Betterment's portfolio is basically a global market cap portfolio plus a tilt towards US value stocks. If that's the portfolio you want, you can build it yourself for cheaper than the betterment service but betterment is probably worth it if you want them to rebalance it for you in a taxable account (which you don't). If you don't want to tilt your US holdings toward value, I think VT or VTWAX is the way to go. If you want to overweight the US like I do, just also hold VTI. Or you can look at the two, three, or four-fund portfolios here. All of these options are cheaper than Betterment. My personal all equity two-fund portfolio of VT+VTI is not a conventional two-fund portfolio, but I'm happy with it. Check out the options in the wiki on this site, and you will see how easy it is to customize a simple portfolio that does what betterment's does for less.

Just let us know if you have questions if you choose to do it yourself. If you don't want to think about it, Betterment's portfolio and advice is not far off the Boglehead block. You would do fine sticking with that. Of course, I think just buying VT (or VTWAX) and contributing to that will accomplish your goal for less.
Thanks for explaining this to me. I'm coming from having things completely automated, so I'm trying to learn as much as I can.

I see VTI is the Total US stock market. How much do you put in VT/VTI to meet that mix you are looking for? Do you mind if I ask your age and how many years to retirement you are at?
One way to cheat and find what is recommended is using a target date fund. For e.g. for 2065 retirement age, for funds based on retirement age, but they will include bonds and will increase bonds as you get close to retirement age, https://investor.vanguard.com/mutual-fu ... file/VLXVX

And to find how vt is setup, https://investor.vanguard.com/mutual-fu ... file/vtwax

It looks like 60% us and 40% international
It looks like VT is already about a 60/40 split. But is north American US or is that Mexico and Canada as well? I'd like to mirror the target date without the bonds. I was told that's what VTWAX/VT was but now I'm not 100% certain they are the same since it's not 60/40 us/international. It's 60/40 North America/international?

whereskyle
Posts: 884
Joined: Wed Jan 29, 2020 10:29 am

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by whereskyle » Sat May 23, 2020 5:42 am

passive101 wrote:
Sat May 23, 2020 12:54 am
annu wrote:
Sat May 23, 2020 12:34 am
passive101 wrote:
Sat May 23, 2020 12:20 am
whereskyle wrote:
Fri May 22, 2020 2:13 pm
passive101 wrote:
Fri May 22, 2020 1:36 pm
Betterment lets you choose how aggressive you want your account and it looks like they use Vanguard funds. Would it be better to use the full market with Vanguard in VTWAX or let Betterment's robo computers do the most aggressive investing they can?

I'm not sure if Betterment charges more then the .25% they advertise or if that includes the fund fees.

Is the old school mutual fund as good as the new AI's in performance? I've been listening to financial podcasts and people seem to recommend Vanguard, Fidelity, and Schwab much more often then Betterment and Wealthfront.
VTWAX is the superior choice in my view. I ditched betterment and have devoted most of my new contributions to VT (Vanguard Total World ETF, ER .08). VT costs one-third of the price of Betterment, and it gives you pretty much the most aggressive Betterment option: a global market-cap all-equity portfolio at 1/3 of the cost. Betterment's portfolio does also tilt towards US value stocks of all sizes in addition to the near-global-market-cap core of its portfolio. I was not interested in the value tilt, holding bonds, or the extra cost, so VT is the answer for me.

Betterment's portfolio is basically a global market cap portfolio plus a tilt towards US value stocks. If that's the portfolio you want, you can build it yourself for cheaper than the betterment service but betterment is probably worth it if you want them to rebalance it for you in a taxable account (which you don't). If you don't want to tilt your US holdings toward value, I think VT or VTWAX is the way to go. If you want to overweight the US like I do, just also hold VTI. Or you can look at the two, three, or four-fund portfolios here. All of these options are cheaper than Betterment. My personal all equity two-fund portfolio of VT+VTI is not a conventional two-fund portfolio, but I'm happy with it. Check out the options in the wiki on this site, and you will see how easy it is to customize a simple portfolio that does what betterment's does for less.

Just let us know if you have questions if you choose to do it yourself. If you don't want to think about it, Betterment's portfolio and advice is not far off the Boglehead block. You would do fine sticking with that. Of course, I think just buying VT (or VTWAX) and contributing to that will accomplish your goal for less.
Thanks for explaining this to me. I'm coming from having things completely automated, so I'm trying to learn as much as I can.

I see VTI is the Total US stock market. How much do you put in VT/VTI to meet that mix you are looking for? Do you mind if I ask your age and how many years to retirement you are at?
One way to cheat and find what is recommended is using a target date fund. For e.g. for 2065 retirement age, for funds based on retirement age, but they will include bonds and will increase bonds as you get close to retirement age, https://investor.vanguard.com/mutual-fu ... file/VLXVX

And to find how vt is setup, https://investor.vanguard.com/mutual-fu ... file/vtwax

It looks like 60% us and 40% international
It looks like VT is already about a 60/40 split. But is north American US or is that Mexico and Canada as well? I'd like to mirror the target date without the bonds. I was told that's what VTWAX/VT was but now I'm not 100% certain they are the same since it's not 60/40 us/international. It's 60/40 North America/international?
Yes, Global market cap (which is what VT/VTWAX gives you) sits currently at about 55% US/45% ex-US. Vanguard and now Betterment recommend/provide 60/40 and 65/35 portfolios. (Note that Betterment tilts the US allocation about 15% towards value stocks). I think the US is unquestionably the safest place to put a US investor's money, so when I left Betterment the first thing I did was put about 70% of my portfolio in VTSAX (Vanguard Total US Index Fund, ER .04). I then started building a position in VT. While I would like to answer your question about the "right mix," I must say it's just too difficult a question to answer for me, and that is why I settled on VTI+VT rather than a mix of VTI+VXUS (Vanguard Total EX-US ETF, ER .08) at a predetermined split. I always take Jack Bogle's advice as a default, and he recommended no more than 20% of equities in ex-us stocks. Currently, I'm at about 80% VTSAX/VTI, 20% VT, so only about 10% of my equities are in ex-us. I plan to build my position in VT up to 30% of my portfolio, and then from there my ex-us allocation will fluctuate depending on how well ex-us stocks do from there. If you want more international, I think it makes sense to go with global market cap as your default and then add VTI to pad according to your taste. If you browse the millions of unhelpful, often hostile threads here where Bogleheads bang their heads against the wall debating how much ex-us stocks to hold and why, you will likely see there is no commonly accepted answer to your question about mix. The two most prominent groups here seem to be global market cap (VT/VTWAX) and the US-only crowd (VTI/VTSAX). I settled on the fact that I honestly believe those two Vanguard funds are the best index funds, so I wanted to own both of them. The beauty is: I don't think I can go wrong with any mix of these two funds. During the most recent great bull run, VT returned about 11% annually, whereas VTI returned over 14% annually. Many expect that some ex-us outperformance is long overdue, and many competently argue that ex-us outperformance is the exception to the rule and one doesn't need ex-us stocks. I honestly agree with both these lines of thinking due to historical evidence and my own personal views on the markets. The reason I'm comfortable just buying as much as I can of VT and VTI in inexact amounts is I'm very confident a 90VT/10VTI portfolio would accomplish my goals, and I'm also confident a 10VT/90VTI portfolio would accomplish my goals. As long as I invest as much as I can in either or both of these two funds, I have little doubt I will succeed in building wealth.

As for my age, I'm 31, and my plan gives me more than enough $ to retire at 59 assuming a modest return of 7% nominal. But sometimes great bull runs happen and people reach their goals more quickly than they expected. Either way, I don't see myself retiring at 59 or earlier. I love my job, the leave is generous, and I expect the incredibly inexpensive insurance will be important for my wife and I. I invest for peace of mind, and I think you will get that if you hold VT, VTI or a combination of the two.
"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
passive101
Posts: 54
Joined: Tue May 05, 2020 2:47 pm

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by passive101 » Sat May 23, 2020 5:44 pm

whereskyle wrote:
Sat May 23, 2020 5:42 am
passive101 wrote:
Sat May 23, 2020 12:54 am
annu wrote:
Sat May 23, 2020 12:34 am
passive101 wrote:
Sat May 23, 2020 12:20 am
whereskyle wrote:
Fri May 22, 2020 2:13 pm


VTWAX is the superior choice in my view. I ditched betterment and have devoted most of my new contributions to VT (Vanguard Total World ETF, ER .08). VT costs one-third of the price of Betterment, and it gives you pretty much the most aggressive Betterment option: a global market-cap all-equity portfolio at 1/3 of the cost. Betterment's portfolio does also tilt towards US value stocks of all sizes in addition to the near-global-market-cap core of its portfolio. I was not interested in the value tilt, holding bonds, or the extra cost, so VT is the answer for me.

Betterment's portfolio is basically a global market cap portfolio plus a tilt towards US value stocks. If that's the portfolio you want, you can build it yourself for cheaper than the betterment service but betterment is probably worth it if you want them to rebalance it for you in a taxable account (which you don't). If you don't want to tilt your US holdings toward value, I think VT or VTWAX is the way to go. If you want to overweight the US like I do, just also hold VTI. Or you can look at the two, three, or four-fund portfolios here. All of these options are cheaper than Betterment. My personal all equity two-fund portfolio of VT+VTI is not a conventional two-fund portfolio, but I'm happy with it. Check out the options in the wiki on this site, and you will see how easy it is to customize a simple portfolio that does what betterment's does for less.

Just let us know if you have questions if you choose to do it yourself. If you don't want to think about it, Betterment's portfolio and advice is not far off the Boglehead block. You would do fine sticking with that. Of course, I think just buying VT (or VTWAX) and contributing to that will accomplish your goal for less.
Thanks for explaining this to me. I'm coming from having things completely automated, so I'm trying to learn as much as I can.

I see VTI is the Total US stock market. How much do you put in VT/VTI to meet that mix you are looking for? Do you mind if I ask your age and how many years to retirement you are at?
One way to cheat and find what is recommended is using a target date fund. For e.g. for 2065 retirement age, for funds based on retirement age, but they will include bonds and will increase bonds as you get close to retirement age, https://investor.vanguard.com/mutual-fu ... file/VLXVX

And to find how vt is setup, https://investor.vanguard.com/mutual-fu ... file/vtwax

It looks like 60% us and 40% international
It looks like VT is already about a 60/40 split. But is north American US or is that Mexico and Canada as well? I'd like to mirror the target date without the bonds. I was told that's what VTWAX/VT was but now I'm not 100% certain they are the same since it's not 60/40 us/international. It's 60/40 North America/international?
Yes, Global market cap (which is what VT/VTWAX gives you) sits currently at about 55% US/45% ex-US. Vanguard and now Betterment recommend/provide 60/40 and 65/35 portfolios. (Note that Betterment tilts the US allocation about 15% towards value stocks). I think the US is unquestionably the safest place to put a US investor's money, so when I left Betterment the first thing I did was put about 70% of my portfolio in VTSAX (Vanguard Total US Index Fund, ER .04). I then started building a position in VT. While I would like to answer your question about the "right mix," I must say it's just too difficult a question to answer for me, and that is why I settled on VTI+VT rather than a mix of VTI+VXUS (Vanguard Total EX-US ETF, ER .08) at a predetermined split. I always take Jack Bogle's advice as a default, and he recommended no more than 20% of equities in ex-us stocks. Currently, I'm at about 80% VTSAX/VTI, 20% VT, so only about 10% of my equities are in ex-us. I plan to build my position in VT up to 30% of my portfolio, and then from there my ex-us allocation will fluctuate depending on how well ex-us stocks do from there. If you want more international, I think it makes sense to go with global market cap as your default and then add VTI to pad according to your taste. If you browse the millions of unhelpful, often hostile threads here where Bogleheads bang their heads against the wall debating how much ex-us stocks to hold and why, you will likely see there is no commonly accepted answer to your question about mix. The two most prominent groups here seem to be global market cap (VT/VTWAX) and the US-only crowd (VTI/VTSAX). I settled on the fact that I honestly believe those two Vanguard funds are the best index funds, so I wanted to own both of them. The beauty is: I don't think I can go wrong with any mix of these two funds. During the most recent great bull run, VT returned about 11% annually, whereas VTI returned over 14% annually. Many expect that some ex-us outperformance is long overdue, and many competently argue that ex-us outperformance is the exception to the rule and one doesn't need ex-us stocks. I honestly agree with both these lines of thinking due to historical evidence and my own personal views on the markets. The reason I'm comfortable just buying as much as I can of VT and VTI in inexact amounts is I'm very confident a 90VT/10VTI portfolio would accomplish my goals, and I'm also confident a 10VT/90VTI portfolio would accomplish my goals. As long as I invest as much as I can in either or both of these two funds, I have little doubt I will succeed in building wealth.

As for my age, I'm 31, and my plan gives me more than enough $ to retire at 59 assuming a modest return of 7% nominal. But sometimes great bull runs happen and people reach their goals more quickly than they expected. Either way, I don't see myself retiring at 59 or earlier. I love my job, the leave is generous, and I expect the incredibly inexpensive insurance will be important for my wife and I. I invest for peace of mind, and I think you will get that if you hold VT, VTI or a combination of the two.

What percentages of VTWAX/VTSAX would I need to have a 60/40, 70/30, 75/25 Between US and International?

whereskyle
Posts: 884
Joined: Wed Jan 29, 2020 10:29 am

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by whereskyle » Sat May 23, 2020 5:59 pm

passive101 wrote:
Sat May 23, 2020 5:44 pm
whereskyle wrote:
Sat May 23, 2020 5:42 am
passive101 wrote:
Sat May 23, 2020 12:54 am
annu wrote:
Sat May 23, 2020 12:34 am
passive101 wrote:
Sat May 23, 2020 12:20 am


Thanks for explaining this to me. I'm coming from having things completely automated, so I'm trying to learn as much as I can.

I see VTI is the Total US stock market. How much do you put in VT/VTI to meet that mix you are looking for? Do you mind if I ask your age and how many years to retirement you are at?
One way to cheat and find what is recommended is using a target date fund. For e.g. for 2065 retirement age, for funds based on retirement age, but they will include bonds and will increase bonds as you get close to retirement age, https://investor.vanguard.com/mutual-fu ... file/VLXVX

And to find how vt is setup, https://investor.vanguard.com/mutual-fu ... file/vtwax

It looks like 60% us and 40% international
It looks like VT is already about a 60/40 split. But is north American US or is that Mexico and Canada as well? I'd like to mirror the target date without the bonds. I was told that's what VTWAX/VT was but now I'm not 100% certain they are the same since it's not 60/40 us/international. It's 60/40 North America/international?
Yes, Global market cap (which is what VT/VTWAX gives you) sits currently at about 55% US/45% ex-US. Vanguard and now Betterment recommend/provide 60/40 and 65/35 portfolios. (Note that Betterment tilts the US allocation about 15% towards value stocks). I think the US is unquestionably the safest place to put a US investor's money, so when I left Betterment the first thing I did was put about 70% of my portfolio in VTSAX (Vanguard Total US Index Fund, ER .04). I then started building a position in VT. While I would like to answer your question about the "right mix," I must say it's just too difficult a question to answer for me, and that is why I settled on VTI+VT rather than a mix of VTI+VXUS (Vanguard Total EX-US ETF, ER .08) at a predetermined split. I always take Jack Bogle's advice as a default, and he recommended no more than 20% of equities in ex-us stocks. Currently, I'm at about 80% VTSAX/VTI, 20% VT, so only about 10% of my equities are in ex-us. I plan to build my position in VT up to 30% of my portfolio, and then from there my ex-us allocation will fluctuate depending on how well ex-us stocks do from there. If you want more international, I think it makes sense to go with global market cap as your default and then add VTI to pad according to your taste. If you browse the millions of unhelpful, often hostile threads here where Bogleheads bang their heads against the wall debating how much ex-us stocks to hold and why, you will likely see there is no commonly accepted answer to your question about mix. The two most prominent groups here seem to be global market cap (VT/VTWAX) and the US-only crowd (VTI/VTSAX). I settled on the fact that I honestly believe those two Vanguard funds are the best index funds, so I wanted to own both of them. The beauty is: I don't think I can go wrong with any mix of these two funds. During the most recent great bull run, VT returned about 11% annually, whereas VTI returned over 14% annually. Many expect that some ex-us outperformance is long overdue, and many competently argue that ex-us outperformance is the exception to the rule and one doesn't need ex-us stocks. I honestly agree with both these lines of thinking due to historical evidence and my own personal views on the markets. The reason I'm comfortable just buying as much as I can of VT and VTI in inexact amounts is I'm very confident a 90VT/10VTI portfolio would accomplish my goals, and I'm also confident a 10VT/90VTI portfolio would accomplish my goals. As long as I invest as much as I can in either or both of these two funds, I have little doubt I will succeed in building wealth.

As for my age, I'm 31, and my plan gives me more than enough $ to retire at 59 assuming a modest return of 7% nominal. But sometimes great bull runs happen and people reach their goals more quickly than they expected. Either way, I don't see myself retiring at 59 or earlier. I love my job, the leave is generous, and I expect the incredibly inexpensive insurance will be important for my wife and I. I invest for peace of mind, and I think you will get that if you hold VT, VTI or a combination of the two.

What percentages of VTWAX/VTSAX would I need to have a 60/40, 70/30, 75/25 Between US and International?
If you want to set and stick to a specific US/ex-US allocation, you should forget about VTWAX/VT and use VTSAX and VTIAX (Vanguard Total International EX-US, ER .11) according to your desired mix. You could then simply set those two funds at your desired allocations and rebalance them once a year. People who do what I am doing (using VTWAX and VTSAX in conjunction with each other), do so because they typically can't decide what their ex-us allocation should be. If you are comfortable setting a specific allocation for your US and ex-US stocks, as many Bogleheads do, then you should use VTSAX and VTIAX. VTWAX is typically ideal for people who want to use just one fund or who are philosophically committed to maintaining a global market cap portfolio at all times. If you want to do 75/25 US/Ex-US, which I think would be very reasonable, then the best way to achieve that is using VTSAX and VTIAX with your desired allocations.
"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
passive101
Posts: 54
Joined: Tue May 05, 2020 2:47 pm

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by passive101 » Sat May 23, 2020 6:32 pm

whereskyle wrote:
Sat May 23, 2020 5:59 pm
passive101 wrote:
Sat May 23, 2020 5:44 pm
whereskyle wrote:
Sat May 23, 2020 5:42 am
passive101 wrote:
Sat May 23, 2020 12:54 am
annu wrote:
Sat May 23, 2020 12:34 am


One way to cheat and find what is recommended is using a target date fund. For e.g. for 2065 retirement age, for funds based on retirement age, but they will include bonds and will increase bonds as you get close to retirement age, https://investor.vanguard.com/mutual-fu ... file/VLXVX

And to find how vt is setup, https://investor.vanguard.com/mutual-fu ... file/vtwax

It looks like 60% us and 40% international
It looks like VT is already about a 60/40 split. But is north American US or is that Mexico and Canada as well? I'd like to mirror the target date without the bonds. I was told that's what VTWAX/VT was but now I'm not 100% certain they are the same since it's not 60/40 us/international. It's 60/40 North America/international?
Yes, Global market cap (which is what VT/VTWAX gives you) sits currently at about 55% US/45% ex-US. Vanguard and now Betterment recommend/provide 60/40 and 65/35 portfolios. (Note that Betterment tilts the US allocation about 15% towards value stocks). I think the US is unquestionably the safest place to put a US investor's money, so when I left Betterment the first thing I did was put about 70% of my portfolio in VTSAX (Vanguard Total US Index Fund, ER .04). I then started building a position in VT. While I would like to answer your question about the "right mix," I must say it's just too difficult a question to answer for me, and that is why I settled on VTI+VT rather than a mix of VTI+VXUS (Vanguard Total EX-US ETF, ER .08) at a predetermined split. I always take Jack Bogle's advice as a default, and he recommended no more than 20% of equities in ex-us stocks. Currently, I'm at about 80% VTSAX/VTI, 20% VT, so only about 10% of my equities are in ex-us. I plan to build my position in VT up to 30% of my portfolio, and then from there my ex-us allocation will fluctuate depending on how well ex-us stocks do from there. If you want more international, I think it makes sense to go with global market cap as your default and then add VTI to pad according to your taste. If you browse the millions of unhelpful, often hostile threads here where Bogleheads bang their heads against the wall debating how much ex-us stocks to hold and why, you will likely see there is no commonly accepted answer to your question about mix. The two most prominent groups here seem to be global market cap (VT/VTWAX) and the US-only crowd (VTI/VTSAX). I settled on the fact that I honestly believe those two Vanguard funds are the best index funds, so I wanted to own both of them. The beauty is: I don't think I can go wrong with any mix of these two funds. During the most recent great bull run, VT returned about 11% annually, whereas VTI returned over 14% annually. Many expect that some ex-us outperformance is long overdue, and many competently argue that ex-us outperformance is the exception to the rule and one doesn't need ex-us stocks. I honestly agree with both these lines of thinking due to historical evidence and my own personal views on the markets. The reason I'm comfortable just buying as much as I can of VT and VTI in inexact amounts is I'm very confident a 90VT/10VTI portfolio would accomplish my goals, and I'm also confident a 10VT/90VTI portfolio would accomplish my goals. As long as I invest as much as I can in either or both of these two funds, I have little doubt I will succeed in building wealth.

As for my age, I'm 31, and my plan gives me more than enough $ to retire at 59 assuming a modest return of 7% nominal. But sometimes great bull runs happen and people reach their goals more quickly than they expected. Either way, I don't see myself retiring at 59 or earlier. I love my job, the leave is generous, and I expect the incredibly inexpensive insurance will be important for my wife and I. I invest for peace of mind, and I think you will get that if you hold VT, VTI or a combination of the two.

What percentages of VTWAX/VTSAX would I need to have a 60/40, 70/30, 75/25 Between US and International?
If you want to set and stick to a specific US/ex-US allocation, you should forget about VTWAX/VT and use VTSAX and VTIAX (Vanguard Total International EX-US, ER .11) according to your desired mix. You could then simply set those two funds at your desired allocations and rebalance them once a year. People who do what I am doing (using VTWAX and VTSAX in conjunction with each other), do so because they typically can't decide what their ex-us allocation should be. If you are comfortable setting a specific allocation for your US and ex-US stocks, as many Bogleheads do, then you should use VTSAX and VTIAX. VTWAX is typically ideal for people who want to use just one fund or who are philosophically committed to maintaining a global market cap portfolio at all times. If you want to do 75/25 US/Ex-US, which I think would be very reasonable, then the best way to achieve that is using VTSAX and VTIAX with your desired allocations.
I was hoping VTWAX would be closer to a 60/40 split without the bonds like their target date funds. Vanguard doesn't auto rebalance in their Roth IRAs which I think is a shame. Not certain how often they should be rebalanced. People recommend lots of different time lines for it.

bogledogle87
Posts: 229
Joined: Wed Sep 26, 2018 7:03 pm

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by bogledogle87 » Sat May 23, 2020 6:50 pm

passive101 wrote:
Sat May 23, 2020 6:32 pm
I was hoping VTWAX would be closer to a 60/40 split without the bonds like their target date funds. Vanguard doesn't auto rebalance in their Roth IRAs which I think is a shame. Not certain how often they should be rebalanced. People recommend lots of different time lines for it.
VTWAX is right around 57.5 US/ 42.5 International. Pretty darn close to 60/40. The key here is that it changes slightly every day and can very quite a bit over the long term.
VTWAX and chill

whereskyle
Posts: 884
Joined: Wed Jan 29, 2020 10:29 am

Re: Rpth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by whereskyle » Sat May 23, 2020 8:18 pm

passive101 wrote:
Sat May 23, 2020 6:32 pm
whereskyle wrote:
Sat May 23, 2020 5:59 pm
passive101 wrote:
Sat May 23, 2020 5:44 pm
whereskyle wrote:
Sat May 23, 2020 5:42 am
passive101 wrote:
Sat May 23, 2020 12:54 am


It looks like VT is already about a 60/40 split. But is north American US or is that Mexico and Canada as well? I'd like to mirror the target date without the bonds. I was told that's what VTWAX/VT was but now I'm not 100% certain they are the same since it's not 60/40 us/international. It's 60/40 North America/international?
Yes, Global market cap (which is what VT/VTWAX gives you) sits currently at about 55% US/45% ex-US. Vanguard and now Betterment recommend/provide 60/40 and 65/35 portfolios. (Note that Betterment tilts the US allocation about 15% towards value stocks). I think the US is unquestionably the safest place to put a US investor's money, so when I left Betterment the first thing I did was put about 70% of my portfolio in VTSAX (Vanguard Total US Index Fund, ER .04). I then started building a position in VT. While I would like to answer your question about the "right mix," I must say it's just too difficult a question to answer for me, and that is why I settled on VTI+VT rather than a mix of VTI+VXUS (Vanguard Total EX-US ETF, ER .08) at a predetermined split. I always take Jack Bogle's advice as a default, and he recommended no more than 20% of equities in ex-us stocks. Currently, I'm at about 80% VTSAX/VTI, 20% VT, so only about 10% of my equities are in ex-us. I plan to build my position in VT up to 30% of my portfolio, and then from there my ex-us allocation will fluctuate depending on how well ex-us stocks do from there. If you want more international, I think it makes sense to go with global market cap as your default and then add VTI to pad according to your taste. If you browse the millions of unhelpful, often hostile threads here where Bogleheads bang their heads against the wall debating how much ex-us stocks to hold and why, you will likely see there is no commonly accepted answer to your question about mix. The two most prominent groups here seem to be global market cap (VT/VTWAX) and the US-only crowd (VTI/VTSAX). I settled on the fact that I honestly believe those two Vanguard funds are the best index funds, so I wanted to own both of them. The beauty is: I don't think I can go wrong with any mix of these two funds. During the most recent great bull run, VT returned about 11% annually, whereas VTI returned over 14% annually. Many expect that some ex-us outperformance is long overdue, and many competently argue that ex-us outperformance is the exception to the rule and one doesn't need ex-us stocks. I honestly agree with both these lines of thinking due to historical evidence and my own personal views on the markets. The reason I'm comfortable just buying as much as I can of VT and VTI in inexact amounts is I'm very confident a 90VT/10VTI portfolio would accomplish my goals, and I'm also confident a 10VT/90VTI portfolio would accomplish my goals. As long as I invest as much as I can in either or both of these two funds, I have little doubt I will succeed in building wealth.

As for my age, I'm 31, and my plan gives me more than enough $ to retire at 59 assuming a modest return of 7% nominal. But sometimes great bull runs happen and people reach their goals more quickly than they expected. Either way, I don't see myself retiring at 59 or earlier. I love my job, the leave is generous, and I expect the incredibly inexpensive insurance will be important for my wife and I. I invest for peace of mind, and I think you will get that if you hold VT, VTI or a combination of the two.

What percentages of VTWAX/VTSAX would I need to have a 60/40, 70/30, 75/25 Between US and International?
If you want to set and stick to a specific US/ex-US allocation, you should forget about VTWAX/VT and use VTSAX and VTIAX (Vanguard Total International EX-US, ER .11) according to your desired mix. You could then simply set those two funds at your desired allocations and rebalance them once a year. People who do what I am doing (using VTWAX and VTSAX in conjunction with each other), do so because they typically can't decide what their ex-us allocation should be. If you are comfortable setting a specific allocation for your US and ex-US stocks, as many Bogleheads do, then you should use VTSAX and VTIAX. VTWAX is typically ideal for people who want to use just one fund or who are philosophically committed to maintaining a global market cap portfolio at all times. If you want to do 75/25 US/Ex-US, which I think would be very reasonable, then the best way to achieve that is using VTSAX and VTIAX with your desired allocations.
I was hoping VTWAX would be closer to a 60/40 split without the bonds like their target date funds. Vanguard doesn't auto rebalance in their Roth IRAs which I think is a shame. Not certain how often they should be rebalanced. People recommend lots of different time lines for it.
I would say you can just incrementally add bonds via VBTLX (Vanguard Total Bond Market, ER .05) as you age or hit certain financial milestones that increase your desire to protect a certain portion of your wealth.
"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
passive101
Posts: 54
Joined: Tue May 05, 2020 2:47 pm

Re: 100% stocks Betterment or VTWAX Vanguard?

Post by passive101 » Mon May 25, 2020 1:53 am

annu wrote:
Fri May 22, 2020 1:47 pm
VTWAX in taxable does not offer Foreign tax credit, this is the only thing I will like to share as negative, where if you do something similar using VTSAX/VTIAX(Us total market and Total International), you will get the credit.

Tax loss harvest is simpler with other funds as well, but that is separate topic altogether.
If I was using this in an non employer HSA would I get the foreign tax credit? (I'm not even certain what the foreign tax credit is). Or would I be better off in the case to use VTSAX/VTIAX instead of VTWAX? Fidslity offers VTWAX/VT as an ETF version.

annu
Posts: 704
Joined: Mon Nov 04, 2019 7:55 pm

Re: Roth IRA 100% stocks Betterment or VTWAX Vanguard?

Post by annu » Mon May 25, 2020 2:30 am

For USA, since it isbyax degree you are okay. Foreign tax credit is something you get when you invest in international equities which are taxed internationally, so for usa you get a credit.

But ignore that for now. Even tax loss harvesting is only relevant in taxeable account. So you should be okay with vtwax ...

User avatar
pokebowl
Posts: 361
Joined: Sat Dec 17, 2016 7:22 pm
Location: The Orion Spur of the Milky Way galaxy.

Re: 100% stocks Betterment or VTWAX Vanguard?

Post by pokebowl » Mon May 25, 2020 12:36 pm

annu wrote:
Fri May 22, 2020 1:47 pm
VTWAX in taxable does not offer Foreign tax credit, this is the only thing I will like to share as negative, where if you do something similar using VTSAX/VTIAX(Us total market and Total International), you will get the credit.

Tax loss harvest is simpler with other funds as well, but that is separate topic altogether.
One nitpick, VTWAX (Total World) does offer the foreign tax credit, however yes it is subjected to IRC Sec. 853(a) which does make it ineligible some years, but not all.

Post Reply