VTWAX [Roth IRA - Three-funds to Two-funds]

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Mario2222
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VTWAX [Roth IRA - Three-funds to Two-funds]

Post by Mario2222 »

One of my coworkers wants to change his Roth IRA portfolio from a 3 funds portfolio. VTSAX,VTIAX, VBTLX . 70/20/10 to a 2 funds portfolio VTWAX & VBTLX 90/10. His desision comes up after he listened to Tom Cock & Don McDonald's podcast where they recommend to their listeners this two fund. VTWAX & VBTLX. He is 41 years old. He is ok with a 90/10 asset allocation . What do you think?
Olemiss540
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Re: VTWAX

Post by Olemiss540 »

I think he should stop listening to podcast or else he will be performance chasing and his returns will suffer greatly as a result.

Stick with a gameplan. As long as its simple, diversified and low cost you are better off setting the course and going on about more important business.

Vanguards total world index is a perfectly fine fund to give world weighted equity exposure and is great for a 2 fund portfolio.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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Brianmcg321
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Re: VTWAX

Post by Brianmcg321 »

Sounds like a good plan if he’s wanting to increase his international exposure. VTWAX is a great one fund world wide diversified option.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
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ohboy!
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Re: VTWAX

Post by ohboy! »

Olemiss540 wrote: Thu Sep 24, 2020 9:33 am I think he should stop listening to podcast or else he will be performance chasing and his returns will suffer greatly as a result.

Stick with a gameplan. As long as its simple, diversified and low cost you are better off setting the course and going on about more important business.

Vanguards total world index is a perfectly fine fund to give world weighted equity exposure and is great for a 2 fund portfolio.
Not sure listening to a rando on an internet forum is inherently better than a podcast. Or any source for that matter. Nothing wrong with podcasts. That being said many here support a 2 fund with vtwax and bond fund. Having international exposure doesn’t seem like performance chasing right now as it’s performance has been lacking. I like vtwax and just added this week.
lostdog
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Re: VTWAX

Post by lostdog »

If it's for simplicity and diversification, go ahead.

Just as long as he doesn't give into the emotional part of paying attention to the separate asset classes of the U.S. index and International index. A couple threads this week popped up bailing on international because of emotions. I call this "low IQ" investing.
Dude2
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Re: VTWAX

Post by Dude2 »

I wonder how those learned gentlemen would feel about
Vanguard LifeStrategy Growth Fund (VASGX)

single fund approach
similar allocation stock/bond (80/20 versus 90/10)
less international (40%)
more diversified bond portion (international bonds + TBM)
slightly higher exp ratio

The less international would sell me on this versus VTWAX/TBM. It's been said about 400,000 times that there isn't a good reason that everybody in the entire would should hold market cap weight of domestic vs. international. We are not all equal. Each individual in whatever country needs to determine a good number. Vanguard's paper on this places that number somewhere between 20 and 40% for a US investor. It places that number at like 80% for an Australian investor, similarly high for Canadian investor, etc. Not every domestic market is equal.
Henceforth I’ll bear Affliction till it do cry out itself, “Enough, enough,” and die.
mcraepat9
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Re: VTWAX

Post by mcraepat9 »

Mario2222 wrote: Thu Sep 24, 2020 9:20 am One of my coworkers wants to change his Roth IRA portfolio from a 3 funds portfolio. VTSAX,VTIAX, VBTLX . 70/20/10 to a 2 funds portfolio VTWAX & VBTLX 90/10. His desision comes up after he listened to Tom Cock & Don McDonald's podcast where they recommend to their listeners this two fund. VTWAX & VBTLX. He is 41 years old. He is ok with a 90/10 asset allocation . What do you think?
I like the move - it's simpler and a bit more international-agnostic. Both approaches are fine.
Amateur investors are not cool-headed logicians.
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arcticpineapplecorp.
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Re: VTWAX

Post by arcticpineapplecorp. »

Mario! It's not your "friend"! It's you!! I listed to BOTH those podcasts where you called into the show. I remember your allocation of 70/20/10.

I think the recommendation is fine provided you are ok with holding more international (I have 30% in my Roth IRA comprised of 70% vtsax and 30% vtiax and 40% in my 457b in the target date fund)

two funds is simpler than 1 and less rebalancing.

you could even just go with 1 fund (target date). But that's going to have 40% of your stocks in international (close to holding vtwax). And then there's NO rebalancing!

you can't go wrong with either choice. your funds are fine too but less international. who knows if/when international will do better than US?

But international (in the 30%-40% range) has been shown to decrease the volatility of your portfolio.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
Olemiss540
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Re: VTWAX

Post by Olemiss540 »

ohboy! wrote: Thu Sep 24, 2020 10:11 am
Olemiss540 wrote: Thu Sep 24, 2020 9:33 am I think he should stop listening to podcast or else he will be performance chasing and his returns will suffer greatly as a result.

Stick with a gameplan. As long as its simple, diversified and low cost you are better off setting the course and going on about more important business.

Vanguards total world index is a perfectly fine fund to give world weighted equity exposure and is great for a 2 fund portfolio.
Not sure listening to a rando on an internet forum is inherently better than a podcast. Or any source for that matter. Nothing wrong with podcasts. That being said many here support a 2 fund with vtwax and bond fund. Having international exposure doesn’t seem like performance chasing right now as it’s performance has been lacking. I like vtwax and just added this week.
Good point. Listen to podcasts and change your investment plan everytime someone makes sense and it sounds like a good idea.

This person already had international exposure in a 3 fund portfolio. Big whoop.

There is a reason that the most successful investors have been shown to be the deceased, and I dont think it's because they are listening to the right podcasts.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
dru808
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Re: VTWAX

Post by dru808 »

arcticpineapplecorp. wrote: Thu Sep 24, 2020 10:25 am Mario! It's not your "friend"! It's you!! I listed to BOTH those podcasts where you called into the show. I remember your allocation of 70/20/10.
Lol, good catch, small world. :beer
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LadyGeek
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Re: VTWAX [Roth IRA - Three-funds to Two-funds]

Post by LadyGeek »

Mario2222 - In order to give appropriate advice, it's best to keep all the information in one spot (regardless of who it's for).

I locked your similar question (VTSAX & VTWAX) so we can discuss it here.

If you have any questions, ask them in this thread.
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