ETF to Hold for 50 Years

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ukbogler
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Re: ETF to Hold for 50 Years

Post by ukbogler » Wed Jan 22, 2020 11:11 am

Scooter57 wrote:
Wed Jan 22, 2020 9:58 am
It's really hard to know how ETFs will do over the long term as they are a recent phenomenon and the Vanguard ones profit because of Vanguard's patented system that will be off patent in the future.

Who knows what changes will be made by Vanguard or regulators, especially if the next big market collapse is due to illiquidity in ETFs?

Planning for a shorter time period would be wiser.
I'm guessing they'll do the same as the basket of sticks they hold. Subject to tracking errors, of course.

DB2
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Re: ETF to Hold for 50 Years

Post by DB2 » Wed Jan 22, 2020 12:08 pm

Scooter57 wrote:
Wed Jan 22, 2020 9:58 am
It's really hard to know how ETFs will do over the long term as they are a recent phenomenon and the Vanguard ones profit because of Vanguard's patented system that will be off patent in the future.

Who knows what changes will be made by Vanguard or regulators, especially if the next big market collapse is due to illiquidity in ETFs?

Planning for a shorter time period would be wiser.
Do you think mutual funds are better in this case even if they have the same stocks (such as VT vs VTWAX)?

Scooter57
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Re: ETF to Hold for 50 Years

Post by Scooter57 » Wed Jan 22, 2020 12:25 pm

Personally, I prefer funds for long term holdings as they actually hold the assets and are not as prone to wild fluctuations when the market hiccups. But given that Vanguard has started to price fund expenses higher than corresponding ETF expenses, it's hard to know what the future holds. Vanguard has already screwed me over a couple of my long-term holdings by changing the definition and mission of funds I held, so they are quite capable of converting their funds into ETFs if it benefits their top executives to do so. They are no longer customer-centric.

My point really is just that you can't invest now for 50 years. Too much can and will change. So don't tie your heirs to restrictive trusts that limit their ability to adapt their investment strategies decades from now.

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Re: ETF to Hold for 50 Years

Post by DB2 » Wed Jan 22, 2020 12:40 pm

Scooter57 wrote:
Wed Jan 22, 2020 12:25 pm
Personally, I prefer funds for long term holdings as they actually hold the assets and are not as prone to wild fluctuations when the market hiccups. But given that Vanguard has started to price fund expenses higher than corresponding ETF expenses, it's hard to know what the future holds. Vanguard has already screwed me over a couple of my long-term holdings by changing the definition and mission of funds I held, so they are quite capable of converting their funds into ETFs if it benefits their top executives to do so. They are no longer customer-centric.

My point really is just that you can't invest now for 50 years. Too much can and will change. So don't tie your heirs to restrictive trusts that limit their ability to adapt their investment strategies decades from now.
I've thought about moving to Fidelity and just use their zero funds.

bogledogle87
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Re: ETF to Hold for 50 Years

Post by bogledogle87 » Wed Jan 22, 2020 12:57 pm

DB2 wrote:
Wed Jan 22, 2020 12:40 pm
Scooter57 wrote:
Wed Jan 22, 2020 12:25 pm
Personally, I prefer funds for long term holdings as they actually hold the assets and are not as prone to wild fluctuations when the market hiccups. But given that Vanguard has started to price fund expenses higher than corresponding ETF expenses, it's hard to know what the future holds. Vanguard has already screwed me over a couple of my long-term holdings by changing the definition and mission of funds I held, so they are quite capable of converting their funds into ETFs if it benefits their top executives to do so. They are no longer customer-centric.

My point really is just that you can't invest now for 50 years. Too much can and will change. So don't tie your heirs to restrictive trusts that limit their ability to adapt their investment strategies decades from now.
I've thought about moving to Fidelity and just use their zero funds.
I considered the same until I asked the question for why they did not just drop the ER's on their already-established Total Market funds, but instead created new ones? It is because they are using "proprietary' sampling to attempt to replicate the markets with half of the stocks. They outsource the management and take a net loss overall on the fund. I could see the tracking error easily exceeding the expense ratio savings. While the funds are legit in that they hold the stocks they claim to, they are surely a marketing gimmick. Who knows if they change the sampling strategy someday in order to reduce the losses?

I would honestly rather just pay a few basis points for the fair value of the management of a truly complete market fund and leave it at that.
VTWAX and chill

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travelogue
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Re: ETF to Hold for 50 Years

Post by travelogue » Wed Jan 22, 2020 12:57 pm

DB2 wrote:
Wed Jan 22, 2020 12:40 pm
I've thought about moving to Fidelity and just use their zero funds.
One of the reasons I’m going through this (admittedly somewhat artificial) thought experiment is that I have Fidelity Zero funds in two kids’ UTMA accounts. I’d leave the money there if they were tax advantaged accounts, but I was thinking that once the kids turn 18 and eventually (hopefully!) start making money the mutual fund structure could be less efficient than an ETF. Hence the consideration of VT that would auto-rebalance based on worldwide market cap and kind of auto-pilot if you “left it in a drawer” untouched for a long period of time.

EDIT: And yes, I know there could be considerations of tax gain harvesting yada yada. This is my thought experiment and I was trying to keep it simple to start with. An ETF to hold for 50 years.

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Re: ETF to Hold for 50 Years

Post by DB2 » Wed Jan 22, 2020 1:00 pm

Good points, guys. Something definitely to consider.

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Re: ETF to Hold for 50 Years

Post by jhfenton » Wed Jan 22, 2020 1:07 pm

Scooter57 wrote:
Wed Jan 22, 2020 12:25 pm
Personally, I prefer funds for long term holdings as they actually hold the assets and are not as prone to wild fluctuations when the market hiccups.
ETFs actually hold the assets. They are subject to the same rules as mutual funds in that regard (since they are, technically, mutual funds operating under a waiver of some of the traditional mutual fund rules.)

There are, of course, mutual funds and ETFs that hold options, futures, and other derivatives, but those are assets too; and there's no difference in that regard between ETFs and traditional mutual funds.

There are ETNs (exchange-traded notes), that are basically bonds with a return profile based on a stated formula, but those are not ETFs (though many people confuse them with ETFs). ETNs have credit risk in addition to the targeted investment risk, so I can't imagine a situation in which I would have reason to buy one.

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Re: ETF to Hold for 50 Years

Post by dru808 » Wed Jan 22, 2020 1:20 pm

Edit: etf.? Vt

remomnyc
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Re: ETF to Hold for 50 Years

Post by remomnyc » Wed Jan 22, 2020 2:10 pm

Another vote for VT. That's where we invest our kids' money.

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Portfolio7
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Re: ETF to Hold for 50 Years

Post by Portfolio7 » Wed Jan 22, 2020 2:23 pm

Actually, I'm soliciting suggestions on this question... one son worked from age 14, and I got him into a Roth IRA. He's 17 now. (My other son has unique circumstances). Because of various incentives at different times, the portfolio is a little odd:

His Portfolio is:
VT (Total World Stock) 65% The rock that this portfolio is built on.
NTSX (90/60 leveraged) 17% Interesting long run potential, also this is his entire bond component. So far has matched S&P500.
SCZ (International S Cap) 9% This was something he wanted to try
IEMG (Emerging Markets) 6% Volatility doesn't matter so much for him
FHLC (Healthcare) 3% Added for long term prospects (boomer retirement), plan is to put next contribution here to bump to 5%
"An investment in knowledge pays the best interest" - Benjamin Franklin

dru808
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Re: ETF to Hold for 50 Years

Post by dru808 » Wed Jan 22, 2020 2:46 pm

I’m actually surprised vanguard doesn’t have a lifestrategy etf. Vt/bndw

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FelixTheCat
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Re: ETF to Hold for 50 Years

Post by FelixTheCat » Wed Jan 22, 2020 4:11 pm

I'll go with the advice from the richest investor everyone knows. VOO
Felix is a wonderful, wonderful cat.

Chrono Triggered
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Re: ETF to Hold for 50 Years

Post by Chrono Triggered » Wed Jan 22, 2020 5:06 pm

bogledogle87 wrote:
Wed Jan 22, 2020 12:57 pm
I considered the same until I asked the question for why they did not just drop the ER's on their already-established Total Market funds, but instead created new ones?
They did.

bogledogle87
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Re: ETF to Hold for 50 Years

Post by bogledogle87 » Wed Jan 22, 2020 6:33 pm

Chrono Triggered wrote:
Wed Jan 22, 2020 5:06 pm
bogledogle87 wrote:
Wed Jan 22, 2020 12:57 pm
I considered the same until I asked the question for why they did not just drop the ER's on their already-established Total Market funds, but instead created new ones?
They did.
....drop existing ones to zero, is clearly what was meant here.
VTWAX and chill

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jhfenton
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Re: ETF to Hold for 50 Years

Post by jhfenton » Thu Jan 23, 2020 12:53 pm

dru808 wrote:
Wed Jan 22, 2020 2:46 pm
I’m actually surprised vanguard doesn’t have a lifestrategy etf. Vt/bndw
You have to believe that is on the drawing board, in either a fund-of-4-funds or fund-of-2-funds flavor.

jdilla1107
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Re: ETF to Hold for 50 Years

Post by jdilla1107 » Thu Jan 23, 2020 8:09 pm

The people that say "why would you need to think about a multi-decade hold period?", are clearly investing out of a tax shielded account.

For taxable accounts where 20-30 years of capital gains is likely, this is a very valid question. I haven't been investing very long (12 years) and already have positions with 200% gains.

I personally hold Vanguard funds based on their size, durability, and legal structure. I want to hold them for 30 to 40 years. I wouldn't have the same confidence in smaller ETF companies not closing a fund and forcing me to take cap gains.

bck63
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Re: ETF to Hold for 50 Years

Post by bck63 » Thu Jan 23, 2020 8:56 pm

ITOT and chill.

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Re: ETF to Hold for 50 Years

Post by abuss368 » Thu Jan 23, 2020 9:08 pm

travelogue wrote:
Tue Jan 21, 2020 10:59 am
If you had to pick an ETF to hold in trust for 50 years for a person who is currently a teenager, what would it be? Volatility doesn’t matter, as no one will be tracking the performance. It’s sitting in a figurative black box. Dividends would be reinvested. Let’s assume it’s a taxable account so tax drag matters.

I’m thinking VT would be my choice.

If you could pick three ETFs, but no rebalancing is allowed, would you pick something different?
I would consider Vanguard Total Stock Market Index Fund. Add to it and I would reinvest dividends. In 50 years you would not believe the magic of compounding.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success." || Buy Total Stock until it hurts. Then find a way to buy even more!

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Re: ETF to Hold for 50 Years

Post by abuss368 » Thu Jan 23, 2020 9:15 pm

I would also consider Total Bond Index fund if a bond allocation was desired.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success." || Buy Total Stock until it hurts. Then find a way to buy even more!

Starper
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Re: ETF to Hold for 50 Years

Post by Starper » Wed Feb 12, 2020 12:48 pm

What are the equivalents of VBTLX for Fidelity and Charles Schwab?

Alaric
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Re: ETF to Hold for 50 Years

Post by Alaric » Wed Feb 12, 2020 1:11 pm

BRK.B. Let it compound for 50 years.

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Forester
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Re: ETF to Hold for 50 Years

Post by Forester » Wed Feb 12, 2020 2:10 pm

iShares World Min Vol ACWV or iShares MSCI India INDA.

MotoTrojan
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Re: ETF to Hold for 50 Years

Post by MotoTrojan » Wed Feb 12, 2020 2:13 pm

Scooter57 wrote:
Wed Jan 22, 2020 9:58 am
It's really hard to know how ETFs will do over the long term as they are a recent phenomenon and the Vanguard ones profit because of Vanguard's patented system that will be off patent in the future.

Who knows what changes will be made by Vanguard or regulators, especially if the next big market collapse is due to illiquidity in ETFs?

Planning for a shorter time period would be wiser.
In what way do Vanguard ETFs profit off the shared share-class? I could see an arguement that more people use their Mutual Funds because of their improved tax-efficiency, but a Vanguard ETF is no different than a Schwab, WisdomTree, or Fidelity ETF.

international001
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Re: ETF to Hold for 50 Years

Post by international001 » Wed Feb 12, 2020 7:02 pm

MotoTrojan wrote:
Wed Feb 12, 2020 2:13 pm
Scooter57 wrote:
Wed Jan 22, 2020 9:58 am
It's really hard to know how ETFs will do over the long term as they are a recent phenomenon and the Vanguard ones profit because of Vanguard's patented system that will be off patent in the future.

Who knows what changes will be made by Vanguard or regulators, especially if the next big market collapse is due to illiquidity in ETFs?

Planning for a shorter time period would be wiser.
In what way do Vanguard ETFs profit off the shared share-class? I could see an arguement that more people use their Mutual Funds because of their improved tax-efficiency, but a Vanguard ETF is no different than a Schwab, WisdomTree, or Fidelity ETF.
YEs.. I think it's the other way around. Vanguard funds benefit from having ETFs associated in another share class.
When patent expires, other ETFs can do the same and create new funds. Will they?

Doubleeagle4me
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Re: ETF to Hold for 50 Years

Post by Doubleeagle4me » Wed Feb 12, 2020 7:05 pm

PRHSX. Bought 20 years ago. Put both my kids thru college.

guyinlaw
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Re: ETF to Hold for 50 Years

Post by guyinlaw » Wed Feb 12, 2020 7:29 pm

100% VBIAX 60-40 balanced fund..

If you trust Wisdomtree then 100% NTSX. (VBIAX on steroids) 90/60 balanced fund

KlangFool
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Re: ETF to Hold for 50 Years

Post by KlangFool » Wed Feb 12, 2020 7:34 pm

OP,

No ETF. 100% Vanguard LifeStrategy Moderate Growth (VSMGX)

KlangFool

bck63
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Re: ETF to Hold for 50 Years

Post by bck63 » Wed Feb 12, 2020 8:17 pm

Vanguard S&P 500 ETF (VOO).

You will own shares of 500 of the biggest and best companies in the United States of America. Who wouldn't want to own such an investment?

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grabiner
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Re: ETF to Hold for 50 Years

Post by grabiner » Thu Feb 13, 2020 12:03 am

I agree with others that VT (Total World) is the obvioys choice for a one-fund portfolio, and VTI, VXUS, and BND (Total US Stock Market Index, Total International Stock Index, Total Bond Market Index) are the choices for a three-fund portfolio. These will continue to track the market, and it will always be reasonable to hold the whole market.

ETFs weren't around when I started investing, but Total Stock Market was my first investment in 1997, and I still hold it 23 years later. I have held Developed Markets Index (Total International wasn't as good for a taxable investment at the time) since 2002.
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Financologist
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Re: ETF to Hold for 50 Years

Post by Financologist » Thu Feb 13, 2020 12:14 am

VWO + ITOT + VXUS


20/40/40

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fortyofforty
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Re: ETF to Hold for 50 Years

Post by fortyofforty » Thu Feb 13, 2020 7:33 am

Has to be VT. If there were a Vanguard balanced ETF, with a high percentage of equities, I'd select that. However, over five decades, I think equities are the way to go, and with so much unknown about the future, global market weight is the logical choice.
Indexing works, not because of magic, but because of math. | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

international001
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Re: ETF to Hold for 50 Years

Post by international001 » Thu Feb 13, 2020 2:23 pm

Are we investing in International because we think that perhaps US goes downhill?
I don't see a real reason for diversification with International over a long enough period of time. Shouldn't we expect US and international to have the same rate of return?

If so, VTI is better because of lower taxes.

guyinlaw
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Re: ETF to Hold for 50 Years

Post by guyinlaw » Thu Feb 13, 2020 3:50 pm

KlangFool wrote:
Wed Feb 12, 2020 7:34 pm
OP,

No ETF. 100% Vanguard LifeStrategy Moderate Growth (VSMGX)

KlangFool
This is excellent suggestion. You can choose between 60-40 and 80-20 fund.

Vanguard LifeStrategy Moderate Growth (VSMGX)- 60-40 allocation
Vanguard LifeStrategy Growth Fund (VASGX)- 80-20 allocation.

Includes domestic and international allocation.

Over 50 years I would recommend the 80-20 fund.

1130Super
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Re: ETF to Hold for 50 Years

Post by 1130Super » Thu Feb 13, 2020 4:22 pm

100% QQQ

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fortyofforty
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Re: ETF to Hold for 50 Years

Post by fortyofforty » Thu Feb 13, 2020 5:52 pm

international001 wrote:
Thu Feb 13, 2020 2:23 pm
Are we investing in International because we think that perhaps US goes downhill?
I don't see a real reason for diversification with International over a long enough period of time. Shouldn't we expect US and international to have the same rate of return?

If so, VTI is better because of lower taxes.
We do expect U.S. and international to have similar rates of return. The issue is that they do not move in sync, so that, when it's time for you to withdraw the funds, you don't know if U.S. or international will be in the ascendancy. So, with international and domestic, you smooth out the periods of outperformance and underperformance. That said, I don't think it's a slam dunk.
Indexing works, not because of magic, but because of math. | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

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Portfolio7
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Re: ETF to Hold for 50 Years

Post by Portfolio7 » Fri Feb 14, 2020 1:30 am

My 17 yo's Roth IRA is 80% VT right now. He has a little in Healthcare and NTSX as well.
"An investment in knowledge pays the best interest" - Benjamin Franklin

All Seasons
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Re: ETF to Hold for 50 Years

Post by All Seasons » Fri Feb 14, 2020 2:32 am

SPXL.
The market portfolio is always a legitimate portfolio.

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mrspock
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Re: ETF to Hold for 50 Years

Post by mrspock » Fri Feb 14, 2020 2:35 am

VTI hands down.

msk
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Re: ETF to Hold for 50 Years

Post by msk » Fri Feb 14, 2020 3:01 am

+1 for VT
My several adult kids live in different countries, so they need different versions of VT, e.g. I told my kids in Canada to go for 5% VCN (Vanguard Canada) + 95% VXC (Vanguard world excluding Canada), my kids in countries where they do not pay income tax to go for VWRA (Vanguard World Accumulative, basically an Ireland based accumulative version of VT with dividends reinvested).

minimalistmarc
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Re: ETF to Hold for 50 Years

Post by minimalistmarc » Fri Feb 14, 2020 3:11 am

ukbogler wrote:
Wed Jan 22, 2020 4:49 am
VWRL if u r in GBP
Or VWRP in tax sheltered

usagi
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Re: ETF to Hold for 50 Years

Post by usagi » Fri Feb 14, 2020 3:16 am

ITOT, low cost, tax efficient and U.S. only. Gosh knows what the reporting and future tax status might be over the next 50 years with foreign stocks. I'll take my international exposure via U.S. corporations operating overseas.

However if you want international exposure I would look at FFNOX(Fidelity Four-in-one fund .11ER). Among other things, one thing that stands out is the equity percentage can be intelligently adjusted, which may be advantageous in times of crisis. I also like the bond exposure, giving you the benefit of rebalancing in a downturn. I would kick the tires on this one for the long hall. 50 years is a long time and the more I think of it the more I like how this fund might work in various crisis that may occur. However FFNOX is not an ETF. But the more I think on it, the more I like the all weather nature of this offering.
Last edited by usagi on Sat Feb 15, 2020 4:27 am, edited 1 time in total.

international001
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Re: ETF to Hold for 50 Years

Post by international001 » Fri Feb 14, 2020 10:50 am

fortyofforty wrote:
Thu Feb 13, 2020 5:52 pm
international001 wrote:
Thu Feb 13, 2020 2:23 pm
Are we investing in International because we think that perhaps US goes downhill?
I don't see a real reason for diversification with International over a long enough period of time. Shouldn't we expect US and international to have the same rate of return?

If so, VTI is better because of lower taxes.
We do expect U.S. and international to have similar rates of return. The issue is that they do not move in sync, so that, when it's time for you to withdraw the funds, you don't know if U.S. or international will be in the ascendancy. So, with international and domestic, you smooth out the periods of outperformance and underperformance. That said, I don't think it's a slam dunk.

Well.. over the long term, the time to withdraw becomes less relevant

So at what point it's better to invest just on VTI? 100 years?

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Re: ETF to Hold for 50 Years

Post by fortyofforty » Fri Feb 14, 2020 4:15 pm

international001 wrote:
Fri Feb 14, 2020 10:50 am
fortyofforty wrote:
Thu Feb 13, 2020 5:52 pm
international001 wrote:
Thu Feb 13, 2020 2:23 pm
Are we investing in International because we think that perhaps US goes downhill?
I don't see a real reason for diversification with International over a long enough period of time. Shouldn't we expect US and international to have the same rate of return?

If so, VTI is better because of lower taxes.
We do expect U.S. and international to have similar rates of return. The issue is that they do not move in sync, so that, when it's time for you to withdraw the funds, you don't know if U.S. or international will be in the ascendancy. So, with international and domestic, you smooth out the periods of outperformance and underperformance. That said, I don't think it's a slam dunk.

Well.. over the long term, the time to withdraw becomes less relevant

So at what point it's better to invest just on VTI? 100 years?
Nobody knows. Which is kind of the point.
Indexing works, not because of magic, but because of math. | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

VAslim16
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Re: ETF to Hold for 50 Years

Post by VAslim16 » Fri Feb 14, 2020 4:35 pm

Living Free wrote:
Tue Jan 21, 2020 11:03 am
VTI and VXUS (vanguard total US and total international stock index ETFs)
This

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geerhardusvos
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Re: ETF to Hold for 50 Years

Post by geerhardusvos » Sat Feb 15, 2020 12:42 pm

TheTimeLord wrote:
Tue Jan 21, 2020 11:59 am
Completely unknowable. Cannot fathom making a 50 year investment decision that doesn't allow for modification.
How is owning the market going to change?
VTSAX and chill

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TheTimeLord
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Re: ETF to Hold for 50 Years

Post by TheTimeLord » Sat Feb 15, 2020 7:17 pm

geerhardusvos wrote:
Sat Feb 15, 2020 12:42 pm
TheTimeLord wrote:
Tue Jan 21, 2020 11:59 am
Completely unknowable. Cannot fathom making a 50 year investment decision that doesn't allow for modification.
How is owning the market going to change?
Which market?
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mikeyzito22
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Re: ETF to Hold for 50 Years

Post by mikeyzito22 » Sat Feb 15, 2020 7:24 pm

backofbeyond wrote:
Tue Jan 21, 2020 1:45 pm
If you had 50 years, I'm assuming it's money you don't need until then and probably not that much to put in it, so I'd swing for the fence.

KWEB: ETF for China Internet.

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How is a .76 ER keeping things "low cost?"

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Re: ETF to Hold for 50 Years

Post by GAAP » Sat Feb 15, 2020 7:52 pm

It would be Global to remove risk of failure in a single economy. It would be Equity to have the best chance of long term growth. It would have a low expense ratio. Management would be aligned with the interests of the owner.

Sounds like VT to me.
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Re: ETF to Hold for 50 Years

Post by HawkeyePierce » Sat Feb 15, 2020 8:45 pm

I like NTSX but I wouldn’t pick it for an investment that can’t be modified for 50 years. Too much risk of the fund shutting down and liquidating.

Given the need for low costs, low tax drag and a low risk of shutdown, we’re not left with too many choices. We can eliminate any provider like WisdomTree, they’re too small to be sure they’ll last.

Which ETFs *are* likely to survive? Probably want to stick with the major funds from Vanguard, iShares and State Street to be safe.

A total world fund like VT has the advantage of capturing growth of both the US market—still the largest in the world—and any of today’s emerging markets that may grow to rival the US market. It’s massive AUM makes shutdown unlikely and it’s fees and tax drag are very low. I expect its fees will probably drop even further over time.

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