My four plan vanguard portfolio !

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anaelmasri
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My four plan vanguard portfolio !

Post by anaelmasri »

I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
teddytimtam
Posts: 133
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Re: My four plan vanguard portfolio !

Post by teddytimtam »

100% VTI is all the diversity I need for US market exposure.

Is there a reason why you're 35% S&P and 40% total market?
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dogagility
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Re: My four plan vanguard portfolio !

Post by dogagility »

No fourth needed. No third either. Just go with 80% VTI and 20% VXUS. Done.
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
whereskyle
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Re: My four plan vanguard portfolio !

Post by whereskyle »

anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
"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
anaelmasri
Posts: 62
Joined: Thu Sep 10, 2020 6:24 pm

Re: My four plan vanguard portfolio !

Post by anaelmasri »

I read alot of VTI and VXUS . for some reason as how the SPY in a way is the pulse of the market, adding a percentage to the VOO even if lower is a smart idea to double on the same horse while also diversifiying with the VTI and VXUS , maybe get in 2 percent or so BND to help diversify more. I feel adding VTI and VOO together isnt a disadvantage per say given the historical numbers. I get VTI represents the whole market and diversified, but owning a portfolio focusing on blue chips as well as tech adds more to the pile.

is there a negative obvious reason why one should invest a little in both for the long run?
Chris K Jones
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Re: My four plan vanguard portfolio !

Post by Chris K Jones »

dogagility wrote: Tue Sep 15, 2020 5:04 am No fourth needed. No third either. Just go with 80% VTI and 20% VXUS. Done.
+1. I agree. Add bonds when you get older. Best wishes.
dcabler
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Re: My four plan vanguard portfolio !

Post by dcabler »

You might want to start here, then follow the links:
https://www.bogleheads.org/wiki/Main_Page

cheers
whereskyle
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Re: My four plan vanguard portfolio !

Post by whereskyle »

anaelmasri wrote: Tue Sep 15, 2020 6:22 am I read alot of VTI and VXUS . for some reason as how the SPY in a way is the pulse of the market, adding a percentage to the VOO even if lower is a smart idea to double on the same horse while also diversifiying with the VTI and VXUS , maybe get in 2 percent or so BND to help diversify more. I feel adding VTI and VOO together isnt a disadvantage per say given the historical numbers. I get VTI represents the whole market and diversified, but owning a portfolio focusing on blue chips as well as tech adds more to the pile.

is there a negative obvious reason why one should invest a little in both for the long run?
It might seem fun when you're just getting started to play with a variety of ETFs but there is absolutely no reason for you to create unnecessary work for yourself down the line. Why in the world would you want to make yourself rebalance between VTI and VOO? If you want to focus on blue chips, VTI does exactly that. It just also includes small stocks and some huge stocks that haven't been added to the SP 500. VTI is pure total market investing that will prevent you from having to buy certain stocks high, as SP 500 funds often must do when a big name finally gets added. VTI will enable you to accomplish every goal that VOO will enable you to accomplish. And you will not miss having two funds doing pretty much the same thing when you could just have one.

"Simplicity is the master key to financial success." - Jack Bogle
"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
Lou354
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Re: My four plan vanguard portfolio !

Post by Lou354 »

There’s not much difference in performance between S&P 500 and Total US market. So I wouldn’t bother with both, except perhaps as a partner if you want to do tax-loss harvesting at some point in the future.

Most people haven’t memorized ticker symbols and won’t go to the effort to look them up. So you’ll get more and better answers if you identify the funds you’re considering by name and not just by ticker symbol.

The high dividend yield fund and the real estate fund aren’t tax efficient, so they don’t belong in a taxable account. If you decide you want them, hold them in a tax-advantaged account or not at all. https://www.bogleheads.org/wiki/Tax-eff ... _placement

If you buy an extended market fund together with an S&P 500 fund, you’d just be recreating the Total US market fund, which would undermine your whole reason for buying the S&P 500 fund in addition to a Total US market fund.

When I was at a similar stage of learning as you I also bought a number of funds: high dividend yield, dividend growth, REIT, some actively managed funds etc. As I learned and experienced more I came to value simplicity and consolidated my holdings, though still holding a couple of funds I wouldn’t buy now but haven’t sold because the tax cost would be too high. Whatever your path, I wish you good luck on your investing journey.

(Edits shown by underlining.)
Last edited by Lou354 on Tue Sep 15, 2020 9:20 am, edited 1 time in total.
sycamore
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Re: My four plan vanguard portfolio !

Post by sycamore »

Agree with Lou354 that there's not much difference between total stock market and S&P 500.

OP, to show this, there's a website portfoliovisualizer.com that lets you compare different portfolios over time. Here's one comparing Vanguard S&P 500 against Vanguard Total Stock Market and a 50/50 split.

From 1993 to the present, there was a difference of 0.03% CAGR between the two funds. The 50/50 portfolio was right in-between.

If you look at the chart, you can see that sometimes S&P500 was ahead by a small amount, sometimes TSM was ahead by a bit. To me, there's no outperformance to be gained by using both funds. You might feel better/sleep better by splitting them up but using just one fund will do the job just as well.

Note: I used the mutual funds to compare rather than the ETFs because there's longer history with the mutual funds.
livesoft
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Re: My four plan vanguard portfolio !

Post by livesoft »

I have a question for the OP: Now that you are using ETFs, what are doing (or are going to do) with the leftover cash bit that is not enough to buy a full share of the ETF?

Example: You have $200 in your account and buy one share VTI for $172 leaving $28. What are you going to do with the $28?
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rkhusky
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Re: My four plan vanguard portfolio !

Post by rkhusky »

It’s good to hold different funds in taxable and tax-advantaged for TLH’ing and avoiding wash sales. You could use VOO in taxable and VTI in the IRA or vice-versa. Use Large Cap Index for a TLH partner.
snailderby
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Re: My four plan vanguard portfolio !

Post by snailderby »

whereskyle wrote: Tue Sep 15, 2020 6:53 am
anaelmasri wrote: Tue Sep 15, 2020 6:22 am I read alot of VTI and VXUS . for some reason as how the SPY in a way is the pulse of the market, adding a percentage to the VOO even if lower is a smart idea to double on the same horse while also diversifiying with the VTI and VXUS , maybe get in 2 percent or so BND to help diversify more. I feel adding VTI and VOO together isnt a disadvantage per say given the historical numbers. I get VTI represents the whole market and diversified, but owning a portfolio focusing on blue chips as well as tech adds more to the pile.

is there a negative obvious reason why one should invest a little in both for the long run?
It might seem fun when you're just getting started to play with a variety of ETFs but there is absolutely no reason for you to create unnecessary work for yourself down the line. Why in the world would you want to make yourself rebalance between VTI and VOO? If you want to focus on blue chips, VTI does exactly that. It just also includes small stocks and some huge stocks that haven't been added to the SP 500. VTI is pure total market investing that will prevent you from having to buy certain stocks high, as SP 500 funds often must do when a big name finally gets added. VTI will enable you to accomplish every goal that VOO will enable you to accomplish. And you will not miss having two funds doing pretty much the same thing when you could just have one.

"Simplicity is the master key to financial success." - Jack Bogle
whereskyle is right. There is no need to hold both VOO and VTI. VOO is fine on its own, as is VTI. 32.2% of VTI's holdings are tech stocks. 33.9% of VOO's holdings are tech stocks. Do you think a 1.7% difference in allocation to the tech sector will make a big difference in the long run? It didn't, historically. Plus, we don't know which fund will outperform going forward. If VTI outperforms going forward, will you regret investing in VOO, or vice versa? Keep it simple. Just use VTI. Or VOO. There are more important things to worry about in life.
whereskyle
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Re: My four plan vanguard portfolio !

Post by whereskyle »

livesoft wrote: Tue Sep 15, 2020 8:11 am I have a question for the OP: Now that you are using ETFs, what are doing (or are going to do) with the leftover cash bit that is not enough to buy a full share of the ETF?

Example: You have $200 in your account and buy one share VTI for $172 leaving $28. What are you going to do with the $28?
Fractional trading in the Fidelity mobile app makes this a non-issue. I buy VTI by the dollar this way.

My advice is to hold mutual funds at Vanguard and to hold Vanguard ETFs at Fidelity.
"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
anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

livesoft wrote: Tue Sep 15, 2020 8:11 am I have a question for the OP: Now that you are using ETFs, what are doing (or are going to do) with the leftover cash bit that is not enough to buy a full share of the ETF?

Example: You have $200 in your account and buy one share VTI for $172 leaving $28. What are you going to do with the $28?
I havent thought of the question, good question. I figured id do the math of what to expect per ETF and buy based on the total amount. if you mean any profit generated then DRIP. but when I buy the etf from my bank account via vanguard for example, why would I send 200 and not just the amount of the share itself/.?
livesoft
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Re: My four plan vanguard portfolio !

Post by livesoft »

anaelmasri wrote: Tue Sep 15, 2020 7:51 pm... when I buy the etf from my bank account via vanguard for example, why would I send 200 and not just the amount of the share itself/.?
With your Roth IRA, I would think that you would want to contribute the maximum allowed legal contribution of $6,000 by the deadline and that would rarely let one buy an integral number of shares. I think once you get going, then you will have a better understanding of my question.
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Robert20
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Re: My four plan vanguard portfolio !

Post by Robert20 »

whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
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arcticpineapplecorp.
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Re: My four plan vanguard portfolio !

Post by arcticpineapplecorp. »

anaelmasri wrote: Tue Sep 15, 2020 6:22 am I read alot of VTI and VXUS . for some reason as how the SPY in a way is the pulse of the market, adding a percentage to the VOO even if lower is a smart idea to double on the same horse while also diversifiying with the VTI and VXUS , maybe get in 2 percent or so BND to help diversify more. I feel adding VTI and VOO together isnt a disadvantage per say given the historical numbers. I get VTI represents the whole market and diversified, but owning a portfolio focusing on blue chips as well as tech adds more to the pile.

is there a negative obvious reason why one should invest a little in both for the long run?
below is a chart back to inception of total stock market index fund 4/27/1992. I'm using the funds instead of the ETFs because the funds started earlier than ETFs. The funds are comparable, however to the ETFs. VTSAX (total stock market, comparable to VTI, in blue below) goes back to 4/27/1992. VFIAX (S&P500 index fund, comparable to VOO, in orange below) goes back further (8/31/1976) but we can't compare them before 4/27/1992.

What do you notice between the two below? Which did better? Is there a significant difference between the two? Is there any advantage to hold both VTI and VOO? Which is more representative of the total market?

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
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
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arcticpineapplecorp.
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Re: My four plan vanguard portfolio !

Post by arcticpineapplecorp. »

Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
PUSH?

or DRAG?

Depends on the time period, doesn't it?

morningstar has VUG going back to 11/2/92, which shows the following (same other two funds previously discussed, and now VUG in green):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

VUG ended higher than total stock market index fund and S&P500 index fund, but there were periods where it underperfomed both from 6/3/2003 until 6/30/2018 (and only briefly beating the market for a few months) before underperforming again, until 6/30/2019 where it outperformed again.

would you have held on to something that underperformed the market for 15 years, knowing all the while you could have gotten a guaranteed return of the market?

isn't the outperformance mostly attributable since 6/30/19?

will it outperform the market or underperform over the long term?

nobody knows.
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
Robert20
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Re: My four plan vanguard portfolio !

Post by Robert20 »

arcticpineapplecorp. wrote: Tue Sep 15, 2020 9:02 pm
Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
PUSH?

or DRAG?

Depends on the time period, doesn't it?

morningstar has VUG going back to 11/2/92, which shows the following (same other two funds previously discussed, and now VUG in green):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

VUG ended higher than total stock market index fund and S&P500 index fund, but there were periods where it underperfomed both from 6/3/2003 until 6/30/2018 (and only briefly beating the market for a few months) before underperforming again, until 6/30/2019 where it outperformed again.

would you have held on to something that underperformed the market for 15 years, knowing all the while you could have gotten a guaranteed return of the market?

isn't the outperformance mostly attributable since 6/30/19?

will it outperform the market or underperform over the long term?

nobody knows.
NObody knows how the future 20years will be ... I am OK to bet 20% with VUG, atleast it gives better/same as VTI.
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dogagility
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Re: My four plan vanguard portfolio !

Post by dogagility »

Robert20 wrote: Tue Sep 15, 2020 9:41 pm
arcticpineapplecorp. wrote: Tue Sep 15, 2020 9:02 pm
Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
PUSH?

or DRAG?

Depends on the time period, doesn't it?

morningstar has VUG going back to 11/2/92, which shows the following (same other two funds previously discussed, and now VUG in green):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

VUG ended higher than total stock market index fund and S&P500 index fund, but there were periods where it underperfomed both from 6/3/2003 until 6/30/2018 (and only briefly beating the market for a few months) before underperforming again, until 6/30/2019 where it outperformed again.

would you have held on to something that underperformed the market for 15 years, knowing all the while you could have gotten a guaranteed return of the market?

isn't the outperformance mostly attributable since 6/30/19?

will it outperform the market or underperform over the long term?

nobody knows.
NObody knows how the future 20years will be ... I am OK to bet 20% with VUG, atleast it gives better/same as VTI.
It gives better/same as VTI/VTSAX... until is doesn't. See the beginning of the graph and 2004-7.

Holding VUG over the long-term is likely OK, but if you are one to compare VUG to the total market periodically, you may find yourself switching positions at inopportune times.
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
000
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Re: My four plan vanguard portfolio !

Post by 000 »

What is VNG?
User avatar
arcticpineapplecorp.
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Re: My four plan vanguard portfolio !

Post by arcticpineapplecorp. »

Robert20 wrote: Tue Sep 15, 2020 9:41 pm
arcticpineapplecorp. wrote: Tue Sep 15, 2020 9:02 pm
Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
PUSH?

or DRAG?

Depends on the time period, doesn't it?

morningstar has VUG going back to 11/2/92, which shows the following (same other two funds previously discussed, and now VUG in green):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

VUG ended higher than total stock market index fund and S&P500 index fund, but there were periods where it underperfomed both from 6/3/2003 until 6/30/2018 (and only briefly beating the market for a few months) before underperforming again, until 6/30/2019 where it outperformed again.

would you have held on to something that underperformed the market for 15 years, knowing all the while you could have gotten a guaranteed return of the market?

isn't the outperformance mostly attributable since 6/30/19?

will it outperform the market or underperform over the long term?

nobody knows.
NObody knows how the future 20years will be ... I am OK to bet 20% with VUG, atleast it gives better/same as VTI.
better/same...or worse as the chart showed at times. you should not just assume better/same, but also be prepared for "or worse".

And to the OP, what is VNG?
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
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CyclingDuo
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Re: My four plan vanguard portfolio !

Post by CyclingDuo »

livesoft wrote: Tue Sep 15, 2020 8:11 am I have a question for the OP: Now that you are using ETFs, what are doing (or are going to do) with the leftover cash bit that is not enough to buy a full share of the ETF?

Example: You have $200 in your account and buy one share VTI for $172 leaving $28. What are you going to do with the $28?
Same as individual stocks, the brokerages allow fractional share DRIP investing to reinvest the quarterly dividends into your ETF's.

CyclingDuo
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anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
Why not VGT? it has a low overlapp with VTI and that way I can focus on growth with long term dividend yeild in the long run? I feel its a stronger market long run that VUG? thoughts?
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anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

arcticpineapplecorp. wrote: Tue Sep 15, 2020 8:52 pm
anaelmasri wrote: Tue Sep 15, 2020 6:22 am I read alot of VTI and VXUS . for some reason as how the SPY in a way is the pulse of the market, adding a percentage to the VOO even if lower is a smart idea to double on the same horse while also diversifiying with the VTI and VXUS , maybe get in 2 percent or so BND to help diversify more. I feel adding VTI and VOO together isnt a disadvantage per say given the historical numbers. I get VTI represents the whole market and diversified, but owning a portfolio focusing on blue chips as well as tech adds more to the pile.

is there a negative obvious reason why one should invest a little in both for the long run?
below is a chart back to inception of total stock market index fund 4/27/1992. I'm using the funds instead of the ETFs because the funds started earlier than ETFs. The funds are comparable, however to the ETFs. VTSAX (total stock market, comparable to VTI, in blue below) goes back to 4/27/1992. VFIAX (S&P500 index fund, comparable to VOO, in orange below) goes back further (8/31/1976) but we can't compare them before 4/27/1992.

What do you notice between the two below? Which did better? Is there a significant difference between the two? Is there any advantage to hold both VTI and VOO? Which is more representative of the total market?

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
I see the overlap and have researched it, I felt more its compounding more of the same company in two different etfs which long run brings more shares. but I see the huge disadvatnage of diversification, thats why I feel VGT can be a good tech alternative that doesnt overlap as much, for addition to VTI and VXUS as opposed to VNQ or VHT. long term that is
Last edited by anaelmasri on Wed Sep 16, 2020 6:30 pm, edited 1 time in total.
Topic Author
anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

arcticpineapplecorp. wrote: Tue Sep 15, 2020 9:02 pm
Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
PUSH?

or DRAG?

Depends on the time period, doesn't it?

morningstar has VUG going back to 11/2/92, which shows the following (same other two funds previously discussed, and now VUG in green):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

VUG ended higher than total stock market index fund and S&P500 index fund, but there were periods where it underperfomed both from 6/3/2003 until 6/30/2018 (and only briefly beating the market for a few months) before underperforming again, until 6/30/2019 where it outperformed again.

would you have held on to something that underperformed the market for 15 years, knowing all the while you could have gotten a guaranteed return of the market?

isn't the outperformance mostly attributable since 6/30/19?

will it outperform the market or underperform over the long term?

nobody knows.
great point, given the track record of the 15 years it just doesnt make sense to bet on VUG
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Re: My four plan vanguard portfolio !

Post by Doctor Rhythm »

anaelmasri wrote: Tue Sep 15, 2020 3:49 am I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM ...
Picking individual stocks as a part of your investment strategy is generally discouraged here. If you’re wealthy enough to have “play money” that can be lost without financial consequences and enjoy the excitement of volatility, you could dabble in it. It’s not a part of a strategy in that case; it’s just an often expensive, though occasionally profitable, hobby. Stick with broad index funds for strategy.
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anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

Doctor Rhythm wrote: Wed Sep 16, 2020 6:56 pm
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM ...
Picking individual stocks as a part of your investment strategy is generally discouraged here. If you’re wealthy enough to have “play money” that can be lost without financial consequences and enjoy the excitement of volatility, you could dabble in it. It’s not a part of a strategy in that case; it’s just an often expensive, though occasionally profitable, hobby. Stick with broad index funds for strategy.
I read about bogle recommending at most 5% in stocks if feasible so I am thinking why not?
also it is amazing to me how many people oppose before voo and vti , which I get the overlap, but I have seen alot of portfolios that have both. and if i had a vfiax in one retirement account and vtsax in another then wouldnt that overlap either way/? but still generate profits seperately?
Image
snailderby
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Re: My four plan vanguard portfolio !

Post by snailderby »

anaelmasri wrote: Fri Sep 18, 2020 12:40 amI read about bogle recommending at most 5% in stocks if feasible so I am thinking why not?
As far as I know, Bogle didn't encourage investors to buy individual stocks, as much as he discouraged them from holding more than 5% in individual stocks, if they wanted to gamble a portion of their money.

Why do you want to hold individual stocks? For the education? Because you enjoy gambling? Or for some other reason?
anaelmasri wrote: Fri Sep 18, 2020 12:40 amalso it is amazing to me how many people oppose before voo and vti , which I get the overlap, but I have seen alot of portfolios that have both. and if i had a vfiax in one retirement account and vtsax in another then wouldnt that overlap either way/? but still generate profits seperately?
Image
There's nothing wrong with holding both VOO and VTI. It's just completely unnecessary, unless you only have access to one fund in one of your accounts. But hey, if you want to increase the complexity of your portfolio for the fun of it, it's your time, not mine.

The portfolio image you posted doesn't hold both VOO and VTI. It holds U.S. large cap stocks, U.S. small cap stocks, international stocks, and U.S. bonds.
Last edited by snailderby on Fri Sep 18, 2020 12:39 pm, edited 1 time in total.
Doctor Rhythm
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Re: My four plan vanguard portfolio !

Post by Doctor Rhythm »

anaelmasri wrote: Fri Sep 18, 2020 12:40 am
Doctor Rhythm wrote: Wed Sep 16, 2020 6:56 pm
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM ...
Picking individual stocks as a part of your investment strategy is generally discouraged here. If you’re wealthy enough to have “play money” that can be lost without financial consequences and enjoy the excitement of volatility, you could dabble in it. It’s not a part of a strategy in that case; it’s just an often expensive, though occasionally profitable, hobby. Stick with broad index funds for strategy.
I read about bogle recommending at most 5% in stocks if feasible so I am thinking why not?
also it is amazing to me how many people oppose before voo and vti , which I get the overlap, but I have seen alot of portfolios that have both. and if i had a vfiax in one retirement account and vtsax in another then wouldnt that overlap either way/? but still generate profits seperately?
Image
I think I may have already advised this in another thread you started, but don’t make things complicated - especially if you’re new to investing and don’t know what you’re doing. BTW, the pie chart portfolio you show is heavily tilted towards smaller companies - you’ve overweighted them by over 100%. In contrast, your earlier proposed VOO+VTI portfolio overweights large companies. What’s your actual long term strategy?
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

Doctor Rhythm wrote: Fri Sep 18, 2020 12:27 pm
anaelmasri wrote: Fri Sep 18, 2020 12:40 am
Doctor Rhythm wrote: Wed Sep 16, 2020 6:56 pm
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM ...
Picking individual stocks as a part of your investment strategy is generally discouraged here. If you’re wealthy enough to have “play money” that can be lost without financial consequences and enjoy the excitement of volatility, you could dabble in it. It’s not a part of a strategy in that case; it’s just an often expensive, though occasionally profitable, hobby. Stick with broad index funds for strategy.
I read about bogle recommending at most 5% in stocks if feasible so I am thinking why not?
also it is amazing to me how many people oppose before voo and vti , which I get the overlap, but I have seen alot of portfolios that have both. and if i had a vfiax in one retirement account and vtsax in another then wouldnt that overlap either way/? but still generate profits seperately?
Image
I think I may have already advised this in another thread you started, but don’t make things complicated - especially if you’re new to investing and don’t know what you’re doing. BTW, the pie chart portfolio you show is heavily tilted towards smaller companies - you’ve overweighted them by over 100%. In contrast, your earlier proposed VOO+VTI portfolio overweights large companies. What’s your actual long term strategy?
Well by that definition when it’s a vt and vgt with under 30 percent overlap is that a bad structure to have ? I am about the three core portfolio but want one more etf but not matter what you try to diversify there will be some overlapping
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Re: My four plan vanguard portfolio !

Post by Doctor Rhythm »

Adding VGT to VTI reduces diversification.
snailderby
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Re: My four plan vanguard portfolio !

Post by snailderby »

anaelmasri wrote: Sun Sep 20, 2020 5:01 amI am about the three core portfolio but want one more etf but not matter what you try to diversify there will be some overlapping
Why do you want to add one more ETF? VTI + VXUS together already cover most of the investable global stock market.

The three-fund portfolio is not the only way to go. But if your goal is to increase diversification, you would be better off adding treasury bonds (and possibly small-cap value stocks, TIPS, gold, or commodities, depending on who you talk to on this forum), rather than overweighting the same large tech companies that already make up a significant portion of VTI. That would spread out your bets, so to speak, rather than betting most of your money on the same companies.

More funds ≠ more diversification.
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

snailderby wrote: Mon Sep 21, 2020 8:51 am
anaelmasri wrote: Sun Sep 20, 2020 5:01 amI am about the three core portfolio but want one more etf but not matter what you try to diversify there will be some overlapping
Why do you want to add one more ETF? VTI + VXUS together already cover most of the investable global stock market.

The three-fund portfolio is not the only way to go. But if your goal is to increase diversification, you would be better off adding treasury bonds (and possibly small-cap value stocks, TIPS, gold, or commodities, depending on who you talk to on this forum), rather than overweighting the same large tech companies that already make up a significant portion of VTI. That would spread out your bets, so to speak, rather than betting most of your money on the same companies.

More funds ≠ more diversification.
how about high dividend individual stocks like a KO or JNJ to buy and hold with VTI VXUS and small percentage of bonds - better than a VYM for example? to build dividends with time?
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Re: My four plan vanguard portfolio !

Post by KingRiggs »

SIMPLICITY :sharebeer
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jibantik
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Re: My four plan vanguard portfolio !

Post by jibantik »

Your plan is too complicated and arbitrary. Just invest market weight and be done. Trust me, you cannot predict anything with accuracy enough where 5% between any various funds is a decision you need to make.
snailderby
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Re: My four plan vanguard portfolio !

Post by snailderby »

anaelmasri wrote: Tue Sep 22, 2020 2:43 am how about high dividend individual stocks like a KO or JNJ to buy and hold with VTI VXUS and small percentage of bonds - better than a VYM for example? to build dividends with time?
Again, what's your goal? Maximum diversification? Dividends? Something else?

On dividend investing, see viewtopic.php?t=274340 and viewtopic.php?t=296292.
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anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

I am not trying to predict nor beat the market. By default investing in VTI and VXUS makes it seem pointless to invest in anything else cause everything will overlap to some degree. now I want to add BND small percentage given my age bracket and maybe some other indvidual stocks in HEALTH or CONSUMER INDUSTRY or TELECOMMUNICATION to diversify - yet everything I read makes me feel its pointless to bother investing beyond VTI and VXUS together.
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Re: My four plan vanguard portfolio !

Post by sycamore »

anaelmasri wrote: Tue Sep 22, 2020 6:24 pm I am not trying to predict nor beat the market. By default investing in VTI and VXUS makes it seem pointless to invest in anything else cause everything will overlap to some degree. now I want to add BND small percentage given my age bracket and maybe some other indvidual stocks in HEALTH or CONSUMER INDUSTRY or TELECOMMUNICATION to diversify - yet everything I read makes me feel its pointless to bother investing beyond VTI and VXUS together.
Sticking to Total Stock Market (for US and Intl) is a very good idea for the stock part of your portfolio.

It's not surprising you're hearing it's pointless to do otherwise -- consider one of the points from the Bogleheads' Investment Philosophy: Invest with simplicity.

Adding more funds or individual stocks makes your investing life more complex - sometimes you'll wonder if you have enough in that fund, at other times you'll think there's not enough. Or maybe you want to get rid of that Health sector fund because it's performed terribly compared to some other sector. You'll be in a perpetual guessing game, leaving you exposed to behavioral mistakes like overreacting to a bear market or trying to time the market.

That said, not everyone here thinks it's pointless to invest outside of VTI and VXUS. For example, fans of "factor investing" feel that it can provide exposure to different kinds of risk (not just "beta" and not just measured by volatility) and/or allows for a portfolio with less exposure to stocks but similar "expected return." But even the factor fans here will discourage anyone from trying it if you don't understand factor investing or can't stick with it for a potentially LONG period of time (decades).

And of course there are the "play money" folks who will take 1 or 2% of their portfolio (typically no more than 5%) and invest in individual stocks or sector funds or the like. As long as you know in a downturn those investments could lose more than Total Stock Market.

Personally I encourage to stick with a simple plan like the 3-funder before even considering a new fund. You should be able to clearly explain why such a fund is needed, how the fund solves the problem, what the pros & cons are, how the fund fits into you IPS, etc. before buying a new fund.
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Re: My four plan vanguard portfolio !

Post by bertilak »

Lou354 wrote: Tue Sep 15, 2020 7:35 am There’s not much difference in performance between S&P 500 and Total US market. So I wouldn’t bother with both, except perhaps as a partner if you want to do tax-loss harvesting at some point in the future.
And in that case you would be holding only one or the other at any point in time.

TSM and S&P500 are excellent TLH swapping partners. But you can't swap if you hold both!
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