Requesting your advice about investing in VTI

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Topic Author
johnkgan
Posts: 82
Joined: Sun Jun 03, 2018 9:43 am

Requesting your advice about investing in VTI

Post by johnkgan »

I request your advice:
I am 25 and have been investing savings meant for long-term (10 years) in VTI . I have emergency funds.
I am planning to invest a bit more money that I recently received, but noticed VTI going down due to interest rate increase, inflation etc. recently.
My portfolio is negative, but I understand that my investments are long term and that I need to be patient with short term ups and downs. I am not panicking, but wondering if you advise continuing to invest my new savings in VTI or VOO or would you recommend any other funds such as TIPS or anything else? I have already invested 10k for this year in i-bond.

Just an article I came across:
https://seekingalpha.com/article/453658 ... ext-decade
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retired@50
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Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Requesting your advice about investing in VTI

Post by retired@50 »

A couple thoughts come to mind...

1. Don't read Seeking Alpha.
2. If you happen to believe in the PE valuation argument (mentioned in the linked article), then buy some VXUS. It's current PE is a touch over 11.

Source: https://www.morningstar.com/etfs/xnas/vxus/portfolio

Regards,
Last edited by retired@50 on Wed Sep 21, 2022 8:14 pm, edited 1 time in total.
This is one person's opinion. Nothing more.
mcdonaldj1
Posts: 4
Joined: Tue Dec 31, 2019 9:36 am

Re: Requesting your advice about investing in VTI

Post by mcdonaldj1 »

Fair question, understand your concern - seeing prices go down are brutal but all part of the cycle.

I recommend you put it in VTI and let it grind away, reinvesting the dividends along the way. What happens if you lock your money in for a year and VTI price goes up? You've lost a chance at a discounted price.

I'm personally 37 and 100% stock. I keep putting money into VTI and forgo iBonds since my gut tells me letting that money churn will be the better investment. Discounted prices are a huge gift to you in your 20s. These are the best investments you'll make.

Just my two cents.
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arcticpineapplecorp.
Posts: 11091
Joined: Tue Mar 06, 2012 9:22 pm

Re: Requesting your advice about investing in VTI

Post by arcticpineapplecorp. »

i would recommend determining what portfolio you want to hold and then just hold it. A portfolio is not meant to be changed everytime something happens exogenously (inflation, deflation, recession, and so on). Otherwise you'll be constantly tinkering with your portfolio and it's been said that a portfolio is like a wet bar of soap; the more you handle it, the smaller it gets.

here's 150 portfolios to choose from:
https://www.whitecoatinvestor.com/150-p ... han-yours/

whatever you pick, you've got to stick with it. If you don't, you won't get the returns you should.

i suggest you read the following:
Getting Started
and
Bogleheads Investment Philosophy

but definitely these:
Never Try to Time the Market, Stay The Course

Develop a workable plan, Never Bear too much or too little risk

And read this:

How much risk do you need to take: https://www.cbsnews.com/news/asset-allo ... -you-need/
How much risk do you have the ability to take: https://www.cbsnews.com/news/asset-allo ... -you-take/
How much risk do you have the willingness to take: https://www.cbsnews.com/news/asset-allo ... tolerance/
How to deal with conflicts between the need, ability and willingness to take risk: https://www.cbsnews.com/news/asset-allo ... ing-goals/
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
dbr
Posts: 42508
Joined: Sun Mar 04, 2007 9:50 am

Re: Requesting your advice about investing in VTI

Post by dbr »

I would recommend going to getting started in the Wiki and reading systematically about investing: https://www.bogleheads.org/wiki/Getting_started

Investing is a long game that involves understanding what you are trying to do and having a plan to do it.

What investing is not is picking and changing this fund or that fund because something has gone up or gone down.
mhalley
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Joined: Tue Nov 20, 2007 6:02 am

Re: Requesting your advice about investing in VTI

Post by mhalley »

You were happy to buy vti at x price, and you can now get it on sale for y% off. Who doesn’t like to buy things on sale?
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arcticpineapplecorp.
Posts: 11091
Joined: Tue Mar 06, 2012 9:22 pm

Re: Requesting your advice about investing in VTI

Post by arcticpineapplecorp. »

if stocks are on sale now, why don't you want to buy things that are on sale?

would it be better to wait for the market to go back up and then buy VTI/VOO when the prices are higher than they are today?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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Billy C
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Re: Requesting your advice about investing in VTI

Post by Billy C »

Yes, absolutely!

Being so young (great job by the way!) you will benefit enormously by the current market decline. That enables you to purchase shares at a much lower price. That’s the best way to accumulate wealth.

Ignore the loss in value of your portfolio. It will become a meaningless blip over time as you continue to invest. Think long-term (decades) and where you want to be when you are 50 or 60.

This may sound counterintuitive, but it really is true.

Stay the course, embrace market declines for the gift they are during your early accumulation phase, dollar-cost average regularly into VTI, and don’t peek at your portfolio. Put it on autopilot as much as you can and forget it and I’m sure you will be successful.

On a personal note, I would be 100% equities (with a cash emergency fund) at your age and forget I-bonds, but that depends on your risk tolerance.
“When there are multiple solutions to a problem, choose the simplest one.” ― John C. Bogle
Topic Author
johnkgan
Posts: 82
Joined: Sun Jun 03, 2018 9:43 am

Re: Requesting your advice about investing in VTI

Post by johnkgan »

Thank you all very much! Your advice is very helpful.
retiringwhen
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Joined: Sat Jul 08, 2017 10:09 am
Location: New Jersey, USA

Re: Requesting your advice about investing in VTI

Post by retiringwhen »

I have kids roughly your age. My advice is consistent regardless of the market. Just keep buying every two weeks (or whenever you get paid).

If you must watch closely, cheer when the market is down because you are getting a discount. It is most likely that 40 years from now, you will be very very satisfied with the money you put in during 2022. It may in fact be the best returns you will likely receive in your entire life. I know 1987 was for me.

The best solution is to stop looking more than once a quarter, especially at your age. The timeframe for funds going into long-term investing is decades, peeking too often is just hard on the psyche.

BTW, you make an aside about 10 years as long term. That in fact, is not all that long, do you have specific goals in 10 years? If so, you may need to revisit your asset allocation. That is beyond the scope of the question you posted, but it may be very important. If you have a 10 year goal like buying a house, then 100% stocks may not be the right answer. You would need to provide more detail on your goals to get actionable feedback from the forum.
dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: Requesting your advice about investing in VTI

Post by dbr »

retiringwhen wrote: Thu Sep 22, 2022 8:39 am
BTW, you make an aside about 10 years as long term. That in fact, is not all that long, do you have specific goals in 10 years? If so, you may need to revisit your asset allocation. That is beyond the scope of the question you posted, but it may be very important. If you have a 10 year goal like buying a house, then 100% stocks may not be the right answer. You would need to provide more detail on your goals to get actionable feedback from the forum.
I agree with this.

At age 25 long term is about 75 years. It can be more if you have some objectives to pass money to your children, failing any specific short term objective.

As far as conventional language goes 10 years is conventionally intermediate term and long term is perhaps 20 and more years.
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ruralavalon
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Location: Illinois

Re: Requesting your advice about investing in VTI

Post by ruralavalon »

Welcome to the forum :D .

It's great to see that you are starting young, using a very diversified index fund with a very low expense ratio and I-bonds.

johnkgan wrote: Wed Sep 21, 2022 7:52 pm I request your advice:
I am 25 and have been investing savings meant for long-term (10 years) in VTI . I have emergency funds.
I am planning to invest a bit more money that I recently received, but noticed VTI going down due to interest rate increase, inflation etc. recently.
My portfolio is negative, but I understand that my investments are long term and that I need to be patient with short term ups and downs. I am not panicking, but wondering if you advise continuing to invest my new savings in VTI or VOO or would you recommend any other funds such as TIPS or anything else? I have already invested 10k for this year in i-bond.

Just an article I came across:
https://seekingalpha.com/article/453658 ... ext-decade
Stop reading seekingalpha, read Bogleheads® investment philosophy.

What sort of account are you using (IRA or taxable brokerage)?

Stocks are on sale. Buy more stocks, Vanguard Total Stock Market ETF (VTI), while stocks are down.

Consider buying some international stocks, such as Vanguard Total International Stock ETF (VXUS).

Is there a plan offered at work like a 401k, 403b, 457b, SEP IRA, SIMPLE IRA, or TSP? If so do you contribute, how much, what funds are offered in the plan and what funds do you use?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
invest4
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Joined: Wed Apr 24, 2019 2:19 am

Re: Requesting your advice about investing in VTI

Post by invest4 »

Billy C wrote: Wed Sep 21, 2022 8:09 pm ...you will benefit enormously by the current market decline. T

...Ignore the loss in value of your portfolio. It will become a meaningless blip over time as you continue to invest. Think long-term (decades) and where you want to be when you are 50 or 60.

Stay the course, embrace market declines for the gift they are during your early accumulation phase, dollar-cost average regularly into VTI, and don’t peek at your portfolio. Put it on autopilot as much as you can and forget it and I’m sure you will be successful.

On a personal note, I would be 100% equities (with a cash emergency fund) at your age and forget I-bonds, but that depends on your risk tolerance.
Yes.

@OP

In regard to I-Bonds, I would only invest if you think you really want to build them up consistently each year for the long term (get educated and take a decision). Otherwise, you are simply chasing the current interest rate with an amount that doesn't move the needle in your portfolio and eventually disappointed when the rate goes away as inflation gets under control and you sell and find something else. A lot of needless maneuvering for minimal gain imho.

Also, if you see a significant decline in equities (50% for example)...seriously consider converting your existing investments to Roth. During the Great Financial Crisis, I never really thought to do this...would have been wonderful to do so (in hindsight). Just sharing as something to be aware of.
Topic Author
johnkgan
Posts: 82
Joined: Sun Jun 03, 2018 9:43 am

Re: Requesting your advice about investing in VTI

Post by johnkgan »

Thanks a lot again. I appreciate all the fantastic advice which is making me think better.

To be honest, I am not yet clear about my financial goals. I expect the usual expenses such as buying a house but not sure when as I have not settled yet in my career nor in my life. I thought about investing some in bonds (AGG) but I understood from the advice I got that it may not be necessary to do that at my age as the returns may be low. I also considered putting it as downpayment for real estate as investment property. But I do understand that it is hard to maintain the tenants, etc. so I landed up opting for VTI as 100% of my portfolio (for long-term savings) so far for now as that was easier. :)
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