Any reason not to stuff it all into VTSAX?

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KlangFool
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Re: Any reason not to stuff it all into VTSAX?

Post by KlangFool »

YeahBuddy wrote: Mon Dec 25, 2023 8:16 am
Plus whatever unemployment pays. I believe it's something like 50% of my pay up to $1,000 per week. That's hardly a doomsday situation in which I would need piles of cash. Merry Christmas :D
YeahBuddy,

Which state are you in? Not saying that you could be wrong. But, in my state of Virginia, the maximum benefit is capped at around 10K spread across 26 weeks.

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Re: Any reason not to stuff it all into VTSAX?

Post by tibbitts »

YeahBuddy wrote: Mon Dec 25, 2023 8:16 am I disagree but I'll move on to my point that it makes no sense to me to hoard cash that will make 0 or a low % when I can easily tap into multiple other accounts that are making 20%+. And in a true emergency, my entire portfolio becomes my EF. Plus whatever unemployment pays. I believe it's something like 50% of my pay up to $1,000 per week. That's hardly a doomsday situation in which I would need piles of cash. Merry Christmas :D
The thread is about 100% VTSAX (or other varieties of 100% U.S. market equities), though... not "other accounts that are making 20%+." Maybe you have some other highly non-correlated investments. Although maybe not 100% reliable it would be preferable to have some typically low-correlation assets.
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Re: Any reason not to stuff it all into VTSAX?

Post by watchnerd »

YeahBuddy wrote: Mon Dec 25, 2023 8:16 am I disagree but I'll move on to my point that it makes no sense to me to hoard cash that will make 0 or a low % when I can easily tap into multiple other accounts that are making 20%+. And in a true emergency, my entire portfolio becomes my EF. Plus whatever unemployment pays. I believe it's something like 50% of my pay up to $1,000 per week. That's hardly a doomsday situation in which I would need piles of cash. Merry Christmas :D
What sort of "other accounts" do you have that are earning 20%+ that won't likely take a huge hit in the event of a major recession?
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Re: Any reason not to stuff it all into VTSAX?

Post by nisiprius »

KlangFool wrote: Mon Dec 25, 2023 8:30 am
YeahBuddy wrote: Mon Dec 25, 2023 8:16 am
Plus whatever unemployment pays. I believe it's something like 50% of my pay up to $1,000 per week. That's hardly a doomsday situation in which I would need piles of cash. Merry Christmas :D
YeahBuddy,

Which state are you in? Not saying that you could be wrong. But, in my state of Virginia, the maximum benefit is capped at around 10K spread across 26 weeks.

KlangFool
I live in a generous/HCOL state and when my employer's sales dropped 70% in late 2008 and I was let go, my unemployment benefits, the maximum at the time, were about $600/week for a limit of 6 months. Minus tax withholding. The actual statements literally showed a total of $15,600, decreasing $600 every week. That was $600/week better than nothing, but it was nothing like "50% of my pay."

One of the financial chores everyone should do is to find out how much they will receive in their state if unemployed. That's not necessarily easy to do, since it's not a topic would care to discuss with HR.
Last edited by nisiprius on Mon Dec 25, 2023 9:44 am, edited 1 time in total.
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watchnerd
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Re: Any reason not to stuff it all into VTSAX?

Post by watchnerd »

nisiprius wrote: Mon Dec 25, 2023 9:37 am I live in a generous state and when my employer's sales dropped 70% in late 2008 and I was let go, my unemployment benefits, the maximum at the time, were about $600/week for a limit of 6 months. Minus tax withholding. The actual statements literally showed a total of $15,600, decreasing $600 every week. That was $600/week better than nothing, but it was nothing like "50% of my pay."

One of the financial chores everyone should do is to find out how much they will receive in their state if unemployed. That's not necessarily easy to do, since it's not a topic would care to discuss with HR.
Here in WA state it maxes out at $1,000/week for 6 months.

So $26k, max.

It would definitely help and cover a lot of survival essentials, but's certainly a lot less than half my salary.
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Re: Any reason not to stuff it all into VTSAX?

Post by nisiprius »

(The tricky part is finding out if your employer is the decent kind who conducts severance in a way that qualifies employees for unemployment benefits, or the nasty kind who look for tricky ways to avoid that.)
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Re: Any reason not to stuff it all into VTSAX?

Post by Claudia Whitten »

Outer Marker wrote: Sun Dec 24, 2023 8:13 am I think we've gotten a little too comfortable thinking bear markets last only a few months, or at worst a few years.
So do I. And then there's the inevitable "if that happens, we'll have bigger problems to worry about." Translation: Yeah, I'm not prepared for that.
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Re: Any reason not to stuff it all into VTSAX?

Post by madbrain »

watchnerd wrote: Mon Dec 25, 2023 9:41 am Here in WA state it maxes out at $1,000/week for 6 months.
In CA, it is maxed at $450/week for 6 monthsw which is federally taxable, but not by the state. That may not even be enough to pay for COBRA for the health insurance you just lost. Essentially, net income drops to zero. I have been in this situation many times, unfortunately. And for periods longer than 6 months.
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Re: Any reason not to stuff it all into VTSAX?

Post by Durzo »

KlangFool wrote: Sat Dec 23, 2023 3:04 pm OP,

Make perfect sense until you are unemployed in the coming recession. Then, you can no longer "Sleep Well At Night" (SWAN). How long can you lasts if you can longer sleep?

On 1/1/2009, my employer laid off 50% of its employee at my location.

KlangFool
Im assumin OP means all of the 401k and Roth. Than means he will still have 170k HYSA + 40k checking + 75K T-Bonds = 285k in cash / cash equivalents. Even assuming high expenses this can be stretched out plenty in an emergency?
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Re: Any reason not to stuff it all into VTSAX?

Post by Box of Rain »

UU37CN13 wrote: Sat Dec 23, 2023 12:11 pm Makes 100% sense until 5 years out from retirement.
Wait, I am closer to retirement than that, maybe 1-2 years and my 401K is entirely in VTSAX.
Do I need to move some money out of there? I am planning that when retired I will roll out about 40% to an IRA and buy bond ladder with it. Can not buy individual bonds in my 401K even though I do have a SDB in it.
Best I can do for bonds right now is bond funds which I don't really want, but I could get some Vanguard low cost short term bond funds now.
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Re: Any reason not to stuff it all into VTSAX?

Post by KlangFool »

Durzo wrote: Mon Apr 01, 2024 6:27 am
KlangFool wrote: Sat Dec 23, 2023 3:04 pm OP,

Make perfect sense until you are unemployed in the coming recession. Then, you can no longer "Sleep Well At Night" (SWAN). How long can you lasts if you can longer sleep?

On 1/1/2009, my employer laid off 50% of its employee at my location.

KlangFool
Im assumin OP means all of the 401k and Roth. Than means he will still have 170k HYSA + 40k checking + 75K T-Bonds = 285k in cash / cash equivalents. Even assuming high expenses this can be stretched out plenty in an emergency?
Durzo,

I think your assumption is wrong. Please read OP's original post. His plan is to move everything into VTSAX except for a small emergency fund.

"Any reason not to stuff it all into VTSAX?

Other than a small emergency fund?

37 years old married with two toddlers.

$170 in HYSA, $40k in checking account.

$75k in T-bonds, $5k in taxable, $240k 401K, $37k Roth."

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Re: Any reason not to stuff it all into VTSAX?

Post by InNameOnly »

RiskAnalyst wrote: Sat Dec 23, 2023 6:41 pm
Kinkajou82 wrote: Sat Dec 23, 2023 5:44 pm Assuming a long time horizon, no debt/liabilities, sufficient "safety" plans for possible/unplanned expenses, and the intestinal fortitude to tolerate the wild swings that are occasionally expected from equities...

The thing I can think of is a hypothetical "Japan" scenario where you domestic stocks (VTSAX is US equities, right?) are negative or exhibit practically no growth for a very long stretch of time, and international equities would've been the diversifier that would've helped you out.

Edit: Also, the studies that established the 4% rule seem to show a higher SWR rate survivability at 75/25 stocks/bonds than 100/0, if that's your thing.
This is my concern as well. At the most basic level of understanding of diversification ("not putting all your eggs in one basket"), VTSAX/VTI is putting all your eggs in the U.S. basket (notwithstanding that big U.S. companies do business outside the U.S.) and none in the baskets of companies headquartered outside the U.S.

To keep the simplicity and low cost, why not just use VTWAX/VT (Vanguard Total World Stock Index Fund) instead of VTSAX/VTI?
5 year:
VTSAX up 76%
VTWAX up 48%

This isn’t recency bias, just reality bias.
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Re: Any reason not to stuff it all into VTSAX?

Post by rkhusky »

Box of Rain wrote: Mon Apr 01, 2024 7:00 am
UU37CN13 wrote: Sat Dec 23, 2023 12:11 pm Makes 100% sense until 5 years out from retirement.
Wait, I am closer to retirement than that, maybe 1-2 years and my 401K is entirely in VTSAX.
Do I need to move some money out of there? I am planning that when retired I will roll out about 40% to an IRA and buy bond ladder with it. Can not buy individual bonds in my 401K even though I do have a SDB in it.
Best I can do for bonds right now is bond funds which I don't really want, but I could get some Vanguard low cost short term bond funds now.
In what are your other accounts invested?

If you have no other significant accounts, I suppose you really don’t want to see a 50% market drop during the next few months.
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Re: Any reason not to stuff it all into VTSAX?

Post by SmileyFace »


5 year:
...

This isn’t recency ...
I suspect a lot of folks here haven't lived thru periods of mass layoffs nor long bear markets nor big double digit sustained dips.
When I see someone cite a 5 year history of returns and say it isn't "recency.." it kind of says it all.
I will stay diversified since for me - 5 years IS recent. I am in it for the long haul and know there will be wide swings and long periods of ups AND downs to weather.
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TimeIsYourFriend
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Re: Any reason not to stuff it all into VTSAX?

Post by TimeIsYourFriend »

There was already a lost decade for VTSAX and it wasn't that long ago (starting in 2000). You were underwater for nearly 6 years even with dividends reinvested, meaning that your VTSAX balance peaked and then didn't recover to the previous value for 6 long years. That's 0% return. It would be like your VTSAX peaked in April 2018 and then just now, in April 2024 has recovered to it's previous high. You know, like 2018 before Covid, meme stocks, and so on. Seems like ages ago. Can you look at your account balance for 6 years and see it look like a dead dog in that way for such as long time without thinking you should invest in this shiny other asset, whatever that is, that is having great returns? And maybe it isn't 6 years again, maybe its 8 years. Nothing is stopping that. Sure, contributions can take the sting out if you are not paying attention, but they may make little difference if your portfolio is already large.

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Re: Any reason not to stuff it all into VTSAX?

Post by radiowave »

OP, my "go to" fund for my taxable account has been VTSAX. I'm in early retirement now, and harvesting the growth from this fund. However, with so much long term gains, I now have to navigate capital gains tax. Have been successful keeping it under the threshold with 0 tax so far but that is at the expense of pushing back SS (just started last year) so keeping under the 15% capital gains bracket is even harder. I have RMDs in 4 years so this is the sweet spot right now to harvest gains.
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Re: Any reason not to stuff it all into VTSAX?

Post by JoeNJ28 »

Claudia Whitten wrote: Mon Apr 01, 2024 5:21 am
Outer Marker wrote: Sun Dec 24, 2023 8:13 am I think we've gotten a little too comfortable thinking bear markets last only a few months, or at worst a few years.
So do I. And then there's the inevitable "if that happens, we'll have bigger problems to worry about." Translation: Yeah, I'm not prepared for that.
This entire country is supported by the stock market if we go into a bear market for years yes we have bigger problems to worry about. Pension systems aren’t prepared for that, 401ks aren’t prepared for that.
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Re: Any reason not to stuff it all into VTSAX?

Post by InNameOnly »

SmileyFace wrote: Mon Apr 01, 2024 7:29 am

5 year:
...

This isn’t recency ...
I suspect a lot of folks here haven't lived thru periods of mass layoffs nor long bear markets nor big double digit sustained dips.
When I see someone cite a 5 year history of returns and say it isn't "recency.." it kind of says it all.
I will stay diversified since for me - 5 years IS recent. I am in it for the long haul and know there will be wide swings and long periods of ups AND downs to weather.
Your suspicion is incorrect.

VTWAX only has a 5 year history, the world market has trailed the US market much longer…

I’m 71, retired with 30+ years in the market. Never lost a minutes sleep through the 2000 tech bubble, 911 (due to markets away), 2008 crash or whatever one calls the markets the last few years with a world wide pandemic. I was 95% equity till nearing retirement in 2019. Today I’m 5 years into retirement and sleeping well with 75/20/5, Total US Market Index Fund/fixed income/Cash in HYSA.

100% Total Market Index Fund at the OP’s age is a walk in the park.

***edited for typo***
Last edited by InNameOnly on Mon Apr 01, 2024 6:51 pm, edited 1 time in total.
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Re: Any reason not to stuff it all into VTSAX?

Post by Johm221122 »

InNameOnly wrote: Mon Apr 01, 2024 7:19 am
RiskAnalyst wrote: Sat Dec 23, 2023 6:41 pm
Kinkajou82 wrote: Sat Dec 23, 2023 5:44 pm Assuming a long time horizon, no debt/liabilities, sufficient "safety" plans for possible/unplanned expenses, and the intestinal fortitude to tolerate the wild swings that are occasionally expected from equities...

The thing I can think of is a hypothetical "Japan" scenario where you domestic stocks (VTSAX is US equities, right?) are negative or exhibit practically no growth for a very long stretch of time, and international equities would've been the diversifier that would've helped you out.

Edit: Also, the studies that established the 4% rule seem to show a higher SWR rate survivability at 75/25 stocks/bonds than 100/0, if that's your thing.
This is my concern as well. At the most basic level of understanding of diversification ("not putting all your eggs in one basket"), VTSAX/VTI is putting all your eggs in the U.S. basket (notwithstanding that big U.S. companies do business outside the U.S.) and none in the baskets of companies headquartered outside the U.S.

To keep the simplicity and low cost, why not just use VTWAX/VT (Vanguard Total World Stock Index Fund) instead of VTSAX/VTI?
5 year:
VTSAX up 76%
VTWAX up 48%

This isn’t recency bias, just reality bias.
No these are past returns
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Re: Any reason not to stuff it all into VTSAX?

Post by KlangFool »

JoeNJ28 wrote: Mon Apr 01, 2024 7:45 am
Claudia Whitten wrote: Mon Apr 01, 2024 5:21 am
Outer Marker wrote: Sun Dec 24, 2023 8:13 am I think we've gotten a little too comfortable thinking bear markets last only a few months, or at worst a few years.
So do I. And then there's the inevitable "if that happens, we'll have bigger problems to worry about." Translation: Yeah, I'm not prepared for that.
This entire country is supported by the stock market if we go into a bear market for years yes we have bigger problems to worry about. Pension systems aren’t prepared for that, 401ks aren’t prepared for that.
JoeNJ28,

1) But, if the person cannot at least survive/prepare for 2 years, the market recovers in 3 years does not help the person.

2) This country had been through long bear market before. And, just like before, unprepared folks do not survive. But, the country moved on.

3) I am prepared. I planned to outlast most people.

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Re: Any reason not to stuff it all into VTSAX?

Post by FrugalInvestor »

StevieG72 wrote: Sat Dec 23, 2023 6:39 pm If you can stomach the dips and will not panic sell, there is nothing wrong with going all in on VTSAX.
The problem is that you don't know what you're emotions will lead you to do until a black swan event occurs and you react. Having a plan including at least a small percentage of bonds can ease your nerves and help you stay the course during those times.
Have a plan, stay the course and simplify. Then ignore the noise!
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Re: Any reason not to stuff it all into VTSAX?

Post by SmileyFace »

InNameOnly wrote: Mon Apr 01, 2024 7:49 am
SmileyFace wrote: Mon Apr 01, 2024 7:29 am

5 year:
...

This isn’t recency ...
I suspect a lot of folks here haven't lived thru periods of mass layoffs nor long bear markets nor big double digit sustained dips.
When I see someone cite a 5 year history of returns and say it isn't "recency.." it kind of says it all.
I will stay diversified since for me - 5 years IS recent. I am in it for the long haul and know there will be wide swings and long periods of ups AND downs to weather.
Your suspension is incorrect.
I am not sure what you mean by my suspension is incorrect - I didn't want to argue over a particular strategy nor set of short term returns.
I was merely pointing out that everytime this argument comes up about 100% equities - it is often driven by folks that haven't lived thru long bear markets.
5 years is NOT a long invesment horizon. I found citing 5 year return comparisons and claiming it not to be recency bias somewhat ironic.
Last edited by SmileyFace on Mon Apr 01, 2024 8:08 am, edited 1 time in total.
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Re: Any reason not to stuff it all into VTSAX?

Post by Johm221122 »

JoeNJ28 wrote: Mon Apr 01, 2024 7:45 am
Claudia Whitten wrote: Mon Apr 01, 2024 5:21 am
Outer Marker wrote: Sun Dec 24, 2023 8:13 am I think we've gotten a little too comfortable thinking bear markets last only a few months, or at worst a few years.
So do I. And then there's the inevitable "if that happens, we'll have bigger problems to worry about." Translation: Yeah, I'm not prepared for that.
This entire country is supported by the stock market if we go into a bear market for years yes we have bigger problems to worry about. Pension systems aren’t prepared for that, 401ks aren’t prepared for that.
You don't remember 2000 to 2010?
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SmileyFace
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Re: Any reason not to stuff it all into VTSAX?

Post by SmileyFace »

InNameOnly wrote: Mon Apr 01, 2024 7:49 am
100% Total Market Index Fund at the OP’s age is a walk in the park.
Maybe, maybe not - it depends.
There have been a lot of posts over the years whereby folks go all in then go all out when the market drops.
Losing 50% of one's lifetime savings isn't considered a walk in the park by everyone.
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Re: Any reason not to stuff it all into VTSAX?

Post by Parkinglotracer »

I never see these type of posts when the market is at recent lows. Maybe dollar cost average in and keep some in CDs and bonds so you are able to stay the course.
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Re: Any reason not to stuff it all into VTSAX?

Post by InNameOnly »

SmileyFace wrote: Mon Apr 01, 2024 8:13 am
InNameOnly wrote: Mon Apr 01, 2024 7:49 am
100% Total Market Index Fund at the OP’s age is a walk in the park.
Maybe, maybe not - it depends.
There have been a lot of posts over the years whereby folks go all in then go all out when the market drops.
Losing 50% of one's lifetime savings isn't considered a walk in the park by everyone.
I hear what you are saying, yet I’ve never understood that reaction.

Maybe I’m just not wired that way, but I’ve never entertained the idea of selling when the market dips, crashes, etc. Whatever ever fear porn news chooses to call the event to sell their marketed space that day, be it paper, airwaves or digital screens.
The realist sees the glass as completely full, 50% water and 50% air.
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Re: Any reason not to stuff it all into VTSAX?

Post by Claudia Whitten »

JoeNJ28 wrote: Mon Apr 01, 2024 7:45 am
Claudia Whitten wrote: Mon Apr 01, 2024 5:21 am
Outer Marker wrote: Sun Dec 24, 2023 8:13 am I think we've gotten a little too comfortable thinking bear markets last only a few months, or at worst a few years.
So do I. And then there's the inevitable "if that happens, we'll have bigger problems to worry about." Translation: Yeah, I'm not prepared for that.
This entire country is supported by the stock market if we go into a bear market for years yes we have bigger problems to worry about. Pension systems aren’t prepared for that, 401ks aren’t prepared for that.
So I take that you're one of the "we'll have bigger problems to worry about" types. Okay.

I guess in 1929 they had "bigger problems to worry about," but somehow people made it, or we wouldn't be here.

In any bear market, there are those who are prepared and those who are not prepared. Don't kid yourself into believing that it's okay to be unprepared because "everyone else will be, too." That ain't true.
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Re: Any reason not to stuff it all into VTSAX?

Post by SmileyFace »

Claudia Whitten wrote: Mon Apr 01, 2024 9:55 am
JoeNJ28 wrote: Mon Apr 01, 2024 7:45 am
Claudia Whitten wrote: Mon Apr 01, 2024 5:21 am
Outer Marker wrote: Sun Dec 24, 2023 8:13 am I think we've gotten a little too comfortable thinking bear markets last only a few months, or at worst a few years.
So do I. And then there's the inevitable "if that happens, we'll have bigger problems to worry about." Translation: Yeah, I'm not prepared for that.
This entire country is supported by the stock market if we go into a bear market for years yes we have bigger problems to worry about. Pension systems aren’t prepared for that, 401ks aren’t prepared for that.
So I take that you're one of the "we'll have bigger problems to worry about" types. Okay.

I guess in 1929 they had "bigger problems to worry about," but somehow people made it, or we wouldn't be here.

In any bear market, there are those who are prepared and those who are not prepared. Don't kid yourself into believing that it's okay to be unprepared because "everyone else will be, too." That ain't true.
Agree. It's kind of like saying "Well, a Hurricane might be coming - but I am not going to prepare my house for it because if it really hits this area of the country there will be bigger things to worry about". It doesn't make sense - we should all prepare for ourselves.
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Re: Any reason not to stuff it all into VTSAX?

Post by rkhusky »

InNameOnly wrote: Mon Apr 01, 2024 8:30 am
SmileyFace wrote: Mon Apr 01, 2024 8:13 am
InNameOnly wrote: Mon Apr 01, 2024 7:49 am
100% Total Market Index Fund at the OP’s age is a walk in the park.
Maybe, maybe not - it depends.
There have been a lot of posts over the years whereby folks go all in then go all out when the market drops.
Losing 50% of one's lifetime savings isn't considered a walk in the park by everyone.
I hear what you are saying, yet I’ve never understood that reaction.

Maybe I’m just not wired that way, but I’ve never entertained the idea of selling when the market dips, crashes, etc. Whatever ever fear porn news chooses to call the event to sell their marketed space that day, be it paper, airwaves or digital screens.
It’s not necessarily that you will panic sell, but that you might have been looking forward to retiring in a couple years with a $1M in the bank. Now you have $500K in the bank and looking at having to work for another 5-10 years or cut your retirement spending in half. Of course, if you’re rich and have twice as you need in the bank, then no worries.
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Re: Any reason not to stuff it all into VTSAX?

Post by TimeIsYourFriend »

Claudia Whitten wrote: Mon Apr 01, 2024 9:55 am
JoeNJ28 wrote: Mon Apr 01, 2024 7:45 am
Claudia Whitten wrote: Mon Apr 01, 2024 5:21 am
Outer Marker wrote: Sun Dec 24, 2023 8:13 am I think we've gotten a little too comfortable thinking bear markets last only a few months, or at worst a few years.
So do I. And then there's the inevitable "if that happens, we'll have bigger problems to worry about." Translation: Yeah, I'm not prepared for that.
This entire country is supported by the stock market if we go into a bear market for years yes we have bigger problems to worry about. Pension systems aren’t prepared for that, 401ks aren’t prepared for that.
So I take that you're one of the "we'll have bigger problems to worry about" types. Okay.

I guess in 1929 they had "bigger problems to worry about," but somehow people made it, or we wouldn't be here.

In any bear market, there are those who are prepared and those who are not prepared. Don't kid yourself into believing that it's okay to be unprepared because "everyone else will be, too." That ain't true.
And Japan is still here despite the Nikkei having an incredible 30-year stock market bear market. People there still retire. They still live. They still invest for retirement. It isn't a barren wasteland.
"Time is your friend; impulse is your enemy." - John C. Bogle
tibbitts
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Re: Any reason not to stuff it all into VTSAX?

Post by tibbitts »

InNameOnly wrote: Mon Apr 01, 2024 8:30 am
SmileyFace wrote: Mon Apr 01, 2024 8:13 am
InNameOnly wrote: Mon Apr 01, 2024 7:49 am
100% Total Market Index Fund at the OP’s age is a walk in the park.
Maybe, maybe not - it depends.
There have been a lot of posts over the years whereby folks go all in then go all out when the market drops.
Losing 50% of one's lifetime savings isn't considered a walk in the park by everyone.
I hear what you are saying, yet I’ve never understood that reaction.

Maybe I’m just not wired that way, but I’ve never entertained the idea of selling when the market dips, crashes, etc. Whatever ever fear porn news chooses to call the event to sell their marketed space that day, be it paper, airwaves or digital screens.
Have you experienced losing most or all of your non-investment income at the same time the market has plunged?
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Re: Any reason not to stuff it all into VTSAX?

Post by gavinsiu »

You just need to have 6-12 months of expense in emergency fund, you can adjust it based on how quickly you can find a job. I have pretty much run a 100% stock portfolio for most of my life. The limiting factor is how sensitive you are to risk. If your portfolio loses 50% tomorrow, would you freak out and go to cash and not go back to stock? If the answer is that you know that the money is for the future and short term crash don't matter or better yet you feel that crashes are great for buying opportunities, you are a good candidate for 100% stock.

The trick is that you have to couple this with a decent contribution rate. If you are aggressive but only save 1% of your money into the market, then the aggressive stance won't help much. Save as much as you can, 15-20% to retirement, have as much stock percentage as you can stand. Stay the course for your lifetime and go more into bond 5-10 years out from retirement.
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Re: Any reason not to stuff it all into VTSAX?

Post by JoeNJ28 »

Claudia Whitten wrote: Mon Apr 01, 2024 9:55 am
JoeNJ28 wrote: Mon Apr 01, 2024 7:45 am
Claudia Whitten wrote: Mon Apr 01, 2024 5:21 am
Outer Marker wrote: Sun Dec 24, 2023 8:13 am I think we've gotten a little too comfortable thinking bear markets last only a few months, or at worst a few years.
So do I. And then there's the inevitable "if that happens, we'll have bigger problems to worry about." Translation: Yeah, I'm not prepared for that.
This entire country is supported by the stock market if we go into a bear market for years yes we have bigger problems to worry about. Pension systems aren’t prepared for that, 401ks aren’t prepared for that.
So I take that you're one of the "we'll have bigger problems to worry about" types. Okay.

I guess in 1929 they had "bigger problems to worry about," but somehow people made it, or we wouldn't be here.

In any bear market, there are those who are prepared and those who are not prepared. Don't kid yourself into believing that it's okay to be unprepared because "everyone else will be, too." That ain't true.
How am I unprepared? If I am unprepared for a bear market with my assets relative to most in this country we are all doomed. Or am I just unprepared because I let it ride on equities seeing how the govt has stepped in on bear markets in 08 and COVID. Let’s say they don’t step in and my all equity taxable account drops 40% in value it’s still worth something. Say a bear market is every 8 years, cash drag hurts over that. I chose to be prepared differently with a large equity taxable portfolio just because you don’t agree doesn’t mean I’m unprepared, it just means we view things differently and prepare in our own ways.
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Re: Any reason not to stuff it all into VTSAX?

Post by InNameOnly »

tibbitts wrote: Mon Apr 01, 2024 10:22 am
InNameOnly wrote: Mon Apr 01, 2024 8:30 am
SmileyFace wrote: Mon Apr 01, 2024 8:13 am
InNameOnly wrote: Mon Apr 01, 2024 7:49 am
100% Total Market Index Fund at the OP’s age is a walk in the park.
Maybe, maybe not - it depends.
There have been a lot of posts over the years whereby folks go all in then go all out when the market drops.
Losing 50% of one's lifetime savings isn't considered a walk in the park by everyone.
I hear what you are saying, yet I’ve never understood that reaction.

Maybe I’m just not wired that way, but I’ve never entertained the idea of selling when the market dips, crashes, etc. Whatever ever fear porn news chooses to call the event to sell their marketed space that day, be it paper, airwaves or digital screens.
Have you experienced losing most or all of your non-investment income at the same time the market has plunged?
Maybe not the exact scenario you are referring to but 40 years ago due to choices that I made I was living in a tent with my future wife, on the national forest, neither of us employed, no investments, no savings other than the twenty dollar bill in my pocket.

Fast forward those 40 years (think: crash of ‘87, dot com bubble, the lost decade, crash of ‘08, all the recent fun of world a pandemic ), we are retired debt free, on 40 acres in a home we build, with double commas in our retirement accounts. Don’t ever remember a sleepless night due to finances.

Heck I was raised in a world that had training drills to “duck and cover” in elementary school.

People have asked me along the way if I’m comfortable thinking outside the box.
My reply to them is, “There’s a box?” :sharebeer
The realist sees the glass as completely full, 50% water and 50% air.
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Re: Any reason not to stuff it all into VTSAX?

Post by KlangFool »

gavinsiu wrote: Mon Apr 01, 2024 10:31 am
If the answer is that you know that the money is for the future and short term crash don't matter or better yet you feel that crashes are great for buying opportunities, you are a good candidate for 100% stock.
gavinsiu,

A) The problem is when someone is unemployed in the coming recession, they would not know how long the unemployment will last. They hope that their unemployment period is short enough that their emergency fund is big enough.

Hoping to be lucky is not a good planning strategy.

B) The alternative is to do not be 100% stock.

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Re: Any reason not to stuff it all into VTSAX?

Post by SmileyFace »

InNameOnly wrote: Mon Apr 01, 2024 11:10 am Don’t ever remember a sleepless night due to finances.
Have you ever considered the fact that you might be in the minority?
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Re: Any reason not to stuff it all into VTSAX?

Post by lostdog »

KlangFool wrote: Mon Apr 01, 2024 11:13 am
gavinsiu wrote: Mon Apr 01, 2024 10:31 am
If the answer is that you know that the money is for the future and short term crash don't matter or better yet you feel that crashes are great for buying opportunities, you are a good candidate for 100% stock.
gavinsiu,

A) The problem is when someone is unemployed in the coming recession, they would not know how long the unemployment will last. They hope that their unemployment period is short enough that their emergency fund is big enough.

Hoping to be lucky is not a good planning strategy.

B) The alternative is to do not be 100% stock.

KlangFool
+1

So far I have 8.5 years in bonds to cover a long bear market. My goal is to get to 10 years.

I sleep very well at night.

Klangfool is right. I would be devastated to be 100% stock and then all of a sudden the oncoming recession and bear market hits.

My wife recently became unemployed for 3 months. It didn't bother me because we have a nice and hefty bond allocation.
Last edited by lostdog on Mon Apr 01, 2024 3:04 pm, edited 1 time in total.
World Stocks(VT)-70% || World Bonds(BNDW)-30%
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Re: Any reason not to stuff it all into VTSAX?

Post by cosmos »

dkwhatimdoing wrote: Sat Dec 23, 2023 12:05 pm Other than a small emergency fund?

37 years old married with two toddlers.

$170 in HYSA, $40k in checking account.

$75k in T-bonds, $5k in taxable, $240k 401K, $37k Roth.
I see no issue with 100% VTSAX in theory during peak accumulation years but I also do not have children or a family which is likely going to make those bear/crash phases very uncomfortable for alot of folks that do. In my case it all goes into 401k which is easy to ignore and keep saving no matter what. Dotcom, financial crisis in 2008, covid etc did not phase me personally but I also never lost a job during any of those times either except for a month in dotcom and that was known well ahead of time.

80/20 is where I am at now in my 50s and prob a good target for aggressive accumulation savers. I also use intermediate treasuries as the ballast part of the 20% portfolio not total bond/corp bond funds.

Keep up the good work!
It's 106 miles to Chicago, we've got a full tank of gas, half a pack of cigarettes, it's dark... and we're wearing sunglasses. Hit it.
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Re: Any reason not to stuff it all into VTSAX?

Post by gavinsiu »

KlangFool wrote: Mon Apr 01, 2024 11:13 am
gavinsiu,

A) The problem is when someone is unemployed in the coming recession, they would not know how long the unemployment will last. They hope that their unemployment period is short enough that their emergency fund is big enough.

Hoping to be lucky is not a good planning strategy.

B) The alternative is to do not be 100% stock.

KlangFool
I did say that OP should couple it with an emergency fund and adjust it to what the OP feel is needed to find work. I am advocating 100% stock allocation + emergency fund. I would not advocate just 100% and have zero emergency fund as a few forum poster advocate. Having a year looking for work, I wouldn't advocate this.

It may also be useful to gauge your emergency fund needs over a long period of time. When I first graduated, the market was terrible and I spend a long time looking for work. A few year later, the market shift and I could find work instantly. I planned my EF to be more pessimistic, but if I had graduated a few year later, I would have had a too rosy view of my profession. It's a good idea to do this any way, since your expense will grow over time. When I graduated I was content with just having milk crates as furniture and living in a dicey neighborhood because I had lower resource, there will always be some lifestyle creep.
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Re: Any reason not to stuff it all into VTSAX?

Post by er999 »

Look up 2000-2008 returns for US stocks for a reason not to be 100% vtsax. Personally I’d have some international but there are hundreds of threads on here to read about that.

You could do way worse than 100% vtsax, though. Just keep at it for 20 years even if there is a downturn. Extend 2000 to 2024 to see what happened to those who kept on holding (no surprise, excellent returns which is why many are now advocating for 100% us)
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Re: Any reason not to stuff it all into VTSAX?

Post by KlangFool »

gavinsiu wrote: Mon Apr 01, 2024 12:30 pm
KlangFool wrote: Mon Apr 01, 2024 11:13 am
gavinsiu,

A) The problem is when someone is unemployed in the coming recession, they would not know how long the unemployment will last. They hope that their unemployment period is short enough that their emergency fund is big enough.

Hoping to be lucky is not a good planning strategy.

B) The alternative is to do not be 100% stock.

KlangFool
I did say that OP should couple it with an emergency fund and adjust it to what the OP feel is needed to find work. I am advocating 100% stock allocation + emergency fund. I would not advocate just 100% and have zero emergency fund as a few forum poster advocate. Having a year looking for work, I wouldn't advocate this.
gavinsiu,

OP is aiming for a small emergency fund. OP feels that he is a very lucky person.

From OP,

"Any reason not to stuff it all into VTSAX?

Other than a small emergency fund?

37 years old married with two toddlers.

$170 in HYSA, $40k in checking account.

$75k in T-bonds, $5k in taxable, $240k 401K, $37k Roth."

KlangFool
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Re: Any reason not to stuff it all into VTSAX?

Post by InNameOnly »

SmileyFace wrote: Mon Apr 01, 2024 11:16 am
InNameOnly wrote: Mon Apr 01, 2024 11:10 am Don’t ever remember a sleepless night due to finances.
Have you ever considered the fact that you might be in the minority?
That’s a reasonable assessment, for these parts. :)
Live long and prosper. :sharebeer
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Re: Any reason not to stuff it all into VTSAX?

Post by Metsfan91 »

Nope. No reason. VTSAX and chill.
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Re: Any reason not to stuff it all into VTSAX?

Post by whodidntante »

100% stock is a fine portfolio if you're built for it and lucky. And we all need a bit of luck. I've seen people struck down in their prime earning years. We're all one adverse event away from human capital destruction.

I might ask though, why so little stock? :P
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Re: Any reason not to stuff it all into VTSAX?

Post by BizarroJerry »

My wife and I are 100% VTI (VTSAX), but we are 31/30 and do not have much retirement assets yet as we had a bit of a late start (~175k currently, est. 200k by end of year due to contributions not accounting for potential growth). I have a government job that is safer, which helps us stay 100% stocks. I do wonder if once we hit 250k I should just go 100% VT for diversification since we have 30 years to retirement and hopefully another 30-40 years in retirement.
InNameOnly
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Re: Any reason not to stuff it all into VTSAX?

Post by InNameOnly »

Johm221122 wrote: Mon Apr 01, 2024 7:55 am
InNameOnly wrote: Mon Apr 01, 2024 7:19 am
RiskAnalyst wrote: Sat Dec 23, 2023 6:41 pm
Kinkajou82 wrote: Sat Dec 23, 2023 5:44 pm Assuming a long time horizon, no debt/liabilities, sufficient "safety" plans for possible/unplanned expenses, and the intestinal fortitude to tolerate the wild swings that are occasionally expected from equities...

The thing I can think of is a hypothetical "Japan" scenario where you domestic stocks (VTSAX is US equities, right?) are negative or exhibit practically no growth for a very long stretch of time, and international equities would've been the diversifier that would've helped you out.

Edit: Also, the studies that established the 4% rule seem to show a higher SWR rate survivability at 75/25 stocks/bonds than 100/0, if that's your thing.
This is my concern as well. At the most basic level of understanding of diversification ("not putting all your eggs in one basket"), VTSAX/VTI is putting all your eggs in the U.S. basket (notwithstanding that big U.S. companies do business outside the U.S.) and none in the baskets of companies headquartered outside the U.S.

To keep the simplicity and low cost, why not just use VTWAX/VT (Vanguard Total World Stock Index Fund) instead of VTSAX/VTI?
5 year:
VTSAX up 76%
VTWAX up 48%

This isn’t recency bias, just reality bias.
No these are past returns
Which suggest trends. My crystal ball is in the shop. ¯\_(ツ)_/¯
The realist sees the glass as completely full, 50% water and 50% air.
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Re: Any reason not to stuff it all into VTSAX?

Post by Johm221122 »

InNameOnly wrote: Mon Apr 01, 2024 7:08 pm
Johm221122 wrote: Mon Apr 01, 2024 7:55 am
InNameOnly wrote: Mon Apr 01, 2024 7:19 am
RiskAnalyst wrote: Sat Dec 23, 2023 6:41 pm
Kinkajou82 wrote: Sat Dec 23, 2023 5:44 pm Assuming a long time horizon, no debt/liabilities, sufficient "safety" plans for possible/unplanned expenses, and the intestinal fortitude to tolerate the wild swings that are occasionally expected from equities...

The thing I can think of is a hypothetical "Japan" scenario where you domestic stocks (VTSAX is US equities, right?) are negative or exhibit practically no growth for a very long stretch of time, and international equities would've been the diversifier that would've helped you out.

Edit: Also, the studies that established the 4% rule seem to show a higher SWR rate survivability at 75/25 stocks/bonds than 100/0, if that's your thing.
This is my concern as well. At the most basic level of understanding of diversification ("not putting all your eggs in one basket"), VTSAX/VTI is putting all your eggs in the U.S. basket (notwithstanding that big U.S. companies do business outside the U.S.) and none in the baskets of companies headquartered outside the U.S.

To keep the simplicity and low cost, why not just use VTWAX/VT (Vanguard Total World Stock Index Fund) instead of VTSAX/VTI?
5 year:
VTSAX up 76%
VTWAX up 48%

This isn’t recency bias, just reality bias.
No these are past returns
Which suggest trends. My crystal ball is in the shop. ¯\_(ツ)_/¯
Then after the decade from 2000 to 2010 we should have stopped buying Large cap US stocks?

After the fast and large interest rate increases in very recent past nobody should have bought individual fixed income paying 5%?
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Re: Any reason not to stuff it all into VTSAX?

Post by hoops777 »

Do_Nothing wrote: Sat Dec 23, 2023 2:34 pm Makes perfect sense to me. I've been all in VTSAX/VTI for the better part of 16 years, and am now 4-5 years from retirement. At retirement i'll add in 10% cash equivalents/ short term bonds.

My only regret is listening to pundits and "experts" that 100% US stocks is wrong and you should have more bonds and international. Each time I made a change I immediately regretted it and ended up losing thousands even tho the change was very short term (days or weeks) vs had I just left my allocation alone.
You also went 100 pct stocks during an incredible bull run.Want to bet the next 16 years will be so great?
Sometimes we are lucky with our timing.
Congrats on that good fortune.
K.I.S.S........so easy to say so difficult to do.
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