Author Topic: VTSAX - Why don't just put all $$ in this Index fund?  (Read 118497 times)

RH

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VTSAX - Why don't just put all $$ in this Index fund?
« on: March 18, 2015, 10:54:53 AM »
I'm been researching Vanguard funds and comparing them to the S&P. Instead of trying to allocate money towards stocks, bonds, and international, rebalancing things, etc... why not just dump everything in the VTSAX fund (Vanguard Total Stock Market Index Fund)? If I look at the 3 year, 5 year, 10 year chart and compare it to other Vanguards (VTWSX, Target Retirement Funds, Wellington, etc..), the VTSAX looks significantly better. I'm 37 and still have 10 years before FIRE. Here is a chart


http://money.cnn.com/quote/mutualfund/mutualfund.html?symb=VTSAX

Am I missing something obvious? I know past performance doesn't = future performance.

Louisville

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #1 on: March 18, 2015, 10:59:23 AM »
This is a viable option. Some smart people do exactly this. However, you won't get bond or foreign exposure like this (well, some foreign indirectly...). Most of us want to diversify into bonds and foreign markets.
At ten years out from draw down, you might not want any bonds, though. Do some research on setting your investment policy and your asset allocation.

frugalman

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #2 on: March 18, 2015, 11:05:22 AM »
Why not?

Investor behavior - faced with a 50+percent loss in 2009, would you have cried uncle and sold at the bottom?
if that is a possibility, then you should mix in some bond funds or savings to smooth the ride (both up and down).
Vanguard's Investing Truths shows that over an 88 year period, pure stocks would have returned 10.2 percent with a worst year of -43.1%, but 50/50 stocks and bonds would have returned 8.3 percent with a worst year of -22.5%.
https://personal.vanguard.com/us/insights/investingtruths/investing-truth-about-risk

Global diversification
The last couple of years, US stocks handily beat foreign stocks. This year, the opposite is true (as the dollar keeps getting stronger). You can go all US, but many smart people want some global allocation also.

GGNoob

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #3 on: March 18, 2015, 11:11:10 AM »
Play around with this website: https://www.portfoliovisualizer.com/

Looking at this link, comparing a 100% US stock, 100% International stock, and a 70% US/30% Int split portfolio, the 70/30 portfolio had better returns and less volatility since 1972.

Being 100% stock and whether or not to invest in international stocks is a topic and comes up a lot lately. Feel free to do a forum search to see some of the other discussions.

xenon5

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #4 on: March 18, 2015, 11:18:51 AM »
There are many people in the FIRE community who argue for this type of allocation; it has low fees and is simple.  Also, many will argue that since most US companies make a large portion of revenue overseas, you're already diversified internationally.

"Why should I invest in things besides VTSAX?", is asking the same question as "Why diversify?"  The two main asset classes this allocation misses are bonds and international stocks.

The argument for adding international stocks is that we can't know for certain whether US or international stocks will perform better over a long period of time.  Since there are some periods where one zigs and the other zags, we can potentially reduce volatility without giving up much returns by investing a portion in both.

The same is true for bonds.  While bonds have returned less than stocks on average, there are some years when they outperform stocks.  Adding bonds helps smooth the wild ride of the stock market.

Dodge

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #5 on: March 18, 2015, 11:58:02 AM »
I'm been researching Vanguard funds and comparing them to the S&P. Instead of trying to allocate money towards stocks, bonds, and international, rebalancing things, etc... why not just dump everything in the VTSAX fund (Vanguard Total Stock Market Index Fund)? If I look at the 3 year, 5 year, 10 year chart and compare it to other Vanguards (VTWSX, Target Retirement Funds, Wellington, etc..), the VTSAX looks significantly better. I'm 37 and still have 10 years before FIRE. Here is a chart


http://money.cnn.com/quote/mutualfund/mutualfund.html?symb=VTSAX

Am I missing something obvious? I know past performance doesn't = future performance.

One of the most important rules of investing, is to control your risk.  Yet newbies continually look at graphs, find the one that went up the most over 30-50 years, and say, "Why not put ALL MY MONEY there???"  I recommend reading through this thread for a good discussion on the pros/cons of such an approach:

 Why would I be in anything other than 100% stocks?


johnny847

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #6 on: March 18, 2015, 12:12:37 PM »
Jeremy over at Go Curry Cracker has opined on this, and says he's been moving towards 100% equities http://www.gocurrycracker.com/path-100-equities/.

But what I think is telling is that he says
Quote
I think that [100/0] is the way to go. I still have to man up and pull the trigger myself
in the comments.

Even a guy who has written a rational post on the arguments for 100/0 still hasn't pulled the trigger on it yet. He's got 11% in US bonds at the moment.


I'm currently 86/14. After reading his post, I decided that I would reevaluate going 100/0 after I go through my first market crash.

forestbound

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #7 on: March 18, 2015, 12:19:04 PM »
Jim Collins agrees with you. Read some of his stock series:

http://jlcollinsnh.com/stock-series/

Schaefer Light

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #8 on: March 18, 2015, 12:53:34 PM »
I do.  My entire Roth IRA is in VTSAX and so is my wife's.  When I have enough to start investing in a taxable account (hopefully, later this year), I'll also be putting all of that money into VTSAX.

BTW, I'm 36 and also have approx. 10 years to go (assuming things continue to go as they are right now).  I can see why it would be tougher from a psychological standpoint for a retiree to have all of his money invested in VTSAX, though.  With 10 years until retirement, I'm really not concerned about a huge market downturn.  In fact, I'd almost welcome one at this point as a I have more money to invest than ever before and it would be a great buying opportunity.
« Last Edit: March 18, 2015, 12:59:16 PM by Schaefer Light »

Dodge

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #9 on: March 18, 2015, 01:48:08 PM »
I'm been researching Vanguard funds and comparing them to the S&P. Instead of trying to allocate money towards stocks, bonds, and international, rebalancing things, etc... why not just dump everything in the VTSAX fund (Vanguard Total Stock Market Index Fund)? If I look at the 3 year, 5 year, 10 year chart and compare it to other Vanguards (VTWSX, Target Retirement Funds, Wellington, etc..), the VTSAX looks significantly better. I'm 37 and still have 10 years before FIRE. Here is a chart


http://money.cnn.com/quote/mutualfund/mutualfund.html?symb=VTSAX

Am I missing something obvious? I know past performance doesn't = future performance.

(Mostly copying my response from thread Dumping the whole pot into VTSAX. Please tell me why I'm wrong)

The dozen large companies in NY state are closely linked to the global economy, why shouldn't I just buy them? GE often follows movements in the S&P 500, why not just own one stock?

If Samsung beats Apple in the multi-billion smartphone business, how much will it help me that Apple also sells phones in South Korea?  Why would I want to own Chevy and Ford and skip Honda and Toyota, or BMW and Mercedes, if you could own them all at low cost?

Consider that in international markets you will find...

  • 7 of the 10 largest automobile companies
  • 7 of the 10 largest diversified telecommunications companies
  • 8 of the 10 largest metals and mining companies
  • 6 of the 10 largest electronic equipment and instruments companies
  • 5 of the 10 largest household durables companies

It is nonsense to think that correlation is always so strong, or that correlation alone is an excuse to not own all stocks in a market. Indexing makes sense globally as much as it makes sense domestically.  The currency risk does not outweigh the diversification benefits.  Here's an example of what can go wrong during retirement, when you're 100% US stocks, vs 40/40/20 US Stocks/International Stocks/US Bonds (global market cap portfolio):



In this catastrophe scenario, the 100% stocks portfolio would have dropped to 0, while the 3 fund portfolio would have grown to $1,051,116 an overall gain of over 50%.  Also, the obligatory 25 year Japan chart:

« Last Edit: March 19, 2015, 07:13:01 PM by Dodge »

whammer33024

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #10 on: March 18, 2015, 03:01:50 PM »
someone help me here...lets say i max out a 403b for my wife in VTSAX, a simple IRA in VTSAX and roth IRA's in VTSAX, then i invest in a taxable account in VTSAX as well.  lets say i decide to pull some money out of the taxable account for whatever purchase i decide to make, wouldn't that be a wash sale and i'd get penalized for it?

TypicalVillain

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #11 on: March 18, 2015, 03:03:59 PM »
someone help me here...lets say i max out a 403b for my wife in VTSAX, a simple IRA in VTSAX and roth IRA's in VTSAX, then i invest in a taxable account in VTSAX as well.  lets say i decide to pull some money out of the taxable account for whatever purchase i decide to make, wouldn't that be a wash sale and i'd get penalized for it?
The wash sale just means you can't deduct any loss on your taxes if you rebuy the assets within 30 days (in any account).

Regarding the OP, the point is that VTSAX isn't fully diversified, the world economy is about 50% USA and 50% everyone else.

Indexer

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #12 on: March 18, 2015, 07:08:53 PM »
someone help me here...lets say i max out a 403b for my wife in VTSAX, a simple IRA in VTSAX and roth IRA's in VTSAX, then i invest in a taxable account in VTSAX as well.  lets say i decide to pull some money out of the taxable account for whatever purchase i decide to make, wouldn't that be a wash sale and i'd get penalized for it?

It is easy to pick out VTSAX as the winner right now, but keep in mind that domestic stocks don't ALWAYS outperform international.  Its been true of late, but there are periods where the reverse is also true.  If you can handle the volatility you don't 'have' to have bonds, but at least throw in some international. 

Total stock index + total international stock index.   Just about all the stocks in the world at a very low cost. 

And if you did need to sell VTSAX you could just buy the 500 index + extended market index. 

Jeremy

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #13 on: March 18, 2015, 11:38:31 PM »
Jeremy over at Go Curry Cracker has opined on this, and says he's been moving towards 100% equities http://www.gocurrycracker.com/path-100-equities/.

But what I think is telling is that he says
Quote
I think that [100/0] is the way to go. I still have to man up and pull the trigger myself
in the comments.

Even a guy who has written a rational post on the arguments for 100/0 still hasn't pulled the trigger on it yet. He's got 11% in US bonds at the moment.


I'm currently 86/14. After reading his post, I decided that I would reevaluate going 100/0 after I go through my first market crash.

I agree, that is telling

But it is telling that I am guilty of being a market timer (I want the market to collapse so I can get out of bonds at that time) as opposed to not believing in the asset allocation :P

DavidAnnArbor

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #14 on: March 18, 2015, 11:52:37 PM »
Just fyi Vanguard Developed Markets Index Fund Admiral Shares VTMGX is up 6.98% as of 3/18 vs. 3.04% for VTSAX. This is the opposite of last year. So one asset class zigs while another zags, diversification is helpful to maintain risk reduction. 

innerscorecard

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #15 on: March 19, 2015, 12:01:53 AM »
I think that sooner or later a lot of people who are bravely going into 100% US stocks are going to be slaughtered.

Not because it's a bad investment. At least if your time horizon is sufficiently long, and you have enough discipline to stay the course. But because the truth is that everyone can say they have a time horizon of "forever" and they will be fully disciplined. But what do you trust more, what people say they will do in the future, or what has actually happened every time there has been a serious drop in the market in the past?

johnny847

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #16 on: March 19, 2015, 12:15:04 AM »
But it is telling that I am guilty of being a market timer (I want the market to collapse so I can get out of bonds at that time) as opposed to not believing in the asset allocation :P

Haha fair enough :)

Jeremy

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #17 on: March 19, 2015, 01:01:21 AM »
I think that sooner or later a lot of people who are bravely going into 100% US stocks are going to be slaughtered.

Not because it's a bad investment. At least if your time horizon is sufficiently long, and you have enough discipline to stay the course. But because the truth is that everyone can say they have a time horizon of "forever" and they will be fully disciplined. But what do you trust more, what people say they will do in the future, or what has actually happened every time there has been a serious drop in the market in the past?


With 100% stock, sooner or later the portfolio will get slaughtered.  Fact


But why such a strong degree of confidence that people will make self-defeating investment decisions, selling at the bottom in an emotional panic?

Especially considering that by the time somebody has saved enough to retire young, they already have a long history of making wise choices and displayed a good command of investing best practices?


innerscorecard

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #18 on: March 19, 2015, 01:23:46 AM »
I think that sooner or later a lot of people who are bravely going into 100% US stocks are going to be slaughtered.

Not because it's a bad investment. At least if your time horizon is sufficiently long, and you have enough discipline to stay the course. But because the truth is that everyone can say they have a time horizon of "forever" and they will be fully disciplined. But what do you trust more, what people say they will do in the future, or what has actually happened every time there has been a serious drop in the market in the past?


With 100% stock, sooner or later the portfolio will get slaughtered.  Fact


But why such a strong degree of confidence that people will make self-defeating investment decisions, selling at the bottom in an emotional panic?

Especially considering that by the time somebody has saved enough to retire young, they already have a long history of making wise choices and displayed a good command of investing best practices?

The answer to your first question is because that is what has happened historically. Pretty much every time there is a panic.

Your point about the degree of self-control being better in this sub-culture is a good one. But this sub-culture consists not only of people who have successfully made the jump to financial independence (such as yourself), and thus actually demonstrated a proven capability of carrying out a long-term financial plan, but also those who are only aspirational towards this goal (such as myself).

By definition, most of this aspirational group (since they haven't reached financial independence yet despite adopting FIRE principles) will only have been saving and investing in a FIRE way for a few years, coinciding with this long bull market. Everyone in a bull market (not just the FIRE community) thinks they will be the super-disciplined group that stays the course. And some will be. But most won't.

I have no doubt the percentage of people who can do it in this community will be higher than that in the general population. But I think it's naive to imagine that somehow this is the time that has forever ended the human tendency to sell out in market panics.

For if that happened, there wouldn't be market panics in the first place. And if there weren't any market panics, there would be no equity risk premium, and stocks would deliver no excess real returns. And we wouldn't want to be in that world, right? The 4% rule (or any other projections, even those much more conservative) would go out the window.

Thankfully, I don't think that's going to be the case at all. It seems much more prudent to assume that human tendencies that have repeated throughout history will continue to persist.

Jeremy

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #19 on: March 19, 2015, 01:56:59 AM »
EDIT:  I just posted this in a new thread to avoid derailing this one


I'm in agreement that some people have sold at the low in the past, I'm just looking for something more concrete.  Deferring to human nature isn't quantifiable enough for my tastes


Has anybody come across a good data source for a review of panic in a market downturn?

What percentage of people "panicked" in 2000 or 2008?
Of that group, how many were retired? 
Of that subgroup, how many had an asset allocation of 70-100% stock?
Etc...



« Last Edit: March 19, 2015, 02:33:05 AM by Jeremy »

Scandium

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #20 on: March 19, 2015, 07:05:02 AM »

By definition, most of this aspirational group (since they haven't reached financial independence yet despite adopting FIRE principles) will only have been saving and investing in a FIRE way for a few years, coinciding with this long bull market. Everyone in a bull market (not just the FIRE community) thinks they will be the super-disciplined group that stays the course. And some will be. But most won't.

I fall into this category, having started my job (and thus investing) in 2009. I'm currently 100% stocks but lately I've been thinking of slowly adding bonds. I (of course...) don't think I'll sell out, but having some safer bonds and rebalancing is starting to look prudent. I'm probably 20 years from FIRE, but all the back tests I've looked at a 20% allocation to bonds detract little from CAGR but reduce the drawdown by quite a bit. The endless debate now is of course how much is "enough" bonds.

And as the OP said, US stocks have done much better over the last 10 years. This makes me more likely to diversify globally, not less! Seeing my international fund drop I want to put more into it.
VTSAX avg P/E = 17.6
VTISX avg P/E = 14.9

In the same vein the more "100% stocks" articles I read the more I feel I should add bonds..

QueenAlice

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #21 on: March 19, 2015, 07:12:18 AM »
I'm currently 86/14. After reading his post, I decided that I would reevaluate going 100/0 after I go through my first market crash.

My current allocation is actually about the same as yours... I like this first market crash idea, a lot. I may steal it from you!

brooklynguy

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #22 on: March 19, 2015, 07:32:05 AM »
For if that happened, there wouldn't be market panics in the first place. And if there weren't any market panics, there would be no equity risk premium, and stocks would deliver no excess real returns. And we wouldn't want to be in that world, right? The 4% rule (or any other projections, even those much more conservative) would go out the window.

The equity risk premium wouldn't disappear if investor psychology were no longer a factor.  It reflects the fact that stocks are the residual interest in a company's capital structure which are only entitled to collect after creditors are paid in full, so it would still exist even if the market were composed entirely of Vulcan robots.

johnny847

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #23 on: March 19, 2015, 08:42:16 AM »
I'm currently 86/14. After reading his post, I decided that I would reevaluate going 100/0 after I go through my first market crash.

My current allocation is actually about the same as yours... I like this first market crash idea, a lot. I may steal it from you!

Haha yea. It's all fine and good to say that we'll be able to watch my portfolio tank during the next market crash...but can we actually do it? Only time will tell!

I like this thread on Bogleheads a lot, even if Bogleheads have a much more conventional retirement age in mind (note the dates on the thread): http://www.bogleheads.org/forum/viewtopic.php?t=26284

Some quotes from the thread
Quote
[posted 10/24/2008]
Rick, with all due respect, I must disagree with what you are saying. I understand that your advice is straight from the Diehard playbook, but this time it is different. If one were to consult with the 10 most respected authorities on the economy (you pick) all would say that this crisis is at least the second worst since 29. All would say that the economy will not recover for a long time. Most would say that at best the market will not increase but more likely the market will decline until recovery.

So my question is what is the hurry? Of course the market might rebound tomorrow, but the broad consensus is that it will not. Why not instead go with the probabilities and wait-and-see?

Countered by
Quote
"This time its different." Those famous 4 words that get so many people in so much trouble. Bubbles go both ways, and this time people have a once in a lifetime opportunity to buy great companies at riduclously low prices. So I agree with you. This time IS different.

Didn't know there was a Diehard's playbook. I have been doing this for 20 years and have developed my own beliefs. My belief is that a person would do much better sticking to one consistent strategy rather than trying to weave in and out of the markets based on their own fear and greed.

Quote
Different from what? Heath, with all due respect, I just laugh out loud when I read that phrase. It's always different, isn't it? The truth is, no one knows, and we can only control what we can control.

slay

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #24 on: November 23, 2017, 01:55:03 PM »
It is nonsense to think that correlation is always so strong, or that correlation alone is an excuse to not own all stocks in a market. Indexing makes sense globally as much as it makes sense domestically.  The currency risk does not outweigh the diversification benefits.  Here's an example of what can go wrong during retirement, when you're 100% US stocks, vs 40/40/20 US Stocks/International Stocks/US Bonds (global market cap portfolio):



In this catastrophe scenario, the 100% stocks portfolio would have dropped to 0, while the 3 fund portfolio would have grown to $1,051,116 an overall gain of over 50%.  Also, the obligatory 25 year Japan chart:



So I know this thread is over 2 years old and apologize, but seeing as how it's so prominent in Google's search index, I knew lots of other people would come across it and draw conclusions.

I've run Portfolio Visualizer and simply don't see how you've gotten a 100% US Stock portfolio from $700k to $0 from 1972 to 1988 (or any other point in history, for that matter). Since you wrote "retirement" I assumed you're drawing down a fixed 4% ($28k/yr), even adjusted for inflation. As a matter of fact, every simulation I've run has a portfolio w/ international stocks performing worse than one with 100% US stocks.

Here's a Monte Carlo simulation that shows a 98% survival rate of a portfolio drawing down inflation-adjusted 28k starting with 700k in 1972 and going for just 15 years to 1987, which approximates the timeline in your graphs. The median ending balance is $1,869,412.

https://imgur.com/GAGG6EU.png

Even drawing down a ridiculous 50k/yr (7%) leads to 80% success rate and a median ending balance of 940k. I then switched over to backtesting asset classes and saw the following (data for Global ex-US Stocks only available after 1986):

https://imgur.com/nd4I3kf.png

That's both a worse return and higher drawdowns vs 100% US Stocks.

So not only can I not reproduce the $700k -> $0 trajectory you've charted, but I also see worse performance and higher volatility for the years that the data can be compared head-to-head against US Stocks.
« Last Edit: November 23, 2017, 01:59:27 PM by slay »

Retire-Canada

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #25 on: November 23, 2017, 03:54:49 PM »
I'm 100% stocks at the moment, but globally diversified. I have no need for $$ from my investments at the moment and proven history not to panic in crashes [tech bubble and 2008]. I want to FIRE more than I want the psychological benefits of bonds. That said when I get to FIRE I will convert ~10% of my portfolio to short term bonds/gold as a sequence of returns risk protection. I won't rebalance that portion of my portfolio and once spent I won't replenish.

If a crash happens right before I was going to FIRE I would continue to work whether it was the day before I converted 10% of my portfolio to bonds/gold or the day after. While I won't panic sell I also don't have the balls to stop working in the teeth of a gnarly market event either.

MaaS

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #26 on: November 23, 2017, 06:17:33 PM »
I'm been researching Vanguard funds and comparing them to the S&P. Instead of trying to allocate money towards stocks, bonds, and international, rebalancing things, etc... why not just dump everything in the VTSAX fund (Vanguard Total Stock Market Index Fund)? If I look at the 3 year, 5 year, 10 year chart and compare it to other Vanguards (VTWSX, Target Retirement Funds, Wellington, etc..), the VTSAX looks significantly better. I'm 37 and still have 10 years before FIRE. Here is a chart


http://money.cnn.com/quote/mutualfund/mutualfund.html?symb=VTSAX

Am I missing something obvious? I know past performance doesn't = future performance.

First of all, assuming it's buy and hold for decades, this is an excellent strategy.

But... one thought:

While 10 years seems like a long time, in terms of the stock market, it really isn't.  The US and international markets have tended to perform in 10 year (ish) rotating cycles.

The US has gone gangbusters the last 10 years. Perhaps we'll innovate our way to another 10 years of exceptional performance.

Or.. perhaps history will repeat itself, and international stocks, which have suffered a "lost decade" will see the growth and the US will see lower returns for a stretch.

I personally prefer to "own the world" and reallocate across funds twice a year.




doneby35

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #27 on: November 23, 2017, 07:48:14 PM »
How would one go about adding VTIAX to the portfolio? Currently I'm 100% VTSAX. If I was wanting to stay 100% stocks but do 50/50 VTSAX and VTIAX, would I just start buying VTIAX instead of VTSAX until I hit the same amount I have in VTSAX? is there re-balancing involved?

TheAnonOne

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #28 on: November 27, 2017, 10:29:29 AM »
How would one go about adding VTIAX to the portfolio? Currently I'm 100% VTSAX. If I was wanting to stay 100% stocks but do 50/50 VTSAX and VTIAX, would I just start buying VTIAX instead of VTSAX until I hit the same amount I have in VTSAX? is there re-balancing involved?

I just started doing this, buying VTIAX(international), but that being said it will take a long time to normalize or even hit 10% of my portfolio. I am not really in a rush to be at any particular AA as I am still accumulating right now.

I will not rebalance myself, because this will trigger capital gains that I would rather avoid.

Travis

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #29 on: November 27, 2017, 02:02:12 PM »
How would one go about adding VTIAX to the portfolio? Currently I'm 100% VTSAX. If I was wanting to stay 100% stocks but do 50/50 VTSAX and VTIAX, would I just start buying VTIAX instead of VTSAX until I hit the same amount I have in VTSAX? is there re-balancing involved?

It could take a long time depending on how much you have invested and have available to invest, but simply stopping adding to VTSAX and adding to VTIAX until you hit 50/50 is a simple way to get there.

doneby35

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #30 on: November 27, 2017, 04:01:32 PM »
Thanks. That's what I was thinking, to just add to VTIAX instead of VTSAX, since it is my taxable account, rebalancing means that I might have to pay taxes if i'm not mistaken.

Retire-Canada

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #31 on: November 27, 2017, 05:03:31 PM »
Thanks. That's what I was thinking, to just add to VTIAX instead of VTSAX, since it is my taxable account, rebalancing means that I might have to pay taxes if i'm not mistaken.

You can also use VTSAX dividends to by VTIAX to speed up the process.

talltexan

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #32 on: November 29, 2017, 07:18:29 AM »
If you can identify another asset class with returns that are no less than VTSAX, you'd benefit from constructing a portfolio that included both of those because of the smoothing of risk and the ability to rebalance between them.

I'd suggest looking at indices that track: small companies, value companies, and international companies. VTSAX isn't the only index.

keyvaluepair

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Re: VTSAX - Why don't just put all $$ in this Index fund?
« Reply #33 on: November 29, 2017, 08:51:55 AM »
As stated in another thread, I've used TRBCX as well - it has beaten VTSAX over multiple years in an up market. And the delta is large enough that the increased fund cost is made up for.

10 Year Rolling Return


3 year rolling return


You can look at the charts yourself on Morningstar. Use Chart -> Rolling Return -> Benchmark (e.g VTSAX) to compare.

 

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