Author Topic: Newb Advice on Vanguard funds  (Read 1419 times)

InFlagranteDelicto

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Newb Advice on Vanguard funds
« on: April 18, 2016, 10:07:02 AM »
I want to put about 100k into vanguard funds. Is there any downside to splitting it up into say 5 or 6 different funds under the Vanguard umbrella (for a little diversity)? I see the fees are a percentage of the overall investment so it seems to me there would be no downside to this. Please help me see if I am missing something.

Travis

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Re: Newb Advice on Vanguard funds
« Reply #1 on: April 18, 2016, 10:17:14 AM »
That's probably more funds than you'd need. What funds did you have in mind specifically?

Jack

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Re: Newb Advice on Vanguard funds
« Reply #2 on: April 18, 2016, 10:20:20 AM »
Nope, no downside -- the only potential pitfall is choosing a poor asset allocation. Figure that out first, then write up an investment policy statement, then go buy your funds.

(You probably don't need five or six different funds, especially if you're new enough to investing to be asking questions like this. A three-fund portfolio consisting of VTSAX (total stock market), VTIAX (total international stock market) and VBTLX (total bond market) should probably be fine.)

MustacheAndaHalf

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Re: Newb Advice on Vanguard funds
« Reply #3 on: April 18, 2016, 07:29:14 PM »
Diversification is not about fund names, but what part of the market they cover.
If someone buys the following 5 Vanguard funds, they have a lot of overlap:
S&P 500
Mid Cap
Large Value
Large Growth
Total Stock Market

It might surprise you to learn putting 100% into Total Stock Market is actually more diverse than any combination of the above.  That spreads your investment over ~3800 stocks, while each of the other funds above has ~300-500 stocks.  Total Stock market type funds are great for diversification.

You might benefit more from 20-30% in an international fund, and hold just US total market and total international funds.  That gets a slice of most U.S. companies (not all), and a sampling of large companies across the world (small companies in foreign countries can be expensive to invest in, but Vanguard is aiming in that direction with it's index changes this year).