The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: akwaddy on March 01, 2021, 06:35:14 PM
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Hi everone,
I have the below funds in my ROTH and Rollover IRAs. It feels limiting and that I'm not diversified enough, maybe have repetitive investments, etc.
I'm all equities, and actually fine with a high equity amount as I'm 26 and have a strong appetite for risk.
I'm pretty much in with Vanguard:
VIGAX, VIMAX, VTSAX, and VTWAX.
Should I add a bond portfolio? Should I add small cap or emerging markets? Please pick this apart, I'd like honest feedback from the more experienced crowd. Thank you guys!
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It looks pretty good. You didn't provide the percentages which are important. You do have some overlap, which isn't necessarily bad. You've got a shot of mid-cap in there, which I personally like. Same with international, but don't go too heavy on that. A shot of small cap wouldn't be a bad idea.
At your age, I wouldn't bother with bonds or emerging markets. Keep in mind portfolio construction is rabbit hole, you can make it as complex as you want. You won't know which construction is the winner until far in the future, so I don't think it is worth agonizing about too much. When in doubt, simple is your friend. Main thing is start young (which you are), keep the fees down (which you are) and contribute as much you can. Do that, and you'll have a ton of money in the future.
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Agree to keep it simple. Vanguard small cap index fund hasn’t outperformed the total market significantly over the last 10 years. Neither has mid-cap. Honestly, pull up the performance and “growth of 10,000$” charts from vanguard and see if you can tell any of them apart (both in terms of return and volatility).
Bonds are somewhat wobbly due to interest rates being low and if you’re not wanting to stabilize some money for a short-term big purchase, don’t bother at your age.
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Agree to keep it simple. Vanguard small cap index fund hasn’t outperformed the total market significantly over the last 10 years. Neither has mid-cap. Honestly, pull up the performance and “growth of 10,000$” charts from vanguard and see if you can tell any of them apart (both in terms of return and volatility).
The important takeaway there is that small and mid-caps can outperform or under perform the broader market for long periods of time. Like a decade. So that might mean a decade of saying "Hey! I'm a genius because I own small caps!" or it could mean "I'm a dope for owning small caps the last decade. I shoulda just bought the index!" So be prepared for that.
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If your intuition is to include other asset classes, take a look here: https://portfoliocharts.com/portfolios/. We use the All Seasons Portfolio.
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You can type in VIMAX (VIMSX- older share class), VSMAX(NAESX), and VTSAX(VTSMX) into https://www.portfoliovisualizer.com/backtest-portfolio
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It all depends on whether you continue to be "fine" and have "high appetite for risk" once the market plunges. If so, no need for bond fund. Rock on with your bad self!
PS. I'm assuming you pay debts before making taxable investments, and your job is reasonably steady. Are those true?