Author Topic: Switch to Total Market From Separate Large/Mid/Small Cap Funds? When?  (Read 1767 times)

desertadapted

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Because of the options in my 401k, I invested separately in Large, Mid and Small cap indexes.  I did so arbitrarily, putting 1/3 of my contribution to domestic stocks in each (Iím accounting for international separately).  This is inconsistent with actual market weighting, which has large caps substantially more heavily weighted than small caps.  I have now rolled over to a T-IRA, and am eyeing putting all my domestic stock investments into  the total market (VTSMX), which would revert to the traditional weighting among capitalization groups.

I donít have the math or the brain to figure out whether there is a better/worse time to do this.  I can say, though, that Iím skeptical Iím making the right choice to weight so heavily towards small/mid caps. I appreciate your thoughts.

Bourbon

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Re: Switch to Total Market From Separate Large/Mid/Small Cap Funds? When?
« Reply #1 on: October 11, 2017, 08:34:48 AM »
I'm lazy and would skip the math.  Would probably have switched to the total market right after the swap(VTSAX if you have $10K for the lower fee, or VTI for the ETF at the same rate, bot at .04 vs .15 for VTSMX)

Also I use this as a resource for my 401K's where I can't buy a total market fund -

https://www.bogleheads.org/wiki/Approximating_total_stock_market

desertadapted

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Re: Switch to Total Market From Separate Large/Mid/Small Cap Funds? When?
« Reply #2 on: October 11, 2017, 08:57:27 AM »
@Bourbon, thanks. Will take a sip of Eagle Rare in your honor.

Bourbon

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Re: Switch to Total Market From Separate Large/Mid/Small Cap Funds? When?
« Reply #3 on: October 11, 2017, 09:16:05 AM »
@Bourbon, thanks. Will take a sip of Eagle Rare in your honor.

Good Stuff.  That is a favorite of my cousin.

You might wait a bit and get advice from people who do like to do the math, and then ultimately decide that my advice was the best.
« Last Edit: October 11, 2017, 09:17:41 AM by Bourbon »

DarkandStormy

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Re: Switch to Total Market From Separate Large/Mid/Small Cap Funds? When?
« Reply #4 on: October 11, 2017, 12:41:58 PM »
Well, what do you want your AA to be?  If you like how VTSAX/VTSMX allocates just do that.  If you want more mid-cap/small-cap exposure, you'll need to add at least one or two other funds.

Radagast

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Re: Switch to Total Market From Separate Large/Mid/Small Cap Funds? When?
« Reply #5 on: October 12, 2017, 12:43:11 AM »
There isn't any time that is better to move to a simpler setup with lower costs and lower risk, like a total market fund.

If the expense ratios are reasonably low on what you are doing already (say, less than 0.10% each) then feel free to keep it if you like it better.

desertadapted

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Re: Switch to Total Market From Separate Large/Mid/Small Cap Funds? When?
« Reply #6 on: October 12, 2017, 02:15:53 PM »
Quote
There isn't any time that is better to move to a simpler setup with lower costs and lower risk, like a total market fund.
Quote
I'm lazy and would skip the math.
I have combined both approaches above and pulled the trigger on the change.   For any who are interested, the following link is to Bogle's "Tell Tale Chart", which casts some doubt on the long-term viability of a small-cap-heavy strategy.   
https://www.vanguard.com/bogle_site/sp20020626.html

Not sure I'm right, but I've fired and forgotten.  The good thing is my laziness with math will likely keep me from running the numbers down the road to see whether I would have been better with my prior allocation.  Yay ignorance!

Thanks to all for their insights.

Mr. Boh

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Re: Switch to Total Market From Separate Large/Mid/Small Cap Funds? When?
« Reply #7 on: October 12, 2017, 04:20:49 PM »
I think you will be happy in the long run so it's only right that you're happy now too.