Author Topic: Vanguard US Growth fund  (Read 1077 times)

nsmall

  • 5 O'Clock Shadow
  • *
  • Posts: 63
Vanguard US Growth fund
« on: November 29, 2018, 08:39:40 PM »
I picked Vanguard US Growth fund as a find to invest 40% of my money in years ago and it has done well this past year. I'm considering investing another 60k soon and it's a toss up between Vanguard Total stock market and Vanguard US Growth fund. 

Is it foolish to pick a find like Vanguard US Growth vs Vanguard Total stock market?

I'm looking to FIRE in 5 years and this fund would be purchased via my brokeage account.

I plan to be contributing monthly to my brokerage account for the next five years and I'm trying to pick the best indexes.

shinn497

  • Stubble
  • **
  • Posts: 247
Re: Vanguard US Growth fund
« Reply #1 on: November 29, 2018, 09:22:41 PM »
Can you give us more information?

What are you current expenses? What do you expect your SWR to be. How old are you. And what is your income?

Personally I think something like a growth fund is highly volatile. I actually am fine with this but understand if you go this route you must master your behaviour as a fund like this is highly likely to fall.

nsmall

  • 5 O'Clock Shadow
  • *
  • Posts: 63
Re: Vanguard US Growth fund
« Reply #2 on: November 29, 2018, 09:38:53 PM »
https://forum.mrmoneymustache.com/case-studies/can-you-please-help-a-history-teacher-fire-one-day/

That's my long drawn story.  Maybe I should stick with Vanguard Total stock market as I'm getting old so no need to be cute with that US Growth fund.

RWD

  • Magnum Stache
  • ******
  • Posts: 2638
  • Location: Mississippi
Re: Vanguard US Growth fund
« Reply #3 on: November 29, 2018, 10:22:38 PM »
[...] and it has done well this past year.
Does that mean it will continue to do well?

nsmall

  • 5 O'Clock Shadow
  • *
  • Posts: 63
Re: Vanguard US Growth fund
« Reply #4 on: November 29, 2018, 10:33:53 PM »
I like you guys and gals.  Great question.  I have No idea.  :)

Andy R

  • 5 O'Clock Shadow
  • *
  • Posts: 92
Re: Vanguard US Growth fund
« Reply #5 on: November 30, 2018, 03:41:01 AM »
Do you have a link to the fund?
And why did you decide on that fund?

flipboard

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Vanguard US Growth fund
« Reply #6 on: November 30, 2018, 10:13:21 AM »
So you picked a growth tilt.

And it worked out well because growth has been doing well recently.

Which means you should definitely not buy growth right now because it's expensive.

And you should probably figure out why you went for a growth tilt since in the long-run it hasn't ever outperformed.

nsmall

  • 5 O'Clock Shadow
  • *
  • Posts: 63
Re: Vanguard US Growth fund
« Reply #7 on: November 30, 2018, 10:25:57 AM »
I really love you folks.

https://investor.vanguard.com/mutual-funds/profile/VWUSX

I picked it as its heavy in info technology, has a good chunk in health care.  Those two sectors make sense to me.

Yes I need to think long term so maybe its time to dump the stock and be thankful for the gains.

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2198
  • Location: EastCoast
Re: Vanguard US Growth fund
« Reply #8 on: November 30, 2018, 06:36:47 PM »


I picked it as its heavy in info technology, has a good chunk in health care.  Those two sectors make sense to me.

Why?


Andy R

  • 5 O'Clock Shadow
  • *
  • Posts: 92
Re: Vanguard US Growth fund
« Reply #9 on: November 30, 2018, 07:09:00 PM »
I picked it as its heavy in info technology, has a good chunk in health care.  Those two sectors make sense to me.

So financials, industrials, communication, energy, materials, real estate, utilities don't make sense to you?
By tilting towards any sector, it implies you believe the market as a whole has priced it incorrectly and you know more than they do. Maybe you do, I have no idea what you know.

What I know is that I don't know. I don't know how to price companies, sectors, markets, and all I know is the bits of information in media and advertising, both of which use half truths to get me to believe something that usually isn't true. By tilting to any specific sector I would be just gambling on a hunch based on nothing that I can verify. My investment philosophy is to have some humility and accept that I do not know more than the market, and then base my strategy around that fundamental fact, which leads me to buying an all-world diversified index proportioned by what the market collectively has set it at, ie by market cap.

If you have specific knowledge that can help you determine prices better than the market collectively, sure go ahead and tilt when you see a market inefficiency. If not, then you're just gambling.

nsmall

  • 5 O'Clock Shadow
  • *
  • Posts: 63
Re: Vanguard US Growth fund
« Reply #10 on: November 30, 2018, 07:25:35 PM »
It just keeps getting better and better.  I figured people like their health and technology, but now you have me second guessing myself and for that...THANK YOU.   I like how most of my thinking, that I thought was smart, is turning out to be naive and wishful thinking.

I would post other funds I have with VAnguard, but I am assuming it will be the same response.

Looks like my best bet is ALL IN VTSAX?

SwitchActiveDWG

  • Stubble
  • **
  • Posts: 118
Re: Vanguard US Growth fund
« Reply #11 on: November 30, 2018, 07:37:50 PM »
It just keeps getting better and better.  I figured people like their health and technology, but now you have me second guessing myself and for that...THANK YOU.   I like how most of my thinking, that I thought was smart, is turning out to be naive and wishful thinking.

I would post other funds I have with VAnguard, but I am assuming it will be the same response.

Looks like my best bet is ALL IN VTSAX?

I would say this is the case.

Andy R

  • 5 O'Clock Shadow
  • *
  • Posts: 92
Re: Vanguard US Growth fund
« Reply #12 on: November 30, 2018, 08:03:22 PM »
It just keeps getting better and better.  I figured people like their health and technology, but now you have me second guessing myself and for that...THANK YOU.   I like how most of my thinking, that I thought was smart, is turning out to be naive and wishful thinking.

I would post other funds I have with VAnguard, but I am assuming it will be the same response.

Looks like my best bet is ALL IN VTSAX?

Same response - do you have any actual knowledge that the market would not already know what you know and have priced into to any asset classes that you would overweight or underweight relative to the market prices?

If so, sure go ahead and adjust by tilting to or from those sectors. If on the other hand it is just arrogance on your part, then the result is really just based on luck.

MustacheAndaHalf

  • Handlebar Stache
  • *****
  • Posts: 1369
Re: Vanguard US Growth fund
« Reply #13 on: November 30, 2018, 08:17:07 PM »
Before you retire, maybe chasing performance makes sense to you, so you picked a fund with more Tech.  And the Tech sector has done spectacularly well.  But you can't rely on that past performance to say what will happen in the next 5 years.

I'd recommend shifting your thinking to "preserving capital".  If you've almost got enough to retire, your goal should be preserving that money.  How much did you allocate to bonds?  If you're retiring in 5 years, your bond allocation should be close to retirement level.

I'd recommend a total stock market fund because it's more diverse.  Can you imagine holding all tech stocks during the dot-com crash?  Not enough diversification.  Speaking of which, do you hold any international?  Vanguard Total International?

nsmall

  • 5 O'Clock Shadow
  • *
  • Posts: 63
Re: Vanguard US Growth fund
« Reply #14 on: November 30, 2018, 10:20:39 PM »
@MustacheAndaHalf

Hey.  I like the preservation thinking.  I need to remember I am trying to retire in the summer of 2024.  Before finding this site is was 2039.

I have no international besides 5k in a vanguard developed index

I have no money in bonds

I have 105k in the checking right now and Im trying to make the best decisions with that money.

I honestly dont know anything about bonds.  When I look at them on Vanguards site, they all seem to be struggling recently (assuming rising interest rates?).  I am in no way trying to sound like a smart mouth, but wouldnt it be wiser to put some of that 105k cash in a Sallie Mae money market vs a bond market?  I need to finalize my plans with that money, I literally just got it yesterday from the sale of a rental.

As I get closer to the 2024 I understand I should invest in the 50/50 or 75/25 allocation, but now?  I should consider doing this now?  Again, not being a wise mouth, I honestly dont know.
  I figured I would do that in 2022 or 2023.

Is there a bond market index that it is a go to bond index for folks around here?

Thanks.  Man I love this site!!!

MustacheAndaHalf

  • Handlebar Stache
  • *****
  • Posts: 1369
Re: Vanguard US Growth fund
« Reply #15 on: December 04, 2018, 12:12:04 AM »
Based on your uncertainty, I'd suggest you look at what Vanguard does with billions of dollars.  Vanguard Target 2025 Retirement fund holds:
https://investor.vanguard.com/mutual-funds/profile/VTTVX

It holds 38% bonds right now.  The traditional retirement mix is 60% stocks / 40% bonds, so it's close to that.

I personally don't like individual bonds, because each one is like a separate contract.  So instead I like bond funds, which have a professional portfolio manager picking the bonds.  If you look online for the "3 fund portfolio", you'll see something like:
60% total U.S. stock market
30% international stock market
10% bond fund

But close to retirement, that might be 40% US, 20% international, 40% bonds.  Look at Vanguard's 2025 example, and search for "three fund portfolio" to get some more ideas.

ILikeDividends

  • Bristles
  • ***
  • Posts: 378
Re: Vanguard US Growth fund
« Reply #16 on: December 04, 2018, 12:22:55 AM »
My understanding is this (and no, I haven't back-tested it):

Large cap growth tends to outperform in expansionary economies.
Large cap value tends to outperform in slowing or recessionary economies.

Are your holdings in a tax advantaged account, or a taxable account?

In my mind, that's the hinge in the decision making process.  I.e., you can't just flip from a growth to a value tilt in a taxable account without incurring tax consequences.  In a tax advantaged account you can flip from growth to value without a tax drag.

So, I guess it depends.  In my taxable account, I go with a straight S&P 500 proxy for my large cap domestic allocation.  In my tIRA, I tilt from growth to value depending on whichever way the wind seems to be blowing.  I make small incremental adjustments monthly.  I am never fully growth or fully value; I just tilt one way or the other in my tIRA.
« Last Edit: December 04, 2018, 03:27:26 AM by ILikeDividends »

Blueberries

  • 5 O'Clock Shadow
  • *
  • Posts: 86
Re: Vanguard US Growth fund
« Reply #17 on: December 04, 2018, 10:51:44 AM »
I haven't looked into the fund, but typically growth funds are best owned at the start of a new bull market.  Again, generalizing, growth funds are likely to correct much more than a standard market correction so you're looking at higher volatility.  If it's my investment account and I'm 5 years to retirement, I'm going to stick with VTSAX.

nsmall

  • 5 O'Clock Shadow
  • *
  • Posts: 63
Re: Vanguard US Growth fund
« Reply #18 on: December 04, 2018, 11:11:48 PM »
Thanks again everyone.  I will dump all of this and buy VTSAX once I find out if its worth the wait for the dividends coming around mid Dec.  I honestly dont know, but I AM LEARNING.  Ive been reading for 2 weeks straight. 

Telecaster

  • Handlebar Stache
  • *****
  • Posts: 1380
  • Location: Seattle, WA
Re: Vanguard US Growth fund
« Reply #19 on: December 04, 2018, 11:42:50 PM »
Thanks again everyone.  I will dump all of this and buy VTSAX once I find out if its worth the wait for the dividends coming around mid Dec.  I honestly dont know, but I AM LEARNING.  Ive been reading for 2 weeks straight.

I love your posts.  Most people get all defensive when their investing decisions are criticized.

None of us really know the best strategy going forward.  The key to success is humility and recognizing the things you don't know.  Kudos.

My opinion (keeping in mind the caveats above) is that simply investing in VTSAX gets you about 95% of where you need to be.  The last 5% you can refine over the next few years.


nsmall

  • 5 O'Clock Shadow
  • *
  • Posts: 63
Re: Vanguard US Growth fund
« Reply #20 on: December 05, 2018, 11:13:36 PM »
Thanks for the kind words @Telecaster

Vanguard was closed today.  I wont have time to call them until next week. 

Does anyone know about dividends/Short term CG/Long term CG payments?

All of the growth funds I have have a yearly payment coming up in 10 days or so.  Is it in my best interest to wait until after the yearly payment  (dividends/Short term CG/Long term CG) is paid before I transfer these growth funds into VTSAX?

All funds are in ROTH IRA's so I dont have tax issues, I just dont want to miss out on some dividens and capital gain payments as I have owned the funds for a long time.

Thanks

Maybe @MDM can chime in.


flipboard

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Vanguard US Growth fund
« Reply #21 on: December 06, 2018, 05:40:22 AM »
Thanks for the kind words @Telecaster

Vanguard was closed today.  I wont have time to call them until next week. 

Does anyone know about dividends/Short term CG/Long term CG payments?

All of the growth funds I have have a yearly payment coming up in 10 days or so.  Is it in my best interest to wait until after the yearly payment  (dividends/Short term CG/Long term CG) is paid before I transfer these growth funds into VTSAX?

All funds are in ROTH IRA's so I dont have tax issues, I just dont want to miss out on some dividens and capital gain payments as I have owned the funds for a long time.

Thanks

Maybe @MDM can chime in.
It makes no difference when you convert: the fund value will drop by the amount of distributions they make on the day they make that distrbution. Since the distributions aren't taxed, it really doesn't matter when you switch over. (In a taxable account meanwhile, you'd usually want to switch before the distributions are made to minimise taxes.)

MDM

  • Walrus Stache
  • *******
  • Posts: 8795
Re: Vanguard US Growth fund
« Reply #22 on: December 06, 2018, 10:50:54 AM »
flipboard covered the distribution timing non-issue in tax-advantaged accounts.

As for growth vs. total market, see Callan periodic table of investment returns - Bogleheads.  Sometimes growth>value, and sometimes value>growth.

See Morningstar Style Box for the somewhat subjective definitions of "growth" and "value" in this context.