Where to invest now?

[HydroJim]

After my next contribution, my investments in Vanguard Total Stock Market Index (VTSMX) will be eligible to upgrade to the admiral shares. After I step up to the lower expense ratio, should i continue pumping money into a strictly US stock based index or should I diversify a bit into something like international stocks or maybe some bonds?

Info that may be important:
Age: 19
Total in Roth IRA: ~$10,000
Contributions left in 2016: $4,500

[Stache-O-Lantern]

First off, congratulations on getting started so early.

VTSMX (or the admiral shares which are VTSAX) is dominated by big companies with lots of income from overseas sales, so in that sense it is already somewhat internationally diversified.  If you do not plan to use this money for at least 5-10 years, my advice would be keep plowing money into VTSMX, at least for now.  Diversifying into bonds is a better idea when a portfolio grows to at least several tens of thousands of $, or you need the money in the relatively short term of a few years.

But the most important thing is not whether or not you diversify a little now or later with international, or bonds, or international bonds.  It's whether or not you make changes to a good plan when there is a big market downturn.  I know this isn't your question, and I apologize in advance if I sound preachy.  But there is nothing likely to be more important for your returns in the long term.

[PhysicianOnFIRE]

Keep on keepin' on.  VTSAX is incredibly diverse, and you have a very long time horizon (assuming you don't plan to FIRE in your twenties). Take advantage of the low expense ratio in the admiral fund.  Add international when you've got substantially more money to invest.

Congrats on hitting a big milestone!

Cheers!
-PoF

[SwordGuy]

At your age and situation, you want growth, not asset protection.  I would stay with VTSAX (which is what you'll have when you convert to Admiral shares) for now.

And, as already posted, don't sell it until you are FI and you are using it to live on - no matter what doom and gloom is on the news.

[Cwadda]

I started at your age and put 100% in VTSAX. Hope it's okay!

WARNING!
Don't contribute more than your claimable income. If you only made $5,000 for a given year, don't put in $5,500!

[MustacheAndaHalf]

John Bogle has suggested everyone should own a percentage in bonds - if only to ride out the bad years in stocks.  In theory people can tolerate 100% stocks, but in practice they should have some "ballast" in bonds.  So what does that mean to someone with $10,000 going on $15,000?

I'd suggest 20% bonds while you learn / experience what you do when stocks take you for a very unpleasant journey.  I believe Roth accounts have a $1,000 minimum investment, so you could already buy into the total bond market fund.  But if that's not the case, at $15,000 in assets you can set aside $3,000 (the normal fund minimum) for the total bond market.

There's a lot of MMM people who like 100% stocks, but at this point in a bull market its hard to tell who's talking and who means it.  That's why I think a 20% bond starting point makes more sense - it fosters better behavior if the market corrects, and you learn that stocks and bonds can do better than each other at different times.

[forummm]

I you "only" have $10k, then you really don't need to worry about diversification beyond VTSAX. I don't mean to sound snooty (I remember when I didn't have $10k, so it also seemed like a lot of money to me at the time). But as you get to 50k or a 6 figure NW, then diversification matters more. You'll get to a point where you save $10k in a month or two :)

[arebelspy]

You shouldn't be asking us this.  :)

You need to develop an IPS (https://www.bogleheads.org/wiki/Investment_policy_statement), and consult it when things like this come up.

Your questions are fairly basic, so I'd suggest two resources to explore to help you develop that statement.

1) JLCollins' stock series: http://jlcollinsnh.com/stock-series

2) Tyler's www.portfoliocharts.com


Start with Jim's stock series, and read it all the way through. Then go to Tyler's site and read through all of his blog posts, to start learning about diversification.  He has some neat tools to play with, at that point.

Once you decide on an strategy, you can write an IPS, and then start a thread for feedback on it.

Good luck!  :)

[dandypandys]

You shouldn't be asking us this.  :)

You need to develop an IPS (https://www.bogleheads.org/wiki/Investment_policy_statement), and consult it when things like this come up.

Your questions are fairly basic, so I'd suggest two resources to explore to help you develop that statement.

1) JLCollins' stock series: http://jlcollinsnh.com/stock-series

2) Tyler's www.portfoliocharts.com


Start with Jim's stock series, and read it all the way through. Then go to Tyler's site and read through all of his blog posts, to start learning about diversification.  He has some neat tools to play with, at that point.

Once you decide on an strategy, you can write an IPS, and then start a thread for feedback on it.

Good luck!  :)

Good advice! I need to do an IPS and finish the stock series- i got half way through then this forum took me over!

[UKFreak]

If you take you age into consideration, you should not even be thinking about bonds. You have so many years to compound, so in my opinion stocks are the way to go. A mix of conservative dividend paying stocks and some high potential ones as well.