VOO and Chill | Is An S&P 500 Index Fund Portfolio a Smart Idea?
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- Опубліковано 1 жов 2024
- You'll often hear the phrase VOO and chill or sometimes VTI and chill. VOO is the ticker to Vanguard's S&P 500 index ETF (VTI is Vanguards total U.S. market ETF). The idea is to invest all of your money in the S&P 500 (or perhaps the total U.S. market) and just relax.
After my video showing my 2021 portfolio tracked the performance of the S&P 500 (more or less), many asked why I bothered with multiple asset classes and individual stocks. Why not just VOO and chill?
This video explains why, and more importantly, walks through some concepts that might help you decide what's best for your portfolio.
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#voo #vooandchill #robberger
ABOUT ME
While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (amzn.to/3by10EE)
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The top 500 US companies have significant international exposure, more so today than ever before. We can't look back to the 80's and use performance then to dictate future performance behavior, b/c we behaved differently back then too.
in my opinion, the top 500 US companies have also gone international thanks to globalization. Companies such as google, apple, Johnson etc are well beyond just the US market
The more scenarios I see of what to invest in, the more I think that I should consider VTSAX for my equity portion and be done with it. I like to think I can do better (with regards to overall returns), but I just don't know. I haven't done better so far.
It would be interesting to see the benefits of having only 1 fund (like VOO) where there was never a tax from rebalancing
If I were as educated and had the background of Rob I would diversify more. Since I'm not though, VFIAX and VTSAX are my core and only holdings in my Roth and 401K. Excellent video for thought though.
Even then, you’d be hard pressed to outperform VFIAX or VTSAX in the longer term, let alone making back your time investment.
VTWAX - 63% is equivalent to VTSAX but you get some additional global exposure
I would love to see the same style video but just with VTI.
They're essentially the same thing. You can copy and paste a lot of what he's saying here to VTI, and it will almost exactly apply.
@@willg1315 which one is better for long term 50+ years
@@MajorRingo nobody knows. Professional analysts often can't even accurately predict these things just 10 years into the future, let alone 50.
VTSAX beats S&P500 by 30% since 2000
@@anthonyqcolosimo5374no it hasn’t 😂😂 S&P500 has beat VTI
Hello Rob, Thank you so much for your videos! I was hoping you could comment on Vanguard’s Lifestrategy funds (Specifically VSMGX Vanguard’s 60:40 Fund) and the use of Target Date retirement funds for Retirement accounts. My portfolio currently consists mainly of VSMGX in my Vanguard brokerage account and all my retirement accounts (TSP, IRA and Roth IRA) are in Target Date Retirement accounts. Could you please share your opinion about these funds. Thanks so much and I really enjoy your videos!
On the chart, the Small Cap separated heavily from the Large cap back in the first years of the chart. They both continue to grow at seemingly the same rate. Can someone explain that? Edit: What I’m getting at is it seems the major difference in portfolio value is due to the separation in the 70s. If you did a lump sum from 1985-present it would be about the same growth. So the way to get these results would be to predict a separation of huge proportions between the Small Caps and the Large Caps.
I think that 'VOO and Chill' makes you uncomfortable because you believe (like most investors) that they can beat the market with their knowledge. I believe for the next 30 years the USA will continue to outperform the Rest of the World. The USA is the undisputed heavyweight technology and innovation leader in a free and legal market and many, many new wafer fabs are going up...in the USA. If you lead the semiconductor industry digital future, the financial market / rest of world will follow. Personally, I am VTI and Chill, and it is going great.
100
VTI and chill 💯
$ARR and chill
I call my approach "orbiting the mother ship" Note: this is only one portfolio
The s&p500 will be the largest stake orbited by a few select companies in diversified sectors.
What about Total US market VTSAX, you can’t be more diversified then this? It covers 95% of US companies including small mid and large.
Holding VTSAX for over 20 years
What is the ETF equivalent
@@davidbrooks8809 vti
VTI and chill
VTSAX and relax
VT and chill own everything
VTI+VXUS and chill
@@pankitorama ,buy everything and hold it forever.
@@tedtyler9336 yep bogelhead motto
VTSAX and take a 😴
VT-SAX and relax
Im 52 with a 91% equity portfolio. 90% of that is VFIAX. I feel pretty good about it.
The traditional calculation is that one can expect the S&P to gain 10% per year on average, but for the last 10 years it's been 15%. I went 100% S&P with my 401k and employer matching in 1995, kept contributing during the 2009 financial crisis since I didn't have a large amount accumulated by then, rode out every dip, and by staying in for decades, I have long term exponential growth that is outperforming all of my coworkers. Another reason why I like it is that the S&P is analyzed and closely tracked on Fox Business News. I also feel that the large cap companies are better equipped at riding out volatility and supply chain disruptions than small companies that have fewer resources and fewer options. A negative is that the big tech companies have bigger and bigger representation in the S&P so it's becoming the NASDAQ. Not terrible though since the future is in Tech.
I back tested via portfolio visualizer. From January 1993 to December 2021, VFINX produced 10.64%. The MWRR was 10.68%.
The Schwab 1000 in the same time period produced an average return of 10.54%. The MWRR was 10.67%.
But my uncle told me he was ruined by invested mostly in s&p right before the Dotcom bust. He said he never really recovered.
@theotherview1716 because he sold, guaranteed. If he woulda held he would have been just fine.
Direct, clear and valuable insight. Thank you. Subscribed.
S&P companies are themselves international. They also buy small cap companies to extract their value. Which is why s&p provides best risk vs reward ratio.
Is the idea that most World indexes are so heavy leaning on USA large caps that it doesnt matter too much if you invest in an SP500 index vs world/total market index
Why not just VT and chill?
Certainly a reasonable approach.
VTSAX is all you need
I watched this again and used VSIAX specifically against VTSAX instead of the generic small cap value and large cap. The period was restricted to a 10yr period of 2012 to 2022. VTSAX outperformed the VSIAX in return by $16k and CAGR by a percent or so.
You can’t argue data but there’s a lot of factors at play. Before the 90s no one had the internet. Manufacturing was still in the US. Today we have technology. Not many technology companies are small cap. Time in the market is the most important takeaway I see from that analysis
Counter point is that US based companies operate internationally, so you get the international diversification without having to sacrifice the strict accounting practices that US based companies offer.
I’m all in on VTSAX. Problem solved.
One argument for VOO is that they are multinational companies that own assets and sell products internationally. The percent of foreign assets or sales who knows.
Bitcoin and ethereum and chill literally for life or broke
You are an absolute machine. Almost an 8 hour workday for you. I hold 15% individual stocks 65% VFIAX for equity exposure. I wish that I never had the individual stocks, most with very large CG
The sp 500 are international companies by default by being so big
I’ve been slowly adjusting out of international and adding more small/mid cap. I’m probably allocated at 60% large, 30 mid/small, and 10 international, but this video has me rethinking maybe adding more international.
Putting money in International is the best way to underperform the market, should totally go for it, don't forget to buy some CDs and bonds as well
@@grigorirasputin425 really? Do you really believe that. A portfolio that is diversified with both us and international has proven to outperform and all us portfolio in the long term. Don't let the last 10 years fool you simply look at the 10 years before that
I must say, I really enjoyed how you approached this. Very well done. I learned a lot…and I’m not an investing rookie.
The argument can be quite easily narrowed down, why invest globally when the SP 500 made the most gains? Why invest in 500 companies when 100 of those made the most gains? Why invest in 100 companies when 10 made the most? You are increasing risk in equal portion to greed.
I'm hoping you have a new video with recommendations or options of index investing in light of how dismal the markets have been since early 2022
VTI all day long !! Best vanguard fund for long term horizon.
VOO & QQQ and chill for me
I go for QQQM instead. Expense ratio is 0.15 instead of 0.2
A professional markets expert I saw on an interview recently had a comment that I hadn't heard before when was asked some question related to the past x number of years about the market performance...He said something to the effect that the markets have ZERO memory of anything that happened in the past, they focus on what is the future...Made sense. Yeah, Bogle and Buffett have said the easiest thing to do is invest over time in the index funds of the S&P or total US stock market and you'll be fine at the end of the day, and for most people that's best. But, like you said, it's up to each individual's preferences, opinions, and risk tolerances...Good video, Rob! Happy New Year to you.
Rob in your opinion if mid caps and small caps are so much better than large caps then why do you not increase your exposure? In reality you have very low exposure compared to large caps.
Good explanation Rob! You do an excellent job with your rationale for what you are comfortable with. Love your content. Keep up the good work. Happy New Year!
What do think when it comes to SCHD VS SWPPX VS the VOO?
I'm 100% FTSE All-World but, I'm concerned that US has 60% of it, I would rather like 30% US, 30% EU, 30 Asia.
Combine it with the ftse all world high dividend 50%-50%
If you are going to invest all your money in the S&P500, why not just invest in the the top 5 or 10 by market cap since they are the ones carrying the index right now anyway?
Diversification, the top 10 stocks in the s&p 500 are how much percentage wise of the fund
Would you compare VOO to VTI?
SP500 (VOO) companies have international exposure. This very basic and apparent property of VOO gets overlooked far too often!
Very very true. Never thought about it like that. Most Top US SP500 have HQs worlwide and share in the growth of developing countries
with all the biggest company's in the USA now getting a bigger and bigger % of there profits from international growth I have no problem with just holding VTI with 4160 holdings gives you a bit of everything micro small mid and large all in one place. thank you for the video
I’m half vti half qqq , love it !
VTSAX/VTI are the best performing Total USA funds in their class.
Close 2nd is Schwab's SCHB by 0.02% short on a 12 year average. 16% vs VTI's 16.02%
Instead of VOO, I do IVV and chill, but in my regular brokerage account, i.e. taxable account
I do apply the core-satellite investing method in my ROTH
I'm curious as to your thoughts on the core-satellite method on constructing a portfolio
That's effectively what I do. I have index funds for the core and individual stocks for the satellite.
S&p500 index and growth index
I just reached 100,00.00 of investing in VOO and my gain is 22,000.00
I'm more of a VT and chill guy. I like a little more diversity. As for the question of international vs all US, over the 50 years from 1970-2020, international outperformed for three of the five decades. The US did better over the long term though. Today the US represents around 25% of the global economy. But the US stock market represents around 60% of the global equity markets. International stocks are currently paying around twice the dividend of the S&P 500. How long do people think this is going to last? It's not 1945 anymore. For that matter, it's not even 1985. The world is evolving, and America's share of the global economy is slowly shrinking. Long term VOO is probably fine. But my gut says international stocks are cheap and we are witnessing, albeit in slow motion, the end of the post WWII economic era. I'd rather own the global stock market.
VTI + VXUS
Or just VT
@@spacof By buying both you can control the weight
How can you compare earnings growth of international funds to US funds?
I took all my money out of tesla a few years ago and put 90 percent of it into this mexican spring water company . The other 10% is in a new and upcoming pay phone manufaturer. The future looks bright🤠
If you wanted some small cap, midcap, large cap all in one fund wouldn't VTI be a better one to chill with then? They all seem to have ties with international businesses too.
Vfiax and chill
VOO good, UPRO great chill
What about foreign taxes and fees? I noticed that investing in TSM, I lose money to foreign taxes on dividends, even in a tax deferred account. It makes me wonder how disadvantaged this makes foreign long-term returns.
Tesla and Chill
The S&P 500 companies are all mostly Global so they are in effect US and international stocks noh?
50%splg 50%schg
It is great for those who can set it and forget it. For the rest of us who love investments, not so easy.
Thanks Rob. I agree with your approach, although many of the S&P500 companies are multinationals with large portions of revenues from operations outside the US. From yesterday's video, why do you hold VFWAX as opposed to it's twin, VTIAX? Did you do a TLH switch away from VTIAX in the past and are still with it? Or do you see some advantage to VFWAX?
Exactly. TLH.
You still have single county exposure by being exclusively in US equities regardless of who else they do business with. A lot of foreign corporations also do business in the US & Canada. Samsung, Toyota, BMW, etc. That doesn’t make them American companies anymore than international operations make US companies foreign orgs.
Great video to think about things. Here're a few things to think about. First, your analysis is based strictly on historical performance. What I find interesting is that often if an idea doesn't suit, people will say the past does not tell about the future. But if the idea suits, they'll use past performance to imply future performance. Something to think about. Another very important aspect of your analysis/reasoning is that it is based on "lump sum". (I think). By and large, we DCA. This is important because small caps are much more volatile than large caps. When you DCA into volatility, it depends on luck a lot.
Why not do QQQM and chill?
Let’s not stop there what about TQQQ+UPRO instead of VOO and QQQM
Personally international markets are of very little interest to me. US companies are diversified internationally and we have the greatest country in the history of the world with the greatest stock market. I see no worry with casting your lot with US enterprises.
Why not start your own channel for your own recommendations
Non US residents dont buy VOO.
30% witholding tax on dividends.
Up 40% estate tax above 60k assets
Most of the large cap stocks in the S&P 500 are overvalued. It's time to look at the the little guy.
Insightful. I was thinking adding three types of fund. ETF for S&P 500, for total US stock market, and bonds
What about VTI??
Hi Rob, thank you for all of the good advise! I agree with almost everything you are talking about except the allocation to Vanguards BND fund, as part of the 3 fund portfolio. It looks to me as though BND has been performing poorly over the past 5 years or so. There must be something better?
Thank you, Tom
Its the difference between those who like to play and try to beat the market and those who are satisfied with market value. The average joe will do great with VFIAX or VTSAX as their equities.
VOO/VGSH and chill, anyone think they know more than Warren Buffet?
Ijr looks to have a better history than vb, vbr and vbk. Paralysis of the analysis
Rob, how about VT and chill? You have the added benefit of international with VT.
Certainly a reasonable approach. And I love the simplicity. For me, a bit too much international exposure, but who knows, it may turn out to be the best approach.
I don't think any serious investor should start investing in the stock market, without at least putting a fat chunk in an Index, putting it on drip & leaving it alone.
Markets are increasingly correlated. Also, the VOO companies are multi-national companies. Both are arguments against the need for international stocks.
VOO are also the most successful international companies
Sir, how about VTWAX. That's total diversification. I can combine that with t bills, savings or CDs at this point too.
This is comforting because I slice and dice too
Confirmation bias! 😂
@@rob_berger guess so!
So how much do you need to invest in it to get about 50000 dollars a year in income?
Morning Rob.... I retired couple of years ago at the 59...I am planning on opening a broker account for my daughter(under my name) whom is 12 years old now in a lump sum of around $100K( Just in case we end up spending the rest of net worth). She is going to have access to it, only after she reaches 40 and can only have monthly distribution for the rest of her life and if anything left, it will go to her kids(This is how we are planning to put in living Trust)....Based on the time horizon, What would you invest in, if you were in my position? Thanks in advance
I opened an custodial acct for my 4y/0. Perhaps you should look into that.
Fidelity has youth accounts available for kids =/< 13 yrs old that they can use to invest in equities.
I find most large and mid cap companies have international ties these days. I am rather new at this DIY investing and I’m investing in US and Canada only.
A friend once told me that if he could get the newspaper (it was a long time ago) one day early, he'd be a very rich man. You shouldn't drive solely through the rear view mirror.
BTW: Another great vid Rob! Thanks!
Exactly - the period of comparison has been one of the most amazing 35 year runs in history.
I really rate VOO and will always be investing in it!
Consider vti for long term
Regarding pricing, 1 share VOO equivalent to 1share VTI & 2 shares SPLG. I prefer to buy 3 shares latter to expose both US whole market & S&P index.
I am not really a Vanguard "fan-boy" so I went with FXAIX for my S&P 500 fund since I invest with Fidelity (401k and IRA's). It pretty much has identical performance as VOO and half the expense ratio at 0.015% vs. 0.03%. Every little bit helps. I am not totally against Vanguard. I have some VGT as well. My 401k is basically FXAIX, SCHD, VGT, IEFA, XSD, a little bit of bonds and my Roth IRA is FXAIX, SVOL, O, and WPC.
Why not FNILX?
FXAIX and chill
I like FXAIX. Super-low expense ratio.
So would you suggest a target date fund?
You better be a little more specific, not all target date funds are created equal. Even vanguard which I consider the best is very high international
why not rebalance in the case of macro changes?
I can't sell my stocks right now because they're down, but when I get back to even I'll put most of it in voo and vti
What's your take on target funds like: life path 2030.
Hilll Walks
What’s the math on success rate on long term(10-40 years) margin usage for a 1 million dollar portfolio in a low interest rate environment ( less the 4%) with a ~+20total leverage?
10% return and I am happy. VTI & chill for me
That's the one. Why panic when investing.
75% VTI, 25% VXUS and chill.
Nice video
Skyrocketing stocks make it hard to accumulate shares. You want growth but DCA will not really grant you any favors with those TSLA moves. It's too easy to peak at your portfolio and see them big gains and think it will just keep going.
VTI, SCHD, O then chill 😊
Bob, is it not wise to invest in the total stock market index fund (fidelity)? I hear the total market index fund is bombarded with IOPs and this spells trouble for future returns? In short which is better, SNP 500 or the total market? thanks
FXAIX
From one stock only maybe Facebook or Tesla might be a better choice
Hi Rob,
Can u suggested some bond investment books for beginners and matured investor?
Agree. I got both large and small caps. My goal is growth, Good video! Thanks.
What are your 6 or 7 funds of choice??
The big (historic) issue with our investments is not necessarily our stock investments, but interest rates. After 40 years, interest rates appear to have bottomed out. I have a friend who is 67 and retired and still has 100% in 10 year U.S. treasuries. How much should we have invested in fixed investments for the next 30 years? I have 0% in fixed investments, currently. I recently learned of the term 'cash drag' (holding a lot of cash drags down our portfolio rate of return). My goal for 2022 and beyond is to keep my cash to an absolute minimum. We all have cash drag, and since our cash earns us a near 0% interest rate, this is a huge opportunity for us all. What was your cash drag for 2021 (how much did it reduce your portfolio rate of return)?
So target date fund is the way to go