If only everyone knew this information. Most of my investments are in VTI. I had read that VTI and VOO are similar over the long term so I just chose one. I was too scared to invest for a long time, because I had heard that investing was risky. After years of trying to sift through all the advice out there, I learned that an s&p 500 or total stock market index fund isn't risky if you buy and hold for a long time. Then I finally took the leap. I'm not planning on buying any individual stocks, a basic plan is better for me. I'll be sharing this video. Thanks!
@@Sicksociety334 That was exactly the statistic I was thinking of. There was no way picking individual stocks would allow me to do better than the stock market itself, so if I can't beat it, just buy it!
I like the SCHD and Growth approach. I chose QQQM for my growth ETF. I know that the math says the S&P will beat dividend reinvestment through SCHD over the long term but the fact that the dividends being paid every quarter keeps going up is a huge motivator to keep going. Yes I’ll also pay more in taxes for non retirement accounts but my goal is to live off the dividends and hand that portfolio off to my kids. It’s worth the trade off. The peace that comes with knowing money is coming in without selling stock is my drive. It doesn’t have to beat the S&P. That being said I will put more of my money into growth stocks after a certain point investing mostly into SCHD.
Thank you for your eloquent videos Sir, personally i keep everything simple sticking to 1 global index fund, simplicity is best for me , much appreciated for your knowledge
Thank you for this video. I think it's content is pure gold. I have a similar strategy. 3 ETFs for 90% of my portfolio and the last 10% I use for individual stock purchases. The individual stock picks are only because I enjoy that part of it. Looking back, I think I would have done even better if I had chosen just Voo.
Thank you! If you enjoy picking stocks there’s nothing with doing it even if you “underperform.” There’s value and enjoyment in learning and it could just as easily outperform over time
I find that dividend portfolio and S&P index compliments each other well. Usually my dividend growth portfolio is doing good or holding even on days the voo isn’t and both are generally doing well when voo is doing well. All I hold are 20 dividend aristocrats and VOO and fidelity’s S&P index. I sleep very well at night.
Pretty much what I've been doing. VOO and VGT. I have some VUG/VTI, but I keep it simple. Studies have shown simplicity is actually s key factor in long term success.
I have VOO 33% QQQM 16.5% VGT 16.5% SCHD 18% DGRO 16% Essentially 33% Foundation 33% Growth and 34% dividend. I’m wondering if I should reduce my dividends ETFs and put more into VOO? Any recommendations on adjusting my portfolio would be appreciated. That or maybe do something like VOO 25% QQQM 25% VGT 25% SCHD 13% DGRO 12% I see the potential for high gains with this profile but higher risk.
Thank you for this clear and concise video. The KISS strategy is definitely the best for most people and most holdings. I definitely use it for my major accounts. I opened a self directed account to more of a dividends focus as I near retirement - this is where the more detailed information from your other videos helps out.
Excellent info and I agree wholeheartedly with it because I have lived it out in real life. I have primarily used funds like VTI and VOO for a very long time. However, I am retired now and prefer to use SCHD. I will probably continue to do so until the "big tech stocks" of the S&P 500 are not so expensive and don't dominate more than a third of the index.
Great video, Matt! Wish I'd watched this before embarking on my investing journey. I had a lot of fun choosing stocks and a variety of etfs thinking it was better to be diversified but the result so far is that VOO and QQQM are positive and everything else is negative - proving your point!
I just looked at, still have to dig into it more. But my general thoughts are - I don't love losing Broadcom and ADP. But this is part of SCHD's process. It tries to find quality companies with high dividend yields, which in theory means that it's buying dividend payers at a discount (higher yield usually means lower price and vice versa). When Broadcom comes back down at some point, maybe SCHD adds it back at a better price. But, I don't know. They're adding Hershey at a time when I just sold it, etc. So it mostly depends on what your goals are. If it's quality dividend income with some prospects for growth - SCHD still is strong for that. But anyone who expects SCHD to beat the market or come close most years may be disappointed just by design. Just with this quick look, I don't love it. But I already was leaning this way with trimming SCHD earlier in the year since one of my goals is to actually beat the market.
I spend a lot of time researching individual stocks but I do not regard the time "work". Rather its a hobby where I get the chance to dig into stuff and cultivate the neardy side of my personality. I know that I will likely end up underperforming, compared to spending more time on work and simply investing in a good index ETF, but that is ok, as long as I do not kid myself into believing anything else. I simply like owning shares of companies and to reflect on their future and the developments in society and markeds in general.
When I started in 2017 I new nothing about investing and wasn’t even online yet so I got a portfolio manager and my returns averaged 6% for the last 6 years,not bad but your example of investing in the SP500 is much better the return is higher and the fees are much lower I now manage my own portfolio UA-cam and your channel are great for beginners,you have just shown a simple way to invest that most investors can’t beat Hopefully this causes some people to start investing
Thanks Matt, great video as always maybe sometime you could do a video on what your strategy would be for basically the reverse, going from way to many fund/etf’s, to just 2 or 3, When I started investing it was.. ahh you gotta have a Large Cap Value, Blend, Growth. Same for mid and small caps, intl., emerging, bond funds, intl. bond funds, etc. I counted them up today I have 15 mutual funds/etf’s. I can guarantee many others in their 40’s to 60’s have as many or more.
That’s a tough one, because it will really depend on each person’s situation and tax situation (ie if selling triggers a tax event or not). In general the simplest approach would be if everything is in retirement accounts and there’s no tax hit then I would sell the ETFs that don’t really fit my plan anymore and move into the 1-3 that I wanted to move forward with. But if there is a tax hit it becomes a more complicated problem. Personally I wouldn’t just stay in an investment because I’ll have a tax hit - but only if the change is worth the short term tax impact. Hope this makes sense
I'm not familiar with MGK, but for VGT and QQQ - both are very good. If your portfolio is only going to be growth (3 growth ETFs that you talked about) I would just ask if you're prepared for what that means in terms of volatility and risk. It's easy to look at the last few years and say "I just want to invest in growth and tech" because they have done very well. If your timeframe is long (20-30+ years) and you're ok with wide up and down swings, it'll likely do well. You just should understand the worst case scenario as well and how that would make you feel. For example - take a look at what a VGT, QQQ, MGK portfolio would've done in 2022. It would've been really bad. If you have the stomach to deal with it though, and you don't believe that will be the norm going forward...then it's ok. Hopefully this is making sense.
I can summarize it this way (for me): It is largely a hobby. The majority of our investment portfolios are in three ETF, I am certain you can guess what they are. Yes, VOO, SCHD and VGT. Then we have a small % of our portfolios that are "play money". I have some ETFs, one being about shipping goods by boats, why? Well I like boats and it is kind of related to my business. Others are a bit more serious. ;-) I also have stocks because I like the company, because I believe in their business model or the industry they are in. My partner own some F1 Ferrari stocks, she lived in Italy for a good portion of her life and being a Tifosi, we had to buy some! (it was also a good investment when Hamilton announced his move there!). . So why do I like this "hobby"? I absolutely love the rush when one of my stocks sky rockets. I also love looking at the few 100$ I receive in dividends. You said something in one of your videos like, I love thinking that someone else (my dividends) bought me a coffee! Lastly, I found Matt channel's due to my hobby, that is pretty good too!
s&p 500 is already a good diversification (500 companies!), for better diversification you might want popular VGS (MSCI world index) investing in stocks from all over the world but still most significant % of its portfolio is USA's biggest companies
I would have to look at what the methodology / criteria is of a specific one, but in general I don't focus on value characteristics all that much (meaning traditional value vs growth, again depends on the methodology). But that's just me
I learned this lesson long ago and when comparing with my friends who invest in individual stocks on robinhood i compare my all time return to theirs and its hilarious how much more return i got not doing anything besides sticking to VOO and all they talk about is stocks and yet their return is a lot lower everytime somebody talks about stocks i tell them lets compare all time return and I’ve yet to meet anyone who has beaten the snp500
Yes, I agree. But there are some times when you can really "kill it" with stocks ex. I just sold some Meta, I had paid 30x 121$ for the stock, I sold 10x 500$, previously I sold 10x @300$. I quickly re-invested that $8k in my 3 favorites ETFs, and the META I have left is still worth more than I paid for! I never intended to keep META as almost all my stocks pay dividends but at 121$, it was so cheap. Same with Microsoft now tripled my investment and it pays dividends. I did buy some Disney as I believe in the Co. that has not been so good... Yet. 🙂
@davidgarza995, my Apple stock is up over 700%. Absolutely crushed the S&P500. Microsoft up over 600%. I'm not against index investing in the S&P500. My largest holdings are in the index. People just have to know the limited upside of index investing. You may find that some of the people you've been talking to, have indeed beaten the index. I'm about 10 years into my investing journey. those are my results so far. You can CLAIM SP will beat Apple in the future. I can Claim the opposite. But we do NOT know what the future holds.
SPLG is nearly identical (same as SPY, etc) so it's a matter of preference mostly. The main point I was trying to make is that a "S&P 500 index fund" is a great one-ETF portfolio for those starting out.
Holy actual sh*tballs, that map analogy was easily the best explanation of the topic at hand that one could ever find. I am stealing that to help bludgeon younger relatives into investing wisely, including in themselves
Totally like the idea behind the video.. but don’t totally agree with the etf suggested 😊 As you said investing in s&p500 is betting on the us. I would prefer to invest in a total stock market (at least developed countries). Never know what may happen in the long time. That’s just my two cents 😉
Given the state of the world and where the US is heading in the eyes of the world, especially with the current middle east conflict and how the US and its ally in the middle east is seen as a rogue state by the rest of the world, I am now a bit worried about VOO. Just a bit though. US economy is still by far very big.
I focus too much on my investments and not enough on other streams of income. I have a day job but if I took the time I spend researching the market and put it into a side hustle I may be further along.
Better to invest in a total world market etf and benefit from international diversification. VT was a good example. The US markets past performance is no indicator of future performance , just look at what happened to japans market.
I understand the thought but here’s my question - should someone be ok with potentially underperforming for the next 30 years with international diversification? Or are there specific catalysts you believe that will make the US market revert back to the mean going forward?
@@mattderron ‘should someone be ok with potentially underperforming for the next 30 years with international diversification?’ I find this an odd question , as you could ask it for just about any investment decision a person could make. For example ‘should someone be ok with potentially underperforming for the next 30 years by overweighting the US market?’ Or perhaps we could just ask ‘are you comfortable having all your eggs in one basket?’ I have no specific catalyst in mind , unless we were to simply take a look at current valuations of US stocks compared to international markets (higher prices all else equal tends to mean lower expected returns). But that’s kind of the point , I don’t think the future is all that knowable. Investing in imperfectly correlated assets gives investors the opportunity to decrease risk without decreasing ‘expected’ return.
@@739jep the reason I ask is that while I agree that “past performance doesn’t guarantee future results” it does give us an idea of what’s been performing. Here’s an example. If you have a basketball player who has averaged 30 points a game for 10 years straight and you have one that has averaged 15 a game for 10 years straight - which one are you going to put your money on averaging 30 next year? This is why I struggle a bit with the idea that “I’m decreasing risk without decreasing expected return.” Because if you looked at the past 30 years or whatever - you would’ve decreased your tangible return by not overweighting the US market. That’s why I asked the question. Because an investor needs to say “I choose more diversification because that is more important to me than the fact that this has underperformed for the past 30 years” Do you see what I’m getting at?
@@mattderron I understand the point you’re making , but I strongly disagree with it. it’s a well known behavioural error in finance. It seems as if you’re assessing the probability of favourable future results of a stock market based on past results. That’s the message I get from your basketball example. The problem is basketball isn’t analogous to stock market performance in the slightest. It’s a mistake to think this way when investing. I think that decreasing the unsystematic risk of a portfolio probably should concern investors more than an asset or sectors past performance truth be told 🤷♂️ ‘Because if you looked at the past 30 years or whatever - you would’ve decreased your tangible return by not overweighting the US market’ - Ignoring the significant hindsight bias with this statement we have to remember that 30 years ago the sentiment surrounding the US market was significantly different compared to now. A little over 30 years ago people were viewing the Japanese market as more favourable than the US market and their reasoning was similar to what you’re using now. Then look what happened to the Japanese stock market. 🤷♂️ I can provide a list of studies related to this topic if you would like to take a look at them?
@739jep ok so this gets more to my point - you fundamentally believe that the US market is overvalued and/or bubble territory like Japan 30 years ago - so that’s your thesis as to why diversification to other countries at this stage is important. That’s fine. Your investment thesis is that the next 30 years in the US market won’t be like the last 30 years based on the fundamentals you see. I have no problem with that. Where I struggle is when people say you should “de-risk” or diversify for the sake of doing it. There are always trade offs. Lastly I disagree that it’s wrong to view stocks like my basketball analogy. There are fundamental factors that we consider with stocks all the time that are similar. The outcome is “this stock has outperformed for 30 years” but the reasons are things like “good management”, “strong moat with pricing power”, “good capital allocation” and those things contribute to the outperformance. In that way, outperformance can be an indicator of fundamental advantages. The reason to pick the 30 point scorer isn’t because they scored 30 points. It’s because there is something about them that has led to the success of averaging 30 points for 10 years straight. If those fundamental things still exist, why wouldn’t I assume they will continue to outperform? This is where I struggle with studies that use heavily aggregated data. It tells you very little about anything EXCEPT for hindsight bias. The catalysts for any company or country are the fundamental advantages that they have. Sometimes that manifests itself into “winners keep winning.” Hope you understand my point of view
"Wow, thats a low blow". Laughed out loud at that one. If you actually enjoy the mental workout of researching companies and tweaking portfolios, who cares if you didnt make the max possible return? Hell, I watch your videos about slightly underperforming, even though I am already an expert underperformer! Maybe i should, y'know, study or something instead of stooging around on UA-cam.
If only everyone knew this information. Most of my investments are in VTI. I had read that VTI and VOO are similar over the long term so I just chose one. I was too scared to invest for a long time, because I had heard that investing was risky. After years of trying to sift through all the advice out there, I learned that an s&p 500 or total stock market index fund isn't risky if you buy and hold for a long time. Then I finally took the leap. I'm not planning on buying any individual stocks, a basic plan is better for me. I'll be sharing this video. Thanks!
Awesome, thanks!
95% of wealth managers do not beat the benchmark ( s&p ). Even if you did how often could you manage to do it ? A vanguard index is great
@@Sicksociety334 That was exactly the statistic I was thinking of. There was no way picking individual stocks would allow me to do better than the stock market itself, so if I can't beat it, just buy it!
I like the SCHD and Growth approach. I chose QQQM for my growth ETF.
I know that the math says the S&P will beat dividend reinvestment through SCHD over the long term but the fact that the dividends being paid every quarter keeps going up is a huge motivator to keep going. Yes I’ll also pay more in taxes for non retirement accounts but my goal is to live off the dividends and hand that portfolio off to my kids. It’s worth the trade off.
The peace that comes with knowing money is coming in without selling stock is my drive.
It doesn’t have to beat the S&P. That being said I will put more of my money into growth stocks after a certain point investing mostly into SCHD.
That's awesome - sounds like you have a solid plan and know what expectations you have for it. Honestly that's the most important part.
I'm doing the same thing.
Always enjoy the insights you offer and share here, Matt.. Truly!
Thanks Ari!
Thank you for your eloquent videos Sir, personally i keep everything simple sticking to 1 global index fund, simplicity is best for me , much appreciated for your knowledge
Thank you, I appreciate it! Simplicity is great, and knowing what works best for you is the most important part of it
Thank you for this video. I think it's content is pure gold. I have a similar strategy. 3 ETFs for 90% of my portfolio and the last 10% I use for individual stock purchases. The individual stock picks are only because I enjoy that part of it. Looking back, I think I would have done even better if I had chosen just Voo.
Thank you! If you enjoy picking stocks there’s nothing with doing it even if you “underperform.” There’s value and enjoyment in learning and it could just as easily outperform over time
i like the combo between growth and dividends, so for me would be (if not investing in DGI): VOO, VGT, SCHD - 33% each!
I find that dividend portfolio and S&P index compliments each other well. Usually my dividend growth portfolio is doing good or holding even on days the voo isn’t and both are generally doing well when voo is doing well. All I hold are 20 dividend aristocrats and VOO and fidelity’s S&P index. I sleep very well at night.
Pretty much what I've been doing. VOO and VGT. I have some VUG/VTI, but I keep it simple. Studies have shown simplicity is actually s key factor in long term success.
VOO and a little bit of VT for a little bit of diversication hits the sweet spot 😮
I have VOO 33% QQQM 16.5% VGT 16.5% SCHD 18% DGRO 16%
Essentially 33% Foundation 33% Growth and 34% dividend. I’m wondering if I should reduce my dividends ETFs and put more into VOO? Any recommendations on adjusting my portfolio would be appreciated.
That or maybe do something like VOO 25% QQQM 25% VGT 25% SCHD 13% DGRO 12% I see the potential for high gains with this profile but higher risk.
Thank you for this clear and concise video. The KISS strategy is definitely the best for most people and most holdings. I definitely use it for my major accounts. I opened a self directed account to more of a dividends focus as I near retirement - this is where the more detailed information from your other videos helps out.
That's awesome, thanks!
I am a simple man, I get notification that Matt uploads, I stop everything and watch
lol awesome, thank you for that!
Excellent info and I agree wholeheartedly with it because I have lived it out in real life. I have primarily used funds like VTI and VOO for a very long time. However, I am retired now and prefer to use SCHD. I will probably continue to do so until the "big tech stocks" of the S&P 500 are not so expensive and don't dominate more than a third of the index.
That’s awesome
Great video, Matt! Wish I'd watched this before embarking on my investing journey. I had a lot of fun choosing stocks and a variety of etfs thinking it was better to be diversified but the result so far is that VOO and QQQM are positive and everything else is negative - proving your point!
It's all good, we all learn as we go!
Eager to hear your thoughts on the SCHD rebalancing. So far I'm not seeing much positive news on it.
I just looked at, still have to dig into it more. But my general thoughts are - I don't love losing Broadcom and ADP. But this is part of SCHD's process.
It tries to find quality companies with high dividend yields, which in theory means that it's buying dividend payers at a discount (higher yield usually means lower price and vice versa). When Broadcom comes back down at some point, maybe SCHD adds it back at a better price.
But, I don't know. They're adding Hershey at a time when I just sold it, etc. So it mostly depends on what your goals are. If it's quality dividend income with some prospects for growth - SCHD still is strong for that.
But anyone who expects SCHD to beat the market or come close most years may be disappointed just by design. Just with this quick look, I don't love it. But I already was leaning this way with trimming SCHD earlier in the year since one of my goals is to actually beat the market.
That map analogy was top notch! Good stuff
Thanks!
Thank you
I spend a lot of time researching individual stocks but I do not regard the time "work". Rather its a hobby where I get the chance to dig into stuff and cultivate the neardy side of my personality. I know that I will likely end up underperforming, compared to spending more time on work and simply investing in a good index ETF, but that is ok, as long as I do not kid myself into believing anything else. I simply like owning shares of companies and to reflect on their future and the developments in society and markeds in general.
Well said, I feel the same way. I genuinely enjoy doing it and buying companies. Performance is TBD and that's ok.
Makes no sense. Hard work to understand perform. I don’t get you guys.
@user-lu5cl3vu9p if you assume that we will underperform forever then…ok
When I started in 2017 I new nothing about investing and wasn’t even online yet so I got a portfolio manager and my returns averaged 6% for the last 6 years,not bad but your example of investing in the SP500 is much better the return is higher and the fees are much lower
I now manage my own portfolio
UA-cam and your channel are great for beginners,you have just shown a simple way to invest that most investors can’t beat
Hopefully this causes some people to start investing
Thanks, I appreciate it!
Great video, well explained, thank you.
Thanks!
Thank you Matt, greetings from Costa Rica
No worries, greetings!
Thanks Matt, great video as always maybe sometime you could do a video on what your strategy would be for basically the reverse, going from way to many fund/etf’s, to just 2 or 3, When I started investing it was.. ahh you gotta have a Large Cap Value, Blend, Growth. Same for mid and small caps, intl., emerging, bond funds, intl. bond funds, etc. I counted them up today I have 15 mutual funds/etf’s. I can guarantee many others in their 40’s to 60’s have as many or more.
That’s a tough one, because it will really depend on each person’s situation and tax situation (ie if selling triggers a tax event or not). In general the simplest approach would be if everything is in retirement accounts and there’s no tax hit then I would sell the ETFs that don’t really fit my plan anymore and move into the 1-3 that I wanted to move forward with. But if there is a tax hit it becomes a more complicated problem. Personally I wouldn’t just stay in an investment because I’ll have a tax hit - but only if the change is worth the short term tax impact. Hope this makes sense
Hey Matt, what do you think of a VGT, MGK and QQQ portfolio? How would you change it to make it better?
I'm not familiar with MGK, but for VGT and QQQ - both are very good. If your portfolio is only going to be growth (3 growth ETFs that you talked about) I would just ask if you're prepared for what that means in terms of volatility and risk.
It's easy to look at the last few years and say "I just want to invest in growth and tech" because they have done very well. If your timeframe is long (20-30+ years) and you're ok with wide up and down swings, it'll likely do well. You just should understand the worst case scenario as well and how that would make you feel.
For example - take a look at what a VGT, QQQ, MGK portfolio would've done in 2022. It would've been really bad. If you have the stomach to deal with it though, and you don't believe that will be the norm going forward...then it's ok. Hopefully this is making sense.
I can summarize it this way (for me):
It is largely a hobby.
The majority of our investment portfolios are in three ETF, I am certain you can guess what they are.
Yes, VOO, SCHD and VGT.
Then we have a small % of our portfolios that are "play money".
I have some ETFs, one being about shipping goods by boats, why? Well I like boats and it is kind of related to my business.
Others are a bit more serious. ;-)
I also have stocks because I like the company, because I believe in their business model or the industry they are in.
My partner own some F1 Ferrari stocks, she lived in Italy for a good portion of her life and being a Tifosi, we had to buy some! (it was also a good investment when Hamilton announced his move there!).
.
So why do I like this "hobby"?
I absolutely love the rush when one of my stocks sky rockets. I also love looking at the few 100$ I receive in dividends.
You said something in one of your videos like, I love thinking that someone else (my dividends) bought me a coffee!
Lastly, I found Matt channel's due to my hobby, that is pretty good too!
Do you mean VTI or VT and not VTT?
@@AxioMATlC sorry the three stock I am referring to are: VOO, SCHD and VGT.
What would be a good addition to an s&p500 etf? Thats more diverse but has alsk shown good returns?
s&p 500 is already a good diversification (500 companies!), for better diversification you might want popular VGS (MSCI world index) investing in stocks from all over the world but still most significant % of its portfolio is USA's biggest companies
I just stumbled on your channel. I love your content.
Thank you!
Just subscribed and your content is right up my alley. Balanced and well-paced, keep it coming 🫡
Much appreciated, thanks!
what do you think about value factor etfs?
I would have to look at what the methodology / criteria is of a specific one, but in general I don't focus on value characteristics all that much (meaning traditional value vs growth, again depends on the methodology). But that's just me
Hey Matt, I enjoy listening to U 🎉🎉😊😊
Thank you!
I learned this lesson long ago and when comparing with my friends who invest in individual stocks on robinhood i compare my all time return to theirs and its hilarious how much more return i got not doing anything besides sticking to VOO and all they talk about is stocks and yet their return is a lot lower everytime somebody talks about stocks i tell them lets compare all time return and I’ve yet to meet anyone who has beaten the snp500
Yes, I agree. But there are some times when you can really "kill it" with stocks ex. I just sold some Meta, I had paid 30x 121$ for the stock, I sold 10x 500$, previously I sold 10x @300$. I quickly re-invested that $8k in my 3 favorites ETFs, and the META I have left is still worth more than I paid for! I never intended to keep META as almost all my stocks pay dividends but at 121$, it was so cheap. Same with Microsoft now tripled my investment and it pays dividends. I did buy some Disney as I believe in the Co. that has not been so good... Yet. 🙂
@davidgarza995, my Apple stock is up over 700%. Absolutely crushed the S&P500. Microsoft up over 600%. I'm not against index investing in the S&P500. My largest holdings are in the index. People just have to know the limited upside of index investing. You may find that some of the people you've been talking to, have indeed beaten the index. I'm about 10 years into my investing journey. those are my results so far. You can CLAIM SP will beat Apple in the future. I can Claim the opposite. But we do NOT know what the future holds.
I enjoy your insight Matt!
Thanks!
Interesting...great vid!
Thanks!
Simpler is always better- great video, Matt!
Thanks!
Hi, how about SPLG?
SPLG is nearly identical (same as SPY, etc) so it's a matter of preference mostly. The main point I was trying to make is that a "S&P 500 index fund" is a great one-ETF portfolio for those starting out.
Is there any reason to buy SPY over VOO then? Cause VOO expense is lower
IMO I would choose VOO for that reason. My understanding is that they're virtually the same other than fees.
@@mattderron only thing I can think of is to trade or buy/sell options SPY has higher volume
How is this not everyone's strategy? Isn't the stat something like ETFs beat 91% of advisors and individual stock pickers?
Holy actual sh*tballs, that map analogy was easily the best explanation of the topic at hand that one could ever find. I am stealing that to help bludgeon younger relatives into investing wisely, including in themselves
Thanks! Steal away, glad it's helpful
Most people are doing nothing and paying for it with their financial lives. Great advice 👍
I’m 95% SP500 and 5% screw around. The 5% is in Nasdaq because the ride back in 2000 was so much fun.
That’s a great plan because it scratches the itch of wanting to get more aggressive. Will be talking about this in my Wednesday video
Many do nothing or get too complicated when DCA into a good index etf is all that’s needed
Agreed!
VGT for the winner
My brokerage account is VOO, VGT, and SCHD. My Roth IRA is VTSAX
Nice!
Totally like the idea behind the video.. but don’t totally agree with the etf suggested 😊
As you said investing in s&p500 is betting on the us.
I would prefer to invest in a total stock market (at least developed countries). Never know what may happen in the long time.
That’s just my two cents 😉
All good, people should choose the one that makes the most sense for them
Given the state of the world and where the US is heading in the eyes of the world, especially with the current middle east conflict and how the US and its ally in the middle east is seen as a rogue state by the rest of the world, I am now a bit worried about VOO. Just a bit though. US economy is still by far very big.
I focus too much on my investments and not enough on other streams of income. I have a day job but if I took the time I spend researching the market and put it into a side hustle I may be further along.
Better to invest in a total world market etf and benefit from international diversification. VT was a good example.
The US markets past performance is no indicator of future performance , just look at what happened to japans market.
I understand the thought but here’s my question - should someone be ok with potentially underperforming for the next 30 years with international diversification? Or are there specific catalysts you believe that will make the US market revert back to the mean going forward?
@@mattderron ‘should someone be ok with potentially underperforming for the next 30 years with international diversification?’
I find this an odd question , as you could ask it for just about any investment decision a person could make. For example ‘should someone be ok with potentially underperforming for the next 30 years by overweighting the US market?’
Or perhaps we could just ask ‘are you comfortable having all your eggs in one basket?’
I have no specific catalyst in mind , unless we were to simply take a look at current valuations of US stocks compared to international markets (higher prices all else equal tends to mean lower expected returns). But that’s kind of the point , I don’t think the future is all that knowable. Investing in imperfectly correlated assets gives investors the opportunity to decrease risk without decreasing ‘expected’ return.
@@739jep the reason I ask is that while I agree that “past performance doesn’t guarantee future results” it does give us an idea of what’s been performing.
Here’s an example. If you have a basketball player who has averaged 30 points a game for 10 years straight and you have one that has averaged 15 a game for 10 years straight - which one are you going to put your money on averaging 30 next year?
This is why I struggle a bit with the idea that “I’m decreasing risk without decreasing expected return.” Because if you looked at the past 30 years or whatever - you would’ve decreased your tangible return by not overweighting the US market.
That’s why I asked the question. Because an investor needs to say “I choose more diversification because that is more important to me than the fact that this has underperformed for the past 30 years”
Do you see what I’m getting at?
@@mattderron I understand the point you’re making , but I strongly disagree with it. it’s a well known behavioural error in finance.
It seems as if you’re assessing the probability of favourable future results of a stock market based on past results. That’s the message I get from your basketball example. The problem is basketball isn’t analogous to stock market performance in the slightest. It’s a mistake to think this way when investing.
I think that decreasing the unsystematic risk of a portfolio probably should concern investors more than an asset or sectors past performance truth be told 🤷♂️
‘Because if you looked at the past 30 years or whatever - you would’ve decreased your tangible return by not overweighting the US market’
- Ignoring the significant hindsight bias with this statement we have to remember that 30 years ago the sentiment surrounding the US market was significantly different compared to now. A little over 30 years ago people were viewing the Japanese market as more favourable than the US market and their reasoning was similar to what you’re using now. Then look what happened to the Japanese stock market. 🤷♂️
I can provide a list of studies related to this topic if you would like to take a look at them?
@739jep ok so this gets more to my point - you fundamentally believe that the US market is overvalued and/or bubble territory like Japan 30 years ago - so that’s your thesis as to why diversification to other countries at this stage is important. That’s fine. Your investment thesis is that the next 30 years in the US market won’t be like the last 30 years based on the fundamentals you see. I have no problem with that.
Where I struggle is when people say you should “de-risk” or diversify for the sake of doing it. There are always trade offs.
Lastly I disagree that it’s wrong to view stocks like my basketball analogy. There are fundamental factors that we consider with stocks all the time that are similar. The outcome is “this stock has outperformed for 30 years” but the reasons are things like “good management”, “strong moat with pricing power”, “good capital allocation” and those things contribute to the outperformance.
In that way, outperformance can be an indicator of fundamental advantages. The reason to pick the 30 point scorer isn’t because they scored 30 points. It’s because there is something about them that has led to the success of averaging 30 points for 10 years straight. If those fundamental things still exist, why wouldn’t I assume they will continue to outperform?
This is where I struggle with studies that use heavily aggregated data. It tells you very little about anything EXCEPT for hindsight bias. The catalysts for any company or country are the fundamental advantages that they have. Sometimes that manifests itself into “winners keep winning.” Hope you understand my point of view
VT
SCHD + VOO
💯 %
"Wow, thats a low blow". Laughed out loud at that one.
If you actually enjoy the mental workout of researching companies and tweaking portfolios, who cares if you didnt make the max possible return? Hell, I watch your videos about slightly underperforming, even though I am already an expert underperformer! Maybe i should, y'know, study or something instead of stooging around on UA-cam.
You're right, I do enjoy it. I don't personally worry about the underperformance all that much. Just a question I get asked about a lot lol
Everybody is an expert until you ask to see their statements. @@mattderron
Very true
VGT is the best one out there, SMH, too concetrated for my taste but if you have the money to spare and have paitence, go for it...
My employer sucks ass, literally no 401k match.
Great video, well explained, thank you!
Thanks, no worries!