Vanguard portfolio ideas

[akiaji]

Hi everybody

I am looking to start putting some money into index funds via IBK. I'm looking for something stable and long-term. No day trading for me just yet.
The funds I am interested in are VTI, VOO, and VUG. Given their overlap, I am not sure how much it makes sense to diversify across them, but here is my current plan.

50% into VTI. Covers the whole market and its up and downs.
30% into VOO. Covers the top-performing companies, but a small spread.
20% into VUG. Covers high-growth companies, but more risk and smaller spread again.
Minor tweaking every few months based on recent behavior.

For reference, I am a US citizen, so trying to work best under those limitations. lol

[adamu]

Overthinking. 100% VTI and forget about it.

Or even better buy the world with VT.

[akiaji]

Thank you for the quick feedback! I was worried I might be overthinking.
The main KPI I have used when looking at these funds, including VT, is the lifetime return. If you look at the increase from start to current of the different funds, we see:

VTI +313.27%
VOO +318.26%
VUG +536.06%
VT +117.68%

I've just pulled these from searching the tickers on Google.
This shows that VTI and VOO are pretty in synch for the long-term. VUG stands out.
VT, despite being global, grows more slowly than the US-focused ones.

Is this a useful measurement, or am I totally off track--which is very possible.

[RetireJapan]

Thank you for the quick feedback! I was worried I might be overthinking.
The main KPI I have used when looking at these funds, including VT, is the lifetime return. If you look at the increase from start to current of the different funds, we see:

VTI +313.27%
VOO +318.26%
VUG +536.06%
VT +117.68%

I've just pulled these from searching the tickers on Google.
This shows that VTI and VOO are pretty in synch for the long-term. VUG stands out.
VT, despite being global, grows more slowly than the US-focused ones.

Is this a useful measurement, or am I totally off track--which is very possible.

It's going to depend on the time period. The US stock markets have been on a tear for the last decade, which might mean they are now overvalued and will underperform going forward, or it might mean that there is a new paradigm and they are going to continue to outperform.

Most companies are predicting lower returns for the US market going forward though (reverting to the mean).

[captainspoke]

...
Most companies are predicting lower returns for the US market going forward though (reverting to the mean).

I wonder what those same companies (that are predicting lower returns for the US) are predicting for the rest of the world?

[RetireJapan]

I wonder what those same companies (that are predicting lower returns for the US) are predicting for the rest of the world?

https://advisors.vanguard.com/insights/ ... ctober2021

[RetireJapan]

To save the click (this is from the Vanguard link above):

[adamu]

This shows that VTI and VOO are pretty in synch for the long-term. VUG stands out.
VT, despite being global, grows more slowly than the US-focused ones.

The problem is that the past doesn't dictate the future. Of course you could say the same thing for asset classes as a whole (e.g. stocks vs bonds/real estate/commodities/crypto etc.).

So there is some reliance on history (the stock market has always gone up in the long run), but I think it's better to make asset allocation decisions based on fundamentals. Stocks represent a business. An index fund represents a collection of those business. A whole-market index fund represents all of those businesses thrown together. By investing in all of them, you get to take the upside of the successful ones, at the cost of the unsuccessful ones. But the winners far outweigh the losers in terms of end result.

So then the question becomes: what scope do you want to apply to the companies you invest in? Just "high growth"? What if a new high-growth company comes along that's not in that list? You'll miss out. Just S&P 500? Just US? The wider you go, the more dispersed the result will be, but the more chance you will have of including the future winners, rather than just the current ones - who may turn out to be the future losers.

[captainspoke]

I wonder what those same companies (that are predicting lower returns for the US) are predicting for the rest of the world?

https://advisors.vanguard.com/insights/ ... ctober2021

I tried but couldn't find a similar vanguard chart for 2020 and 2019 (but I was trying to trick the url into displaying that rather than searching vanguard's site). It would be interesting to see their outlooks for some past years. Also, vanguard maybe simplifies ex-US too much? While they slice and dice the US market five or six ways, the rest of the world is just global ex-US.

As @adamu writes, go for the index.

[captainspoke]

Here's an earlier report: https://pressroom.vanguard.com/nonindex ... k_2020.pdf

Bottom of p. 37, looks like growth was not going to be a good bet a year ago?