For now I'm interested in the vanguard S&P 500,value , small cap, and maybe growth. I will be actively contributing to one or combo over the next 6-7 years. They appear to share some of the same stocks at different %. What I'm tring to figure out is it really beneficial to allocate different % into 3 or 4 of the funds or just pick one and let it ride. They all seem to be a large blend. I won't be relying on this to make ends meet. Open to opinions and not held as financial advise. Hray

Look at the holdings of each fund as there may be significant overlap between them. In other words, what good does owning two funds where 50% of the value of each is the same sticks? Looking at the holdings can help make other decisions as well. For example, over 20% of the value of the S&P 500 is made up of 5 stocks: Apple, Google, Facebook, Amazon, and Microsoft. Knowing this might influence what individual stocks or other funds you might want to buy.

Diversification is always a good idea. A smallish purchase of the International fund would be good I would say. I would talk with one of their advisers.

Talking to their advisers isn’t much help. My 18 year old opened up an account and I called them for help in what the differences were between their branded funds (admiral etc) and why would I want an etf fund vice just a fund. Their response was less than inspiring.

I agree with the above that says there is probably a lot of overlap. If you want to diversify, then diversify. The SP500 index is pretty diversified as is.

Diversification is a good thing. Going with 3 or 4 different broad index funds is a common portfolio strategy. Often called a "lazy portfolio".

See https://www.bogleheads.org/wiki/Lazy_portfolios

or

https://www.bogleheads.org/wiki/Three-fund_portfolio

or

https://www.bogleheads.org/wik..._four_fund_portfolio


However, this strategy invests in more than just stocks, and more than just domestic stocks. Generally, it's a mix of domestic stock, international stock, domestic bond, and international bond index funds.

Among those four, find a stock/bond split that you're comfortably with, usually 60/40 or 80/20, with stocks on the higher end. And then within the stocks and bonds, something like a 70/30 or 60/40 split between domestic and international, with domestic on the higher end.


Another option is one of Vanguard's "fund of funds", like their LifeStrategy funds. These are "all-in-one lazy portfolio funds" that allow you to invest in just one mutual fund, but within that fund is a diversified mix of those same four types of index funds discussed above. This approach simplifies the investing since you're only putting money into one fund each week/month/whatever, and it keeps you from having to rebalance your portfolio as your stocks and bonds perform at different rates. Those adjustments all happens automatically behind the scenes in a LifeStrategy fund.

https://investor.vanguard.com/...-funds/lifestrategy/

There are various different LifeStrategy funds offering different ratios between stocks and bonds. Either the Moderate Growth (60/40 stocks/bonds) or Growth (80/20) LifeStrategy Funds will be what most non-retired people choose.

quote:

Originally posted by pedropcola:

I agree with the above that says there is probably a lot of overlap. If you want to diversify, then diversify. The SP500 index is pretty diversified as is.

I Agree That the SP500 is pretty diversified and those funds do overlap.

I just went in the DROP 3 months ago and was pigging backing off of the pension managers but for the net cost and earning it's cheaper and historically more profitable to switch to a Self Direct DROP which I'm doing. Just signed the paperwork and selected everything so far to roll over / future allocations to go into Vanguard's 500 index admiral for now, until I do more research. I have only a choice of those funds I posted in OP plus 13 more that I'm not really interested at this point. That's posted below. Thanks everyone other opinions welcomed. Hray

This message has been edited. Last edited by: hray,

I have some accounts where I have a couple broad-market index fund choices. Generally I split the investment into two: one large cap and one small cap.

In your case that'd be Vanguard 500 Index Admiral (large cap) and Vanguard Small-Cap Index Admiral (small cap)

There should not be much if any overlap between those two; by definition S&P 500 only has huge companies. And they are both pretty well diversified inside their specific silos (US equity securities of many firms.) And Vanguard is excellent (and very low cost) with their index funds.

Small-cap indexes are riskier and on average return a bit more than large cap indexes over long stretches of time. So my allocation of new investment dollars in those accounts are generally between 75% S&P500/ 25% Small-Cap and 65%/35%.

Of course my risk preferences and time frames may be far different than yours, so take the above just as info.

Also you will note my personal investment strategy in these types of accounts allocates nothing to bonds or to international equities. That is not accidental - the historical returns and risks of US equities are enough for me - but may be atypical. You may differ in your desire for exposure to bonds/international stocks, and if so carve some percentage out of the above if you want to salt some in.

I'd do an S&P 500 fund, a Mid-cap Fund, a Small cap fund. and international fund. I'd also buy some QQQ to have some tech centrism.

quote:

Originally posted by BBMW:
I'd do an S&P 500 fund, a Mid-cap Fund, a Small cap fund. and international fund. I'd also buy some QQQ to have some tech centrism.

yep. lots of ways to skin this cat.

definitely don't need 20 funds to get broad diversification.

just keep an eye on fees / expenses and save as much as you can long-term

-----------------------------------------

You really can’t go wrong with the admiral vanguard index 500 fund mentioned several times here. We have a good amount of money in that fund both personal and and 401ks and it has been a consistent performer with very low fees. This is also the fund that Warren Buffet chose in his charitable bet against a hedge fund manager, where the index fund beat the hedge fund manager easily.

https://www.investopedia.com/a...-eight-brka-brkb.asp

quote:

Originally posted by RogueJSK:
Diversification is a good thing. Going with 3 or 4 different broad index funds is a common portfolio strategy. Often called a "lazy portfolio".

Good info for a buy and hold approach.Lots of good info on the Boglehead.org site about picking an asset allocation for your situation/age.

I got even lazier when I retired and went 50/50 SP 500 and Total Bonds as I wanted no International exposure on the stock side.

Diversification is always a good strategy, and sector diversification is as important as anything else. I think you're on the right track, using an S&P500 as your base, then splitting off into growth, value, small caps. I would only worry about overlap if it's excessive.

Your real challenge is to figure out percentages into each sector, which depends on your personal situation, goals, and risk tolerance.

quote:

Originally posted by hray:
I have only a choice of those funds I posted in OP plus 13 more that I'm not really interested at this point. That's posted below.

Ah. I misunderstood.

Well, you can still get the same "all-in-one four fund portfolio" as the aforementioned LifeStrategy fund using just a Vanguard Target Retirement Fund. Those are on your list.

They're similar to the LifeStrategy funds, using the same four component index funds within (Vanguard's stock, bond, int'l stock, and int'l bond index funds). The only difference is that the ratio of stocks to bonds inside a LifeStrategy fund is static (staying at 80/20, 60/40, etc.), while the ratio in a Target Date fund changes from year to year as it approaches the target date. (Usually approximately your estimated year of retirement.)

These Target Date funds will start out at a 90/10 stocks/bonds ratio until 25 years before the target date, and then start gradually transitioning to being primarily bonds by a little after the retirement date. This lets you take advantage of the greater return on stocks when you're further off from retirement and have enough time before retirement to recover from an unexpected downturn due to stocks' higher volatility. Greater risk, but greater reward, and still time to recover sufficiently. Then when you're near/at/in retirement, you're getting a lower return from the bond-heavy profile, but you also won't get hit as hard if there's a major downturn in the stock market while you're relying on your fund for income.

So with a Target Date fund, your options are to:

A) Just invest in the target date retirement fund that's closest to your retirement date and simply ride the glide path as you go. This is the easiest and simplest approach, and will generally be what's best for the average retirement investor, though it may not be specifically what's best for you, or exactly what you want. (For example, the average retirement investor may not want to be as aggressive when they're 5 or 10 years from retirement, but your financial situation may allow you to be able to chance some greater volatility in exchange for potentially greater returns than the average investor at that point in their retirement plan.)

or

B) Compare each of the target date funds on Vanguard's website and then invest in the one whose stock/bond ratio is currently the closest to whatever is your personal preference (90/10, 60/40, 70/30, 50/50, whatever). Then just check that fund's composition every year or so to see if it's transitioning too far away from your desired ratio, and if so, roll your investment from that fund into a different date fund that's still at your preferred ratio.

That B) option is what will let you treat a Target Date fund just like a LifeStrategy fund, sticking your money in whichever Target Date fund has your desired portfolio ratio and then switching as appropriate to maintain that same ratio. It still has the benefit of simplicity from only having to allocate investment income into one fund at a time, plus the same extremely broad diversification, having exposure to the entire world's stock and bond markets (just in different ratios).

Thank you very much. I kind of figured that was the idea of those funds, Thanks for breaking it down that way and seems like a good strategy.

quote:

Originally posted by BBMW:
I'd do an S&P 500 fund, a Mid-cap Fund, a Small cap fund. and international fund. I'd also buy some QQQ to have some tech centrism.

We have Vanguard's Total Stock Market Index Fund (kinda encompasses the 500, mid and small cap funds into one fund). At our age we elected to eliminate specific international exposure. We also have Vanguard's Total Bond Fund. These two funds have served us well.

My transition from pension managed DROP to Self direct drop should be finalized at the end of the month. The way it works it has to be approved by the board which won't be a problem then the funds will transfer along with future allocations to the vanguard 500 index admiral fund. I already have a 457 with ICMA and that's the company the city and pension board have agreed for Self Direct Drop. Thankfully the have Vanguard which to my understanding the pension board dictates what can be offered. Looking out for us. Once that drop account is active I'll be able to easier select the funds and dissect them. Thanks for everything fellas. Hray

quote:

Originally posted by joel9507:

Small-cap indexes are riskier and on average return a bit more than large cap indexes over long stretches of time. So my allocation of new investment dollars in those accounts are generally between 75% S&P500/ 25% Small-Cap and 65%/35%.

.

Thanks This was my initial thought 80/20- 60/40. Leaning more to 80/20 with the 500 admiral being 80%.

My point is to skin several different cats, not get multiple pieces of skin from the same cat.

quote:

Originally posted by Sig209:

quote:

Originally posted by BBMW:
I'd do an S&P 500 fund, a Mid-cap Fund, a Small cap fund. and international fund. I'd also buy some QQQ to have some tech centrism.

yep. lots of ways to skin this cat.

definitely don't need 20 funds to get broad diversification.

just keep an eye on fees / expenses and save as much as you can long-term

-----------------------------------------

Even the names /style of investment can be confusing. International usually means they can buy any stock. Including US based companies, overseas usually means EXcluding U.S. I have a few single digit percentages of my holdings in overseas and emerging markets. Think mostly DJT shithole countries because they have been emerging for decades. Those are actively managed because I trust the humans to research companies better in those dumps. 90%+ of the rest is in SP 500, mid cap 400 and Russell 2000 indexes. I use schwab but they are all chasing the same stocks. fees are .02-.05 per year. I do have a few tech and other industry centric managed funds, I know the managers as mortgage / bank clients and in the process their loan several of them were kind enough to an extensive private conversation after we finished loan talk. They are all very cagey though and can’t talk about their fund in specifics

ETF trade like a stock real time and you can buy/sell/short during the market hours. But you have to buy the full share price. Funds you get the end of day price and can typically buy fractions of a share if you are putting in set amount like $20 a week.

Might wish to google the Three Fund Portfolio as promoted by Bogle.