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In Cad CASV In US AVDV/AVUV/AVEE Statistics says we should life says maybe
My port is: \~30% VOO \~25% AVUV \~20% VGT \~20% AVDV \~5% AVEE
Optimal portfolio theory would tell you to seek higher leverage with smaller funds because large percentage losses are still much easier to make up for. I use 2X leverage (writing SPX-Box spreads for low-cost, tax-efficient credit) on a 200k Portfolio with internationally diversified small-cap-value funds (25% AVUV, 25% AVEE, 50% AVDV), deleveraging as my portfolio grows. I aim for 1X leverage at 500k and about 0.8X at 1M. These numbers need to slowly be adjusted upwards with inflation. (e.g. 1M now might equate 2M in 30 years). Also, I would double those numbers if I had a spouse to support. The rationale is, that I wont ever need more than 1M in retirement if I factor in social security and a paid-for house, so there is no point going high risk at that point, whereas using high leverage now gives me the highest chance of getting there.
The most important principle in investing (in my opinion) is diversification. You want to buy a globally diversified portfolio of stocks, and the ETF that achieves this is VT (Vanguard Total World Stock Market Index Fund). If you invest $100 into VT, your money effectively goes to all the publicly traded companies in the world according to their market capitalization. Nvidia Corporation is 4.26% of the world's stock market capitalization, so $4.26 of your money would be invested in Nvidia Corporation. Similarly, Rolls-Royce Holdings is 0.13% of the world's stock market capitalization so $0.13 would be invested in Rolls-Royce Holdings. You get the idea. The point is that you are not betting on any individual country, sector etc. by investing in VT. The safe option to start off with is to buy VT, and keep investing whenever you can. Now, there are ways of "beating the market". Financial science suggests that there is no publicly known way to do so without taking on more risk (if there was a less risky way to do so that was publicly known, wouldn't everyone do it and then it wouldn't work anymore?). For example, factor exposure (which was introduced by Eugene Fama and Kenneth French in their Nobel Prize winning paper) suggests that, for example, small cap value stocks are expected to outperform the market over long time horizons because they are inherently riskier. The historical data suggests this is the case. You could tilt toward small cap value with ETFs such as AVUV (Avantis US Small Cap Value) and AVDV (Avantis International Small Cap Value). Emerging Markets is another sector of the market that is inherently riskier and has historically delivered higher long-term returns than the US Stock Market, for example. You could tilt a bit to Emerging Markets with AVEM (Avantis Emerging Markets), and especially AVES (Avantis Emerging Markets Value) and AVEE (Avantis Emerging Markets Small Cap). Avantis' methodology is based on the Fama-French model and their research and this has also historically outperformed the market over long time horizons. My suggestion is to buy VT, and if you want some tilts you could buy some AVUV, AVDV, AVEM, AVES, AVEE (of the latter three, AVEM is the best if you want to go with one). I would keep at least 75% of your investment in VT (maybe more) and tilt according to your preference after you have done some research and asked lots of questions. The other method to outperform the market is buying individual shares. Unfortunately, this is really risky and mostly does not pay off unless you are willing to do a lot of research and buy and hold for long periods of time. I couldn't tell you what individual shares will take off in the next 10 years with any sort of guarantee. On the other hand, there is a third method to beat the market, by buying leveraged ETFs. It turns out that leveraged ETFs, provided the leverage isn't too high, do outperform the market over long time horizons, but I wouldn't recommend getting into them until you have accumulated more knowledge and started with the core base of VT. I wish you the best in your investment journey! You absolutely can't go wrong, over long time horizons, with VT. Remember that investments in stocks (including VT) is for the long haul, these do not function as savings accounts, because they can be volatile in the short term and have drawdowns lasting several years. You should look at the historical performance over decades, however, to see that if you stick with them, and provided capitalism continues to thrive on Earth (which in my mind is a safe bet, unless something really disastrous happens), then VT will give you strong growth over a long time horizon. I would estimate it will beat inflation by around 5% on average per year based on historical performance, and that compounding effect can really snowball over several decades. A cool stat is that $5 a day invested for 45 years at 10% annual return, would be around 1.4 million dollars, where 80k of that is your own money, and nearly 1.4 million of that is interest earned from investments. If you contribute more early, then of course, you can see faster results. I wish you all the best in your investment journey! 😊
Yes it is called cash drag. I never had an emergency fund. I had credit cards and margin. Even paying interest on them 1x in life would be far better than cash drag. Now I am starting to prepare for retirement, sequencing risk, and so I do need something like that. I'm boosting the yield via insurance products because I still hate cash drag. Two things that work well for emergency funds: 1. Risk parity structure. Do something like 70% VCSH, 15% FNDA, 15% AVEE. This should underperform stocks by a bit over 1% not massively like a pure money market. 2. Permanent life insurance. Returns before expenses that beat corporate bonds, tax treatment that beats municipals and liquidity close to a money market.
Surprised to see these three bullets coexisting. To add some context here: * The argument for tilting toward small-cap value is that historically, over the very long-term, small cap stocks and value stocks (those trading at low valuations according to things like P/E, P/B, P/S, etc) tend to outperform large cap stocks and growth stocks respectively, and the combination of those two factors performs best of all. This outperformance has *not* happened in recent history (10+ years now) and there are those who think the small-cap / value premium doesn't exist anymore for a variety of reasons (an economy ever more dependent on high-growth tech companies, broader market participation and better data meaning hidden gems are harder to find, globalization and deregulation leading to oligopolies, etc). Others (myself included) think the pendulum will swing back as it always does, and small-cap value will outperform again in the long-term. I own some AVUV. * The argument for tilting toward emerging markets is two-fold: they too historically showed superior returns (although the data showing this is not as robust as for small-cap value stocks and, returns in the last decade have been terrible), and they also offer diversification in that they tend not to move in lockstep with developed markets. Here too I'm betting on a pendulum swing and do own some AVES and AVEE. * The argument for growth funds is that they target companies that are fast growing. Note that this does not exist on the same axis as the other bullets. You buy small-cap value ETFs and emerging markets value ETFs because you think the *stocks* contained in those funds will outperform the market. One buys growth ETFs because they think the *companies* will grow. One set of strategies is looking at what gives the investor a better return. The other is looking for the best companies and just hoping/assuming that a good return for the investor will follow. This has been a fantastic strategy for the last 15 years, as large cap American tech/growth firms have outperformed every other asset class. It's been a bad strategy for most of history previously because, by ignoring stock valuation entirely, investors end up buying into overvalued stocks that don't do well even if the underlying company does. I don't own any growth funds and don't intend to buy any. Again, I'm expecting a pendulum swing, and even if that doesn't come, I already own *plenty* of growth stocks through broad-based index funds which are already dominated by big growth companies. I agree with allocating more toward VXUS (or just buying VT instead of trying to balance the allocation yourself). American stocks have rarely if ever been more expensive relative to international counterparts, and I've never found the arguments for a strong home-country bias to be convincing.
VT, AVUV, AVDV, AVEE. VT, AVGV, GOVT, and something like cash or gold or managed futures if you need less volatility than a 100% equities portfolio.
Without knowing which company you work for, you could look into the holdings of SPXT. Problem might be that Meta, Amazon, and Alphabet are not technically considered "tech". Better strategy might be to just hold VTI but also sure you have a healthy dose of Ex-US exposure (both developed and emerging markets) with something like VXUS. It will give you better sector diversification because Ex-US stocks are more heavy in industrials and financial sectors. Like you said, your human capital is already heavily invested in the U.S. market. You could also consider a heavy tilt toward small cap value stocks (AVUV, AVDV, AVEE). Also, you might want to make sure you have a bigger emergency fund than most people do (maybe 12 months worth of expenses rather than 6).
Equities: VTI, AVUV, AVDV, AVEE, AVXC Bonds,: VGLT, FALN, HYMB Commodities: GLDM