VIVAX

belangp

Value investing won't save you from a real economic catastrophe such as the great financial crisis of 2008-2009; however, it will somewhat shield you from the concentration and overvaluation of certain sectors when a bull market gets overdone. You can see this behavior if you go to [testfol.io](http://testfol.io) and plot the total returns of VIVAX (Vanguard's CRSP Value Index) against VFINX (Vanguard's S&P500 Index Fund). VFINX didn't lose nearly as much between 2000-2003, but it lost as much and more between 2007-2009.

Pierson230

I'd think about what my time horizon is for the money to tighten my beam a little bit. Then think about what your lifestyle targets are, and how much money is needed to hit them. Looking at a 7 year plan? A 15 year plan? A 3 year plan? Seems like you probably have the index funds covered with your 401k assuming you've been investing at that clip for a while. For the next step, I'd try to get my head around where I thought the market would be in my time horizon. Listen to podcasts, watch youtubes, talk to people, use my own eyes, etc, and form an opinion that might inform my investing. If it was me, I'd max out I bonds first, $10k for you and $10k for your wife. Collect the easy 9%+ right away, and inflation probably isn't going down anytime soon, so odds are you might just keep dumping into I bonds every year. So I'd probably target being able to buy $20k in I bonds every year in the short term If I wanted to buy actual stocks after that, I'd look at value stocks in "old economy" companies, and just forget about growth stocks altogether. You probably own them in your 401k indices already. For 7+ year horizons I'd look at holdings within XME and for shorter term I'd probably look holdings within VIVAX. Whether or not to hire an advisor depends on your interest level and how much you enjoy looking at this stuff- to some degree, I found it fascinating after I started understanding a little more, and it's "fun" enough to try some things myself vs paying someone else to try them for me. If I hated it, I'd hire an advisor to handle it. If I was just intimidated by it, I'd do what my wife and I did, and find an advisor who would work for a fee, and pay him $500 to cover some basics with us in some detail, then figure it out myself along the way with an experimental $5k in a brokerage account or something. Good luck!

th3cr1t1c

Well, the younger you are the greater the amount of future compounded growth you've left on the table. If you're sitting on funds, you're going to notice that the longer this plays out over 30-50 years, the risk adjusted return of the S&P is unbeatable. Now, let's take [this](https://i.imgur.com/FagAi9B.png) backtest, for example, between three broad index funds: The S&P 500 (VFINX), the Vanguard U.S. Growth Index (VWUSX) and Vanguard Value Index (VIVAX). The first thing you'll notice is that over a thirty year period, the S&P 500 beats growth and value. The second thing you'll notice is that the growth index has a substantial decline from its peak in 2000. Its max drawdown during this 30 year period was 71%. Not only does it take 14 years to claw back that loss, but it still hasn't outperformed the S&P 500. So while its best year was 20% lower than the growth fund, its worst year was 20% higher... should balance out between the two? Right? No. You'll recall that volatility drag is a factor. If you lose 30%, you have gain back 42% just to break even. Consequently, the Growth index's CAGR is 8.54% to the S&P's 10.36%. And we see this behavior in the S&P (maintaining a CAGR above 10% with a risk standard deviation below 15%) at 40, 50, 60 year intervals as well—the data aren't included in the backtest calculator's db but you can look up the entire history [here](http://www.moneychimp.com/features/market_cagr.htm). That difference of just under two percentage points annualized adds up. You'll notice that the final balance of the hypothetical $10,000 is $178,985 with the S&P fund vs. $109,949 with the growth fund. That's an aggregate difference of about 63 percent—enormous.