- April 14, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Rethinking Investment Strategy: Diversification Concerns
Hey all. I’m wondering if I need to rethink my approach as it dawned on me that I may putting all my eggs into one basket without much though. I have an IRA with vanguard that I max that is 100% in the VTSAX fund. I also contribute into my TSP with intentions to max this year that has a 75/25 split C/S. My understanding is that mimics the stock market well and the VTSAX is the same. I also recently opened a new brokerage account with intentions to use as just a normal investment account and was looking at VTSAX and VFIAX when it occurred that I’d be layering up too much? Is that the case here? And if so, what would you all recommend for different funds to spread the love. Thank you! (For reference I’m 25M)
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Vtsax is diversified already, adding additional accounts doesn’t really do anything for you. Resist the urge to start buying random stocks. Keep piling into vtsax and wait 20 years.
I know of people with 7-8 figures in a single Vanguard ETF. You’re fine. VTSAX is incredibly diversified and Vanguard is a solid company.
https://jlcollinsnh.com/2012/09/07/stocks-part-x-what-if-vanguard-gets-nuked/
You’re all in on stock. You’re diversified investing in stocks but that’s not diversified investing.
Bonds have been underwhelming for over a decade so recency bias suggests to not use them but real diversification comes from using less correlated assets. With the recent rise in interest rates bonds and treasuries are starting to be more attractive. One rule of thumb is to use 110 minus your age to come up with an allocation for income assets (G fund and F fund). Some believe that is still too conservative and so they use 120 or 130 minus your age instead. My personal guideline is 120 minus my age.
FWIW, I like having my index funds in Schwab because:
1. I can get Amex Schwab card (with fee waived for AD military) in addition it a regular platinum card, so free money
2. The Schwab checking account I have has no international fees for withdrawals so when traveling overseas it is awesome
3. Super low cost index funds, and also easy to pick up some “for play” stocks if you’re into that.
I would try and have everything (except the TSP) in the same company. Easier for taxes and likely cheaper with fees since most have fee reductions at certain amounts…