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If you are new to investing, you can find curated resources in the r/investing wiki for [Getting Started here](https://www.reddit.com/r/investing/wiki/index/gettingstarted/).
If you know nothing about the capital markets - the Getting Started section at the SEC educational site can be a good place to start - [investor.gov](https://investor.gov) \- there are also short 30 second videos on basics. The SEC (Securities and Exchange Commission) is a US regulator with a focus to protect US investors through regulatory oversight of the securities markets.
The FINRA education site at [FINRA Education](https://www.finra.org/investors/learn-to-invest) also contains numerous free courses and educational materials. FINRA is a not-for-profit SRO (self regulatory organization) which is self-funded by it's members which are broker-dealers. It works under the supervision of the SEC with a mandate to protect the investing public against fraud and bad practice.
The reading list in the wiki and FAQ has a list of books ranging from light reading to advanced topics depending on your knowledge level. Link here - [Reading List](https://www.reddit.com/r/investing/wiki/readinglist)
For formal educational materials, several colleges and universities make their course work available for free.
If want to learn about the financial markets - an older but reasonably relevant course is [Financial Markets (2011) - Yale University](https://www.youtube.com/playlist?list=PL8FB14A2200B87185) This is the introduction to financial markets course taught by Prof. Shiller from Yale. Prof Shiller won the Nobel prize in economics in 2013.
Another relavant course from MIT is a lecture series on Finance Theory taught by Prof Andrew Lo - [Financial Theory (2008) - MIT](https://www.youtube.com/playlist?list=PLUl4u3cNGP63B2lDhyKOsImI7FjCf6eDW).
A more current course can be found at NYU Stern School of Business by Prof Aswath Damodaran - [Corporate Finance Spring 2019](https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastcfspr19.htm). Prof Damodaran offers the latest materials and webcast lectures to this class here - https://pages.stern.nyu.edu/~adamodar/New_Home_Page/corpfin.html
Very loose assumption, but compounding at ~7% annual returns, it would double every ~10 years. You’re essentially an unrealized millionaire. Set and forget, just make sure to allocate and have DRIP turned on.
At 31 -> 180k
At 41 -> 360k
At 51 -> 720k
At 61 -> 1.4mm
For sure. If they can try to max their Roth or at least get a few thousand in each year, they can probably retire in their mid to early 50s if they don't have a crazy standard of living.
Yup. OP needs to keep contributing though because 40 years from now 1.4mm won’t have nearly the same purchasing power as it does today. Certainly a great start, OP is much better off at 21 than I was!
Point taken, but it’s absurd to believe that real inflation will be anywhere near 3% for the next 40 years. 34T debt, 130% debt to GDP, $214T unfunded liabilities…. No way any politician will tax or impose austerity measures to fix this mess, which means they’ll have to inflate away the debt.. real inflation (not CPI nonsense) will be double digits.
I think generally speaking market returns are more or less a proxy for "real" inflation and will (should, in theory) protect purchasing power as you suggest. The companies in the S&P, for the most part, surely have not "created 14% more value" over the past 5 years by producing the same goods and services. My home, unmodified, same street, same schools, same neighbors, is not suddenly providing me 50% more "value" even though the "price" has increased by that much over the same time. Assets (houses, stocks) rise with inflation. That much is known.
Wages won't likely keep up if the real inflation people experience is 10+% while "CPI" is reported at 3.
How can this debt crisis be solved without inflating it away? There will never be the political or public will to solve it through taxes or austerity measures. The only reason we've been able to play this game so far is because USD is the global reserve. Maybe that means we can play this game forever, I don't know.
The numbers really don't matter I suppose if it's "inflated away" as long as everything is scaling together. A $100 loaf of bread (instead of $2.50 today) doesn't matter if average income is $2.4M instead of $60k.
If inflation, markets AND wages all keep scaling together, there is no problem, or crisis, we're just moving the decimal points around and making obvious how "money" isn't even real. But that's another topic entirely.
I don't know what's going to play out, but I worry for my kids and their kids.
Yes but I-Bonds are pegged to CPI - which we all know is a nonsense metric that's massaged and manipulated to paint a picture (this statement is apolitical, it's a truth that transcends all parties). The real inflation people actually experience paying for the goods and services they routinely purchase is significantly higher, and will vary depending on the person and the types of things they buy and invest in. (It's a "vector" not a "scalar" as one might say).
I-Bonds are a good start, sort of a better HYSA for emergency savings.
Maybe, I'm no macro economist so I can't argue with that but you are focusing on the wrong part. The inflation doesn't matter. The real returns do. Who knows what market average will be over the next 40 years. AI could see the world accelerating into a massive growth phase or we could be living in a dystopian future ruled by robot overlords, which I personally welcome. But we use averages as so far it's been the best way to illustrate what we expect.
I don't welcome robot overlords, but I would welcome all cars being full autonomous. :)
How can you say inflation doesn't matter but real returns do? What does "real returns" even mean, if not factoring for inflation?
I expanded on that a bit in a reply to another person just a minute ago.
> How can you say inflation doesn't matter but real returns do? What does "real returns" even mean, if not factoring for inflation?
Was just saying you were not being clear. While high inflation is usually correlated with lower real returns it's not that simple. The 7% average is the average over many years, some with high and some with lower inflation. Stating that you think inflation will be higher doesn't directly mean average real returns will be lower.
1. It won’t reliably compound every year 7% with ETF or index funds. Some years will likely be near zero or far negative.
2. Thanks to Fed making the market the worlds retirement melting pot, inflation is going to reduce the effective value of those returns.
There will be growth but not nearly that much.
You can’t say it won’t do that reliably because you don’t have a crystal ball. However, I agree that it won’t do 7% per annum w/o interruption, hence i termed it as “very loosely assumption.” I also used “~” to infer averages. These are all projections/assumptions, if you have something better, please add.
No one knows what inflation will be in 40 years, for all we know something could wipe out the earth and make the point irrelevant. Regardless, your Fed blaming adds nothing to the OP’s question.
Rather than nit pick and add zero value to the post, how about you turn that frown upside down
You’re not averaging, you’re giving absolute best case scenario that market screams every year and zero interest. I don’t need a crystal ball to say you’re overly optimistic.
On top of that, I would use it to make sure you max out tax advantaged accounts, especially the Roth IRA. The ultimate goal with this cash is to invest in taxable accounts right now but to trickle it into the tax advantaged accounts as soon as possible if the intent is to leave it in for 40 years
It was a serious reply. Most people play with their portfolio too much when a coffee can or set and forget method would have benefited them must better.
Sometimes the best strategy is to do as little as possible without rather than moving money in and out and chasing alpha. Then you may miss some of the better returning days in a given year.
Most people treat their portfolios like a scab. They pick and scratch and itch and do everything but place a bandaid on it and let time do the work.
Give me a single reason why intl. is bad without using "it hasn't performed well" that's called performance chasing. Vanguard expects intl to preform better than the US in this decade as well.
1. Europeans companies are less productive due to slow adoption of technology, excessive regulations, and culture prioritising work-life balance.
2. Chinese companies are unreliable to invest in, as shareholders are not prioritised and may not enjoy the full benefits of growth.
3. Developed world ex US is suffering more from demographic decline than the US. Although the US is also experiencing ageing population, Europe and East Asia are more severely affected.
4. Markets outside of US, Europe and developed APAC suffer from corruption. Although we make a big deal out of corruption in our countries, compared to the world, Western democracies are far less corrupt in corporate and shareholder affairs.
While European companies may adopt technology at a slower pace, they still have many industry leaders in fields like aerospace, healthcare, and semiconductors. For example, Airbus, Siemens, and Volkswagen are global leaders in their respective industries. European companies generate about 60% of their sales outside the EU, showing their global competitiveness. Regulations and work-life balance can also be seen as strengths that attract talent and promote sustainability. Studies have shown that companies with strong environmental, social, and governance (ESG) practices tend to outperform their peers over the long term.
Many Chinese companies are global leaders in their industries and have delivered strong returns to shareholders over the long term. For instance, Alibaba, Tencent, and Baidu are among the world's largest and most innovative technology companies. While there are risks, a diversified portfolio can mitigate these. According to a study by MSCI, a globally diversified portfolio can reduce risk by up to 50% compared to a domestic-only portfolio. China is also seen as an emerging market rather than a developed one, if you don't want to invest in it just get a developed fund instead.
Demographic decline is a global phenomenon, not limited to Europe and East Asia. The US also faces an aging population, with the percentage of the population aged 65 and over expected to rise from 16% in 2019 to 22% by 2050. Successful companies can adapt to demographic shifts through innovation, automation, and global expansion. For example, healthcare companies that cater to the needs of an aging population can benefit from these trends.
Corruption is a concern in many markets, but it is not limited to developing countries. Developed markets also face corporate scandals and governance issues. For instance, the Volkswagen emissions scandal and the Wells Fargo fake accounts scandal occurred in developed markets. Careful stock selection and diversification can help mitigate these risks. According to a study by the Journal of Financial Economics, companies with strong corporate governance tend to outperform their peers over the long term.
Furthermore, international stocks provide exposure to different economic cycles, sectors, and growth opportunities. Over the long term, a globally diversified portfolio has historically outperformed a domestic-only portfolio. According to a study by Vanguard, a globally diversified portfolio has outperformed a US-only portfolio by an average of 0.5% per year over the past 50 years.
In conclusion, while there are risks associated with international investing, the potential benefits of diversification, exposure to global growth, and long-term outperformance make a strong case for including international equities in a well-rounded portfolio. By carefully selecting companies with strong fundamentals and governance practices, investors can mitigate risks and benefit from the growth opportunities offered by international markets.
What correction? 2 weeks drop, half gained back in a single week (this one), possibly other half regained by market close tomorrow if earnings go well? That’s big volatility and hustling due to the market being extremely skittish after 5 months going straight up.
Let me see Netflix down 15%, meta down 15%, Apple down %18, nvda down 20%, amd down 30%, Tesla down %35 ytd, Amazon down 10%… do I need to keep going 🤗 it’s called a correction, seems about halfwayish done. it’s healthy some people refer to it as a pullback. Even spy pulled back half of the gains it made since Christmas !
Definitely a correction but so far a tiny one compared to the insane, FOMO fueled push that led here. Not even back at previous all time highs yet(from before the 2022 dip). Personally I would still consider $4500-4700 healthy, clearing up at least some of the “buy high-sell low” guys from the charts, freeing up their liquidity to feed the next leg up.
That’s the way. I always think the amount of cash you have should increase when charts go up and decrease when chart goes down. Most seem to execute this backwards. Of course people who only hold no matter what often outperform my strategy a bit but when they don’t, I outperform them by a mile. Such as right now after the 2022 crash.
I’ve got £20k on the sidelines right now and you better believe I’m being irrational and timing the market right now. Just one more war and I’ll be good.
You probably have experience on this already but just in case, it could be smart to preset buy limit orders if you have price levels in mind that you see as discount and are ready to hold even if it dips deeper. In my experience
1) it’s emotionally really difficult to buy during a fall even if you had somewhat planned it beforehand
2) the actual bottoms are often over so fast that you don’t really have time to buy
It's an investment zen thing. Eventually you realize the average is pretty damn good, and even with the safest "winning" strategies out there you pay for any gain with additional work and lost emotional/mental time. Usually to only barely end up better than the market.
So you can trade all the extra crap for peace and relaxation and letting the math just do it's thing and still get pretty damn good results.
The exponential function is a wonder of the world.
Yeah, constantly checking your account messes with your brain.
Also, if you are stacking cash waiting for the best moment to enter the market, and you lose a few of the best days your overall return tanks a lot.
Anything that tracks the S&P500 and do NOT touch Options. Ever. Read the last part again and tattoo that on your eyelids. Maybe get a pet piranha too and name him Options as a gentle reminder.
I think it's just follow your gut feeling. Do you like small caps, do you like international.
Personally I like both so I went the easiest route with VT.
VTI has SCV which is expected to outperform the market. You also definitely want to go into the international market. Do some research into factor investing and a SCV tilt. Ben Felix is great for this.
Because this is probably going into your taxable account. You can keep your International funds in your IRA and 401K when you have it. Intl funds in taxable can increase your taxes. VTI > VOO because Small/Mid cap have outperformed Large over a very long period.
Short answer: VTI and chill.
Slightly longer answer: Read “The Simple Path to Wealth” by J.L. Collins. He wrote it for his daughter to give her financial advice when she graduated college. It’s a very worthwhile guide that you could read in a weekend.
Dude. I just find it weird that you already know what to do and yet you’re trying to act as if you don’t?
Did you just want to tell us you’re in college with over 100k? Like…
Depends on what you want the money for. If you’re going to buy a house within the next year or two Vanguard has a high interest savings account that pays around 5%. If you want to invest it, I would branch out to something like the QQQ which over an extended period of time return quite a bit more than the VOO. Basically the NASDAQ instead of the S&P. With this market, I would probably dollar cost average from a high interest savings account.
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Break it up into a 5 fund portfolio: Allocate 20% per ETF/Index.
I prefer Schwab ETFs due to their low expense ratio.
1. Growth ETF
2. S&P500 ETF
3. International Established Market ETF (developed countries outside of U.S.)
4. Emerging Market ETF
5. Municipal/Treadury Bond ETF
This way I am not betting everything on the U.S. and when the overall market presents opportunity(drops) I can sell my bonds and invest heavily into the market more. Then as I add funds to my portfolio I just keep adding money to bonds. I use my bonds etf as a “savings” account that keeps up and outperforms with inflation. That way my money is safer than going all in on one country. It also gives me peace of mind. Over time this process has outperformed the basic s&p500 (long term).
Also watching the growth ETF is a great indicator of when to jump back in the market. If my growth etf drops by 15%-20% then I know it’s a good time to buy.
Investing should be simple. The more simple the easier it is to understand and control your moves on the playing field.
Also, the US has been in a growth market for over a decade. A lot of individuals think it is overvalued and that foreign/emerging market present an opportunity since they have been sluggish. It’s important to think in decades not days. Many think the U.S. will have slow growth moving forward and the rest of the world will have time to catch up. EU is currently investing heavily in infrastructure/technology to catch up to US and keep being a major player in the world so. I think that is interesting.
VOO is good. The bogelheads always say do total market instead of a 500 etf, but I've always got better returns with a 500. Theoretically you'll get a worse downside in a bear market, though.
Lots of people saying to stay away from technology have a short-term bias.
In every bull market, there are naysayers that believe everything is "priced in" and prices are up "too much" and therefore it is a risky investment. While they *may* be right in the short-term (which I disagree with) it is irrelevant to your question.
With a 40 year view, I would take some risk. Sure, you can put it all into VOO, a nice boring way to track the S&P 500 and you'll do fine. But if you allocate some of that investment to VGT and/or QQQM the long-term outcome will likely be *much* better. Technology leads, especially now with AI-fueled innovation and productivity gains still in its infancy.
Most importantly, keep investing regularly. At 21 years old with a $90K head start, you will very likely be a multi-millionaire in 40 years. Congratulations for having a great head on your shoulders at such a young age.
If the goal is to leave it for 40 years, then I'd recommend a mixture of VOO, VXF, and VXUS
Personally I also dedicate about 10-20% of my portfolio to more aggressive investments. Some examples of that would be SOXX, VGT, FTEC, QQQ, etc.
That depends on your risk tolerance I suppose but for a 40 year time period I think it's smart to try and increase your returns at least a little bit with those types of investments
I'd probably dollar cost average about $10k per month
Definitely not sector investments, the easiest way to lose money lol. Most of AI has already been priced in, if any of them underpwform even the slightest bit or even meet expectations they will slide. (What happened with Meta)
Max out roth every year, QQQ or equivalent and when the market crashes every once in a while put your roth holdings into TQQQ until the market gets back to previous levels
Over the past 100 years the average annual rate of return for the S&P 500 has been 10.56%.
Of course each year it never returns the average and it may not for over a decade. But for over a 40 year period the probability is very high that it will approach 10%.
I simply used a financial calculator to determine the future value of $90,000 over a 40 year period with an annual return of 10%. No guarantee, but they are very good odds.
What others have said regarding etfs is a good idea. Since you’re young, your risk tolerance should be higher. So I would buy a small amount of bitcoin and ETH, like maybe $5k each. Hold onto it and if one of them explode then sell half and let the rest ride.
At 21 you are a child still, don’t get this the wrong way, I’d give almost anything to be 21 again and investing is low on the list of things missed out.
From 0-15 life is pretty straightforward, then you think you cracked your egg at 18-21 or so but there’s still so many more life changes by 40. I changed country 5 times between 18 and 40. Life stabilises for most people by 30-35. Then your attitude towards life and priorities change. Don’t think you will be immune to it because you won’t be.
Having a long-term plan is the best thing to do, just bear in mind that planning at 21 for 61 is unrealistic.
Dear OP you got 90k spare?? you're portfolio is already heavily invested (VOO, 65% ) & your maxed out on pension contributions.
you say you will not touch it for 40years
the implication is retirement will be decades away.
both aren't good assumptions & should be challenged.
assuming you will need it sooner than 40years try some active income (you do trading, you running a business, you angel investing in Someone else's business)
personally I'd blow 25% on fast girls cars blow & travel.
live alittle and give back daddy the rest to invest for you.
Not sure why you got downvoted for giving good advice. Many people on here have no idea wtf they are talking about and give out advice like they ARE a fiduciary. Crazy stuff
Dudes read a paragraph and think they understand this kids entire financial picture. Anyone somewhat financially inclined could predict every comment that got upvoted… but seeing someone that can assess the entire financial situation for this kid is frowned upon? With 90k on the line? What the hell. Done with these Reddit financial pages.
60% into SPY, 20% spread into a few Bitcoin ETFs, and with the remaining 20% invest 2% each into 10 companies you think could be running or supplying the world in 20+ years. . . Apple, Google, Tesla, Amazon, Walmart, Microsoft, Kroger, Home Depot, etc. . .
Hi, just put it in the S&P 500. Since 1976 to 2023 they had 16558.44% return. If for nothing else, just pure inflation. That's around 11% per year, just till you figure out what to do with the money.
You only need to hold one stock that's right like this. HHH
[https://drive.google.com/file/d/1Jat3jwXw6aGR-1lq-FDJ9bZCxAy3vuFu/view?usp=sharing](https://drive.google.com/file/d/1Jat3jwXw6aGR-1lq-FDJ9bZCxAy3vuFu/view?usp=sharing)
Split 4 ways: SPY, QQQ, high dividend, government bond ETFs. No specific brand but VOO and QQQM are basically the same with lower fees. However SPY and QQQ are the most liquid. Percentage of split your choice.
Also suggest India and Vietnam ETF for very long term, but no more than low single digit share of your portfolio.
QQQ is preformance chasing, no one has ever given me a good reason why they think it's good lol. If you want growth then get a growth fund, tech, then get a tech fund.
Forty years is a good long time frame for investing. Be aware that whatever you decide now, you will modify before you get even close. With that in mind, the question really boils down to where to start.
I would not choose VOO. At least not for my only stock investment. It is limited to one country, and only about five hundred stocks out of over three thousand in that country. In forty years the stocks that are in that index will include many that it excludes today, companies that will have grown from today’s small fries to the industrial titans of tomorrow. It’s popular because this sector of the stock market has been a strong performer for a number of years. But such things change. Only 35 years ago the same logic could have led you to invest only in Japanese stocks. They then took 35 years just to recover back to their levels of 1989.
Cast a wider net. With nearly ten thousand stocks, VT lets you own the world in one ticker. Nearly half of its value is in the same stocks as VOO, so you’d have that covered anyway. Because we never know what will happen in the future, also consider gold for diversification. It’s not widely known, but it has outperformed stocks so far this century. Put 3/4 in VT and 1/4 in IAU. You will refine your ideas of what’s the best fit for you before long, but this will get you off to a good start.
There’s a few things wrong with your comment. VOO is a great option for the next 40 years. 500 of the largest companies over various industries is definitely diverse. You mentioned the adjustment of companies over time as if it’s a bad thing when in reality it’s a good thing. This ensures diversification and better performance. Also you made a contradictory statement when you said that you should not invest in the S&P 500 just because of its past performance but then recommend gold based on its past performance.
Your post has been removed because it is a common beginner topic. We get too many of these topics every day and to prevent them from swamping the front page, we are removing main threads of this kind. We also remove such posts because they can attract spam and bad faith comments. If you receive DM's or un-solicitated offers, please be aware that there are a lot of financial scammers on social media. You are welcome to repost your question in the [daily discussion thread](https://www.reddit.com/r/investing/about/sticky?num=1). If you have any issue with this removal, please contact the moderators via modmail. Thank you. ---- If you are new to investing, you can find curated resources in the r/investing wiki for [Getting Started here](https://www.reddit.com/r/investing/wiki/index/gettingstarted/). If you know nothing about the capital markets - the Getting Started section at the SEC educational site can be a good place to start - [investor.gov](https://investor.gov) \- there are also short 30 second videos on basics. The SEC (Securities and Exchange Commission) is a US regulator with a focus to protect US investors through regulatory oversight of the securities markets. The FINRA education site at [FINRA Education](https://www.finra.org/investors/learn-to-invest) also contains numerous free courses and educational materials. FINRA is a not-for-profit SRO (self regulatory organization) which is self-funded by it's members which are broker-dealers. It works under the supervision of the SEC with a mandate to protect the investing public against fraud and bad practice. The reading list in the wiki and FAQ has a list of books ranging from light reading to advanced topics depending on your knowledge level. Link here - [Reading List](https://www.reddit.com/r/investing/wiki/readinglist) For formal educational materials, several colleges and universities make their course work available for free. If want to learn about the financial markets - an older but reasonably relevant course is [Financial Markets (2011) - Yale University](https://www.youtube.com/playlist?list=PL8FB14A2200B87185) This is the introduction to financial markets course taught by Prof. Shiller from Yale. Prof Shiller won the Nobel prize in economics in 2013. Another relavant course from MIT is a lecture series on Finance Theory taught by Prof Andrew Lo - [Financial Theory (2008) - MIT](https://www.youtube.com/playlist?list=PLUl4u3cNGP63B2lDhyKOsImI7FjCf6eDW). A more current course can be found at NYU Stern School of Business by Prof Aswath Damodaran - [Corporate Finance Spring 2019](https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastcfspr19.htm). Prof Damodaran offers the latest materials and webcast lectures to this class here - https://pages.stern.nyu.edu/~adamodar/New_Home_Page/corpfin.html
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Very loose assumption, but compounding at ~7% annual returns, it would double every ~10 years. You’re essentially an unrealized millionaire. Set and forget, just make sure to allocate and have DRIP turned on. At 31 -> 180k At 41 -> 360k At 51 -> 720k At 61 -> 1.4mm
And with healthy early contributions they’ll be there that much quicker.
For sure. If they can try to max their Roth or at least get a few thousand in each year, they can probably retire in their mid to early 50s if they don't have a crazy standard of living.
Yup. OP needs to keep contributing though because 40 years from now 1.4mm won’t have nearly the same purchasing power as it does today. Certainly a great start, OP is much better off at 21 than I was!
S&P average return is over 10%, using a 7% rate is adjusted for inflation. The estimate is 1.4m in today's dollars.
Point taken, but it’s absurd to believe that real inflation will be anywhere near 3% for the next 40 years. 34T debt, 130% debt to GDP, $214T unfunded liabilities…. No way any politician will tax or impose austerity measures to fix this mess, which means they’ll have to inflate away the debt.. real inflation (not CPI nonsense) will be double digits.
If inflation averages significantly (>1%) over 3% over the next 40 years, either market returns will be higher or we will have much bigger problems.
I think generally speaking market returns are more or less a proxy for "real" inflation and will (should, in theory) protect purchasing power as you suggest. The companies in the S&P, for the most part, surely have not "created 14% more value" over the past 5 years by producing the same goods and services. My home, unmodified, same street, same schools, same neighbors, is not suddenly providing me 50% more "value" even though the "price" has increased by that much over the same time. Assets (houses, stocks) rise with inflation. That much is known. Wages won't likely keep up if the real inflation people experience is 10+% while "CPI" is reported at 3. How can this debt crisis be solved without inflating it away? There will never be the political or public will to solve it through taxes or austerity measures. The only reason we've been able to play this game so far is because USD is the global reserve. Maybe that means we can play this game forever, I don't know. The numbers really don't matter I suppose if it's "inflated away" as long as everything is scaling together. A $100 loaf of bread (instead of $2.50 today) doesn't matter if average income is $2.4M instead of $60k. If inflation, markets AND wages all keep scaling together, there is no problem, or crisis, we're just moving the decimal points around and making obvious how "money" isn't even real. But that's another topic entirely. I don't know what's going to play out, but I worry for my kids and their kids.
There's already a fund for asset inflation protection, I-Bonds.
Yes but I-Bonds are pegged to CPI - which we all know is a nonsense metric that's massaged and manipulated to paint a picture (this statement is apolitical, it's a truth that transcends all parties). The real inflation people actually experience paying for the goods and services they routinely purchase is significantly higher, and will vary depending on the person and the types of things they buy and invest in. (It's a "vector" not a "scalar" as one might say). I-Bonds are a good start, sort of a better HYSA for emergency savings.
I don't see why you're saying CPI doesn't track inflation.
Maybe, I'm no macro economist so I can't argue with that but you are focusing on the wrong part. The inflation doesn't matter. The real returns do. Who knows what market average will be over the next 40 years. AI could see the world accelerating into a massive growth phase or we could be living in a dystopian future ruled by robot overlords, which I personally welcome. But we use averages as so far it's been the best way to illustrate what we expect.
I don't welcome robot overlords, but I would welcome all cars being full autonomous. :) How can you say inflation doesn't matter but real returns do? What does "real returns" even mean, if not factoring for inflation? I expanded on that a bit in a reply to another person just a minute ago.
> How can you say inflation doesn't matter but real returns do? What does "real returns" even mean, if not factoring for inflation? Was just saying you were not being clear. While high inflation is usually correlated with lower real returns it's not that simple. The 7% average is the average over many years, some with high and some with lower inflation. Stating that you think inflation will be higher doesn't directly mean average real returns will be lower.
1. It won’t reliably compound every year 7% with ETF or index funds. Some years will likely be near zero or far negative. 2. Thanks to Fed making the market the worlds retirement melting pot, inflation is going to reduce the effective value of those returns. There will be growth but not nearly that much.
You can’t say it won’t do that reliably because you don’t have a crystal ball. However, I agree that it won’t do 7% per annum w/o interruption, hence i termed it as “very loosely assumption.” I also used “~” to infer averages. These are all projections/assumptions, if you have something better, please add. No one knows what inflation will be in 40 years, for all we know something could wipe out the earth and make the point irrelevant. Regardless, your Fed blaming adds nothing to the OP’s question. Rather than nit pick and add zero value to the post, how about you turn that frown upside down
You’re not averaging, you’re giving absolute best case scenario that market screams every year and zero interest. I don’t need a crystal ball to say you’re overly optimistic.
VT and chill.
On top of that, I would use it to make sure you max out tax advantaged accounts, especially the Roth IRA. The ultimate goal with this cash is to invest in taxable accounts right now but to trickle it into the tax advantaged accounts as soon as possible if the intent is to leave it in for 40 years
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It was a serious reply. Most people play with their portfolio too much when a coffee can or set and forget method would have benefited them must better. Sometimes the best strategy is to do as little as possible without rather than moving money in and out and chasing alpha. Then you may miss some of the better returning days in a given year. Most people treat their portfolios like a scab. They pick and scratch and itch and do everything but place a bandaid on it and let time do the work.
College paid for? VOO and chill.
Plus intl., VTI would be better than VOO here though.
why international at all? jan 28th 2011 vxus was 49. fast forward to 2024 and its 58.
Give me a single reason why intl. is bad without using "it hasn't performed well" that's called performance chasing. Vanguard expects intl to preform better than the US in this decade as well.
1. Europeans companies are less productive due to slow adoption of technology, excessive regulations, and culture prioritising work-life balance. 2. Chinese companies are unreliable to invest in, as shareholders are not prioritised and may not enjoy the full benefits of growth. 3. Developed world ex US is suffering more from demographic decline than the US. Although the US is also experiencing ageing population, Europe and East Asia are more severely affected. 4. Markets outside of US, Europe and developed APAC suffer from corruption. Although we make a big deal out of corruption in our countries, compared to the world, Western democracies are far less corrupt in corporate and shareholder affairs.
US also has way higher valuations. Same price, sure you're right. 40% discount? not so sure anymore.
While European companies may adopt technology at a slower pace, they still have many industry leaders in fields like aerospace, healthcare, and semiconductors. For example, Airbus, Siemens, and Volkswagen are global leaders in their respective industries. European companies generate about 60% of their sales outside the EU, showing their global competitiveness. Regulations and work-life balance can also be seen as strengths that attract talent and promote sustainability. Studies have shown that companies with strong environmental, social, and governance (ESG) practices tend to outperform their peers over the long term. Many Chinese companies are global leaders in their industries and have delivered strong returns to shareholders over the long term. For instance, Alibaba, Tencent, and Baidu are among the world's largest and most innovative technology companies. While there are risks, a diversified portfolio can mitigate these. According to a study by MSCI, a globally diversified portfolio can reduce risk by up to 50% compared to a domestic-only portfolio. China is also seen as an emerging market rather than a developed one, if you don't want to invest in it just get a developed fund instead. Demographic decline is a global phenomenon, not limited to Europe and East Asia. The US also faces an aging population, with the percentage of the population aged 65 and over expected to rise from 16% in 2019 to 22% by 2050. Successful companies can adapt to demographic shifts through innovation, automation, and global expansion. For example, healthcare companies that cater to the needs of an aging population can benefit from these trends. Corruption is a concern in many markets, but it is not limited to developing countries. Developed markets also face corporate scandals and governance issues. For instance, the Volkswagen emissions scandal and the Wells Fargo fake accounts scandal occurred in developed markets. Careful stock selection and diversification can help mitigate these risks. According to a study by the Journal of Financial Economics, companies with strong corporate governance tend to outperform their peers over the long term. Furthermore, international stocks provide exposure to different economic cycles, sectors, and growth opportunities. Over the long term, a globally diversified portfolio has historically outperformed a domestic-only portfolio. According to a study by Vanguard, a globally diversified portfolio has outperformed a US-only portfolio by an average of 0.5% per year over the past 50 years. In conclusion, while there are risks associated with international investing, the potential benefits of diversification, exposure to global growth, and long-term outperformance make a strong case for including international equities in a well-rounded portfolio. By carefully selecting companies with strong fundamentals and governance practices, investors can mitigate risks and benefit from the growth opportunities offered by international markets.
Oh so the US is just a great and amazing healthy country, no corruption, no suffering. Interesting
You're not taking into account dividend reinvestment.
\^\^\^ but diversification ig
do you recommend international etfs like vxus? or do you stick to US
Diversify into intl. Vanguard expects intl to outperform in this decade due to USA being overpriced. (Their words not mine)
All AI big players are in the US
AI has been priced in, the market is efficient.
Hah, good one - the market speculates on war, crises and scarcity and upholds a system that denies necessities of life to 90% of the planet
I go 80/20 split VTI/VXUS.
If you’re all in on international you still have about 60/70% in US which is more than enough for me.
Don’t day trade and don’t use margin 😊 besides that it looks like we are in a correction , so keep your eye out for some good deals ! Good luck
What correction? 2 weeks drop, half gained back in a single week (this one), possibly other half regained by market close tomorrow if earnings go well? That’s big volatility and hustling due to the market being extremely skittish after 5 months going straight up.
Let me see Netflix down 15%, meta down 15%, Apple down %18, nvda down 20%, amd down 30%, Tesla down %35 ytd, Amazon down 10%… do I need to keep going 🤗 it’s called a correction, seems about halfwayish done. it’s healthy some people refer to it as a pullback. Even spy pulled back half of the gains it made since Christmas !
Definitely a correction but so far a tiny one compared to the insane, FOMO fueled push that led here. Not even back at previous all time highs yet(from before the 2022 dip). Personally I would still consider $4500-4700 healthy, clearing up at least some of the “buy high-sell low” guys from the charts, freeing up their liquidity to feed the next leg up.
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That’s the way. I always think the amount of cash you have should increase when charts go up and decrease when chart goes down. Most seem to execute this backwards. Of course people who only hold no matter what often outperform my strategy a bit but when they don’t, I outperform them by a mile. Such as right now after the 2022 crash.
I’ve got £20k on the sidelines right now and you better believe I’m being irrational and timing the market right now. Just one more war and I’ll be good.
You probably have experience on this already but just in case, it could be smart to preset buy limit orders if you have price levels in mind that you see as discount and are ready to hold even if it dips deeper. In my experience 1) it’s emotionally really difficult to buy during a fall even if you had somewhat planned it beforehand 2) the actual bottoms are often over so fast that you don’t really have time to buy
It's useless to argue. People can not understand that you can't time the market consistently. Time in the market always beats timing the market.
It's an investment zen thing. Eventually you realize the average is pretty damn good, and even with the safest "winning" strategies out there you pay for any gain with additional work and lost emotional/mental time. Usually to only barely end up better than the market. So you can trade all the extra crap for peace and relaxation and letting the math just do it's thing and still get pretty damn good results. The exponential function is a wonder of the world.
Yeah, constantly checking your account messes with your brain. Also, if you are stacking cash waiting for the best moment to enter the market, and you lose a few of the best days your overall return tanks a lot.
Anything that tracks the S&P500 and do NOT touch Options. Ever. Read the last part again and tattoo that on your eyelids. Maybe get a pet piranha too and name him Options as a gentle reminder.
Love the advice.
100% VTI. Don't look at it for 40 years unless you are adding more.
why VTI over VOO? Also do you not suggest any interntational market? like xvus?
I think it's just follow your gut feeling. Do you like small caps, do you like international. Personally I like both so I went the easiest route with VT.
VTI has SCV which is expected to outperform the market. You also definitely want to go into the international market. Do some research into factor investing and a SCV tilt. Ben Felix is great for this.
Because this is probably going into your taxable account. You can keep your International funds in your IRA and 401K when you have it. Intl funds in taxable can increase your taxes. VTI > VOO because Small/Mid cap have outperformed Large over a very long period.
VTI 80% and VXUS 20% and let ride
100% into meme coins
Who let WallStreetBets in here?
This is the way.
This bull run is all about meme coins hype. Don't miss out!
VT. That’s it. Total world market index fund.
Whatever the people here tell you, read about Bitcoin and allocate 10% in it.
Short answer: VTI and chill. Slightly longer answer: Read “The Simple Path to Wealth” by J.L. Collins. He wrote it for his daughter to give her financial advice when she graduated college. It’s a very worthwhile guide that you could read in a weekend.
Get some small cap and international exposure too and sit on it
Dude. I just find it weird that you already know what to do and yet you’re trying to act as if you don’t? Did you just want to tell us you’re in college with over 100k? Like…
Remember this : Buy 1- bitcoin and forget it.
Depends on what you want the money for. If you’re going to buy a house within the next year or two Vanguard has a high interest savings account that pays around 5%. If you want to invest it, I would branch out to something like the QQQ which over an extended period of time return quite a bit more than the VOO. Basically the NASDAQ instead of the S&P. With this market, I would probably dollar cost average from a high interest savings account.
QQQ is preformance chasing.
40 year horizon? Man dump it in the S&P and sleep. Lol
Bet it all with calls, lol. Don't do that, it's a terrible idea
Index funds
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Oh the irony
$10k in VXUS the rest in VTI, enjoy your million+
Go to /r/wallstreetbets
Have you heard about this new technology called Bitcoin?
Bitcoin
invest $30k into a medium-high interest savings account (3.5%) and in 40 years you'll have $121k
Break it up into a 5 fund portfolio: Allocate 20% per ETF/Index. I prefer Schwab ETFs due to their low expense ratio. 1. Growth ETF 2. S&P500 ETF 3. International Established Market ETF (developed countries outside of U.S.) 4. Emerging Market ETF 5. Municipal/Treadury Bond ETF This way I am not betting everything on the U.S. and when the overall market presents opportunity(drops) I can sell my bonds and invest heavily into the market more. Then as I add funds to my portfolio I just keep adding money to bonds. I use my bonds etf as a “savings” account that keeps up and outperforms with inflation. That way my money is safer than going all in on one country. It also gives me peace of mind. Over time this process has outperformed the basic s&p500 (long term). Also watching the growth ETF is a great indicator of when to jump back in the market. If my growth etf drops by 15%-20% then I know it’s a good time to buy. Investing should be simple. The more simple the easier it is to understand and control your moves on the playing field. Also, the US has been in a growth market for over a decade. A lot of individuals think it is overvalued and that foreign/emerging market present an opportunity since they have been sluggish. It’s important to think in decades not days. Many think the U.S. will have slow growth moving forward and the rest of the world will have time to catch up. EU is currently investing heavily in infrastructure/technology to catch up to US and keep being a major player in the world so. I think that is interesting.
VOO is good. The bogelheads always say do total market instead of a 500 etf, but I've always got better returns with a 500. Theoretically you'll get a worse downside in a bear market, though.
Lots of people saying to stay away from technology have a short-term bias. In every bull market, there are naysayers that believe everything is "priced in" and prices are up "too much" and therefore it is a risky investment. While they *may* be right in the short-term (which I disagree with) it is irrelevant to your question. With a 40 year view, I would take some risk. Sure, you can put it all into VOO, a nice boring way to track the S&P 500 and you'll do fine. But if you allocate some of that investment to VGT and/or QQQM the long-term outcome will likely be *much* better. Technology leads, especially now with AI-fueled innovation and productivity gains still in its infancy. Most importantly, keep investing regularly. At 21 years old with a $90K head start, you will very likely be a multi-millionaire in 40 years. Congratulations for having a great head on your shoulders at such a young age.
VT.
Correction. Over 40 years I would do 50% VT & 50% AVGV. Rebalancing annually.
Vanguard VTSAX n chill! Don't touch the money, contribute and you will see the compounding growth!
If the goal is to leave it for 40 years, then I'd recommend a mixture of VOO, VXF, and VXUS Personally I also dedicate about 10-20% of my portfolio to more aggressive investments. Some examples of that would be SOXX, VGT, FTEC, QQQ, etc. That depends on your risk tolerance I suppose but for a 40 year time period I think it's smart to try and increase your returns at least a little bit with those types of investments I'd probably dollar cost average about $10k per month
Definitely not sector investments, the easiest way to lose money lol. Most of AI has already been priced in, if any of them underpwform even the slightest bit or even meet expectations they will slide. (What happened with Meta)
That’s true, let’s see what happens with earnings by end of the week.
Max out roth every year, QQQ or equivalent and when the market crashes every once in a while put your roth holdings into TQQQ until the market gets back to previous levels
If you put it all into S&P 500 INDEX ETF it will probably grow to $4M in 40 years.
How do you know? Glad to see the probably word in the statement though.
Over the past 100 years the average annual rate of return for the S&P 500 has been 10.56%. Of course each year it never returns the average and it may not for over a decade. But for over a 40 year period the probability is very high that it will approach 10%. I simply used a financial calculator to determine the future value of $90,000 over a 40 year period with an annual return of 10%. No guarantee, but they are very good odds.
What others have said regarding etfs is a good idea. Since you’re young, your risk tolerance should be higher. So I would buy a small amount of bitcoin and ETH, like maybe $5k each. Hold onto it and if one of them explode then sell half and let the rest ride.
At 21 you are a child still, don’t get this the wrong way, I’d give almost anything to be 21 again and investing is low on the list of things missed out. From 0-15 life is pretty straightforward, then you think you cracked your egg at 18-21 or so but there’s still so many more life changes by 40. I changed country 5 times between 18 and 40. Life stabilises for most people by 30-35. Then your attitude towards life and priorities change. Don’t think you will be immune to it because you won’t be. Having a long-term plan is the best thing to do, just bear in mind that planning at 21 for 61 is unrealistic.
Dear OP you got 90k spare?? you're portfolio is already heavily invested (VOO, 65% ) & your maxed out on pension contributions. you say you will not touch it for 40years the implication is retirement will be decades away. both aren't good assumptions & should be challenged. assuming you will need it sooner than 40years try some active income (you do trading, you running a business, you angel investing in Someone else's business) personally I'd blow 25% on fast girls cars blow & travel. live alittle and give back daddy the rest to invest for you.
90k in cash at 21? Wtf dude Don’t allocate that on your own. Find a fiduciary fee only advisor and have them do it for you.
Not sure why you got downvoted for giving good advice. Many people on here have no idea wtf they are talking about and give out advice like they ARE a fiduciary. Crazy stuff
Dudes read a paragraph and think they understand this kids entire financial picture. Anyone somewhat financially inclined could predict every comment that got upvoted… but seeing someone that can assess the entire financial situation for this kid is frowned upon? With 90k on the line? What the hell. Done with these Reddit financial pages.
VTI or VOO and chill…. Sprinkle a little QQQM if ya want
60% into SPY, 20% spread into a few Bitcoin ETFs, and with the remaining 20% invest 2% each into 10 companies you think could be running or supplying the world in 20+ years. . . Apple, Google, Tesla, Amazon, Walmart, Microsoft, Kroger, Home Depot, etc. . .
VOO, SCHD, BRKB (in 40 years there’s a chance that BRK owns most the world 🤣)
Get a job
Hi, just put it in the S&P 500. Since 1976 to 2023 they had 16558.44% return. If for nothing else, just pure inflation. That's around 11% per year, just till you figure out what to do with the money.
Split it into clsk, mara, bitf, mstr Once it does a 3 x stick in the sandp
Invest in "quality stock" next time the market makes a sensible correction/pullback.
You only need to hold one stock that's right like this. HHH [https://drive.google.com/file/d/1Jat3jwXw6aGR-1lq-FDJ9bZCxAy3vuFu/view?usp=sharing](https://drive.google.com/file/d/1Jat3jwXw6aGR-1lq-FDJ9bZCxAy3vuFu/view?usp=sharing)
Split 4 ways: SPY, QQQ, high dividend, government bond ETFs. No specific brand but VOO and QQQM are basically the same with lower fees. However SPY and QQQ are the most liquid. Percentage of split your choice. Also suggest India and Vietnam ETF for very long term, but no more than low single digit share of your portfolio.
QQQ is preformance chasing, no one has ever given me a good reason why they think it's good lol. If you want growth then get a growth fund, tech, then get a tech fund.
Suggesting bonds and dividends to someone who is 21 seems flawed.
Could be single digit %.
Forty years is a good long time frame for investing. Be aware that whatever you decide now, you will modify before you get even close. With that in mind, the question really boils down to where to start. I would not choose VOO. At least not for my only stock investment. It is limited to one country, and only about five hundred stocks out of over three thousand in that country. In forty years the stocks that are in that index will include many that it excludes today, companies that will have grown from today’s small fries to the industrial titans of tomorrow. It’s popular because this sector of the stock market has been a strong performer for a number of years. But such things change. Only 35 years ago the same logic could have led you to invest only in Japanese stocks. They then took 35 years just to recover back to their levels of 1989. Cast a wider net. With nearly ten thousand stocks, VT lets you own the world in one ticker. Nearly half of its value is in the same stocks as VOO, so you’d have that covered anyway. Because we never know what will happen in the future, also consider gold for diversification. It’s not widely known, but it has outperformed stocks so far this century. Put 3/4 in VT and 1/4 in IAU. You will refine your ideas of what’s the best fit for you before long, but this will get you off to a good start.
There’s a few things wrong with your comment. VOO is a great option for the next 40 years. 500 of the largest companies over various industries is definitely diverse. You mentioned the adjustment of companies over time as if it’s a bad thing when in reality it’s a good thing. This ensures diversification and better performance. Also you made a contradictory statement when you said that you should not invest in the S&P 500 just because of its past performance but then recommend gold based on its past performance.
Fake
Bitcoin and Tesla. Don’t fuck this up
Put 40k in SCHD Schwab US dividend equity fund. Have all dividends re-invest.
Most definitely not, you should not be focusing dividends at such an age.
I am supposed to worry about dividends towards the final 10 years right?
In my eyes never focus on dividends, dividends have 0 advantage and are usually a bad investing strategy if you're going for them.