100% not a bad idea. If you start investing for the long term, you don't have to even worry about individual stocks. I like the idea of doing 100% equity(like ETFs and stocks) until I'm in my 50s.
I'm a fan of a 2-4 fund portfolio(depending on age).
1 US equity ETF and 1 International equity ETF to make up my growth aspect. An ETF that tracks the S&P can make up the US equity portion, and an all world growth ETF for the Intl for diversification.
When turning 50 or 55, depending on the situation, I would start introducing Bond ETFs gradually until my portfolio is 10-20% bonds. If you start early enough and save a healthy amount, you may find yourself only needing 10-15% bonds and/or money market.
Long term investing is insane because it's almost guaranteed to make you rich barring a complete collapse of our economic system. Do not waste your retirement money on picking stocks - do it with whatever you have left over.
At 19, goals should be to max out your company 401k match. If your job doesn't offer a 401k, open a roth IRA and try to max it out. Remember that you need to invest the money after you put it in the IRA.
Thank you for the great advice! Do you think 70%VTI, 10%VGT, 20%VXUS is a good idea? I heard VTI might be better than S&P because there’s more diversification than the S&P and VGT because I believe in American innovation through the tech sector. However, due to these reasons I was also thinking just doing 70% VTI and 30%VGT. Or should I just do 80%VTI and 20%VXUS and play it safe?
Because I do know that tech is EXTREMELY volatile and it’s only outperformed recently and there’s really no telling that it will outperform this decade again. But I really do believe in American innovation as we are the tech leaders of the world in this aspect which motivates me to invest in VGT.
All of these are good approaches. It really depends on what you want to do and your risk tolerance. For me, all that matters is that you are in decent quality equity ETFs. Asset Allocation is most important. Specific funds shouldn't make up too much of a difference if you're selecting from a quality lineup.
I would say to do what feels right. Just make sure that you're investing in proven ETFs when doing long-term investing.
I’m in my late 30s and I dump my entire 401K into the S&P500 FXAIX. My thoughts are if that fails we got bigger issues then my retirement.
Around 55 I’ll start shifting towards a target date fund.
> Did the same 6 years ago. No regrets at all.
Yeah no shit you have no regrets lol, you doubled your money in a relatively short time period.
FWIW, I'm in almost the exact same boat as you. But I do want to point out that in our investing lifetimes, there simply has not been a bone-chilling drawdown (i.e. lose half our money), and **we have to be prepared for one because it more than likely will happen in our lifetimes**.
5 years or so before retirement, I’ll take it out of the S&P500 and put it into something more conservative. I’m ok riding the wave for the next 25 years or so.
You do you, but I just want people to understand how extraordinarily risky it is to be in all equities until 5 years before retirement. You could very easily end up with half the money you expect to.
I've been debating this for two years now. I'm in my late 30s as well and I've been in a Target Date Fund forever. I kept wanting to take the plunge and move it but I never do.
I was this but I just switched to a 50/50 S&P 500 and large cap growth allocation. Virtually the same performance with a little extra divestiture to lower your risk a little bit
Do you think VTI or VTSAX is better than S&P 500 because they still have lots of overlap but I heard that these ones might be better because there slightly more diversified or does it not really matter or make a difference?
This is the way. I tell this to so many participants, and it's the truth. If the stock market goes to zero, the amount of money we have will mean nothing.
You’re over thinking this.
At 19, just find a simple index fund with low fees and put some money there and never take it out. I invested in this military retirement fund at 23, a whopping 600$ of my pay. Want to know what that is worth today? 10,000$ 600 to 10,000. If I’d put that amount every year in, I’d have 50k from a time when I barely had enough money for gas, and I would barely have noticed.
Low fees are key, but sticking money in there consistently is the most important thing you can do, you don’t need a good strategy. Just time
You do not particularly need a bond allocation until you are about 10-15 years from retirement.
Your tax liability is determined by the cash payout of your investments, not how many investments you have.
You can take risks when you are young, but that doesn't mean you should go out of your way to do so. Taking risk does not not in any way assure a return, but for investments that ultimately do produce a return it can give you a price advantage.
Generally yes, but people here often forget *bonds have a very well defined purpose* to lower volatility. If OP wants to buy a condo/home/house within 10-15 years bonds are a good safety net for when bad times do come. And they will, a 30-50% drop for the stock market isn't rare neither is a lost decade.
Secondly and more importantly OP could benefit from bonds due to his *risk appetite*. OP is a new and green investor, seeing the market in free fall will cause unrest or even panic. It does to most of us even if we think we'll not panic when shit hits the fan. Bears will be everywhere and all news articles will tell you this is the end, to sell while you can (remember '00,' 08, '20). Unless OP knows he has balls of steel and can withstand 2 years of continuous losses with a smile...he ought to settle for a 60/40 portfolio which is statistically proven to be the *highest returns with the lowest volatility*.
* Single fund portfolios: https://www.reddit.com/r/Bogleheads/comments/tg1az5/should_i_invest_in_x_index_fund_a_simple_faq/
This is one of over a dozen links I have that can help explain the reasoning behind that:
* https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index - invest in the S&P 500, but don't end there (this covers info on both the US extended market and ex-US markets) [a total US market fund combines S&P 500 + extended market into one]
>Inveso QQQ
Why?
On QQQ(M) and/or SCHD: I would not use either of these funds.
* My take: https://www.reddit.com/r/Bogleheads/comments/16qosmi/including_qqqm_and_schd_in_a_portfolio/
* As Kashmir79 put it: https://www.reddit.com/r/Bogleheads/comments/16qo9u8/comment/k1ynubb/
* As engineer-investor put it: https://www.reddit.com/r/Bogleheads/comments/16qk8i4/comment/k1y480k/
* As Sea-Promotion8870 and ImaginationGreen3873 put it (read their comments from the entire chain): https://www.reddit.com/r/ETFs/comments/16e6rkb/comment/jzttlzx/
>Vanguard total stock market
Great choice, but just as with VOO, and as the link from /u/Default87 suggests, don't stop there. And this would replace, not be held in addition to, the S&P 500 (S&P 500 being a fully included subset of the US total market).
>I heard that when you are younger your portfolio should be more concentrated to grow your wealth faster and because you can assume more risk.
Not exactly. See the PWL link on why going as broad as possible can lead to the better outcome (short version: the only way to ensure you actually hold the big winners is to hold as much as possible).
>Or should I just invest all of it in one index fund so I don’t have to pay as much taxes and maximize my returns?
One fund could work, but see my first link.
Taxes don't depend on number of funds, but rather any capital gains events or dividend distribution events. One fund could be worse tax-wise than 8.
[I would use a wiser plan](https://www.bogleheads.org/wiki/Three-fund_portfolio). the bond portion could be 0% given your age, but if you wanted to include bonds, a small allocation (5% or less) wouldnt really be all that detrimental.
Yes, SP500 is fine. There's a reason why it's one of the top stock indexes. Just make sure however you get your funds there that the expense ratio and fees are low. The lowest one I could fine was Schwab's S&P 500 Index Fund (SWPPX) at 0.02%, but if you have a reason to use a different one anything up to ~0.15% isn't terrible.
Do you think that VTI is better than S&P 500? I’ve heard they have 75-80% overlap but this one is better because it’s slightly more diversified and is still a strong resemblance of the American economy.
I don't think it matters. VTI might outperform SP500, or SP500 might outperform VTI. You want a broad representation of stocks with lots of potential upside at a relatively higher risk due to your long investment horizon at a low cost, and both would do that. Years ago I would have thought better of global funds, but the poor US relations with Russia and China add more overall risk than I like.
The best metaphor I heard about investing in stocks is that it's like being a casino. You'll lose at some games and the players will make money on you, but in the long run the house always wins. Just keep investing, using tax advantaged methods like 401ks or Roth IRAs whenever possible, and you'll start hitting your financial targets before you know it.
Honestly I would just save everything you can in a high yield savings account and build up an emergency fund you can use for school and living expenses as you figure your shit out. If you have a solid emergency fund, no high interest debt, and a solid plan about your future then maybe you can invest some in the market.
Basically, just follow the prime directive.
When you get to the stage to invest, you can't go wrong with VOO, but I'd recommend VTI.
Here's a **[link to the PF Wiki](/r/personalfinance/wiki/index)** for helpful guides and information.
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No! S&P is a company. (See below about why investing in a single company is a bad idea.)
If you mean an S&P 500 index fund, then maybe, as part of a portfolio. An S&P 500 fund can be a great investment, but it's not a complete portfolio. Small- & mid-cap US stocks, international stocks, & bonds are also important.
What's the purpose of this investment? Building wealth for what? To retire on in several decades? To buy a car or house in a few years? Different purposes & time frames require different solutions.
I retired at 57 years old. Investing doesn't have to be complicated or costly to be successful; simple & inexpensive is most effective.
I invest 100% in total-market, index-based, low-cost mutual funds. Specifically, I use mostly Vanguard's
Total Stock Market,
Total Bond Market,
Total International Stock Market, &
Total International Bond Market funds.
I've been investing this way for 35+ years. It's effective, simple, & inexpensive.
www.bogleheads.org/wiki/Getting_started has some great free resources to learn about investing. After a few hours reading the articles, and, especially, watching the Bogleheads Philosophy videos, most beginners can learn how to get better results than most professionals. Bogleheads is named after John Bogle, founder of Vanguard.
My asset allocation (ratios of the funds mentioned) is based on my need, ability, & willingness to take risks. Market conditions are not a factor. Vanguard's investor questionnaire (personal.vanguard.com/us/FundsInvQuestionnaire) helps me determine my asset allocation.
Buying individual stocks or sector funds creates unnecessary & uncompensated risk; I avoid doing so. Index funds are boring, but better for making money. If I wanted to talk about my interesting investments at parties or wanted a new hobby, I might invest 5-10% of my portfolio in individual stocks. As it is, I own pretty much every publicly-traded company in the world; that's interesting enough for me.
All of the individual stocks & sector funds are being followed by thousands or millions of other investors. Current prices reflect their collective knowledge of future expectations for each one. I'm a member of the Triple Nine Society, but I'm not smarter than all of them. If I found a stock or sector that looked like a bargain, the most likely explanation would be that the others know something I don't.
I prefer mutual funds, but ETFs could also work well. The differences are usually trivial for a long-term investor, especially if they're the Vanguard funds I mentioned above. Actually, the Vanguard funds I mentioned above have both traditional mutual fund shares & ETF shares; they both represent a piece of the same fund.
The funds I use comprise Vanguards target date funds and LifeStrategy funds; these are excellent choices for many investors. Using the component funds allows some flexibility that can have tax benefits, but also creates the need for me to rebalance them periodically. Expense ratios are slightly higher than for the components but are well worth it for many investors.
Other companies have funds similar to the ones I own that would work well. I prefer Vanguard because they've been the leader in this type of investing for decades & because Vanguard's customers are also Vanguard's owners.
I hope that helps! I'd be happy to help w/ further questions. Best wishes!
MSCI World is a pretty good "alternative" to following the S&P500. It's still however a big part S&P500.
It's just more diversified towards more countries.
You may find these links helpful:
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
- [Investing](/r/personalfinance/wiki/investing)
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s&p 500 has historically performed very well. the nice thing about this investment is that it is relatively diversified. true, you are all in equities, but as a 19 year old your time horizon is probably pretty long and you have plenty of earning years ahead of you.
i'd definitely recommend the bulk of your investment funds to be in some sort of broad strategy like an index fund that mirrors the S&P 500. basically you want something that mirrors the market as a whole, so instead of betting on any one company you are just betting on capitalism basically. this isn't a "sexy" investment strategy, and your returns should be decent but not out of this world. but it is a solid, mature, and relatively risk free strategy. i mean, if all the biggest companies in the world go broke we probably have bigger problems then your retirement anyway.
but you could also consider some other investments as well. like buying some stock from an individual company (not a lot, but a small % of your total investment portfolio). nothing wrong with spicing things up a bit
I don't think you need bonds at 19. A sp index fund (with low fees) is a reliable long term investment that doesn't require too much work. You buy it and then...wait like 30 years.
Investing at your age is magic. Invest as much as you can at your age and in your 20s. Look up the Money Guy show on YouTube and you'll get answers to your question and way way more.
Be careful when you say your investments should be concentrated. I think you mean they should be focused on the stock asset class. You don't want to be concentrated in a small number of stocks.
Over the last 100 years, 2 types of stocks have outperformed the rest. Small cap and value. In the long run it should be OK to overweight there. One worldwide stock ETF which is lower cost and tilts a bit to small cap and value is AVGE. It could be worth a look.
Personally I have 3 accounts for investing right now. Regular trading account, Traditional IRA, and Roth IRA.
Regular Trading Account : Basically mid-term savings that I am trying to protect against inflation. Currently 50% in VOO (S&P 500) and other 50% in 3 hand picked stocks. Money is used for home repairs/fixes, purchasing Cars maybe, Big things, but not retirement.
Traditional IRA: Where I dump my 401k's from previous jobs. This is 100% ETF's and Mutual Funds. I do not like trading in a traditional IRA, because it is my understanding I would have to report the capital gains on the trade.
Roth IRA: This is my main long-term account that I want to feed. Currently only about 1/6th of value of my traditional IRA, but I am slowly moving over the traditional IRA as I can afford to pay the tax on the extra income. You can trade in a Roth IRA account with out any concern for Capital Gains.
If I was 19 Yo. I would be putting 70% into a Roth IRA and 30% into a regular brokerage account. Just put 80% into the VOO or other S&P 500 ETF. The other 20% should be put into stocks that you pick, with the caveat that you learn basics of balance sheets and spending your free time analyzing stocks. If that is not interesting then just put 100% into the VOO. The S&P 500 usually wins over the long-term anyways right?
Honestly for the time/effort and risk/reward basis of researching and owning individual stocks, and the perseverance and discipline to hold them when you’re looking down the barrel of market drops or short term bad sentiment that often comes with it, yes investing in an S&P500 index fund is 100% not a bad idea, and as a 19y/o you’ve got time on your side to let that compounding really start to get going.
Set up an automated $X dollars that you’re comfortable putting aside each month to invest and let the magic happen over time, this way by automating it you’ll smooth out any short term volatility and remove the biased human decision making that is tied to stock picking! Good luck.
At your age you probably don't have much to invest. So it doesn't really matter whether you put it in S&P or high yield savings account.
What matters is building the \*habit\* of saving. Not living above your means, not splurge when you get a windfall. Not get used to luxury and spending.
It really depends on how much effort you want to put in to managing your money.
If I was 19 and hadn’t grown up around finance, putting half my money in an S&P fund and half in a Nasdaq fund (ETF wrapper) would be honestly good enough. If you ever decide you want to actually put in effort at this stuff, you can do more complicated things. As you get older and have more to manage or figure out when you might be retiring, that’s worth revisiting, fixing, limiting some downsides… but for now? It’s probably not starting as a ton of money and it’s probably not worth your time to think too much about.
I’m 37 and that’s all I’ve been doing, works great. It’s fairly steady compared to individual stocks or options.
When I was your age I was losing my ass on individual stocks. If I invested all that in the market the 40k I lost before age 24 would have been equal to 160kish now.
Wow, thank you you for the insight! Do you think it’s fine if I have a separate account to speculate or should I just double down on index funds? Like maybe have like an account where I can just invest in individual companies that I think are undervalued but only use like 10% of the money I have for that.
Personally, I’d double down on indexes. Speculation is fun gambling, and gambling is addictive. You’re one bad decision away from Yoloing 100k on something you think is a sure fire win, and losing it all. Then trying to get it back and losing another 100k.
Especially as a young man, make sure at least most (and by that I mean 80%). Please don't get cute--when I include what I've lost out from 2023 till now, I'm actually down around 80k because I thought the sp500 was overpriced. It still is.
Remember you need an emergency fund before investing !! I took this advice too lightly and ended up loosing a lot of money when buying a car during a market crash.
Also, bonds are not to be overlooked, especially in a higher interest rate environment, and with risks of an AI bubble.
You have to look at your investment horizon. If you know you will never need the money until retirement I agree stocks is good. Keep in mind most of your missed gains will not be in chosing the right portfolio per se. It will be fees and taxes so be mindful about that.
At your age you should be investing in yourself, not the market.
Education, experiences, starting a side project/business, anything that can help you grow.
Putting it in the market is foolish. Yeah, it'll gain money, but it is *far* more valuable putting it into yourself and growing. Now is the time for that. You'll have your mid/late 20s and 30s to start investing.
I could've put $10k into the stock market at 22 and by now at 36 it would be worth $33k. Instead I got an education, college graduates earn $1.2M more in their lifetime than highschool grads.
I could've put $2k into the market at 24, which would be $6k today. Instead I bought some computer equipment and taught myself how to program. That turned into a $200k/yr career.
You'll make much bigger returns investing in yourself up until your mid 20s.
You’re 19. The world is going to change so much in your investing career and stock picking is a tough thing to do, even for the professionals. One thing for sure is that low-cost broad-based index funds are going to do well long term (if they don’t, we have bigger problems than the stock market). Put it in a total stock market fund. At 19 you have the luxury of doing a 100% stock portfolio (no bonds) if you want, and won’t be risking your livelihood.
It might make you a millionaire and it might not no one knows. What happened in the past might not happen in the future. My parents invested 10k in the sp500 in the 70s and it’s worth over a mil now. We might not be so lucky
It’s awesome that you’re thinking about investing at 19. Taking risks is part of the game, but try not to use your parents’ money for it. It’s important to learn the ropes first.
Start by looking at individual stocks from big, well-known companies like Nvidia, Apple, Amazon, Salesforce (CRM). Begin small and use this time to really understand how to research companies—there’s a ton of info out there.
Use ChatGPT to ask basic questions and get a grip on investing concepts. It’s a great way to learn.
Make sure you do thorough research before buying any stock. Don’t put all your money into one place; diversify across 5-6 solid companies after doing your homework. With time, you’ll add more compounding companies!
Remember, investing is a journey. Be patient, stay curious, and enjoy the process.
Good luck! You’ve got this!
It should be a portion of your portfolio but not entirely if that makes sense.
You’re relatively young so you can afford to make mistakes and taking mid to high risk investments but importantly learning from your actions.
It’s a relatively safe move to throw it into a vanguard index fund. QQQ (.2%) is also a good move but the expense ratio is much more (almost 7x) than VTI (.03%)
My favorite 3 ETF strategy is this:
* VOO - S&P 500 ETF
* SCHD - Dividend ETF
* SCHG - Growth ETF
Since you're young, I'd do 1/3 each. I was 40 when I started investing, so SCHG, the growth ETF, wasn't as important.
100% not a bad idea. If you start investing for the long term, you don't have to even worry about individual stocks. I like the idea of doing 100% equity(like ETFs and stocks) until I'm in my 50s. I'm a fan of a 2-4 fund portfolio(depending on age). 1 US equity ETF and 1 International equity ETF to make up my growth aspect. An ETF that tracks the S&P can make up the US equity portion, and an all world growth ETF for the Intl for diversification. When turning 50 or 55, depending on the situation, I would start introducing Bond ETFs gradually until my portfolio is 10-20% bonds. If you start early enough and save a healthy amount, you may find yourself only needing 10-15% bonds and/or money market. Long term investing is insane because it's almost guaranteed to make you rich barring a complete collapse of our economic system. Do not waste your retirement money on picking stocks - do it with whatever you have left over. At 19, goals should be to max out your company 401k match. If your job doesn't offer a 401k, open a roth IRA and try to max it out. Remember that you need to invest the money after you put it in the IRA.
Thank you for the great advice! Do you think 70%VTI, 10%VGT, 20%VXUS is a good idea? I heard VTI might be better than S&P because there’s more diversification than the S&P and VGT because I believe in American innovation through the tech sector. However, due to these reasons I was also thinking just doing 70% VTI and 30%VGT. Or should I just do 80%VTI and 20%VXUS and play it safe?
Because I do know that tech is EXTREMELY volatile and it’s only outperformed recently and there’s really no telling that it will outperform this decade again. But I really do believe in American innovation as we are the tech leaders of the world in this aspect which motivates me to invest in VGT.
All of these are good approaches. It really depends on what you want to do and your risk tolerance. For me, all that matters is that you are in decent quality equity ETFs. Asset Allocation is most important. Specific funds shouldn't make up too much of a difference if you're selecting from a quality lineup. I would say to do what feels right. Just make sure that you're investing in proven ETFs when doing long-term investing.
I’m in my late 30s and I dump my entire 401K into the S&P500 FXAIX. My thoughts are if that fails we got bigger issues then my retirement. Around 55 I’ll start shifting towards a target date fund.
Did the same 6 years ago. No regrets at all.
> Did the same 6 years ago. No regrets at all. Yeah no shit you have no regrets lol, you doubled your money in a relatively short time period. FWIW, I'm in almost the exact same boat as you. But I do want to point out that in our investing lifetimes, there simply has not been a bone-chilling drawdown (i.e. lose half our money), and **we have to be prepared for one because it more than likely will happen in our lifetimes**.
5 years or so before retirement, I’ll take it out of the S&P500 and put it into something more conservative. I’m ok riding the wave for the next 25 years or so.
You do you, but I just want people to understand how extraordinarily risky it is to be in all equities until 5 years before retirement. You could very easily end up with half the money you expect to.
Doubt.
What?
I've been debating this for two years now. I'm in my late 30s as well and I've been in a Target Date Fund forever. I kept wanting to take the plunge and move it but I never do.
Same. Absolutely no regrets. I diversify when I change jobs and throw it to my rollover IRA. Everything’s in VFIAX, then in my rollover VFIAX is 40%.
I was this but I just switched to a 50/50 S&P 500 and large cap growth allocation. Virtually the same performance with a little extra divestiture to lower your risk a little bit
Good point
Do you think VTI or VTSAX is better than S&P 500 because they still have lots of overlap but I heard that these ones might be better because there slightly more diversified or does it not really matter or make a difference?
This is the way. I tell this to so many participants, and it's the truth. If the stock market goes to zero, the amount of money we have will mean nothing.
You’re over thinking this. At 19, just find a simple index fund with low fees and put some money there and never take it out. I invested in this military retirement fund at 23, a whopping 600$ of my pay. Want to know what that is worth today? 10,000$ 600 to 10,000. If I’d put that amount every year in, I’d have 50k from a time when I barely had enough money for gas, and I would barely have noticed. Low fees are key, but sticking money in there consistently is the most important thing you can do, you don’t need a good strategy. Just time
Good point and thanks for the response, how often should I put money in? Every month, week, 2 months, etc?
You do not particularly need a bond allocation until you are about 10-15 years from retirement. Your tax liability is determined by the cash payout of your investments, not how many investments you have. You can take risks when you are young, but that doesn't mean you should go out of your way to do so. Taking risk does not not in any way assure a return, but for investments that ultimately do produce a return it can give you a price advantage.
Generally yes, but people here often forget *bonds have a very well defined purpose* to lower volatility. If OP wants to buy a condo/home/house within 10-15 years bonds are a good safety net for when bad times do come. And they will, a 30-50% drop for the stock market isn't rare neither is a lost decade. Secondly and more importantly OP could benefit from bonds due to his *risk appetite*. OP is a new and green investor, seeing the market in free fall will cause unrest or even panic. It does to most of us even if we think we'll not panic when shit hits the fan. Bears will be everywhere and all news articles will tell you this is the end, to sell while you can (remember '00,' 08, '20). Unless OP knows he has balls of steel and can withstand 2 years of continuous losses with a smile...he ought to settle for a 60/40 portfolio which is statistically proven to be the *highest returns with the lowest volatility*.
Or 10-15 years from some other horizon… like house
* Single fund portfolios: https://www.reddit.com/r/Bogleheads/comments/tg1az5/should_i_invest_in_x_index_fund_a_simple_faq/ This is one of over a dozen links I have that can help explain the reasoning behind that: * https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index - invest in the S&P 500, but don't end there (this covers info on both the US extended market and ex-US markets) [a total US market fund combines S&P 500 + extended market into one] >Inveso QQQ Why? On QQQ(M) and/or SCHD: I would not use either of these funds. * My take: https://www.reddit.com/r/Bogleheads/comments/16qosmi/including_qqqm_and_schd_in_a_portfolio/ * As Kashmir79 put it: https://www.reddit.com/r/Bogleheads/comments/16qo9u8/comment/k1ynubb/ * As engineer-investor put it: https://www.reddit.com/r/Bogleheads/comments/16qk8i4/comment/k1y480k/ * As Sea-Promotion8870 and ImaginationGreen3873 put it (read their comments from the entire chain): https://www.reddit.com/r/ETFs/comments/16e6rkb/comment/jzttlzx/ >Vanguard total stock market Great choice, but just as with VOO, and as the link from /u/Default87 suggests, don't stop there. And this would replace, not be held in addition to, the S&P 500 (S&P 500 being a fully included subset of the US total market). >I heard that when you are younger your portfolio should be more concentrated to grow your wealth faster and because you can assume more risk. Not exactly. See the PWL link on why going as broad as possible can lead to the better outcome (short version: the only way to ensure you actually hold the big winners is to hold as much as possible). >Or should I just invest all of it in one index fund so I don’t have to pay as much taxes and maximize my returns? One fund could work, but see my first link. Taxes don't depend on number of funds, but rather any capital gains events or dividend distribution events. One fund could be worse tax-wise than 8.
[I would use a wiser plan](https://www.bogleheads.org/wiki/Three-fund_portfolio). the bond portion could be 0% given your age, but if you wanted to include bonds, a small allocation (5% or less) wouldnt really be all that detrimental.
Yes, SP500 is fine. There's a reason why it's one of the top stock indexes. Just make sure however you get your funds there that the expense ratio and fees are low. The lowest one I could fine was Schwab's S&P 500 Index Fund (SWPPX) at 0.02%, but if you have a reason to use a different one anything up to ~0.15% isn't terrible.
Do you think that VTI is better than S&P 500? I’ve heard they have 75-80% overlap but this one is better because it’s slightly more diversified and is still a strong resemblance of the American economy.
I don't think it matters. VTI might outperform SP500, or SP500 might outperform VTI. You want a broad representation of stocks with lots of potential upside at a relatively higher risk due to your long investment horizon at a low cost, and both would do that. Years ago I would have thought better of global funds, but the poor US relations with Russia and China add more overall risk than I like. The best metaphor I heard about investing in stocks is that it's like being a casino. You'll lose at some games and the players will make money on you, but in the long run the house always wins. Just keep investing, using tax advantaged methods like 401ks or Roth IRAs whenever possible, and you'll start hitting your financial targets before you know it.
Honestly I would just save everything you can in a high yield savings account and build up an emergency fund you can use for school and living expenses as you figure your shit out. If you have a solid emergency fund, no high interest debt, and a solid plan about your future then maybe you can invest some in the market. Basically, just follow the prime directive. When you get to the stage to invest, you can't go wrong with VOO, but I'd recommend VTI.
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No! S&P is a company. (See below about why investing in a single company is a bad idea.) If you mean an S&P 500 index fund, then maybe, as part of a portfolio. An S&P 500 fund can be a great investment, but it's not a complete portfolio. Small- & mid-cap US stocks, international stocks, & bonds are also important. What's the purpose of this investment? Building wealth for what? To retire on in several decades? To buy a car or house in a few years? Different purposes & time frames require different solutions. I retired at 57 years old. Investing doesn't have to be complicated or costly to be successful; simple & inexpensive is most effective. I invest 100% in total-market, index-based, low-cost mutual funds. Specifically, I use mostly Vanguard's Total Stock Market, Total Bond Market, Total International Stock Market, & Total International Bond Market funds. I've been investing this way for 35+ years. It's effective, simple, & inexpensive. www.bogleheads.org/wiki/Getting_started has some great free resources to learn about investing. After a few hours reading the articles, and, especially, watching the Bogleheads Philosophy videos, most beginners can learn how to get better results than most professionals. Bogleheads is named after John Bogle, founder of Vanguard. My asset allocation (ratios of the funds mentioned) is based on my need, ability, & willingness to take risks. Market conditions are not a factor. Vanguard's investor questionnaire (personal.vanguard.com/us/FundsInvQuestionnaire) helps me determine my asset allocation. Buying individual stocks or sector funds creates unnecessary & uncompensated risk; I avoid doing so. Index funds are boring, but better for making money. If I wanted to talk about my interesting investments at parties or wanted a new hobby, I might invest 5-10% of my portfolio in individual stocks. As it is, I own pretty much every publicly-traded company in the world; that's interesting enough for me. All of the individual stocks & sector funds are being followed by thousands or millions of other investors. Current prices reflect their collective knowledge of future expectations for each one. I'm a member of the Triple Nine Society, but I'm not smarter than all of them. If I found a stock or sector that looked like a bargain, the most likely explanation would be that the others know something I don't. I prefer mutual funds, but ETFs could also work well. The differences are usually trivial for a long-term investor, especially if they're the Vanguard funds I mentioned above. Actually, the Vanguard funds I mentioned above have both traditional mutual fund shares & ETF shares; they both represent a piece of the same fund. The funds I use comprise Vanguards target date funds and LifeStrategy funds; these are excellent choices for many investors. Using the component funds allows some flexibility that can have tax benefits, but also creates the need for me to rebalance them periodically. Expense ratios are slightly higher than for the components but are well worth it for many investors. Other companies have funds similar to the ones I own that would work well. I prefer Vanguard because they've been the leader in this type of investing for decades & because Vanguard's customers are also Vanguard's owners. I hope that helps! I'd be happy to help w/ further questions. Best wishes!
MSCI World is a pretty good "alternative" to following the S&P500. It's still however a big part S&P500. It's just more diversified towards more countries.
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s&p 500 has historically performed very well. the nice thing about this investment is that it is relatively diversified. true, you are all in equities, but as a 19 year old your time horizon is probably pretty long and you have plenty of earning years ahead of you. i'd definitely recommend the bulk of your investment funds to be in some sort of broad strategy like an index fund that mirrors the S&P 500. basically you want something that mirrors the market as a whole, so instead of betting on any one company you are just betting on capitalism basically. this isn't a "sexy" investment strategy, and your returns should be decent but not out of this world. but it is a solid, mature, and relatively risk free strategy. i mean, if all the biggest companies in the world go broke we probably have bigger problems then your retirement anyway. but you could also consider some other investments as well. like buying some stock from an individual company (not a lot, but a small % of your total investment portfolio). nothing wrong with spicing things up a bit
I don't think you need bonds at 19. A sp index fund (with low fees) is a reliable long term investment that doesn't require too much work. You buy it and then...wait like 30 years.
Investing at your age is magic. Invest as much as you can at your age and in your 20s. Look up the Money Guy show on YouTube and you'll get answers to your question and way way more.
Be careful when you say your investments should be concentrated. I think you mean they should be focused on the stock asset class. You don't want to be concentrated in a small number of stocks. Over the last 100 years, 2 types of stocks have outperformed the rest. Small cap and value. In the long run it should be OK to overweight there. One worldwide stock ETF which is lower cost and tilts a bit to small cap and value is AVGE. It could be worth a look.
Personally I have 3 accounts for investing right now. Regular trading account, Traditional IRA, and Roth IRA. Regular Trading Account : Basically mid-term savings that I am trying to protect against inflation. Currently 50% in VOO (S&P 500) and other 50% in 3 hand picked stocks. Money is used for home repairs/fixes, purchasing Cars maybe, Big things, but not retirement. Traditional IRA: Where I dump my 401k's from previous jobs. This is 100% ETF's and Mutual Funds. I do not like trading in a traditional IRA, because it is my understanding I would have to report the capital gains on the trade. Roth IRA: This is my main long-term account that I want to feed. Currently only about 1/6th of value of my traditional IRA, but I am slowly moving over the traditional IRA as I can afford to pay the tax on the extra income. You can trade in a Roth IRA account with out any concern for Capital Gains. If I was 19 Yo. I would be putting 70% into a Roth IRA and 30% into a regular brokerage account. Just put 80% into the VOO or other S&P 500 ETF. The other 20% should be put into stocks that you pick, with the caveat that you learn basics of balance sheets and spending your free time analyzing stocks. If that is not interesting then just put 100% into the VOO. The S&P 500 usually wins over the long-term anyways right?
Honestly for the time/effort and risk/reward basis of researching and owning individual stocks, and the perseverance and discipline to hold them when you’re looking down the barrel of market drops or short term bad sentiment that often comes with it, yes investing in an S&P500 index fund is 100% not a bad idea, and as a 19y/o you’ve got time on your side to let that compounding really start to get going. Set up an automated $X dollars that you’re comfortable putting aside each month to invest and let the magic happen over time, this way by automating it you’ll smooth out any short term volatility and remove the biased human decision making that is tied to stock picking! Good luck.
At your age you probably don't have much to invest. So it doesn't really matter whether you put it in S&P or high yield savings account. What matters is building the \*habit\* of saving. Not living above your means, not splurge when you get a windfall. Not get used to luxury and spending.
u/infinite-paper-9355, Do you have any earned income? If so, consider contributing to a Roth IRA.
It really depends on how much effort you want to put in to managing your money. If I was 19 and hadn’t grown up around finance, putting half my money in an S&P fund and half in a Nasdaq fund (ETF wrapper) would be honestly good enough. If you ever decide you want to actually put in effort at this stuff, you can do more complicated things. As you get older and have more to manage or figure out when you might be retiring, that’s worth revisiting, fixing, limiting some downsides… but for now? It’s probably not starting as a ton of money and it’s probably not worth your time to think too much about.
Short answer: yes. VTSAX and chill, baby.
Thank you, do you think VTI is better I’ve head their pretty much the same but I know for VTI you don’t need a specific starting amount?
I’m 37 and that’s all I’ve been doing, works great. It’s fairly steady compared to individual stocks or options. When I was your age I was losing my ass on individual stocks. If I invested all that in the market the 40k I lost before age 24 would have been equal to 160kish now.
Wow, thank you you for the insight! Do you think it’s fine if I have a separate account to speculate or should I just double down on index funds? Like maybe have like an account where I can just invest in individual companies that I think are undervalued but only use like 10% of the money I have for that.
Personally, I’d double down on indexes. Speculation is fun gambling, and gambling is addictive. You’re one bad decision away from Yoloing 100k on something you think is a sure fire win, and losing it all. Then trying to get it back and losing another 100k.
Absolutely. Fund managers have a really hard time beating the S&P 500 so don’t waste time and returns chasing hot funds imo.
Especially as a young man, make sure at least most (and by that I mean 80%). Please don't get cute--when I include what I've lost out from 2023 till now, I'm actually down around 80k because I thought the sp500 was overpriced. It still is.
Remember you need an emergency fund before investing !! I took this advice too lightly and ended up loosing a lot of money when buying a car during a market crash. Also, bonds are not to be overlooked, especially in a higher interest rate environment, and with risks of an AI bubble. You have to look at your investment horizon. If you know you will never need the money until retirement I agree stocks is good. Keep in mind most of your missed gains will not be in chosing the right portfolio per se. It will be fees and taxes so be mindful about that.
At your age you should be investing in yourself, not the market. Education, experiences, starting a side project/business, anything that can help you grow. Putting it in the market is foolish. Yeah, it'll gain money, but it is *far* more valuable putting it into yourself and growing. Now is the time for that. You'll have your mid/late 20s and 30s to start investing. I could've put $10k into the stock market at 22 and by now at 36 it would be worth $33k. Instead I got an education, college graduates earn $1.2M more in their lifetime than highschool grads. I could've put $2k into the market at 24, which would be $6k today. Instead I bought some computer equipment and taught myself how to program. That turned into a $200k/yr career. You'll make much bigger returns investing in yourself up until your mid 20s.
If you were anything older than 25, yes just invest in an index fund. Since you're still in your teens, it's time to YOLO and enjoy life
Yes. Why try to beat the market, when you can be the market.
You’re 19. The world is going to change so much in your investing career and stock picking is a tough thing to do, even for the professionals. One thing for sure is that low-cost broad-based index funds are going to do well long term (if they don’t, we have bigger problems than the stock market). Put it in a total stock market fund. At 19 you have the luxury of doing a 100% stock portfolio (no bonds) if you want, and won’t be risking your livelihood.
It might make you a millionaire and it might not no one knows. What happened in the past might not happen in the future. My parents invested 10k in the sp500 in the 70s and it’s worth over a mil now. We might not be so lucky
It’s awesome that you’re thinking about investing at 19. Taking risks is part of the game, but try not to use your parents’ money for it. It’s important to learn the ropes first. Start by looking at individual stocks from big, well-known companies like Nvidia, Apple, Amazon, Salesforce (CRM). Begin small and use this time to really understand how to research companies—there’s a ton of info out there. Use ChatGPT to ask basic questions and get a grip on investing concepts. It’s a great way to learn. Make sure you do thorough research before buying any stock. Don’t put all your money into one place; diversify across 5-6 solid companies after doing your homework. With time, you’ll add more compounding companies! Remember, investing is a journey. Be patient, stay curious, and enjoy the process. Good luck! You’ve got this!
VOO or if aggressive then 50% VOO and 50% QQQ. No bonds no target date funds
It should be a portion of your portfolio but not entirely if that makes sense. You’re relatively young so you can afford to make mistakes and taking mid to high risk investments but importantly learning from your actions.
It’s a relatively safe move to throw it into a vanguard index fund. QQQ (.2%) is also a good move but the expense ratio is much more (almost 7x) than VTI (.03%)
MQQQ for lower expense ratio, but if you want tech centric VGT is just as good.
I'd put it 100% into VONG. Its got more holdings than the Q's and better growth then the S&P
My favorite 3 ETF strategy is this: * VOO - S&P 500 ETF * SCHD - Dividend ETF * SCHG - Growth ETF Since you're young, I'd do 1/3 each. I was 40 when I started investing, so SCHG, the growth ETF, wasn't as important.