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longshower024
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Post by longshower024 »

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Re: Investing in VT

Post by placeholder »

longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Don't try to time the market and remember that everything you know everyone else knows.
Doctor Rhythm
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Re: Investing in VT

Post by Doctor Rhythm »

Welcome to the forum.

There is unfortunately no way to reconcile this contradiction. Investing in stocks involves risk. Over 10 years, there is likely to be another bear market. There have been two ~ 30% drops in the last 3 years alone.

Some might recommend dollar cost averaging into the market (ie, gradually buy VT over months) rather than make a single large purchase. This might ease the anxiety, but over 10 years, it probably doesn’t make a huge difference in risk reduction. If you do this, don’t try to time the market; just make scheduled purchases.

We talk about risk tolerance as one’s need, ability, and willingness to take risk with investments. You’ve stated your low willingness, which is fine. What about your need and ability? Will you reach your financial goals if you don’t own stocks? Will you reach these goals if you own stocks and the market drops?
gotoparks
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Re: Investing in VT

Post by gotoparks »

Maybe 100K is too much for you to invest. You can always dollar cost average. Stocks go up and down, that's what they do. We all are hoping that after 10 years we will have more money, but it is not guaranteed.
zero_coupon
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Re: Investing in VT

Post by zero_coupon »

Consider reading the following thread, which concerns the "market timing" aspect of increasing one's equity allocation, which is exactly what you're planning to do:

viewtopic.php?t=401313
muffins14
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Re: Investing in VT

Post by muffins14 »

longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
50k Monday morning. 10k each Monday after

Economic conditions are always uncertain
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burritoLover
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Re: Investing in VT

Post by burritoLover »

a 10 year timeframe is way too short for spending from an equity position. I would make sure you have enough fixed income to balance out this portfolio. Equities are highly risky - a 10 year period with a negative return is a distinct possibility and wouldn't be the first time its occurred. You have to accept that, otherwise don't invest.
zero_coupon
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Re: Investing in VT

Post by zero_coupon »

muffins14 wrote: Fri Mar 31, 2023 6:37 am 50k Monday morning. 10k each Monday after

Economic conditions are always uncertain
Why start with a lump?
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Re: Investing in VT

Post by muffins14 »

zero_coupon wrote: Fri Mar 31, 2023 7:22 am
muffins14 wrote: Fri Mar 31, 2023 6:37 am 50k Monday morning. 10k each Monday after

Economic conditions are always uncertain
Why start with a lump?
Ideally doing 100k in a single lump would be mathematically expected to be best. The OP expressed hesitation to do so, so by at least spreading half out over the following month might make them feel better
Crom laughs at your Four Winds
matthewbarnhart
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Re: Investing in VT

Post by matthewbarnhart »

longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
I suggest you read this article, internalize it, and adjust your mindset: https://jlcollinsnh.com/2012/04/15/stoc ... -save-you/

You will never, ever be able to invest in volatile/risky assets without said volatility or risk. You have to understand and accept this volatility, as it's far easier to adjust your psychology to reality than vice-versa.

I've been 100% stocks (mostly VT, in fact) since learning this ~10 years ago, starting from a negative net worth. I have yet to be fazed by any stock market drops.
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Re: Investing in VT

Post by muffins14 »

If you’re really skittish and really think the market is wrong on inflation, you could wait until the next CPI report and invest after the market digests that info. You’d likely be wrong though, not because you’re not smart, but just because most people are wrong when they try to time things
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crefwatch
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Re: Investing in VT

Post by crefwatch »

Are you aware that VT is relatively volatile ETF, for an index fund? Do you have the stomach for volatility? Decide carefully before you invest $100K.
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Re: Investing in VT

Post by DesertDiva »

longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Consider the three-fund portfolio, and invest like a Boglehead. Nothing is certain, but this is a solid model. Start here: https://www.bogleheads.org/wiki/Getting_started
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Re: Investing in VT

Post by Artsdoctor »

longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Totally understand your apprehension. Statistically, you'll do better by investing the lump sum at once. But that doesn't mean you'll always do better. If it represents a large portion of your investment portfolio and you're anxious about it, you can invest it monthly over the next several months if you would feel better. I wouldn't spread it out over a year though.
kojima
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Re: Investing in VT

Post by kojima »

Artsdoctor wrote: Fri Mar 31, 2023 10:25 am
longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Totally understand your apprehension. Statistically, you'll do better by investing the lump sum at once. But that doesn't mean you'll always do better. If it represents a large portion of your investment portfolio and you're anxious about it, you can invest it monthly over the next several months if you would feel better. I wouldn't spread it out over a year though.
Why not over a year?
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BraveBison
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Re: Investing in VT

Post by BraveBison »

DesertDiva wrote: Fri Mar 31, 2023 9:44 am
longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Consider the three-fund portfolio, and invest like a Boglehead. Nothing is certain, but this is a solid model. Start here: https://www.bogleheads.org/wiki/Getting_started
VT is investing like a Boglehead. It is two of the three funds you're referring to.
secondopinion
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Re: Investing in VT

Post by secondopinion »

crefwatch wrote: Fri Mar 31, 2023 8:38 am Are you aware that VT is relatively volatile ETF, for an index fund? Do you have the stomach for volatility? Decide carefully before you invest $100K.
In comparison to the S&P 500, the volatility is only slightly higher. I can think of numerous index funds that are much more volatile.

If stocks are desired, it is hard to do better than VT for global investment.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Re: Investing in VT

Post by muffins14 »

kojima wrote: Fri Mar 31, 2023 11:36 am
Artsdoctor wrote: Fri Mar 31, 2023 10:25 am
longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Totally understand your apprehension. Statistically, you'll do better by investing the lump sum at once. But that doesn't mean you'll always do better. If it represents a large portion of your investment portfolio and you're anxious about it, you can invest it monthly over the next several months if you would feel better. I wouldn't spread it out over a year though.
Why not over a year?
Because stocks usually go up — that’s why we invest in them.

The later you invest, the more you might miss out on
Crom laughs at your Four Winds
maj
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Re: Investing in VT

Post by maj »

From your self-description, i.e., up-to-now a saver, not an investor, it surprises me that you want to invest $100,000 for 10+ years in 100% global equity.
As pointed out above, ten years does not guarantee a capital gain.

Investing seems like a reasonable option for a lifetime saver; however, you may want to look at one of the Life Strategy funds, with four levels of global equity exposure and corresponding bond exposure. Even the 80% equity/20% bond allocation would provide a bit of relief during stock bear markets.

peace
maj
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Re: Investing in VT

Post by maj »

From your self-description, i.e., up-to-now a saver, not an investor, it surprises me that you want to invest $100,000 for 10+ years in 100% global equity.
As pointed out above, ten years does not guarantee a capital gain.

Investing seems like a reasonable option for a lifetime saver; however, you may want to look at one of the Life Strategy funds, with four levels of global equity exposure and corresponding bond exposure. Even the 80% equity/20% bond allocation would provide a bit of relief during stock bear markets.

peace
darrens
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Re: Investing in VT

Post by darrens »

longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
I was in a similar position with a similar temperament a few years ago. I bought 30k right off and then DCA's 1000 a month from then on. After about a year of DCA'ing I kind of got used to the ebb and flow and recently stuck the rest of it in. During the year I learned to not really pay too much attention to the news and only went into my account during my monthly purchases. I kind of just got desensitized to any big movements and frankly bored with being scared.
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Artsdoctor
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Re: Investing in VT

Post by Artsdoctor »

kojima wrote: Fri Mar 31, 2023 11:36 am
Artsdoctor wrote: Fri Mar 31, 2023 10:25 am
longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Totally understand your apprehension. Statistically, you'll do better by investing the lump sum at once. But that doesn't mean you'll always do better. If it represents a large portion of your investment portfolio and you're anxious about it, you can invest it monthly over the next several months if you would feel better. I wouldn't spread it out over a year though.
Why not over a year?
There have been a few studies looking at lump sum investing versus DCA at 3-month, 6-month, or 12-month periods. I apologize for not having those studies at my fingertips but you can find them with a little effort. A synopsis is here:

https://www.marketwatch.com/story/the-b ... 2016-01-05

Also, Vanguard did their own study which found similar results.

There are plenty of reasons why someone might be comfortable taking a little time to invest a lump of cash. Obviously, if the lump is only 10% of your entire portfolio, you'll probably be less nervous than if it comprised 75% of your investable assets. But once you start getting out to spreading that lump of cash investment time horizon over 12 months or more, the data in support of extended DCA become less and less compelling.
zero_coupon
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Re: Investing in VT

Post by zero_coupon »

Artsdoctor wrote: Fri Mar 31, 2023 4:43 pm But once you start getting out to spreading that lump of cash investment time horizon over 12 months or more, the data in support of extended DCA become less and less compelling.
Given the attractive return currently available on US Treasurys, one could buy a ladder of Treasurys on secondary with one rung maturing each month, or whatever, then invest the proceeds in VT at each maturity. This would provide stock-like return (5%) during the DCA process.
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Re: Investing in VT

Post by mega317 »

longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
How much of your total savings/net worth is this? The statements "I want to invest in VT" and "I can't stomach a big drop in the market" are incompatible, since big drops in the market can and WILL happen.
delamer
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Re: Investing in VT

Post by delamer »

If you are investing for a 10-year period, then it’s almost inevitable that you’ll experience a significant (20%+) decline in VT during that time.

If you can’t stomach that, then you should consider investing in 10-year TIPS or a similar investment. Their value probably will fluctuate too, but you’ll know that if you hold them for 10 years that you’ll get your principal back.

Good luck.
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Re: Investing in VT

Post by arcticpineapplecorp. »

longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Welcome to the group.

1. read this about Market Timing

2. If you DCA rather than lump sum Do Not Dollar-Cost-Average for More than Twelve Months

Now with that aside I want you to think about a few things:

3. Assume you had invested this $100k in some prior year (regardless of whether all at once or over some 12 month period). Your money has already been invested in VT before now. But now it's 2023. And you're thinking:
The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum.
what do you do considering you already have that lump sum invested and now there's an "economic condition" that has your stomach in knots?

what do you do?

Are you going to sell out of VT for fear of what might (or might not) happen?

Are you aware that sometimes:
a. the market is not the economy
b. pundits are really good at scaring people but what they say isn't worth a hill of beans:

headline from 1980:
"Coming on Fast. The Slump of 1980 Will be Severe"

actual performance of S&P500 in 1980: +32%

2 headlines from 2009:
"Worst Crisis since '30s, With No End in Sight"
"US Unemployment Rate Hits 10.2%, Highest in 26 years"

actual performance of S&P500 in 2009: +26%

for fun, you should keep track of what the negativos said/wrote, then go look at their track record. I love when people do that. What you see are things like this:

Image

source: https://ritholtz.com/2018/12/spx-vs-pundits-2/

4. the market falls. not just now and again. E.V.E.R.Y. Y.E.A.R. that's kinda what the market does:

Image

source: https://am.jpmorgan.com/us/en/asset-man ... e-markets/

but notice that while the average intrayear decline was -14.3% (you should expect in any given year for the market to decline by that much "on average") annual returns (i.e. from Jan 1 - Dec 31) were positive 32 out of 43 years (74% of the time in the past). In other words, markets recover from declines. That's what they do. Not always in one year. Could take a few years or more to recover. So stocks are for the long term, not short term. It's where you put money you don't need in the short term.

You should determine how much of your money you want to put at risk (for growth) and how much you want to keep safe (expect no or little growth). That's your asset allocation (i.e. do you want to be 80/20 or 60/40 or 30/70, etc? This is your mix of stocks and fixed income). Figure that out, invest accordingly and stay the course. Read more here:

How much risk do you need to take: https://www.cbsnews.com/news/asset-allo ... -you-need/
How much risk do you have the ability to take: https://www.cbsnews.com/news/asset-allo ... -you-take/
How much risk do you have the willingness to take: https://www.cbsnews.com/news/asset-allo ... tolerance/
How to deal with conflicts between the need, ability and willingness to take risk: https://www.cbsnews.com/news/asset-allo ... ing-goals/

5. if you've chosen your asset allocation properly, there should be no need to panic. Because you understand how different allocations perform during 50% declines (and you've chosen according to your max pain point, right?):

Image

6. So it's not all or nothing. It's a question of how much in VT (risk) and how much NOT IN VT (safe)? See the difference?

7. And so you focus on the things you can control and don't stress over the the things you cant:

Image

source: https://am.jpmorgan.com/us/en/asset-man ... etirement/

8. If you still want to panic after that there's always A Guided Meditation for when the stock market is falling

what do you think?
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Re: Investing in VT

Post by malabargold »

Don't have your emotional well-being tied to your net worth
No way to live
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Re: Investing in VT

Post by DesertDiva »

BraveBison wrote: Fri Mar 31, 2023 12:29 pm
DesertDiva wrote: Fri Mar 31, 2023 9:44 am
longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Consider the three-fund portfolio, and invest like a Boglehead. Nothing is certain, but this is a solid model. Start here: https://www.bogleheads.org/wiki/Getting_started
VT is investing like a Boglehead. It is two of the three funds you're referring to.
No, his plan on VT alone is a one-fund portfolio.
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BraveBison
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Re: Investing in VT

Post by BraveBison »

DesertDiva wrote: Fri Mar 31, 2023 11:52 pm
BraveBison wrote: Fri Mar 31, 2023 12:29 pm
DesertDiva wrote: Fri Mar 31, 2023 9:44 am
longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Consider the three-fund portfolio, and invest like a Boglehead. Nothing is certain, but this is a solid model. Start here: https://www.bogleheads.org/wiki/Getting_started
VT is investing like a Boglehead. It is two of the three funds you're referring to.
No, his plan on VT alone is a one-fund portfolio.
I guess I fail to see how that makes it incompatible with investing like a Boglehead. VT is a very well-diversified, very low-cost index fund. OP is planning on buying and holding it. OP is avoiding commissions and high fees. 100% equities may not be to your taste, but is there a minimum bond allocation one must hold to be considered a Boglehead, in your opinion? Would OP’s plan be sufficiently Bogleheaded to you if it was 99% VT and 1% BND? 90/10? What is the cutoff to meet the philosophy? A target date index fund is also a one-fund portfolio, but surely you would agree that it is “investing like a Boglehead”, so it can’t just be the fact that VT is only one fund.

(I will agree that the portion of OP’s query regarding timing the market doesn’t fit Boglehead philosophy, but I don’t see the fund choice, or even allocation depending on age, being a problem.)
minimalistmarc
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Re: Investing in VT

Post by minimalistmarc »

longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
You will need to address your inability to stomach big drops before investing in equities. Big drops are common and normal.
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Re: Investing in VT

Post by donaldfair71 »

BraveBison wrote: Sat Apr 01, 2023 12:17 am
DesertDiva wrote: Fri Mar 31, 2023 11:52 pm
BraveBison wrote: Fri Mar 31, 2023 12:29 pm
DesertDiva wrote: Fri Mar 31, 2023 9:44 am
longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Consider the three-fund portfolio, and invest like a Boglehead. Nothing is certain, but this is a solid model. Start here: https://www.bogleheads.org/wiki/Getting_started
VT is investing like a Boglehead. It is two of the three funds you're referring to.
No, his plan on VT alone is a one-fund portfolio.
I guess I fail to see how that makes it incompatible with investing like a Boglehead. VT is a very well-diversified, very low-cost index fund. OP is planning on buying and holding it. OP is avoiding commissions and high fees. 100% equities may not be to your taste, but is there a minimum bond allocation one must hold to be considered a Boglehead, in your opinion? Would OP’s plan be sufficiently Bogleheaded to you if it was 99% VT and 1% BND? 90/10? What is the cutoff to meet the philosophy? A target date index fund is also a one-fund portfolio, but surely you would agree that it is “investing like a Boglehead”, so it can’t just be the fact that VT is only one fund.

(I will agree that the portion of OP’s query regarding timing the market doesn’t fit Boglehead philosophy, but I don’t see the fund choice, or even allocation depending on age, being a problem.)
It’s not a problem.

You two are both investing like a BH. One choosing to hold bonds, the other not. Since the OP hasn’t mentioned them, VT perfectly fine.
kojima
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Re: Investing in VT

Post by kojima »

If OP were to invest in some bonds alongside VT, would one recommend VTEB if it is a regular taxable account?
Outer Marker
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Re: Investing in VT

Post by Outer Marker »

longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
If you're new to investing and this is your only holding outside of bank deposits, I would consider an "all in one" fund like the Vanguard Balanced Fund, or one of the Lifestrategy funds. Having a fund that contains a mix of stocks and bonds will cushion the ups and downs and make them a lot easier to stomach.
muffins14
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Re: Investing in VT

Post by muffins14 »

kojima wrote: Sat Apr 01, 2023 6:08 am If OP were to invest in some bonds alongside VT, would one recommend VTEB if it is a regular taxable account?
Sure. However it would be best to choose whatever offers the highest after-tax yield for similar risk.

It could be VTEB, BND, a treasury fund, a state-specific muni
Crom laughs at your Four Winds
Robert20
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Re: Investing in VT

Post by Robert20 »

BraveBison wrote: Fri Mar 31, 2023 12:29 pm
DesertDiva wrote: Fri Mar 31, 2023 9:44 am
longshower024 wrote: Fri Mar 31, 2023 12:51 am I want to invest $100,000 into VT for the long term (10+ years). The banking crisis and uncertain economic conditions are making me hesitant though. I can't stomach a big drop in the market after investing such a large sum. For context, I've always been someone who keeps everything in savings, and I'm new to investing. So naturally investing this sum into the market makes me a bit nervous especially in these economic conditions.

Any suggestions on what to do in terms of timing?
Consider the three-fund portfolio, and invest like a Boglehead. Nothing is certain, but this is a solid model. Start here: https://www.bogleheads.org/wiki/Getting_started
VT is investing like a Boglehead. It is two of the three funds you're referring to.
VT is fine/OK/good in retirement accounts.

But not in taxable account because we miss FTC.
mjfrad
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Re: Investing in VT

Post by mjfrad »

Perhaps backwards?

Foreign tax credit obtains only when held in taxable, not tax-free or tax-deferred.

This gives some preference for holding foreign allocation in taxable.
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BraveBison
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Re: Investing in VT

Post by BraveBison »

mjfrad wrote: Sat Apr 01, 2023 10:53 am Perhaps backwards?

Foreign tax credit obtains only when held in taxable, not tax-free or tax-deferred.

This gives some preference for holding foreign allocation in taxable.
That poster is referring to the fact that VT doesn't qualify for the FTC because it's less than 50% international.

For me, the impact of the FTC in my situation is outweighed by the behavioral risk VT mitigates for me, but it is a consideration for some.
mjfrad
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Re: Investing in VT

Post by mjfrad »

Thx BraveBison. I did not know about the 50% foreign holdings rule to qualify for the FTC.

The FTC is a true benefit then of holding US and foreign equity allocations in separate holdings within taxable, by luck rather than intent the way I have always done it.
zero_coupon
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Re: Investing in VT

Post by zero_coupon »

mjfrad wrote: Sat Apr 01, 2023 12:57 pm Thx BraveBison. I did not know about the 50% foreign holdings rule to qualify for the FTC.

The FTC is a true benefit then of holding US and foreign equity allocations in separate holdings within taxable, by luck rather than intent the way I have always done it.
Check out https://www.physicianonfire.com/international-stock/

Turns out, for many marginal tax brackets, international is better in tax-advantaged, due to its higher dividends.
Ed 2
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Re: Investing in VT

Post by Ed 2 »

Now you’ve got all answers:
1. No, it’s too volatile
2. Why not , lump sum
3. Just dollar cost average and you’ll be ok with it.
4.Just buy IBonds or go 10 year Treasury.

My ten in a half cent’s: if you think 10 year is a long term , you should start reading Jack Bogles books first and stop listening news , period. Also, there’s no right answer for you , even on this forum until you do the homework by yourself first by understanding what long term means and how market volatility doesn’t mean anything when it comes to real long term investing and how market timing and impulse decisions just is not your friends.
Good luck . Ed.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
polldav
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Re: Investing in VT

Post by polldav »

Outer Marker wrote: Sat Apr 01, 2023 6:44 am If you're new to investing and this is your only holding outside of bank deposits, I would consider an "all in one" fund like the Vanguard Balanced Fund, or one of the Lifestrategy funds. Having a fund that contains a mix of stocks and bonds will cushion the ups and downs and make them a lot easier to stomach.
This is the best advice for OP in my opinion. Yes, ideally they would just "get over it" regarding the risk, but a balanced fund like STAR or Wellesley or whatever is a pretty good compromise, and it doesn't hurt that bond funds have become a bit cheaper in the last year too.
mjfrad
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Re: Investing in VT

Post by mjfrad »

Check out https://www.physicianonfire.com/international-stock/

Turns out, for many marginal tax brackets, international is better in tax-advantaged, due to its higher dividends.
[/quote]

Thx again BraveBison. That link was a great analysis on the tax-efficiency of international equities inclusive of the FTC and corrected a long held misconception on my part. I am grateful to you and as always to this forum for the outstanding advice and education.
secondopinion
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Re: Investing in VT

Post by secondopinion »

zero_coupon wrote: Sat Apr 01, 2023 8:55 pm
mjfrad wrote: Sat Apr 01, 2023 12:57 pm Thx BraveBison. I did not know about the 50% foreign holdings rule to qualify for the FTC.

The FTC is a true benefit then of holding US and foreign equity allocations in separate holdings within taxable, by luck rather than intent the way I have always done it.
Check out https://www.physicianonfire.com/international-stock/

Turns out, for many marginal tax brackets, international is better in tax-advantaged, due to its higher dividends.
It would be slightly better, but saving about 0.1% of returns in tax drag is not worth filling my Roth IRA with just international stocks in order to dodge taxes (there are bigger tax concerns that exist). I will pay the tax man and just move on with life without restriction as to my taxable account holding stocks. Besides, if international stocks pay less dividends or US stocks pay more dividends in the future, then the analysis can flip.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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