Hi Jeremy !
What’s your opinion on investing in the 3 funds below :
50% - VTI
25% - QQQ
ARKK - 25%
Let me know , thanks!
Hey @CS161!
I don’t HATE it, but I also don’t love it. Here’s my breakdown:
The good:
- Pretty simple… just 3 ETFs, that’s great
- Mostly low cost. VTI and QQQ have low expense ratios, but ARKK has a high expense ratio of 0.75%
The not so good
- Not really diversified. VTI is the total us stock market QQQ is the Nasdaq 100 which is a subset of the total US stock market (so offers no additional diversity) ARKK is just 33-55 US tech stocks which is likely largely a subset of QQQ. So again, no additional diversity.
- ARKK is actively managed and has a high expense ratio.
- You’re chasing past performance. This is the worst part. Instead of buying what is going to go up in the future, I’m pretty sure you just picked QQQ and ARKK because they have done great the last few years. And I’m pretty sure you didn’t pick international stocks because they haven’t done great the last few years. But what happens if the next few years it flip flops. Tech stocks are stagnant or fall (because they’ve been bid up to astronomical levels… prices you’re now paying) and international surges based on pent up value that just now is converted to market value. What do you do then? Drop your crappy tech stocks and go buy expensive international ETFs?! I get tons of questions about chasing past performance. But buying AFTER something gets bid way up isn’t what you want to do. You want to buy the thing that’s ABOUT to go up. Since we can’t know that, our only choice is to diversify as broadly as possible.
So yeah. I’m not a huge fan of the QQQ and ARKK portion of this portfolio. Instead, I’d go with a three fund portfolio like this:
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