VTSAX vs VTTSX! Should you be only using one for the lifetime of your Roth IRA?

Investing
#1

Hello! Thank you soooooo to the investing community and helping those who are trying to learn how to make smart long term decisions with their money.

I’m 28 and I just started investing at the beginning of this year. I opened an account with vanguard. One brokerage account for my investments and another for my Roth IRA.

  1. My brokerage account is still a baby but I have started out with shares of VGT, VYMI, VOO, and VTI and today 2 shares of VT (thanks to an awesome IG post). Is this diverse enough or should I be looking to add bonds etc. ? My plan was to just stick to the above 5 and keep investing in those but my portfolio isn’t very diverse so please let me know if there are other ones you think would be good for me to look into.

  2. My 2nd brokerage account is for Roth IRA. I chose to invest the 6000 limit into VTSAX for the 2020 year. Should I then choose VTTSX for next year 2021 or stick to VTSAX for the lifetime of my ROTH? Not sure if that is something you also supposed to diversify. :woman_shrugging:t4:

#2

Hey @CarolinaM531!

I think it’s important to understand what it means to diversify and what’s inside of your ETFs and funds.

Diversifying is basically buying more different stuff. So if you own only US stocks, you could buy international stocks or bonds to diversify. As of now, you kind of have a “throwing spaghetti against the wall” strategy. You listed seven different ticker symbols. Five of them are US stocks. Those five have a lot of overlap… i.e Apple might be inside every one of them. The other two (VT and VTTSX) are more diversified, because they both own WORLD stocks… including Apple!

To put it another way VTTSX ALONE is more diversified than the other six combined. Because it has US stocks, international stocks, and bonds.

So, if it were me, I’d put 100% of your portfolio, both accounts, into VTTSX. Simple, efficient, optimal, inexpensive, diversified. The throwing ETFs against the wall to see what sticks strategy is more likely to open you up to underperformance.

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