I max out my Roth IRA every January. I don’t have a 401k at work but a pension. I then invest in a taxable brokerage. I mainly use VTSAX. What else can I do? I am dumping anywhere from 2-5k per month into my taxable brokerage account. I think I am doing Grat, but always looking to learn/do more. Thanks for any advice! Trying to get to the double comma club ASAP!
It sounds like you are doing great!
Broad strokes, there are really only two things I would invest in that provide positive meaningful long term growth:
- Equities (Stocks and Bonds)
- Investment Real Estate
Warren Buffett has stated he wants his estate to be held 90% in an S&P 500 index fund and 10% in cash for his wife and heirs. VTSAX is a superset of the S&P 500. So if those 500 companies are good enough for his $72 billion, they’re probably diverse enough for you to get into the two comma club too 
So basically, if you told me “My plan is to dump every penny I can into VTSAX in a brokerage account until I’m 70” I would say “That sounds like an awesome plan.” Don’t overcomplicate things.
IF YOU REALLY WANT TO complicate things, you could add a bond fund for 10-20% to add some diversification (VBTLX). Or an international fund (VTIAX). Those three represent a typical "three fund portfolio, which is about as diversified as you can get in equities.
If you want to be in the business of investment real estate, it’s a lot of learning, and a lot more ongoing work. But you can also get great returns by buying properties with some leverage, building equity, repeating. But that pretty quickly could become your full time job. It’s not for everyone.
So you’re doing great. I’d consider the 3-fund portfolio, otherwise the only lever you can move is how much money you put in, and how long you stay the course. The more the better.
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Thanks man! I’m investing pretty much as much as I can right now. All the calculators have b
Me reaching the double comma club in about 10 years if I keep investing aggressively the whole time like I am right now. Would love to get there quicker but I am happy with my dedication so far. I’m 34 so if I get there by 45 I would be happy. I also have a very small amount in VSMAX(small cap) and VTIAX (international) just to get a little more exposure to small companies and some exposure internationally. But my main focus is VTSAX and it has done well for me so far!
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Sounds like an awesome plan! I think overweighting small cap is reasonable, and I still like international even though it’s been getting stomped the last 10 years. (But what’s gonna happen the next 40 years is what’s important).
Just keep staying the course. If fortunes switch and international temporarily outperforms, don’t switch your asset allocation. Just look at is as a better buying opportunity for VTSAX
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Why is overweighting small cap reasonable? About 20% of my 401k is VSGAX. It seems to have performed much better than VSMAX over any time period.
Well, those are both small cap indexes. To break it down a bit:
- VSMAX: Vanguard Small-Cap Index Fund. Contains 1,370 stocks that represent “small cap” companies.
- VSGAX: Vanguard Small-Cap Growth Index Fund. A subset of the above fund, it contains 570 stocks that are “small cap” companies in the “growth” index.
I’ve read some compelling articles that point to small cap stocks being more volatile, but likely to produce bigger long term returns over long periods of time. Honestly, it feels like something that is more likely to encourage chasing past performance than it is provide better real returns to investors. But if someone wants to thrown an extra 10% at a small cap fund, I think it’s reasonable.
Further slicing and dicing small cap into small cap growth and small cap value seems like an even bigger opportunity to gamble. Not BAD per se, but feels like more likely to add complexity without adding expected returns.
John Bogle on the issue:
“Impressed both by the long-term performance (and recent performance) of value stocks and small-cap stocks, some investors hold the all-market (or S&P 500) index fund as the core, and add a value index fund and a small-cap index fund as satellites. I’m skeptical that any kind of superior performance will endure forever. (Nothing does!) But if you disagree, it would not be unreasonable to hold, say, 85 percent in the core, another 10 percent in value, and another 5 percent in small cap. But doing so increases the risk that your return will fall short of the market’s return, so don’t push too far.”
– The Little Book Of Common Sense Investing , p.206.
Quote borrowed from the bogleheads.org page on small cap tilting
I only have about 2.5% in VSMAX and about 2% in VTIAX.
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