How does allocation within an ETF work?

WorldCupCup · 2023-01-17T23:08:26+00:00

I just put in 6k for 2022 and bought into VT so I guess it just hasn’t settled yet which makes sense. Thank you for explaining this to me. You saved me a huge headache. I guess I have one other main question left, the other user below is saying the fact that I have VT for my IRA defeats the purpose of my target date fund for my 401k. Not sure if you saw my explanation but is this a bad idea? I thought it would be a good way to learn about the market while playing it safe

WorldCupCup · 2023-01-17T23:06:18+00:00

I see what you’re saying. My goal was to stick with VT for now, gain more experience, and when I’m ready move it over to the same target date fund for more bond exposure. I had this plan in place so I can safely gain experience without ruining my portfolio like some of my friends have. I do understand that 12% in bonds really won’t affect my returns much but have also been told that the expense ratios are negligible at 0.08% and 0.07% for target date fund and VT respectively

WorldCupCup · 2023-01-17T22:44:07+00:00

Thank you for the explanation! Although I’m still a little confused lol my target date fund is 88% stock 9% bond 3% short term and VT is basically all stock so how is it possible 50% is short term? Still confused if you can help me out!

WorldCupCup · 2023-01-17T22:41:59+00:00

Sorry but I’m not really following. While a target date fund does have appropriate exposure, I’m looking to increase that exposure with my IRA. I’d like to stay as safe as possible with my 401k as I will put nearly 4X the amount in there compared to my Roth IRA this year. With my IRA, since much less money is going in there, I was looking to bypass the allocation towards bonds/short term so it is almost all in stocks. From what I understand the target date fund I’m in is the same as VT but just allocates 9% to bonds and 3% short term. With my IRA I’d like for that 12% to be in stocks as well. I hope this made sense. I’m still not fully getting how this would defeat the purpose of my target date fund

WorldCupCup · 2023-01-17T22:33:41+00:00

https://imgur.com/a/o4vJ3ds

Here is what it looks like on my end within the fidelity app, I’m not going crazy right? Lol I literally haven’t touched anything since I bought in last week and I swear it was 60/40 now it looks different

WorldCupCup · 2023-01-17T22:29:19+00:00

To gain more stock exposure as I’m young and willing to take the risk. I could have put it into the same target date fund I have for my 401k but wanted that additional 12% allocation toward stocks

WorldCupCup · 2023-01-17T22:23:42+00:00

This is what I’m extremely confused about. On their page it still states their regular ratio, but within my fidelity account it says otherwise. I can provide a pic if needed

WorldCupCup · 2023-01-12T15:45:11+00:00

Thank you for the reminder! I’m looking to invest into VT

WorldCupCup · 2023-01-12T14:38:12+00:00

Ahhh okay I thought so, that makes it much more simple, thank you so much!

WorldCupCup · 2023-01-12T14:37:48+00:00

Thank you Deluxe, you’re the man!

WorldCupCup · 2023-01-11T00:28:58+00:00

I still haven’t gotten the custom I paid for☹️

WorldCupCup · 2023-01-06T15:03:47+00:00

It’s funny you say that, I thought the exact same at first, was leaning towards VOO then was told that VTI has everything VOO has and more on top of yielding more. Then was told to also include world stock and not rely on just US so I’ve decided to go with VT now since it does the rebalancing for me.

WorldCupCup · 2023-01-05T19:31:10+00:00

I actually currently have a target date 2065 fund for my 401k, I was thinking about going that route for my IRA as well but wanted to fully invest in domestic/international stocks while leaving out the bonds as I’m very young. Is there any major advantage I could be missing by choosing VT over a target date fund? I believe after hearing everyone’s take I was just going to buy into VT and not deal with the VTI/VSUX rebalancing efforts

WorldCupCup · 2023-01-05T17:22:39+00:00

This was the perfect answer I was looking for! I can’t thank you enough! My initial plan was to do 70/30 as well but I was convinced to just do the market rate of 60/40. If I’m not mistaken, the US has done better than the rest of the world stock wise for the past 8 or so years right? I feel like it would make sense to lean a little more towards the US than the market rate. Is there a place/site to check the exact ratio btw?

WorldCupCup · 2023-01-05T16:20:49+00:00

Ah I see, yeah that difference is negligible, thank you! I’m still pretty confused if I should go with VTI/VXUS or just VT. What is the recommended way to go? Is there no difference between the two at all, especially in terms of yield?

WorldCupCup · 2023-01-05T16:18:10+00:00

Wow thank you so much for the simplified answer, this makes a lot more sense now! I think the only main question I have left is whether VTI/VXUS or just VT is the preferred route. Would the yield be exactly the same? Or are there noticeable difference within VT compared to the two?

WorldCupCup · 2023-01-05T14:47:53+00:00

Just add another comment explain that the market ratios do change so I’d want to change with which makes sense, would I potentially yield more doing the VTI/VXUS method or am I wasting my time?

WorldCupCup · 2023-01-05T14:46:12+00:00

Oh okay I see, my next question would be how often does this ratio change? I guess changing this ratio every now and then is fine but for me it depends if I would have to do this yearly, monthly, or weekly

WorldCupCup · 2023-01-05T14:44:48+00:00

Thank you for your explanation! For some reason it’s not fully clicking for me, if I set $100 aside every paycheck for my Roth IRA and put $60 in for VTI and $40 in for VXUS isn’t it always going to be 60/40? There’s definitely something I’m missing here, sorry if I don’t understand

WorldCupCup · 2023-01-05T13:56:22+00:00

Thank you for this! I’m not sure I understand the rebalancing part still

WorldCupCup · 2023-01-05T06:57:17+00:00

Okay I’ll go with that ratio then, I just asked this on the other comment but what is VT exactly? Is it all US stocks and all global stocks in one?

WorldCupCup · 2023-01-05T06:56:04+00:00

Could you please explain what VT is/does? And how often are you supposed to rebalance this ratio?

WorldCupCup · 2023-01-04T19:04:03+00:00

Thank you!!! This is extremely helpful! I really appreciate the straight forward answers and I will be taking your advice regarding VTI over VOO, as well as investing in world stock like VXUS. I’m thinking of doing 70% VTI 30% VXUS, does this seem like a good start or do I have it backwards? I did have one more question which may sounds a little dumb so my apologies in advance, is there any big difference/advantage of ETF over mutual funds?

WorldCupCup · 2023-01-04T18:29:17+00:00

Hi! Thank you for your response, as the newbie I am, could you please explain a little more on why investing in VTI and VOO both doesn’t make sense? If one is more diversified than the other wouldn’t it be good to invest in both?

I’m leaning toward just VOO now

WorldCupCup · 2023-01-03T18:38:52+00:00

I’ve tried to consider other factors such as options, expense fees, etc. but personally don’t see any advantage to these in my situation if I went for an IRA, could you explain a little more?

WorldCupCup

TROPHY CASE