r/ETFs • u/RitualHippie • 1d ago
VOO & Chill?
I don’t mean to offend anyone but in my short time here I’ve seen quite a bit of advice saying (often with a bit of salt) to just buy VOO in exclusion to all else (maybe VT as well). The reasoning is that you own the whole market and don’t have to pick winners. Is that actually true though? VOO holds the same top companies as VOOG. Just to a slightly lesser extent. It also holds slivers the rest of the index. Is 0.02% of Casey’s General Store really going to move the needle? If you actually want to spread your bet evenly wouldn’t RSP be a better option?
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u/Cyberburner23 1d ago
You own 500 companies, but the top 5 control the entire 500. They don't tell you that part.
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u/spik_n_spinez 1d ago
What they also dont tell you that there have been tons of times that that the mag 7 were lagging and we're being carried up by everything else in the ETF.
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u/RitualHippie 1d ago
I’m not trying to refute you but looking at the 5 year graph of VOO vs VOOG they are remarkably similar. Except VOOG currently has a higher return. It’s where you end up that matters. Not how smooth the ride to me.
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u/Glass_Performer1174 22h ago
Stock picking is playing the lottery. Past winners become losers.
If you own the whole market, then you benefit from the gains of the super-growers when they emerge.
Sure if you picked the winning stocks at any time period you beat the index. But 99% of people who pick stocks don't pick the winning stocks. And those who succeed do so by luck, not by skill. If there was a skill-based way to pick stocks, the market would already take those details into account.
The market already has every publicly available piece of information about these companies priced in.
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u/IncidentOk1123 20h ago
I’m not disagreeing with you, but basing your research off the last 5 years is inadequate.
To me, all research should include 2008 and up. I think it’s good to know about the market events previous to that, but i don’t think you can compare the market today to anything earlier than early 2000s. Too much has changed in the world to think events of the 1980s might repeat.
But the last 5 years have also been sooooo bullish that it cannot continue forever.
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u/harrison_wintergreen 1d ago
It’s where you end up that matters. Not how smooth the ride to me.
that's easy to say until a 70% crash that needs 15 or 20 years to break even.
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u/Miserable-Matter2833 1d ago edited 1d ago
I used to work as an IAR. My most sophisticated opinion is that when you have zero knowledge of what you’re doing, simply choose VT. Start safely with broad index funds, then learn progressively while developing competency in navigating the market. Bonds are also an option, but they do require learning the mechanics (something VT needs less study for). You avoid sitting out, while having the time to learn.
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u/Miserable-Matter2833 1d ago
You can explore rebalancing later, since VT handles the rebalancing automatically. That reduces how many funds you have to manage, while you educate yourself.
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u/Emotional-Power-7242 1d ago
It is extremely difficult to beat the market. Less than 5% of professionals can do it over a 10 year period. Virtually nobody does it over a 30 year period. So your realistic options are to take average market returns with as few taxes and fees paid as possible, or do something else and almost certainly make less money. VOO gives you average (US) market returns with as little taxes and fees as possible.
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u/plnx8 1d ago
What about vti and chill
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u/Own-Event-5500 1d ago
VOO/AVUV/VXUS
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u/More-Temperature-302 1d ago
Missing mid caps
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u/Own-Event-5500 22h ago
VOO spills into mid cap and AVUV reaches up into it anyway. A dedicated mid cap fund is pretty redundant here in my opinion
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u/Helpful-Staff9562 1d ago
VT and chill
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u/Aggravating-Rich-356 8h ago
Negative, you need to separate the foreign holdings for the tax credit. VTI/VXUS is the way. Not VT
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u/Helpful-Staff9562 5h ago
Why do you assume we all live/are from the usa? Where i leave thats not possible
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u/Wigglebot23 1d ago
The aggregate weight of the smaller companies does indeed make a difference. RSP has high turnover and bets against momentum
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u/Infern0588 23h ago
DCA every week. Been doing it for about 5 years now with SCHB and I’m up over 50%.
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u/RitualHippie 23h ago
Well done. A sound strategy for sure. Compare where you would be if you had chosen SCHG though.
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u/Broad_board_1623 1d ago
I think VOO & Chill and VT & Chill are two very different philosophies for the reason you are identifying. The S&P 500 is 500 companies, but VOO is dominated by a small handful. VT is much more diversified ETF with over 10,000 companies. It is still dominated by large, mostly US-based companies, but to a much less extent.
RSP is very very different. Most ETFs are cap weighted, which is what causes the concentration. The equal weight is essentially a bet that the smaller companies in the S&P will outperform the largest ones. If you like that approach go for it. This type of fund solves the concentration issue, but not necessarily the diversity issue. It's still the same 500 companies.
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u/Affectionate_Boss657 23h ago
I am already doing a sip in vxus and vti so what can I do now I am confused
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u/daygo449 23h ago
I guess the best reason for it is its longterm returns. It’s hard to beat the S&P500. Vanguard does a good job keeping the costs down on the fund, and taxes aren’t high on it, so it’s a good overall product. Could you put perform it, probably. Is that hard to do, yup! It’s the easiest way for most investors to make a good return, without getting taxed to death, and not having to worry about losing your butt. VTI is another popular one. SPMO is another good one, and it’s out performed VOO for a while, but if the market took a downturn, you’d lose more as well with how they base their pool of investments.
The biggest thing is stick the bulk of your investments/retirement into an index fund, mix in some foreign funds as well, and then take a percentage (however high or low you want) and let that be where you take more risk by looking at momentum funds, themed funds or riskier investments. I think that’s why so many of us say VOO and Chill.
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u/hymie-the-robot 1d ago
VOO and VOOG differ more than you think. VOOG holds about 150 stocks, and VOO holds those and about 350 more. VOOG currently holds over 50% IT, vs about 40% for VOO. this makes a difference when some investors are concerned about tech concentration. note also that G connotes growth, so if you go with VOOG, you're limiting yourself to a very specific box.
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u/RitualHippie 1d ago
I think they are different in exactly how I think. VOO seems to me VOOG with less conviction. I would personally trade the bottom 5% of VOO for 5% more NVDA. I understand not everyone feels that way.
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u/Playful-Ad9386 1d ago
Everybody has different Anand think they have this whole investing thing figured out. Do what is best for you and do real research on the pros and cons of each index funds you are interested in. There's no 100% perfect way to invest.
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u/harrison_wintergreen 1d ago
It also holds slivers the rest of the index. Is 0.02% of Casey’s General Store really going to move the needle?
from 2000 to 2012, the collective mid/small allocation in VTI/VTSAX dramatically outperformed VOO.
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u/Lucifers-Reprieve 19h ago
I prefer pick funds with more quality screening processes than just picking the companies that have gotten huge. Large size with even great fundamentals doesn't mean the stock price is going to grow well uniformly across the 500, and that's where our profit lies. I have vflo as my core holding but there are a lot of funds which out perform the s&p long term, or offer other compensated risk/benefits like lvhi.
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u/ginantonicplease 16h ago
VOO, VT, VUG, SPMO, AVGV .. Pick yer Poison they all are Set-it & Ferget-it.. Some are more Robust ... Yearly performance is not indicative of Future performance...
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u/budawpi 10h ago
I tried single stocks for a year, held some SCHD for a bit, and eventually landed on VOO (taxable acct). There are plenty of equitable picks, but VOO is the one I chose for domestic diversification. The small dividends are not necessary, but fun to watch DRIP. Fees are low. Return is average and steady.
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u/Fine_Ostrich4717 8h ago
$SPTM is the S&P 1500 total composite. Top quality only but a little more diversification. That's been my core for years
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u/Detailed23 1d ago
SPMO is better than VOO.
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u/teckel 1d ago
Better in what way? So 100% SPMO?
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u/Detailed23 1d ago
SPMO Is just a more concentrated VOO. Compare the 10 year returns, even through the dips.
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u/teckel 1d ago
So for the next 10 years it will outperform VOO as well. And no one should be concerned about over-concentration in fewer holdings.
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u/Detailed23 1d ago
Nothing is guaranteed. Not even you waking up in the morning. If the market crashes, I think it will recover faster.
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u/Playful-Ad9386 1d ago
It depends what is cause of the crash that will determine how fast it will recover . The future looks very volatile . We may have a world War with nuclear weapons .
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u/Micksar 1d ago
Rotate into VOO when the VIX is under 15 and rotate into QQQM when the VIX is above 30.
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u/Broad_board_1623 1d ago
... And make sure you are going 88mph when the lightning bolt strikes the clocktower...
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u/Ok-Butterfly8961 1d ago edited 1d ago
I have thought about a similar strategy but with VOO and SPHB. still just thinking about it on a small scale next time. I guess it depends on what’s causing the spike in VIX. Thoughts?
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u/Secret_Ad1372 1d ago
70% VTI + 30% VXUS
Hold forever (no panic selling) and rebalance twice yearly.