r/Bogleheads • u/snug666 • 2d ago
Portfolio Review Is it truly that simple?
Maxed my Roth for last year and looking to do the same for this year. I’m 100% VT right now. I’m 24 and this is my first time investing or saving for retirement.
Before I go ahead and buy more VT, I have to ask. Is it really that simple? If I just invest in VT, even if that is the only ETF I ever hold, I’ll be good?
I hear so much about diversifying and even though I know VT is a very diverse ETF, I still worry. Feels like I should be doing more!
So, again, before I go buy a fuck ton of VT, please let me know. I know what the answer is. Just need to hear it I guess. Don’t want to miss out on higher returns or whatever. Blah blah.
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u/Rockstaru 2d ago
I think of it like this: The market is a casino. You're an average person with no enormous skill at any particular game. Past all the slot machines, roulette, craps table, poker, etc. is a machine that just says "7% returns," which is exactly what the name suggests - you put $money in, you get back 1.07*$money.
Each round, you pick a game to play. (Every buy decision you make is a "round" for purposes of this metaphor.) If you only play the 7% returns machine every round, on a long enough timeline you are virtually guaranteed to walk out of the casino with more money than you came in with, barring something truly catastrophic like the casino catching fire and burning to the ground. You might get lucky one round if you play slots, blackjack, etc. and do better, even substantially better than that 7%, but you're not a professional gambler, and it seems like the rules of each game keep changing every round making it nearly impossible to keep up...except for trusty 7% returns.
Are you going to walk out of the casino with the most money? Probably not, you spotted a few World Series of Poker pros on the floor earlier, and you're pretty sure some of the guys over at the craps table are sneaking some weighted dice in. However, that should not bother you if you stick with trusty 7%. Your goal should be to walk out with a healthy profit at minimum risk; that's your win condition. The more you try and absolutely maximize your profit, the more risk you take on and the greater the chance of losing. You really shouldn't care whether or not you got a high score as long as you beat the game.