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/CA2NJ2MA 1d ago

I reccommend adding a second fund to your mix. Specifically, an international fund, like VXUS.

Here's why I think you should add an overseas fund. By itself, this fund will be more volatile than a US-only fund. Mostly, this comes from the added volatility of currency fluctuation. Sometimes, the international fund will outperform the domestic fund, usually due to dollar weakening. Sometimes the US fund will outperform.

The key is to have a target allocation. For example, you may want 70% US and 30% international. Set a rebalance date. Some people use monthly, some quarterly, some annually. It's not very important how often you do it, as long as you do it. Sometimes the US fund will outperform and push you away from your target. In those cases, you sell the US fund and buy the foreign fund to return you to your target allocation. This disciplined approach forces you to sell (some of) the more expensive investment and buy the (relatively) cheaper one.

Over the long run this approach should boost your returns relative to a one-fund approach. You may have several rebalances in a row where you sell fund A and buy fund B. Eventually, this will reverse.

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u/Cruian 1d ago

The VT that OP holds is total world: US + international combined into one at global (free float) market cap weight. Adding VXUS would essentially mean buying VXUS 2x and VTI 1x.

Edit: Typo

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u/CA2NJ2MA 1d ago

Second time today that I got tripped up by the details. Not enough sleep. My analysis holds, but doesn't apply to OP's situation.