Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Why bother diversified? Why not all in Index SP500?
Old 05-27-2023, 12:49 AM   #1
Recycles dryer sheets
 
Join Date: Oct 2005
Posts: 477
Why bother diversified? Why not all in Index SP500?

Anyone here all in S&P500? Boring but seems like a "set it and forget it" strategy?

Would anyone dare to keep it after retired? Vanguard much lower percentage, more like 40% or so.

Your thought please

Enuff
Enuff2Eat is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-27-2023, 01:56 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: NC
Posts: 20,616
Just do a search…

https://www.sarwa.co/blog/invest-sp-500

https://www.fool.com/investing/2022/...a-millionaire/

https://blog.nbkcapitalsmartwealth.c...in-the-sp-500/
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 05-27-2023, 05:29 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 16,713
Quote:
Originally Posted by Enuff2Eat View Post
Anyone here all in S&P500? Boring but seems like a "set it and forget it" strategy?

Would anyone dare to keep it after retired? Vanguard much lower percentage, more like 40% or so.

Your thought please

Enuff
I'm sure you could do worse, but why not a wider spectrum of stock - say Vanguard Total World Stock.

What about a balance with bonds?

How about Scott Burns Couch Potato investing? Simple and easy to balance.
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 05-27-2023, 05:37 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Nov 2014
Location: Austin
Posts: 1,319
Quote:
Originally Posted by Enuff2Eat View Post
Anyone here all in S&P500? Boring but seems like a "set it and forget it" strategy?

Would anyone dare to keep it after retired? Vanguard much lower percentage, more like 40% or so.

Your thought please

Enuff
Very good friend is pretty much 100% SP500 and retired in his early 50's.

Why would he do so?
- He has more than enough.
- He's using a withdrawal method that results withdrawals that are variable and can live with the variability
- He dislikes insurance of any form and considers bonds to be insurance
- He's more of a "free market" type philosophically when it comes to investments

Everybody has a different need, willingness, and ability to take risk.

Cheers
Big-Papa
big-papa is offline   Reply With Quote
Old 05-27-2023, 05:52 AM   #5
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 4,634
Much of my equity portion is in SPX or equivalents, plus some VTI.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 05-27-2023, 06:09 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jan 2018
Location: Tampa
Posts: 10,895
Most of my equity allocation is in the S&P 500, but the total equity allocation is only 43%.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 05-27-2023, 06:12 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Feb 2019
Location: St Pete
Posts: 1,077
Other than cash I'm all in equities. I have a long WD period so equities have the best shot against inflation for a ~50 year retirement. SORR isn't fun but my WD is low enough I sleep well at night and, if history is a reliable guide, I'll be BTD in a few years. If not, I'm perfectly content at my current standard of living! If that happens I might skim off living expenses and invest some more conservatively and let the rest ride as I get older but for now equities work for me.
__________________
FIREd 7/2021 at age 47
FLSUnFIRE is offline   Reply With Quote
Old 05-27-2023, 06:28 AM   #8
Thinks s/he gets paid by the post
VanWinkle's Avatar
 
Join Date: Oct 2017
Location: Tellico Village
Posts: 2,510
If you have a taxable account and qualified account, you will need different stock funds in each one if you want to tax loss harvest. That would look like VTSAX in taxable and VFIAX in qualified. That is the reason all of my equity allocation is not in one S&P 500 fund. You could stick with 31 days and no reinvestment, but that is a hassle.
__________________
Retired May 13th(Friday) 2016 at age 61.
VanWinkle is offline   Reply With Quote
Old 05-27-2023, 06:55 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Dec 2016
Posts: 1,184
Its not the worst strategy in the world, but if you look at the 2000s for example, having some exposure to small caps helped your portfolio tremendously.
__________________
Retired 1/6/2017 at 50 years old
Immensely grateful


“The most important quality for an investor is temperament, not intellect.”—Warren Buffett
FREE866 is offline   Reply With Quote
Old 05-27-2023, 07:15 AM   #10
Full time employment: Posting here.
 
Join Date: Oct 2020
Posts: 848
100% stocks has had a lower SWR than more balanced portfolios. So you should only consider it if you have more than enough. SP500 has been great for years vs. other stock choices but no way to know if that continues.
Exchme is offline   Reply With Quote
Old 05-27-2023, 07:27 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 35,318
Quote:
Originally Posted by Enuff2Eat View Post
Anyone here all in S&P500? Boring but seems like a "set it and forget it" strategy?

Would anyone dare to keep it after retired? Vanguard much lower percentage, more like 40% or so.

Your thought please

Enuff
I think that would be fine. Link below compares Vanguard's Total Stock and S&P 500 results since 1994... they are similiar enough to me and the less diversified index fund actually outperformed.

  Vanguard Total Stock Mkt Idx Inv Vanguard 500 Index Investor 
YearInflationReturnBalanceReturnBalance
19932.75%10.62%$11,0629.89%$10,989
19942.67%-0.17%$11,0441.18%$11,118
19952.54%35.79%$14,99637.45%$15,282
19963.32%20.96%$18,13922.88%$18,778
19971.70%30.99%$23,76133.19%$25,010
19981.61%23.26%$29,28928.62%$32,168
19992.68%23.81%$36,26421.07%$38,945
20003.39%-10.57%$32,429-9.06%$35,418
20011.55%-10.97%$28,873-12.02%$31,160
20022.38%-20.96%$22,821-22.15%$24,259
20031.88%31.35%$29,97628.50%$31,174
20043.26%12.51%$33,72810.74%$34,522
20053.42%5.98%$35,7454.77%$36,170
20062.54%15.51%$41,28915.64%$41,827
20074.08%5.49%$43,5565.39%$44,081
20080.09%-37.04%$27,424-37.02%$27,762
20092.72%28.70%$35,29426.49%$35,114
20101.50%17.09%$41,32714.91%$40,351
20112.96%0.96%$41,7241.97%$41,145
20121.74%16.25%$48,50615.82%$47,656
20131.50%33.35%$64,68232.18%$62,989
20140.76%12.43%$72,72113.51%$71,498
20150.73%0.29%$72,9351.25%$72,391
20162.07%12.53%$82,07611.82%$80,945
20172.11%21.05%$99,35521.67%$98,484
20181.91%-5.26%$94,132-4.52%$94,028
20192.29%30.65%$122,98331.33%$123,485
20201.36%20.87%$148,64918.25%$146,018
20217.04%25.59%$186,68528.53%$187,680
20226.45%-19.60%$150,090-18.23%$153,468
20231.70%8.25%$162,4679.12%$167,468

https://www.portfoliovisualizer.com/...ocation2_2=100
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 05-27-2023, 07:31 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 1,889
Depends on which index (weighted or equal weight). Just 10 stocks make up ~30% of the S&P by weight so it's not that diversified.
Also depends what you are looking for in diversification. To manage risk the assets need to be uncorrelated. You could own thousands of stocks but if they are all correlated you haven't gotten any diversification and haven't reduced risk.
This is a bit of a stumbling explanation:
Spock is offline   Reply With Quote
Old 05-27-2023, 07:55 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Dec 2016
Posts: 1,184
I think Ray Dalio is very smart, but I'm just dubious of the % correlation of different assets. I just don't think it's that clear. 2022 was a perfect example. My sense is consensus was very clear on stock v bond correlation , yet owning a portfolio of 20-30% bonds did very little to offset the poor returns of stocks. I saw that in my moms account.
__________________
Retired 1/6/2017 at 50 years old
Immensely grateful


“The most important quality for an investor is temperament, not intellect.”—Warren Buffett
FREE866 is offline   Reply With Quote
Old 05-27-2023, 07:58 AM   #14
Recycles dryer sheets
 
Join Date: Jan 2013
Posts: 160
Your choice - follow Warren Buffet's advice or random strangers on the internet.
enjoyinglife102 is offline   Reply With Quote
Old 05-27-2023, 08:29 AM   #15
Recycles dryer sheets
 
Join Date: Aug 2013
Location: Roanoke
Posts: 151
Other than cash, which is about 3% of our portfolio, we are all equities. We are also in a fairly unique situation compared to most here.

I'm retired military and we comfortably live off my pension and VA disability. I retired 5 years ago at 49 and still do a little part time work, mostly so I can still add to retirement accounts.

I view both my pension and VA disability as the equivalent of a large portfolio of government bonds. Very safe and adjusted for inflation. So I don't feel a need to have a big chunk in bonds at this point.

We don't anticipate any significant withdrawals from our retirement accounts for at least another decade or so and even then, our SWR plan is 2-3%, so not too worried about SORR.

My MIL passed away and my wife received a good chunk in inheritance which has served to increase our savings that much more.
rwdflynavy is offline   Reply With Quote
Old 05-27-2023, 08:39 AM   #16
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 1,889
Quote:
Originally Posted by FREE866 View Post
I think Ray Dalio is very smart, but I'm just dubious of the % correlation of different assets. I just don't think it's that clear. 2022 was a perfect example. My sense is consensus was very clear on stock v bond correlation , yet owning a portfolio of 20-30% bonds did very little to offset the poor returns of stocks. I saw that in my moms account.

I'm not defending Dalio. I chose to post his vid because it was one of the shorter ones discussing the point.
I think the logic and math of risk reduction with uncorrelated assets is sound which means that the old consensus that stocks-zig when bonds-zag has broken down some what. When bottomless pocketed buyers (central banks with "printers") buy bonds with a goal to control rates, the market is no longer functioning the way it did when the stocks+bonds=diversification consensus was formed and the correlation is no longer an inverse relationship... at least not to the degree it was 40 years ago.


So the trick becomes finding 10 truly uncorrelated assets. I only looked into it for about 5 minutes a couple of weeks ago and the suggested assets were non-starters like fine art and wine. The wine might work except I buy cheap stuff and I'd drink my assets skewing my portfolio allocation...
Spock is offline   Reply With Quote
Old 05-27-2023, 08:45 AM   #17
Thinks s/he gets paid by the post
 
Join Date: Dec 2016
Posts: 1,184
Quote:
Originally Posted by Spock View Post
I'm not defending Dalio. I chose to post his vid because it was one of the shorter ones discussing the point.
I think the logic and math of risk reduction with uncorrelated assets is sound which means that the old consensus that stocks-zig when bonds-zag has broken down some what. When bottomless pocketed buyers (central banks with "printers") buy bonds with a goal to control rates, the market is no longer functioning the way it did when the stocks+bonds=diversification consensus was formed and the correlation is no longer an inverse relationship... at least not to the degree it was 40 years ago.


So the trick becomes finding 10 truly uncorrelated assets. I only looked into it for about 5 minutes a couple of weeks ago and the suggested assets were non-starters like fine art and wine. The wine might work except I buy cheap stuff and I'd drink my assets skewing my portfolio allocation...

Nothing wrong with cheap wine ha!


I am all stock, but diversified with S and P, IWM, SCHG and international

I just cant get into bonds , I know they mitigate the volatility, but I view that as just the price I pay for market returns...and to reach my goal all I need are market returns...and actually now almost 6.5 years into retirement I need much less, so barring something cataclysmic happening I'll be fine.
__________________
Retired 1/6/2017 at 50 years old
Immensely grateful


“The most important quality for an investor is temperament, not intellect.”—Warren Buffett
FREE866 is offline   Reply With Quote
Old 05-27-2023, 09:01 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
target2019's Avatar
 
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,334
There's a chart below this quote that helps explain "most investors". If you're not in that bunch, it's your choice.

Quote:
The chart in this article shows hypothetical portfolios with different asset allocations: The most aggressive portfolio shown comprises 60% US stocks, 25% international stocks, and 15% bonds: it had an average annual return of 9.77%. Its best 12-month return was 136%, while its worst 12-month return would have lost nearly 61%. That's probably too much volatility for most investors to endure.
https://www.fidelity.com/learning-ce...iversification

So, you've made a decision to accept the results of an index with 500 companies. If that's ok with you, fine. But I'd advise a friend to look further at what diversification consists of.
target2019 is offline   Reply With Quote
Old 05-27-2023, 09:13 AM   #19
Recycles dryer sheets
 
Join Date: Oct 2021
Posts: 465
Excluding rentals, my AA = 100% equities. My largest portfolio is a taxable non retirement account and thus I use VOO and VTI as TLH partners otherwise I’d be mostly in the S&P 500. The only other index fund I strongly believe in is QQQ (which has been extremely profitable especially lately). YMMW but yes I believe in couch potato portfolios…
RetiredAt49 is offline   Reply With Quote
Old 05-27-2023, 11:11 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2011
Posts: 8,115
As a dividend investor a ~2% annual dividend from the S&P index is not very attractive. Having said that, I do hold about 13% of it in the portfolio solely for growth purposes.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Beating Index SP500 Enuff2Eat FIRE and Money 59 01-19-2022 03:53 PM
Why bother picking stocks, just go with S&P index etf (SPY) Future beach bum Active Investing, Market Strategies & Alternative Assets 31 05-09-2013 06:33 PM
SP500 Index fund tax efficiency prgsdw FIRE and Money 4 04-13-2008 08:46 PM
You're not fully diversified until... Nords FIRE and Money 1 02-08-2007 05:43 PM
DCA'ing into the sp500 index maddythebeagle FIRE and Money 11 07-16-2006 12:56 PM

» Quick Links

 
All times are GMT -6. The time now is 01:43 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.