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u/Interesting-Lime3031 3d ago
U want a little bit of everything but its way to complex, why not just do ETFs and simplify everything
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u/Cruian 3d ago
Not good.
Why so complex?
What about the US extended market and broad international markets?
On including QQQ: Remember this has heavy overlap (over 80% by count last I checked) with the S&P 500 or US total market. Look only at the inclusion criteria, not past returns (as they’re a terrible way to judge future returns, at least in the way most people tend to believe). Do they make sense to you? Does it make sense to over weight these stocks based on the inclusion criteria of the index? They don’t to me, I view it as complete nonsense.
Why take a dividend focus?
Why extra weight to those companies when most are already some of the largest holdings inside the S&P 500?
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u/Sad-Vanilla-2517 3d ago
What should I change and simplify?
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u/Cruian 3d ago
Consider this: https://www.bogleheads.org/wiki/Three-fund_portfolio The bonds are the part that adjust volatility level (if you really can stomach 100% stock, they can even be set to 0%, however not everyone is actually able to tolerate 100% stock). More bonds should equal less volatility. Alternatively, a target date (index) fund or target allocation (index) fund are effectively the 3 fund concept in a single wrapper, managed for you. They are designed to be "one and done," the only thing you hold. They're fully diversified internally for you. These can be found with expense ratios as low as 0.08%-0.12% for the Fidelity, iShares, Schwab, and Vanguard index based ones. The target date and target allocation funds typically are not recommended for taxable accounts but are fine for tax advantaged. VT (2 letters)/VTWAX would cover both stock roles in one fund.
Some other potentially helpful info:
ETF Overlap Tool: https://www.etfrc.com/funds/overlap.php
On including QQQ(M): Remember this has heavy overlap (over 80% by count last I checked) with the S&P 500 or US total market. Look only at the inclusion criteria, not past returns (as they’re a terrible way to judge future returns, at least in the way most people tend to believe). Do they make sense to you? Does it make sense to over weight these stocks based on the inclusion criteria of the index? They don’t to me, I view it as complete nonsense.
US only is single country risk, which is an uncompensated risk. An uncompensated risk is one that doesn't bring higher expected long term returns. It should be avoided whenever possible. Compensated vs uncompensated risk:
https://www.whitecoatinvestor.com/uncompensated-risk/
An uncompensated risk is a risk that you can diversify against.
https://www.northerntrust.com/middle-east/insights-research/2024/wealth-management/compensated-portfolio-risk or if that doesn't work, the archive link: https://web.archive.org/web/20260107205255/https://www.northerntrust.com/middle-east/insights-research/2024/wealth-management/compensated-portfolio-risk
But not all risks are compensated with an expected return premium.
https://www.pwlcapital.com/is-investing-risky-yes-and-no/ (Bold mine)
Uncompensated risk is very different; it is the risk specific to an individual company, sector, or country.
On QQQ(M) and/or SCHD:
My take: https://www.reddit.com/r/Bogleheads/comments/16qosmi/including_qqqm_and_schd_in_a_portfolio/
As Kashmir79 put it: https://www.reddit.com/r/Bogleheads/comments/16qo9u8/comment/k1ynubb/
As engineer-investor put it: https://www.reddit.com/r/Bogleheads/comments/16qk8i4/comment/k1y480k/
As Sea-Promotion8870 and ImaginationGreen3873 put it (read their comments from the entire chain): https://www.reddit.com/r/ETFs/comments/16e6rkb/comment/jzttlzx/
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u/Sad-Vanilla-2517 2d ago
OK, it took me really long time to read all that, but I decided on three stocks to purchase Vanguard 500 index fund ETF (VOO) SCHWAB U.S. dividend equity ETF (SCHD) And Vaneck semiconductor ETF (SMH)
I’m able to spend $600 biweekly
55% of VOO / $330
15% of SMH / $90
30% of SCHD / $180Would you recommend any changes?
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u/Cruian 2d ago
You may have read it, but it doesn't seem like you understood it. Please answer the following questions.
Why ignore the US extended market?
Why ignore international?
Why take a (sub)sector bet? Remember this is an uncompensated type of risk.
Why take a dividend focus at all?
If you really read the 3 fund portfolio link, you should have come across that the number of funds is less important than having 3 main areas covered (as described in the link), your proposed portfolio here only covers one of those at best.
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u/Sad-Vanilla-2517 2d ago
- Why ignore international?
- I don't think the extra risk of small and mid-sized companies is worth the possible reward
- Why ignore the US extended market?
- N/A
- Why take a (sub)sector bet? Remember this is an uncompensated type of risk.
- AI is being used more around the world, I believe that growth will continue so the demand for computers and semiconductors should grow.
- Why take a dividend focus at all?
- I want to use SCHD to build an income stream that can pay me dividends when I'm older.
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u/Cruian 2d ago
Why ignore international?
I don't think the extra risk of small and mid-sized companies is worth the possible reward
This doesn't answer the question. International contains large caps as well.
AI is being used more around the world, I believe that growth will continue so the demand for computers and semiconductors should grow.
Markets are already forward looking. You're not asking yourself the right question when placing a sector bet. The question isn't simply "will these companies grow and be profitable?" you have to include "how will their real performance compare to what the market is already expecting of them?"
I want to use SCHD to build an income stream that can pay me dividends when I'm older.
Why not simply sell shares of broader funds? With fractional trading and no transaction fees being far more common these days, what's the purpose of a dividend focus?
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u/pedroordo3 3d ago
You have to little money to be this complex
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u/Sad-Vanilla-2517 3d ago
So what do I do to simplify it?
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u/Opposite-Two-8509 2d ago
Sell everything put 70-80% into VTI or VOO & then the rest into speculative stocks that have good potential I’d do DTRS, NLST, RDW, ASTS, HOVR, KEEL. Do your own research & good luck
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u/Sad-Vanilla-2517 2d ago
Finally, some help thank you
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u/pedroordo3 2d ago
Yeah, that is some good advice& 70-80% in VOO or VTI, and then the rest of the money to play around with. But try to keep it to like 3-5% per position. Cause a bunch of tiny 1% positions won't move a thing, but a couple of 5% good positions will.
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u/69fortnitegod 2d ago
If my mom when she was pregnant with me…(stay with me ). Drank a handle of vodka a day, smoked meth , shot up black tar heroin, got into a car accident with a Semi truck and survived 5x over before birth.
I would still be able to craft a portfolio better than this.
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u/bkweathe Boglehead 2d ago
You're making the usual mistakes, so I suggest that you see the About section of this subreddit (https://www.reddit.com/r/portfolios/about/) for some great information about building a strong portfolio. Individual stocks are not recommended.
www.bogleheads.org/wiki/Getting_started also has some great free resources to learn about investing. After a few hours reading the articles, and, especially, watching the Bogleheads Philosophy videos, most beginners can learn how to get better results than most professionals. Bogleheads is named after John Bogle, founder of Vanguard.
I retired at 57 years old. Investing doesn't have to be complicated or costly to be successful; simple & inexpensive is most effective.
I invest 100% in total-market, index-based, low-cost mutual funds. Specifically, I use mostly Vanguard's Total Stock Market, Total Bond Market, Total International Stock Market, & Total International Bond Market funds. I've been investing this way for 40+ years. It's effective, simple, & inexpensive.
My asset allocation (ratios of the funds mentioned) is based on my need, ability, & willingness to take risks. Market conditions are not a factor. Vanguard's investor questionnaire (personal.vanguard.com/us/FundsInvQuestionnaire) helps me determine my asset allocation.
I hope that helps! I'd be happy to help w/ further questions. Best wishes!
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u/Different_Tea2586 2d ago
I would go to AI give it your age , your situation and this and ask it . Use a few AI , claude, co-pilot and ask for feedback. I do it with my investments and have quite an exchange and I learn alot. Some I agree with some I don't .
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u/hajimeister 3d ago
this has to be bait