Do you invest in any of these ETFs? Let me and everyone else know in the comments!
Here is a very basic strategy for allocating your capital in a stock market portfolio.
S&P 500 ETF, 50% allocation - The S&P 500 is a US based index that has had a total rate of return of 10.5%/year since
1926. The vast majority of people will not beat that return by stock picking. Investing in the S&P 500 is a must!
Large Cap Growth ETF, 15% allocation - Large Cap growth companies have done incredibly well for the last 10+ years.
For example, the ETF $VUG has had a total return of 239.11% in comparison to 219.55% by the S&P 500!
Whether large cap growth stocks will continue to produce similar returns for the next 10+ years is questionable, but possible.
Large Cap Value ETF, 15% allocation - Large Cap value companies in comparison to large cap growth have done quite poorly the last 10+ years. For example, the ETF $VTV has underperformed the S&P 500; 204.13% versus 219.55%. However, there is reason to believe based on historical data that value companies should perform extraordinarily well in the next 10+ years.
Small Cap Value, 10% allocation - $VBR is made of small market cap companies. Small cap stocks are companies with a $300 million valuation to a $2 Billion valuation. Small cap value companies have historically beat the market given their inherent riskiness. Although more risky than any other type of stock, this risk is compensated, meaning you are generally rewarded for investing in small cap value. Similar to large cap value, small cap value should perform well in the next 10+ years for the same reasons.
International ETF, 10% allocation - Investing in only US companies is somewhat accepted and encouraged, especially in the US, but does expose you to an uncompensated risk. Having an international presence in your portfolio is highly recommended! Although the US continues to have above average stock returns in comparison to other countries, this overperformance is not guaranteed to continue.
#takingachance #longterm #buildandgrow #buyandhold #believe #shib2mars #invest #staythecourse #btc #shib2penny
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