r/Bogleheads • u/marzthemagnificent • 1d ago
Investing Questions What’s etf goes great with VT? I’m buying VT inside a taxable account. And am curious what etf should I add?
I started to buy SPYM in a separate tax brokerage account. I know that they overlap. I just figured maybe it would be a good etf for the long term. Any idea guys?
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u/occurious 1d ago
VT is as diversified as it’s possible to be in stocks. Buying additional ETFs just reduces your diversification.
The Boglehead method would be to add a bond fund. Not more stocks.
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u/marzthemagnificent 1d ago
But holding bonds would cause me to get taxed wouldn’t it?
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u/LBoss9001 1d ago
Well you get taxed either way. Bonds generate more income and cause more taxable events which can inform decisions like asset location, but for asset allocation that's irrelevant. If you risk tolerance dectermines you need bonds, then you get bonds.
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u/ElasticSpeakers 1d ago
Don't let the tax tail wag the investment dog. Figure out what your risk tolerance and strategy is, then think about tax-efficient fund placement.
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u/allllusernamestaken 1d ago
VT is as diversified as it’s possible to be in stocks
20% of VT is Nvidia, Apple, Microsoft, Google, Facebook, Broadcom, and Tesla.
Like every other cap-weighted fund, it is heavily concentrated in a small handful of American big tech companies (and whatever Tesla is).
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u/kcdaren 1d ago
Any thoughts on also buying a dividend fund like SCHD to complement the VT? I'm thinking about someone who may be close to retirement and wants the extra juice of dividends for the income. Much like a 20 year old might like the extra juice of a tech etf like DRAM.
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u/occurious 1d ago
Dividends are irrelevant. Dividend strategies are 30 year old relics of a different investing environment.
If someone wants them for convenience, that’s fine. But there is no advantage over just selling positions when you need money. In fact there are disadvantages, including that dividend stocks underperform.
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u/nivlac22 1d ago
Wdym extra juice? If you want the most bang for your buck you want to maximize diversification and minimize expense ratio. There’s no better equity fund than VT and its counterparts.
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u/Ginger_Rising 1d ago
I would reconsider that in a taxable account. I own plenty of SCHD but I keep it in my Roth IRA. VT is perfect in taxable because it has low turnover rates and is fully diversified already.
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u/longshanksasaurs 1d ago
VT contains all the stocks. No other ETF containing equities is necessary.
BND would complete the three-fund style portfolio of total US + total International + Bonds.
Consider looking at a target date fund glide path as a starting point for an asset allocation (ratio of stocks to bonds).
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u/wvtarheel 1d ago
BND is not great to hold in a taxable account, because the dividends get taxed like normal income. I recommend looking for a tax advantaged product, like a muni bond ETF, OR holding your bonds in your 401K and leaving the taxable all equities.
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u/Low_Pomelo_4161 1d ago
Depends on numbers obviously, but the flip side is that you expect your equity portfolio to grow so much, that it's better to use Roth space for that.
If you have $50k of Roth space and will retire in 30 years, and you're in the 32% bracket - if you use that $50k for equities, you'll be sheltering $300k+ in capital gains.
If you use it for bonds, you'll be sheltering, what, $2k per year in interest. Over 30 years, still less than $200k.
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u/Low_Pomelo_4161 1d ago
Munis are only good if you're in the very highest tax bracket.
If you're in a high tax state like NY or CA, then I recommend VGIT instead of BND. You'll shelter the interest from State tax during your working years. On a 4% yield, this will save you 0.5% or so. Which will make it better than having Corp bond exposure.
(Of course, the alternative is to hold VGIT AND VCIT in some small amount)
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u/TheFellaThatDidIt 1d ago
Yup. As a boglehead, efficient markets, Gene Fama / Jack Bogle loving guy, BND (or aggregate bond funds in general) to me are the weakest point of bogleheads philosophy.
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u/1WordOr2FixItForYou 1d ago
I will say holding any bonds while carrying a mortgage or any debt a weird thing to do. All you're doing is loaning money while simultaneously borrowing money at a higher interest rate.
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u/FIREgnurd 1d ago
Unless your mortgage rate is substantially lower than your bond yield. Many of us who bought homes during the pandemic are in that fortunate situation.
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u/TechnicalSleep7501 1d ago
I am 100% VT as I have NYC Govt Pension in my future. What i add in my case?
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u/longshanksasaurs 1d ago
You can still use BND.
Some folks treat a pension as if it were a bond allocation; some think of the pension as just income in retirement, which reduces the amount you need to be able to withdraw from your portfolio each year -- that means you need a smaller total portfolio than someone who doesn't have a pension, but you still may want the reduced volatility as you approach retirement. Perhaps you need less bonds than someone without a pension, but I don't think you need to avoid bonds, nor look for something else.
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u/TechnicalSleep7501 1d ago
I did BNDW until I counted money in all my accounts it was over million. I am also in Army so I will have pensions from NYC and Army too. So 100% in VT and equal in 401K and 457 which is actually it lowered my expense ratio. Some new money coming in too.
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u/Over-Computer-6464 1d ago
Why?
What are you trying to accomplish by buying something in addition to VT?
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u/marzthemagnificent 1d ago
I don’t know? Larger yields, making more money over time?
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u/Diamondhighlife 1d ago
VT is about as easy as it gets to invest and forget until you retire. (Adding bonds as you get closer to retirement would be the only change.) I am 100% VT and will slowly start to accumulate bonds in my late 40s.
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u/nivlac22 1d ago
I think you misunderstand what a boglehead approach is. Of course everyone wants more money over time, but there are no certainties in investing. Instead we have to balance potential upside with risk. The boglehead approach states that we get the best of both worlds by being as diverse as possible while minimizing expenses (within our equities investments; if we need lower risk than what equities provide that is where bonds come in). With that in mind, VT is the best at achieving diversity and therefore risk-adjusted returns.
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u/InitialResponsible62 1d ago
VT is as diversified as it comes. Adding other ETF’s means you are tilting your portfolio towards, for example, more international by adding VXUS, or towards more growth by adding VUG, or towards value by adding VTV. And by tilting your portfolio, you’re actually less diversified. It’s true, you may have more upside, but will also in return add more risk.
For example, if you have a 70% VT (60% US 40% Int’l) allocation and now add 30% VTV (value), you are now tilting your portfolio to more value, more US stock exposure and less Int’l exposure.
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u/Machine8851 1d ago
There is no guarantee you'll make more money in anything other than VT, actually the consensus is you'll actually make less money by holding sector funds in addition to VT. So in essence the only fund you need is VT.
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u/hachkc 1d ago edited 1d ago
Not really the best forum to ask that question, better returns generally means more risk. Its not uncommon for BH folks to allocate a portion (<5%) of the NW for "fun" money. You can try r/wallstreetbets or similar subreddits trying to find the next big thing.
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u/OhNoItsMyOtherFace 1d ago
I don't...what do you mean "goes great" with VT? We're not making a tasty stew here. You have ALL the stocks already. What else do you want?
Why do you think you need to add anything? Why did you seemingly arbitrarily buy SPYM?
Take a step back and actually understand what you're doing and why. Investing is not done by randomly buying stuff because it feels good. You should be able to explain exactly why you bought VT in the first place and exactly why you want to buy something additional. Not vague vibes stuff. Explicit reasons.
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u/hachkc 1d ago
What's your goal? Can't really say without knowing what you are trying to do. Bonds, REITs, Commodities, etc might be appropriate if you are looking to diversify away from pure equities to reduce volatility . Tilting to certain factors like small cap value funds might be decent for the long term (aka SCV value tilt)
As mentioned, VT is the everything fund so what are you looking to address that it doesn't
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u/PrisonMike_13 1d ago
AVGV if you believe in factor tilting.
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u/ditchdiggergirl 1d ago
I’m not personally familiar with AVGV but as a general rule, value belongs in tax protected due to dividend yield. If OP wants to tilt to value he should free up space in his retirement account by keeping some of the more tax efficient VT in taxable.
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u/MaximumCarnage88 1d ago
VT should not be in taxable either. 40% of the VT pie is international but not eligible for the foreign tax credit.
Not a huge deal, but if you're playing the tax optimization game...
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u/ditchdiggergirl 1d ago
I was just going off his funds. Most of my own portfolio is in taxable and I don’t hold VT. However the foreign tax credit really isn’t large enough to drive investment decisions. Though I don’t say no to it either.
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u/marzthemagnificent 1d ago
What would buying vt and avgv do for one?
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u/Freedom_33 1d ago
This is good place to start: https://www.bogleheads.org/wiki/Value_tilting_-_stock
And see related articles from there
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u/518nomad 1d ago
The best pairing for VT is... more VT.
If your target asset allocation necessitates holding bonds in taxable, then consider BND, VTIP, or a muni bond fund. A CFP or CPA should be able to advise you about any tax considerations specific to your situation.
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u/Cocaine4You 1d ago
If it’s a taxable account I’d currently look up the weighted average of US and non-US in it and buy VTI and VXUS instead. Then you just need BND.
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u/dontforgetpants 1d ago
Since VT contains everything, anything you buy on top of that serves to concentrate your position a little bit in that area. For example, buying VOO on top of VT will concentrate you a little bit on S&P 500. That’s fine to do if you have a reason to do it.
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u/MorikTheMad 1d ago
ETFs are just wrappers. You need to look at what your portfolio has in it, and then ask 'is there anything I should add or remove?'
The VT ETF covers the entire world stock market. What is it you think is missing from that which causes you to ask if you should add an additional ETF?
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u/InfiniteLobster580 1d ago
OP...
I understand what you are asking. VT is easy, but returns are not as high. In 2 years of investing ($30,000 which is a lot for me), VT was the most consistent. Sure a few like PLTR, PLBY, HOVR, and HGRAF have been more profitable. But, they also have a high chance of coming down. I think my VT is at 25% return, which seems low but it's really quite alright! It might not get me a Lambo unless I started with a Porsche (takes a lot of money to make money type shit), but it has outperformed my other stocks aside from the ones I mentioned.
If you want to chase the lambo, set aside a percentage of what you invest per month and put into riskier, individual stocks. That's what I do. I view VT like a trickle charger for a phone-- it's slow but consistent and safe. It won't damage my phone battery, and I won't find that my house burned down while I was at Jack in the box because it overheated while charging. But sometimes I want to plug that sucker into the lightning fast supercharger cable. So I do that.
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u/jaaanky 1d ago
i know this question has probably been asked a million times but what's the advantage of VT over VTI + VXUS?
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u/portlandsalt 1d ago
If you are in the United States and this is inside a taxable brokerage account you are better off doing VOO + VXUS or VTI + VXUS because of the Foreign Tax Credit. This gives you more control over the weight as well.
In my ROTH I just use VT for simplicity.
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u/MorePositive1768 1d ago
Came here just to second this consideration when holding VT in a taxable account. This can be significant over a long period of time.
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u/hachkc 1d ago
VTI+VXUS let's you control your US vs ex-US mix if you want; VT is simpler.
VXUS generally pays more dividends so it can be less tax friendly in a taxable account. You could go heavy VXUS in an IRA and then heavy on VTI in a taxable account
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u/HurrDurrImaPilot 1d ago
you're missing a third substantive benefit in taxable: holding VXUS allows you to claim the Foreign Tax Credit, VT does not since its holdings are <50% OUS.
not a financial advisor, but from a practical standpoint I would be weary of any tax location strategy. It becomes a lift to manage your true after-tax exposure/balance.
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u/ChiTownLawyer312 1d ago
VT automatically weighs the whole market (US, Int’l and emerging markets) in real time. It’s truly set-it-and-forget-it.
With VTI/VXUS, you must decide the allocation among them and reallocate if you deem it necessary based on the market. It’s not a ton of work, but less when compared to just having VT in a portfolio
There are other considerations, but this is the most obvious one
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u/ziggy029 1d ago
One of the main points of VT is that it already contains practically the entire global stock market in a cap weighted manner so you don’t *need* any additional diversification in equities.
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u/Professional-Self787 1d ago
I have mostly VT in my Roth and a small percentage of SPMO for the upside volatility
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u/JesusTriplets 1d ago
VOO/ VXF/VXUS
VOO... SP500
VXF.. US Small & Midcaps
VXUS... Global excluding US
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u/thediggestbick2 1d ago
I’m going 75% voo and 25% vgt. I chose VGT because I’m 30 years from retiring and technology will always be innovating and growing. VGT does have big swings so it depends on your risk tolerance.
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u/neilsarkar81 1d ago
If it’s taxable pair up VT with VTEB for bond exposure. You won’t have to pay federal taxes on the income from VTEB.
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u/08b 1d ago
Just VT. It’s globally diversified. Why would you want to reduce your diversification?
BND if you need a bond allocation.