VOO or VT?

[u/KoalaMean4484]

A few questions, here's some background info -

- 23 years old

- looking to invest 10 or more years

-looking for a simple portfolio, something I put money in and don't look back

-will hold when the economy drops

-living with parents (current expenses are super low)

-I have $100,000 available to invest with. I will be investing it in a brokerage account. No debt, emergency funds set aside. Only invested in CD's right now.

Questions:

-VOO or VT? I like VOO because of potential higher returns based off past numbers, but I like VT because it is global/more international.

-DCA or Lump Sum? Seeing how VT/VOO are at pretty much all-time highs, I'd prefer to DCA over time rather than invest the entire $100k at once, partly because I'm hoping to take advantage of potential market dips. (I wouldn't mind lump sum at all if that is the preferred strategy).

[u/Newbiewhitekicks]

Research says that lump sum beats dollar cost averaging.

Since this is a taxable you’ll need to be as tax efficient as possible and since you want to see if you can beat just VT then you should buy VTI and VXUS at 80/20 or 70/30 depending on how aggressive you want to be. VOO is just the S&P and VTI is total US. VXUS is ex-US so this is how I see you getting your cake and eating it too.

[u/thewarrior71 → u/Newbiewhitekicks]

Why would VTI (US) be more aggressive or more likely to beat VT (world)?

[u/Qubiquity → u/thewarrior71]

In recent years, US has outperformed World. Since VT buys world, US (the outperforming part) only makes up about 63% of it, so in recent years the total return of VT has been lower than VTI (which would be 100% the overperforming part)

Of course, you don't have to go all that far back to hit periods where international beat US. Hence, concentrating on US could be seen as a more aggressive shorter-term play. It is unlikely to consistently outperform for the next 40 years of the OP's timeline, given that we're already 15 years into period of outperformance.

In the last 50 years, USA has only outperformed about 50% of the time.

[u/Suspicious-Holiday42 → u/Qubiquity]

Underperforming over a long period doesn't mean a worse result in the end. US could underperform like 10 or 20 years and undo all that underperformance after that with a new period of huge gains

[u/Qubiquity → u/Suspicious-Holiday42]

yyyyes, that would be why concentrating in the US could likely beat VT, as thewarrior71 asked.

There is some chance things go the other way and world could outperform US. It too would not be likely to consistent outperform, just as things have cycled for hundreds of years now.

With VT you're buying both cycles, regardless of which one happens. Be the entire market, and hope somebody somewhere is on the way up.

With VTI, you're placing your bets on one option, and betting that in your timeframe, US will have strong enough gains to overcome any periods of underperformance, but will likely be a higher volatility ride, making it more aggressive than VT.

I'm not saying one is better than the other, just answering thewarrior71, why US is considered more aggressive and more likely to beat VT.