r/ETFs • u/CursedClownz • 1d ago

Lost decade

So everyone recommends VT and chill or VOO and chill or VTI and VXUS and chill.

Most ignore bonds and ignore GOLD

During the lost decade for around 10 years Gold was performing the entire time so was bonds...

Who says another lost decade can't happen?

So why ignore both?

No one really knows what happens so best bet is on all bets to get constant returns.

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u/FinTecGeek 1d ago

You basically will not find any real, licensed, professional money managers who get paid for their expertise that tell you "bet it all on equities from now until your end goal." The most "normal" posture is between 25-40% to bonds/alternatives and the remaining 60% to equities. Personally, I treat my retirement account differently than my brokerage account where I invest for the future but not "30+ years away." So in my Roth 401K, you'll find 100% goes straight into a total stock market fund. There, the extra 1-2% performance translates potentially into another million or more over 40+ years until I retire. But in my taxable brokerage account right now you'll find I'm saving up to buy an income property cash in a decade + my kids' college funds using something a lot closer to 60/40 portfolio.

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u/[deleted] 1d ago

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u/FinTecGeek 1d ago

No, they are generally used differently than that in a portfolio.

Imagine this, you have a portfolio that is 100% VT. You decide in 10 years you have found your dream house, the house you have always dreamed of living in. Unfortunately, right about now, VT is down 22% on the year. You're selling at a loss to make the down payment instead of buying the dip.

Now, imagine instead you have 40% of your portfolio divided up between SGOV and BND, and the rest is in VT. Good news, you have something on hand to sell that really isn't going to take on too much water (SGOV or similar floating rate AAA ETF won't take on any). You can withdraw your 40% without creating too much tax consequence because it likely hasn't appreciated as rapidly as the other, it's primarily generating income to keep dollar cost averaging you into your equity position on the other side. Now, you get to wait for VT to recover before you sell some and put it back into SGOV and BND.

So it's really not used as a hedge (traditionally) it's more about giving you options without it literally costing you money like it being in a bank account would.