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Buying into VOO (lemmy.world)

submitted 5 days ago by [email protected] to c/[email protected]

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Up until now, I’ve just been saving an emergency fund in a HYSA. I’m getting to the point where I’d like to put excess savings into the market, and am looking at something like the VOO ETF. It seems things are essentially at an ATH right now, and there are a lot of big political things happening at the same time.

Would it be ill advised to buy into VOO right now? I could hold this in my HYSA but at the same time, I’m not needing this money for a while and long term I would think the market will continue to rise.

I know there was news a couple days ago about Berkshire Hathaway selling their S&P 500 ETFs, but this made up ~0.01% of their total portfolio.

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[–] [email protected] 14 points 5 days ago* (last edited 5 days ago) (1 children)

For other people's benefit:

VOO: Vanguard S&P 500 ETF, the ETF version of VFIAX

ATH: "all time high"

As for the question, if the choice of putting money into VOO will be made based primarily on the market conditions, that is market timing, using the definition from the Boglehead wiki here. Part of the Boglehead investment philosophy is to "stay the course", which means following through with whatever your asset allocation plan is, irrespective of market conditions. The primary benefit of this is to control risk, since although no one can predict the future of stock prices, one's exposure to the markets (or lack thereof) is directly controllable.

If you don't currently have an asset allocation plan, then at least think about what you want this money to do: is it retirement, late-life healthcare, early-life healthcare, child education fund, emergency fund, or just spare money? The objective and the time horizon for that objective will indicate whether VOO is a good choice or not.

Any goal short of 5 years is, IMO, generally not a good choice to put into a large-cap index, because the market can -- and has -- suffer sustained downturns for as long, meaning the goal could be missed and without any time for a positive correction.

[–] [email protected] 3 points 4 days ago

Those are all great points. This would basically be a longer term general savings fund. I have other funds for retirement, education, etc.

I do have a goal of buying a house in the next 5 years, but that would basically be putting RSUs into this (or another) account as they vest over the next 5 years. So maybe this wouldn’t be the best choice for that type of strategy

[–] [email protected] 13 points 5 days ago (2 children)

The S&P500 is almost always at an ATH, for the record. Buy as soon as you have the money and buy often. The market is irrational, and doesn't always reflect reality. Efficient market hypothesis says that all this "scary risk" is already "priced-in" instantly. If there's money to be made off this uncertainty, it's been made. Anything else is just gambling.

This sort of stuff is scariest when you're just getting started, but remember that you're probably looking at a multi-decade timespan. It doesn't matter what happens next week in the grand scheme of things.

[–] [email protected] 2 points 4 days ago (1 children)

This line of thinking is why Boggle (?) is a genius. Just choose large low fee index funds and time in the market always wins. Don’t try to play the game.

I mostly put mine in VT, VTI, QQQ, and SPY. Idk how SPY and VOO compare

[–] [email protected] 2 points 4 days ago (2 children)

Definitely. I have my retirement in a large cap, mid/small cap, international and bonds. My rIRA is a low cost Vanguard age based portfolio and my 529 is mostly large cap. I still have quite the horizon on those accounts so I don't mind being a bit risky, but for this 'savings' account I should be a bit more safe. I think I got my answer here. I'll hold off on VOO and just use HYSA as I'll probably want to try making a down payment on a house in the next 5 ish years.

[–] [email protected] 2 points 4 days ago

Thanks for sharing! That sounds like a smart plan.

Reminds me when I had a bit of cash I was keeping it in a SCHWAB HYSA, I forget what it was called. You had to buy some “stock” of theirs and it paid an average 5%

[–] [email protected] 1 points 4 days ago (1 children)

What HYSA are you using?

[–] [email protected] 1 points 4 days ago

Currently Wealthfront at 4%

[–] [email protected] 2 points 4 days ago

Great advise, thank you.

[–] ahal 4 points 4 days ago

Time in the market beats timing the market.

[–] [email protected] 4 points 4 days ago

VOO is just the S&P 500, which is large-cap US. It doesn't make any sense to go with VOO and not also expand elsewhere, VT would make more sense as its global and market-cap weighted.