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Hey everyone! new here. I came from the frum softw...
# general
c
Hey everyone! new here. I came from the frum software developers group and looking to learn more about person finance. My employer doesn't offer a 401k. I already have a Roth IRA through Fidelity and contribute the max of 6.500 in FSKAX (similar to S&P500). Are there other ways to save more aggressively aside for traditional brokerage? FWIW, I worked for the federal government for about a year and have TSP through that.
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m
If you are married your wife can contribute 6.5k as well.
m
I think my flowchart might answer this question sufficiently (I hope, if not, push me so I can make it better!) https://frum.finance/chart/
c
@mysterious-tomato-10057 Thanks. I'll take a look. @melodic-restaurant-25257 I'm not yet married but iy'h soon!
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n
@chilly-lock-55900 welcome! Also, make sure to check out the differences between traditional and Roth (unless you already did) @mysterious-tomato-10057, aren't you proud that he went for the total market fund instead of S&P 500? 😀
m
Very!!
If the exposure isn't enough, just read about the story with Tesla and you'll switch in a heartbeat from s and p to total stock market haha
c
Thanks guys! Based on my research, I chose Roth because I'm just starting to work and my salary is relatively low. I figured I pay taxes now and let it grow tax free, rather than pay tax later when my income is higher (hopefully) and who knows, maybe taxes will be higher too. And i picked FSKAX b/c boggle heads told me to LOL
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n
@mysterious-tomato-10057 which story with Tesla?
m
You should look into fzroz as an alternative
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Audio Clip (2023-08-31_19-10-02-222).m4a
Audio Clip (2023-08-31_19-10-02-222).m4a
e
@mysterious-tomato-10057 I hear your point about it being political etc. but on average, who performed better? SP or total market? Having Tesla in the game with all companies as well, while we have all early gains of Tesla we also have all the losses of other small companies... So I might be angry on them not taking in tesla into the SP but this wouldn't make me switch to total market unless I see better returns...
m
Past performance does not indicate future returns.
All the next big companies are not in the s and p, simple as that.
The last 20 years have been the same tech companies carrying the market, so I think s and p outperforms by less than a percent, but I'd argue that wouldn't be the case in the long term. It certainly isn't at a theoretical level, and I'm not a betting man
The question is which index can you trust to buy, hold, and ignore. Not which one has given the best returns in the past.
If you think small or mid caps have any chance to perform well going forward, then the choice is simple.
Bc you are completely missing 2500 companies when you pick s and p
But remember that 81 percent of VTI is S&P so we are talking about a small optimization
e
If I can pick those 2500 winners I would definitely go for it. But by taking this 2500 winners I'm also taking 5000 loosers that diminishes my return on that 2500...
VTI does not track the total market?
m
VTI tracks the whole market. 3800 holdings. I should have said 3300 more than VOO
@eager-keyboard-7093 the same argument can be made about the future losers in VOO
No one knows which bucket will have more losers in the future
Voo is only ahead of VTI over that last 10 years by half a percent, so it's not like we are talking about a massive difference anyway for past returns (which I still argue is irrelevant)
e
If that is the case you might be right, not going for the half of a percent, and be open to the other gains...
m
That's what I'm saying!
Also makes it so you avoid being as heavily invested in tech
m
By that measure, @mysterious-tomato-10057, I’m curious why you are so opposed to having some international holdings in one’s portfolio despite the diversification it provides. Many conservative investors believe it should have a place in people’s portfolios.
m
Im not so opposed to it. I just am not actively recommending it right now which I'll admit I'm relying on others more well versed than me (read the simple path to wealth) If someone wants to invest in VT (world index) instead of VTI, I fully support it. It's just not my default recommendation
If I ever switch my personal portfolio from VTI to VT I'll change my recommendation, but I don't want to recommend something I'm not putting my money where my mouth is with.
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m
Fair enough.
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m
Ideologically, I agree VT would make more sense than VTI, which is why I actively say it's a good choice.
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