GuinnessPhish wrote: Sat Oct 25, 2025 1:31 pm
rebellovw wrote: Sat Oct 25, 2025 1:24 pm
Did your mom want to invest her money into IT? Or was that your idea?
It was my idea. I informed her of the returns of VITAX compared to VTSAX, and that yes, even while past performance doesn’t guarantee future results, we decided to invest.
why not look at the returns of NVIDIA and invest in that?
VITAX companies are already in VTSAX so you get the benefits of all those companies plus the ones that may be TOMORROW’S next entrants into VTIAX (BEFOREHAND). What you’ve done is concentrated risk instead (the fund has 314 companies as opposed to 3529 companies). Sure it could work out, but usually buying things at a higher price leads to lower returns than buying shares at a lower price.
I think you only looked at this:
and said ZOWIEE!!! I want me some of THAT!!
But then I wondered what happened over shorter periods of time. Why?
Your post below from 2018 seemed to indicate you think your mom may pass an inheritance in 20 years (2038). 2038 is only thirteen years away. What happens if we look at a shorter period.
GuinnessPhish wrote: Wed Apr 18, 2018 10:00 am
by GuinnessPhish » Wed Apr 18, 2018 10:00 amThanks again to everyone who responded.
I’ve got to do some research on some of the things mentioned in this thread. Admittedly, I’m no expert. I just knew there was absolutely no reason for my mom to lock up money in annuities when she has plenty of money coming in, that is guaranteed to come in for as long as she lives.
With the logic being that this Vanguard account is entirely intended and wanted to be an account for her children’s inheritance to grow as much as possible, from which it will not be touched for about 20 years, and with the hope of minimizing taxes, what is the best way to go?
I’m cherry picking here from start to 11 years in just to make a point that over shorter periods you would not have gotten the same jaw dropping results:
While you may say, “But still, VTIAX even beat VTSAX over those 11 years. Ha! I made the right choice.” What you miss are a couple things. First there will be long stretches were VTIAX WILL underperform VTSAX. It’s right there on the chart. Are you going to stick with it NO MATTER WHAT? Investor know thyself.
What you should also see is that it had slightly lower risk adjusted returns (Sharpe/Sortino). You would have taken risk for which you were NOT compensated. When you own the market you diversify away all risks like sector risk (and size, style, country, stock, manager) and are only left with market risk which is the risk you take to get the commensurate compensation. When you take sector risk you’re taking risk that could be diversified away and you are not guaranteed to get compensated for taking such risk. Why take a risk that may not be compensated when instead you can take risks for which you are going to be compensated? Why not own the market and get the guaranteed return of the market?
