Sharing my investment story as a 29 year old – Feedback appreciated

I can’t find any notes, why I picked the high div yield ETF. :confused:
I guess I was looking for free ETFs on Degiro that are managed by Vanguard and looked promising back then. (Somehow it got into my head, that Vanguard are the good guys and I should only invest in ETFs from them)

I was really naive back then and didn’t do the proper research. Especially the whole tax thing was the reason why I wanted to share my story here. So really appreciate your feedback here.


I’ve picked the “Vanguard FTSE All-World UCITS” ETF based on this blog post:
https://www.mustachianpost.com/how-to-buy-my-vwrl-etf-on-degiro-for-free/

The S&P 500 ETF was picked, as I wanted an ETF that mimicks that index.

Will definitely review my ETF picks before I make my next investment all course correct existing investments.

I would go to Interactive Brokers. Vanguard Total World Stock ETF (VT) is superior in every level to those ETFs which are available in Degiro.

FWIW, it also doesn’t make a lot of sense. SP500 is something like 40% of all world? Or maybe you have a thesis for heavily overweighting US large cap?

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I don’t have a big thesis here.
Just what I thought would make sense (I’m still a novice in this field).

So would you suggest to just invest in a single All-World ETF and forget about it?

Exactly. Any other allocation (overweighting dividends, the US market, tech stocks etc.) should require a strong argument. If you don’t have one, just aim for a neutral allocation (Vanguard FTSE All World in Degiro or Vanguard Total World Stock ETF in IBKR).

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I support the answer by @Cortana. Vanguard all-world has over 9000 single stocks, so there is a huge overlap with the other ETFs you purchased. @1000000CHF pointed out that VT (or VWRL) has underperformed against the S&P 500 almost consistently. But as we Mustachians do not want to stockpick, we should be happy with a broad index that should bring a steady but unspectacular return in the long run. (I don’t follow my own advice and have multiple single-stock and industry ETFs, to spice things up ;-))

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Even if the USA outperformed the stock market since our childhood, it is still possible that some day it won’t be the leading country and end up in a deflation trend like Japan.
That is why it is better to be optimistic and very bullish on the World (all countries) rather than picking only the best performing country.

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my thesis for going SP500 instead of VT is that SP500 are the most successful 500 companies vs the multiple thousand of bad companies added to that mix in VT. Why would I want to track the bad companies?

The SP500 is not US-only. Even though these companies are listed on the US Exchanges, they all work globally, their exposure is not overwhelmingly US-only.

So if you say the US economy might have a problem, that will be a problem regardless. SAP will suffer just as well as Siemens or Novartis, even though these companies are not listed in the SP500. All of the big companies are getting a global revenue stream nowadays, so they are not really different at the end of the day.

The SP500 does have a survivor bias built-in, though. VT/VWRL buys a lot of “bad companies” on top of the SP500.

Good job. I wish I was that disciplined at 29. (actually I was, I already had two flats and a well-earning job :smiley: )

Two points to add:

  • stocks are not the savior of everything. Diversify your portfolio into real-estate (as you see fit), bonds (your BVG is perfect here) and maybe keep cash as well when that well-overdue large correction comes. You still have 30+ years to retire officially, so the crashes in the near term will not impact your overall performance a lot, though, but it’s good to have gunpowder dry when they happen. Look at buying your own place, look at obligations (crowdlending?), etc.
  • you’re still young. Go travel. Experience the world, take long breaks between jobs and experience different cultures on your skin. Yes, it does dent your FIRE portfolio, but money is not everything and there is a lot of good exposure on a 2-month Asia/LATAM/East-EU/Siberia/US trip (you name it).
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So why not only QQQ?

Most of the constituents have international exposure and an economic crisis or downturn in the US will be felt in other economies.

That said, there are jurisdiction-specific risks and it’s not as if S&P500’s constituents were all wonderfully globalised…

Picking out 10 of the 50 biggest constituents…

JP Morgan
UnitedHealth
Home Depot
Bank of America
Comcast
Verizon
Costco
Walmart
Wells Fargo
NextEra Energy

…can anyone here say he’s ever been, directly or indirectly, a Europe-based customer of these companies?

Even for the supposedly “globalised” companies, figures can be be quite lopsided: While Apple’s makes only 45 of its sales in the Americas (North & South), for Salesforce that figure stands at 69%. For Amazon, 61% of revenue comes from North America only. AbbVie’s makes 76% of its revenues in the United States only.

If you really worry about that, you’d still be crazy to invest more than 50% of your investment into one country, like you do with the “All-World” funds propagated here. (though there may of course be good reasons to consciously overweight US companies).

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I’m hard in VGT :slight_smile: could be QQQ as well. Technology is what makes the world tick, and it’s a long way to saturation, still.

That has always been the case, yet new techonolgy has also been a bad investment most of the time.

What you call crappy small companies have outperformed large cap companies by 4-8% per year in the US over the last 60 years.

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Classic recency bias and performance chasing.

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SP500 is not the most successful companies. SP 500 is set of largest companies, and it does not necessarily mean the largest 500 are good “investments” vs the second largest 500 or small caps.

@wnox well done investing in broad based funds in a disciplined way at a young age. I wish I would’ve done the same. The choice of ETF can always be optimised

If one is going for this approach, why not consider Quality investing?

Here is a short article theorising why Quality investment approaches might have outperformed the market: “Tendency to Gamble… At horse races people have a known bias to betting on long shots with high odds, even though those horses are unlikely to provide a reasonable payoff given their very low chance of winning.”

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My Finpension 3a scheme is in a Quality tracker fund
I’m an open book, aren’t I? :slight_smile:

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what about the last 12? You can call it recency bias, but it’s a half generation’s time.
point being, VT is by far the worst in comparison.

12 years is nothing when it comes to stock returns.

Would you have invested everything in Japan in 1988?

US Small cap value + Operating profitability Portfolio with 500 companies vs total US Stock Market over the last 58 years:

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