Diversification

[LivingAlmostLarge]

I know we are chatting about FVRR, NVDA, BYND, TESLA, etc. But I was just looking at my portfolio and realized we are heavily invested in VOO and QQQ. I mean heavily. Like 75% of my DH's 401k is VOO (it's equivalent MF in his 401k). Kids college funds and taxable funds in VOO and maybe like 10% in QQQ. Also I'm not changing them, I've left it since birth for both in VOO (529 NV plan allows for this). Then in our joint taxable and DH's roth we have like 50% in VOO it's a lot of money. We aren't diversified much outside of it.

Am I crazy? I mean we have a few stocks mostly in DH's roth and some in joint, but in the joint our other big holdings are IJH and IJR for mid and small cap ETFs. We own QQQ for a big chunk as well. And we have 25% international ETF in DH's 401k, plus we have VNQ like 5%.

But when we have money I bulk up our QQQ, IJH, and IJR. Nothing fancy, but do you guys diversify more than VOO? Am I being to undiversified?

[Jluke]

More funds does not equate to diversification.

what the fund is invested in leads to diversification- holding 500 S&P stocks vs one stock.

or VTI with 3000 plus stocks.

investing in small cap is referred to as tilting as you are chooosng a sector (slicing and dicing is another term)

[kork13]

Maybe a bit, but it sounds like you're just fine. What are you missing with only VOO relative to normal recommendations? International (got that) plus mid-cap & small-cap (got those). And given how much the S&P500 companies dominate the market, being heavy-weighted there is probably alot closer to market-weighted than you might expect.

The vast majority of my portfolio is similar (though I use MFs), broken up between S&P500, mid-cap, small cap, REITs, and a bit of international.

Remember that ETFs/index funds are also inherently diversified. So keeping VOO as your core holding (at 50-75%) is just fine.

[disneysteve]

Mutual funds are already diversified, some more than others. An S&P 500 fund owns about 500 stocks across a range of industries. QQQ holds about 100 stocks in a variety of industries (heavy on tech).

Could you be more diversified? Sure. Is it necessary? Probably not.

My daughter has her entire retirement savings in a Target Date fund. That holds US and international stocks and bonds. So just one fund with broad diversification. Nothing wrong with that. My 401k is entirely in a balanced 60/40 fund.

[scfr]

I know it's not as exciting to talk about as the latest hot pick(s), but really, it's true . . . time & compounding are your best investment friends.

[srblanco7]

My daughter has her entire retirement savings in a Target Date fund. That holds US and international stocks and bonds. So just one fund with broad diversification. Nothing wrong with that. My 401k is entirely in a balanced 60/40 fund.

Not to hijack this thread, but I'm interested if others have thoughts on balanced funds. As I approach ER, I've moved away from balanced funds (where feasible) for portfolio "cleanliness". Often, stocks and bonds move in different directions, thus if stocks are down and bonds are up, I could sell the bonds for income and vice versa. Balanced funds - with a mix of stocks and bonds - would seem to obscure the cleanliness of selling either stocks or bonds.

Anyone else have thoughts on this? Am I overthinking?

[Fishindude77]

If you really want to diversify, you should probably consider having some significant $$ invested in something other than stocks.
Real estate is an obvious one, but there are many other things you could have an interest in.

[LivingAlmostLarge]

Not to hijack this thread, but I'm interested if others have thoughts on balanced funds. As I approach ER, I've moved away from balanced funds (where feasible) for portfolio "cleanliness". Often, stocks and bonds move in different directions, thus if stocks are down and bonds are up, I could sell the bonds for income and vice versa. Balanced funds - with a mix of stocks and bonds - would seem to obscure the cleanliness of selling either stocks or bonds.

Anyone else have thoughts on this? Am I overthinking?

I think it's easier to control it if you create your own balanced fund because depending on how the market is and how you feel you can change the composition easier than a balanced fund.

Fishindude, i was about to pull the trigger recently and buy a rental property to diversify our holdings. But then the car situation and now I"m looking at having to buy a car and the cash i was going to put as a down payment instead might be a car payment. So I did consider it. Yep I was thinking about that sort of diversification. But how do you balance investment for real estate and the fact we have a large real estate position by just having our primary residence? Also I do have reits of about 10% of our portfolio. Own WPC and O.

Also I do have slice and tilt of sector ETFs. I haven't measured our portfolio recently and maybe I should. I am extremely heavy into stocks like I think 95% and cash is minimal. Then couple of individual stocks and then ETFs mostly.

[LivingAlmostLarge]

Just did a quick crunch and it's 8.8% cash/bonds and 91.2% stocks. Bonds = ibonds, cash in ef, and a small SGOV for next years Roth and ibonds purchases.

The kids have almost 100% in VOO about $450k. Then our 401ks is 85% VTI and 15% International and QQQ index. Our roths are sector ETFs like IJR, IJH, QQQ and some international tech. Our taxable has like 25% individual stocks and 75% ETFs. ETFs are split evenly with ETFs for VOO, QQQ, VTI, IJR, IJH, IXN (global tech), IHY (healthcare), i might put some reits in the taxable, I've left it in DH's Roth currently.