Don’t Make This Common Mistake with Vanguard ETFs
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- čas přidán 25. 07. 2024
- Vanguard’s VTI, VOO, and VGT are 3 of the most popular and talked about ETFs out there. But a lot of people are making a very basic and common mistake with them. In this video we break down the problem and dive into all 3 ETFs so you know how to fix it.
0:00 - A common mistake people are making with these Vanguard funds
1:43 - Understanding fund overlap
5:16 - VTI or VOO, which one is best?
9:13 - Understanding what VGT actually is
11:36 - Why does any of this matter?
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I’m glad you are talking about fund overlap. This is the second channel I have found that mentioned it. It doesn’t seem to get discussed often.
That's what I'm worried about if I invest in VTI since I already own 358 shares of fxaix 🤔
Doesnt matter. I can only buy VOO and VTI for the rest of my life and I would probably still beat 99% of any portfolio managers 😂
If you need a youtube channel to explain investment basics to you then you already failed at managing your money.
Sorry but this is just a dumb take. Plenty ways to learn many things and CZcams is one of them. Every information source needs to be vetted and just because it’s “more traditional” won’t guarantee that it’s better. Where did you learn to manage your money?
I've invested in VOO and looked at other ETF's and noticed the overlap and couldn't figure out why I should have those too! I know nothing about investing but that didn't make sense to me so I haven't purchased any more. I think I understand better after this video so I appreciate the info.
You had the best explanation in the difference than any other You Tuber presentation I have watched! I am a VTI investor, and I won't switch because I have over 3 years in investing VTI. To me one is not any better than the other and it's like you say just pick 1 and get started! I just like VTI because I like the exposure to Mid and small cap stocks all in one ETF.
Thanks I appreciate it!
Thank you. One of the best informational videos I've watched all year. I've been concerned about overlap for sometime and determining the difference between funds. This is extremely helpful.
Great video once again Matt...I am longtime Vanguard client and I am very active with my Self Directed IRA so this was a great video for me to watch.great insight..I have holdings in the mutual fund VTSAX...and VIGI ETF..thanks..
Thank you!
Love your content brother! You introduced me to that etf overlap website and now I am addicted to it! Great tool!
Thank you! It’s an awesome website, very helpful!
Great explanation, thank you.... Need to figure out what to do with my VTI since i already have VOO
Thanks! One option is to do nothing and just contribute to the one you like most going forward. There’s no “issue” with holding both as long as you understand the overlap is there
Thank you, algorithm, for bringing me to this channel. Just subscribed and time to binge watch. Nice work 👍
Thank you so much Andy and yuki! These are fantastic learning devices and they’re free for us ❤
Thanks Matt! Appreciate the candid breakdown and pitfalls to look out for. Found ETFRC through your video, so again, glad I clicked to watch it!
Awesome, thanks!
The interest rate chart you put up was very telling. Great video breaking down holdings within these ETFs!
Thanks!
I knew a lot of what you covered here, but this is solid info (not fluff like most channels). Earned a subscriber. Will see me commenting occasionally. Appreciate the content!
Awesome, thanks!
Thanks for the video! I sold out of a couple laggard large cap mutual funds in the last few months and looking to redeploy that money in lower cost ETF’s, virtually every etf I look at…the exact same top 5 holdings. Apple, Microsoft, Nvidia, Google, Amazon, it’s impossible to escape. Vanguard actually had a couple lesser known ETF’s I found but they trade 7k shares a day and the bid/ask spreads are crazy.
Yeah that's tough, unless you go with a sector or style specific ETF there's going to be overlap
Great insights! I wasn’t as aware of these overlaps so great to know! Thank you!
No worries, glad it helped!
Fund overlap is a real concern. i do watch out for it a lot and make the necessary adjustments for my portfolio
@journeyman_15 have you found an easy method to quantify the overlap? Meaning having the ability to see how much of your total portfolio is invested in any one stock?
Fantastic video. Thank you for this information.
Thank you for the video and information.
I once did own VOO, VYM, VNQ, VTI & SPY
I owned them for almost two years, then realized the only real difference between VOO & SPY was there payout dates. Actually, SPY held it's value better and VOO paid better dividends.
A medical emergency had me liquidating stocks to raise quick cash without having to barrow any funds.
Now I only own VNQ & VYM
this is great info.. never thought about this in any detail.. thx
No worries, glad it's helpful!
I really enjoyed the information you presented in this video. I am new to the market. Thank you!!!! You have yourself a new Subscriber!!!! Woot Woot!!!!
Awesome, glad it helped!
Informative, thank you!
Very informative video . Thanks!
Great new info for me , I agree w/ u , I've had voo for while & I like it . But w/ this video I'm really understanding the 3 . Thank you
Awesome, glad it was helpful!
Great video! I admittedly clicked for the title, but the video is much more. At the start, investing is very confusing, but this broke a lot of things down in a way that I wish I was aware of on the outset. This is a good introduction to investing, keep it up.
Thanks glad it was helpful!
This is why diversification is so important, becasue we simply don't know which companies are going to blow up (in stock price and out of production) in 5 or 10 years. Some will undoubtedly but it's better to guarantee a modest growth by investing in different markets and types of assets than to try to guess what's going to happen.
Personally I like having a blend (a base in a broad market index fund and combine that with individual stocks) because that interests me. But definitely agree it's important to have some exposure to the full market
thinking about that exactly, but since I don't have time neither ability to stock pick a realistic next level from "one ETF does it all investor type" would be what you say : a sector ETFs picking type of investor, kind of fund of funds active holder portfolio 🖖
This is what Im doing. Im so glad to read that you like doing this too. Thank you @@mattderron
Thank you for this my bro.
nice video, I always held all three and never thought anything of it
Thanks for this video. Just now making big pay checks and wanting to invest. Thanks for pointing out specific examples and especially the last section on why this should matter. Those parts helped the most.
Awesome, glad it helped. Congrats on making big paychecks and wanting to invest!
I have the S&P500, midcap, small cap, and international funds. I have some SCHD too, but not a core holding. I actually do think it's important to have the smaller cap stocks, and if rather have control over how much % of invested in them, which is why I dont just have VTI. However, this is in my retorement accounts. in a taxable brokerage, i may do VTI for simplicity and not creating too many tax events. We'll see.
I completely agree with having mid cap and small cap exposure. I like the Russell 2000 etf for small caps and I am holding it long.
I'm keen on diversification by way of categories rather than just random diverse stocks which may, and as you rightly point out, carry massive overlap.
Ty and you for sharing. I’m starting late at 51 yrs young and made a few bad choices but now I’m at a short end of investing at my age but the annual income in Louisiana is hard to meet that mark. From 23,000 annual vs a 63,000 annual. I invest in robinhood only bc I don’t know better or I don’t understand which platform to use. But thank you for clarifying a lot on vanguard. Especially exoense ratio.
No worries, we've all made bad choices in the beginning don't worry about it!
That is like condensed wisdom. That was so valuable. Especially last part. Thank you! More like this please.
Thanks, glad it was helpful!
@@mattderron it's just one of the things you take as granted about the market, that funds are effective and diversified and almost guarantee impactful ROI. and you shattered this blind belief that I had and now I see things that I couldn't before. I'm so grateful for you sharing your opinion and analysis so generously.
Great info. Thank you.
I totally agree with you, with interest rate this high and not falling ... those mage cap growth stock is going to have a hard time (and VGT, QQQ will also under perform as a result)
I don't know exactly what's going to happen obviously, but I feel like too many people are taking the last 20 years as "this is how markets always are"
@@mattderronYes, and that's called recency bias
I watch another channel and they brought up fund overlap. It's been something I look at ever since
Great video, thanks for this!
Thanks for an informative presentation. Having pivoted from single shares, single countries and thematic to global and trackers one of my greatest concerns apart from the disruption to trade wrought by wars, which is out of my hands, is overlap and concentration. I also don’t like investing in China which is problematic in the global environment. As you say research then research some more. You can’t simply buy and forget.
got a 4 fund: VOO, VDC, SCHD, DGRO. SCHD and DGRO are a combo dividend play. VDC invests in all consumer goods. Most of allocation goes into VOO. These are all in my personal account. Maxing a Roth out with a 4 mutual fund allocation (Dave Ramsey blend). Lets see how it all plays out in 30 years.
Mutual funds to me are a scam. The expense ratio and hidden fees. Actively managed hardly ever beats the passive.
What's the advantages is SCHD and Dgro blend being used together like that? And what proportions?
You should be in great shape
Really enjoyed this video and your delivery. SUBSCRIBED!!
Great video, really opened my eyes to some flaws in my current strategy!
Nice, glad it was helpful!
This is super useful Matt, thank you so much. I was about to do research on the ETFs before investing. And I'm from Singapore :)
Awesome, glad it helped!
Good video boss. This video video was straight forward and very informative.
Thank you!
Wow ! Very very informative. Thanks 🙏
You’re welcome, no worries!
great video Matt ! So for long term investors sector ETFs diversification seems to be a key factor in a portfolios risk management but also important seems to be timing the percentages of each sector according to the economic cycle we are in. Like right now 20+ years bonds, REITs and Utilities are being hammered by high interests therefore a good opportunity to DCA or get into those ? If you could release a video on that topic would be very helpful 😊 Thanks for you calm and easy to follow videos 👏🏻
I think you bring up really good points - ultimately I think it mostly depends on how active people want to be in terms of asset allocation. in some cases people may not want to be active at all (ie, just put money into VTI or VOO forever and ignore market cycles).
But I do think there's an opportunity to do what you're talking about to take advantage of them. I'll think about this in terms of a video. Maybe I'll focus it around REITs / Real Estate since that seems to be a really popular question right now and probably easier to put together something coherent. I will get out of my element very quickly trying to explain and dive into bonds lol
@@mattderron will wait for you video on that 👍 About bonds I was thinking on ETFs, such as TLT+IEF combo, VNQ or XLRE for REITs and XLU for utilities. Also, with those ETFs now could be a good opportunity to lock good dividend yields for the long run ?
I wanted to hear an experts opinion on this as well. Currently I have most of my 401k contributions going into small cap and utility funds, because these seem to be at a "discount" right now.
I'm hoping this is a valid thought process
This was such an informative video, thanks for that Matt!! I'm only just a baby-baby investor lol, but for the past three'ish months I've put the minimal extra income i get into voo, schd and vgt, and one stock which is Realty Income. Its not much but that's how i dipped my pinkie into the offshore market 😊😊
No worries, glad it was helpful!
Thank you for explaining this in a clear, kind, and concise way.
No worries, glad it’s helpful!
Thank you - good informative video. Thank you.
Thanks!
Awesome video, Matt. I own all 3 and enjoy the growth in the past years. These are the foundations of growing a 6 digit portfolio to a 7 digit portfolio in only a few years. Personally, very hard to go wrong with any of them. I view investment as a marathon - one step at a time and keep buying every two weeks (does not matter if the market is up or down). Please keep posting and thanks again for the great content.
Thank you, I appreciate it!
Whats the downside of fund overlap?
@@fmxmyway , there is nothing per se; you are just not as diversified. You own the same stocks just in multiple places with different weighting.
SCHD go clobbered with the rapid rise in FED interest rates. I did not see this coming. Bonds were paying up to 5 %.
Very well explained - new subscriber!👏 👏
Awesome, thanks!
I was trying to get the mid cap exposure with VTI, but it’s good info… I may need to make some minor adjustments…
I actually think the mid/small cap exposure can be good, but could we dial in the allocations better probably with some combo of VOO, VO, and VB? Probably
New subsciber. Loved the video as a whole but, wow, that etf site….very cool. 👍
Thanks! Glad it was helpful
You’re the only CZcamsr who’s channel I check everyday for a new video.
Thanks, much appreciated! Just FYI I try to post Mon / Wed / Fri, but have only been posting Mon / Wed lately
@@mattderronAh ok thanks! That’s good to know as your videos genuinely make my day because they’re so high quality and there’s nothing that comes close to it in the finance CZcams niche.
That’s amazing, thank you for your kind words. Means a lot!
Good video. I have VOO and VGT.
No love for VQT? It combine American stock + exposure to Canadian and emerging market stock. Or would multiple dedicated ETF be better?
Great video, thanks!
This is a solid video. Keep it up 👍
Thanks!
This was incredible, thank you.
Thank you, glad it was helpful!
VGT AND VOO IS A KILLER COMBO. it’s in my own personal Roth. But to make it the perfect triforce add VXF which is the Vanguard Extended Market etf, which is I believe all medium cap stocks in the Total market. No small cap companies in VXF that’s a different etf. IMO VOO + VXF >> VTI bc you can allocate more towards VOO large caps and get more gains than VTI which is the entire large medium and small cap companies. VOO is pure blue chip and VXF adds diversification to medium caps as well, and u can tailor it to your liking to offset VOO nicely. Pair that with VGT for the rising TECH markets(cybersec/cloud/ai etc) Microsoft and Apple etc gains will be insane. I’m up 16% 1YR as of last week
Why VGT over QQQM?
Thanks. "Look inside" before you buy. I did that and found the one I wanted to purchase I already owned those companies as individual stocks for years.. AKA- 'The Magnificent seven". Why pay a fee to buy more of what I already own was my takeaway.
Totally agree with the market forecast so I'm now looking to put together a DRIP fund focusing on dividend reinvesting. Any suggestions worth looking at? Thanks/subscribed.
I've done a couple videos on dividend ETFs specifically - most recent one is here: czcams.com/video/5RVIH7QGqDg/video.html Hope that helps
Matt, just read your story. Wonderful! Looking forward to being a customer.
Thank you, that means a lot! I'll obviously be keeping people updated in my normal videos, but if you're interested in knowing when things happen consider signing up for the newsletter on the website. That's where I'm talking about stuff and provide updates every week. Thanks again!
This is why i make my own index and dollar cost average it, i did it with defence etfs, i took the top 3 or 4 etfs and took their top 10 holdings and averaged them out over 100% and started buying and my performance is beating the indexes which i also buy but in much smaller amounts
Great job in educating your subscribers on the Why and What we invest in 👍🏻
First time listening to you, and sure will not be the last. Great information will continue listening ,thank you.
No worries, thank you!
Excellent video valuable information!
Thank you, I appreciate it!
Amazing video, thank you!
No worries, thanks!
Could you analyze SPGP , garp index. related etf
Really great explanation!
Thanks!
valuable info and I thank you for doing this. I invest in multiple dividend growth stocks, but I have my grandson in 25% each VB, VO, VOO and VXUS. He’s 10. Who knows what will outperform over his lifetime.
That's awesome, you have a very lucky grandson!
Good video. What do you think about public REITs?
Thank you! I think there are REITs that look attractive but not sure how higher for longer interest rates will impact their performance
Aqui do Brasil ,. acompanhando vc.
Parabens .
Tha k you your video gave me lot of clarity
Awesome, glad it helped!
Great vid Matt. Yes it does matter and thanks for bring this forward. Dave
Thanks!
Very brilliant Matt! Thank you!
Thanks!
hi, great video. What i am afraid is what happens if for some reason the exchange is broke. Do we loose all money?
I’m no expert in this but my understanding is that your holdings are fine in that scenario. The broker is just the custodian it doesn’t change the fact that you own the security
You did a great video on ETF overlap.
Thank you!
Great video Matt. I always enjoy your input and research. People most definitely need to do there due diligence and understand what they’re buying. Kinda like ordering food, you wouldn’t eat it if you didn’t know what was in it. Why would you not do the same with your hard earned money
I know it's crazy how we'll scrutinize a $10 charge on our card, but then be willing to put hundreds or thousands of dollars into something we heard about on the internet in 5 minutes lol
Good stuff. Keep up the good work
Thanks!
Good analysis. Note: this isn't exclusive with Vanguard. Generally investing in ETFs and mutual funds will have the same overlap just by the nature of the investment offerings. It's up to the individual to be cognizant of their holdings.
Yup absolutely correct, this isn't Vanguard specific - it's something to look at for everyone. I chose Vanguard to highlight this issue because they are some of the most popular and well known ETFs out there - especially VTI and VOO.
This channel is the NVIDIA of CZcams finance content creators. Outstanding growth and bright future. Well done Matt.
Much appreciated, thank you!
The etf SCHD is basically an index fund of strong companies that pay out dividends. It only has an expense ratio of 0.06% and has performed well since it came about 10 or so years ago. I highly recommend people consider adding it to their portfolio. With enough time, you can use those dividends later in life to largely live off of without touching the principle.
I’m sorry if this comes across as offensive, I really don’t mean for it to be but, if you dont know how to add stocks into your portfolio, you need to learn a lot more basics before you even pick anything to invest in.
I've done many videos on SCHD and just to clarify - it's methodology prioritizes higher dividend yield companies (in the top 50% only are eligible) who meet certain quality criteria. It's been a great performer, but people need to understand what their goals and situation are. If they are young and are looking for acceptable long-term growth, SCHD is likely not the right answer. If they are specifically looking for dividend income to use now or once they get closer to retirement age they want to shift to a dividend income strategy - then it makes perfect sense.
A common misconception online is that SCHD will give you acceptable growth over a long period of time. It is not designed to do that and many people may be extremely disappointed if they go in with that perspective.
VOO automatically balances the top performing companies through the decades. Historically, the market leaders of every decade change. VOO assures you always have the top 500.
100%
Doesn’t VTI basically do the same thing only the whole stock market?
@@nicholasnoriega1205did you get a answer on this?
Exactly. The whole point of weight based balance is that if Apple drops in valuation then their % in the top 500 will drop as well.
@@nicholasnoriega1205that's correct. VTI holds all US companies in accordance with their size. If you hold VTI and VOO, you are holding the top 500 companies at a larger percentage than the overall stock index.
This is the best break down video I’ve watched!
Thanks!
@@mattderron VOO for me!
Great information ☝🏼
Thank you!
good points made there
Matt did his homework! Thanks for the great thoughts.
No worries!
Great content! Thank you for this. I've been investing in both VTI and VOO thinking that this gave me a good mix of large to small cap exposure and not realizing the extent of the overlap. What ETFs should I be looking at for small and mid cap exposure to complement VOO?
I think Vanguard's mid and small cap ETFs are VO and VB, so you could simply add those in whatever allocation makes sense for you
Im in the UK
which ones do i buy
👍 great info well presented
Thank you!
Amazing information, overlap is something that many people don't pay attention.
Thanks!
Thumbs up to this guy! I subscribed.!
Awesome video and a very common mistake... Thanks Matt!
Thanks!
Thanks for the video. I’m new to investing and I realized that I have 4 overlapping ETF’s, so I got rid of 2 and left with 2. After watching this video, I realized again that I am still overlapping with my remaining 2: VOO and VTI. I think will keep VOO and get rid of VTI since I have VTSAX in my other brokerage account; they are essentially the same thing except one is an ETF and other is an Index Fund. D’oh! I don’t know what I’m doing. 😅
No worries. Just to be clear - overlap itself isn’t always bad as long as you’re aware of it and it’s what you intend to do. For example - if you have VOO but you want higher allocation to tech and so you buy VGT - that’s ok. The main point is just to know what you’re invested in so you can make the best decisions for yourself. Hope that helps
I currently hold VOO only, but holding both VTI and VOO is, I think is OK because it forces people to deviate from investing individual stocks. I am not saying we shouldn't invest in the individual stocks, but if buying ETFs and chill out is a person's goal, then it won't matter to hold both in my rookie opinion.
You're right, I thought about that as I was editing the video. They are essentially the same so having both is like having more of one than the other. I think the main point I was trying to get across is if you have both because you think they're different or doing something different for you - then it's good to know that it's not really.
@@mattderron Yes, I agree. You made a good point.
Can any one tell me if VOO, SCHD, VUG, XLK, VXUS, and BND are a good combo or am I doing to much? This is for my Roth IRA
Learned alot. Great video
Thank you!
It would be nice to have websites and tools mentioned to help with the issue of stock overlap in ETFs.
Not sure I understand - I talked about the exact tools I used in this video
I own VGT precisely because it is overweight AAPL and MSFT. Good explanation. People need to consider the WEIGHTS of each stock and the OVERLAP. Just subscribed.
Awesome that's great! To your point, the overlap and being overweighted in some stocks is perfectly fine...as long as you know that you're doing it!
Fantastic video!
Thanks!
We do VUG and VOOG and they are great, but similiar issue. VUG has a lot of apple. Voog, does not.
I went with VGT and SCHD as the core in my Roth IRA, and SCHD, VGT, QQQM in my taxable acct. Overlap is low to medium, SCHD raises the floor and there's some good growth. My timeframe is about 15 years, maybe 20.
Sounds like a great plan!
good work Matt!
Thank you!