1 ETF for Life to Get Rich - It's NOT One You'd Guess!

[@OptimizedPortfolio]

What's your 1 ETF to hold forever?

[@thatguyoverthere54]

@@OptimizedPortfolio RSSB

[@Howell_Jolly]

Avuv

[@OptimizedPortfolio]

@@Howell_Jolly I like AVUV for a small cap value tilt.

[@DK-pr9ny]

VOO and chill. International has been awful for way too long.

[@OptimizedPortfolio]

@@DK-pr9ny You say that as if that indicates international will continue to be "awful." It doesn't. The rational investor would draw the precise opposite conclusion - current valuations would predict international outperforming in the coming years, but then I don't condone market timing. And I'm curious what "way too long" is in your book; the Lost Decade 2000-2009 begs to differ. Best of luck. Thanks for sharing.

[@keltonjohnson6197]

There’s a hidden benefit to AOA- it uses ETF rules to rebalance meaning no capital gains at rebalancing if all works as intended. In other words, it is slightly more efficient than holding the funds directly

[@OptimizedPortfolio]

Awesome!

[@Parcian-]

When ETF rebalances, they do not pay taxes on capital gains? I invest in etfs from Brazil, but i don't know the etfs rules

[@keltonjohnson6197]

@@Parcian- at least under US tax law, an ETF can rebalance in two ways- 1st selling/buying holdings and this will trigger capital gains or capital losses on the fund holder. 2nd share redemptions/creations which does not involve buying or selling holdings and has no capital gains impact.

[@Parcian-]

@@keltonjohnson6197 Thank you

[@christophecaron7105]

This is so funny how I coincidently came across your video this evening (and knowing you published it 6 hours ago). I'm a new bee in investing and I have litterally spent the past weeks trying to figure out what the best strategy and allocation are. This afternoon I was saying to myself "wouldn't that be great if there would be a single ETF that would do that for us!" :). Thank you so much! Excellent video!

[@OptimizedPortfolio]

Excellent! Glad you found it useful!

[@OptimizedPortfolio]

You might also enjoy my video on the Bogleheads 3 Fund Portfolio I mentioned (kzbin.info/www/bejne/rWSZpH2al9h1nqM), which goes a bit more in depth on the actual concepts and reasoning, and possibly my video on target date ETFs as well, which shift the allocation for you as time passes: kzbin.info/www/bejne/nmOol6GHnNZsqZo

[@John-mz2te]

AVMA is another good option. More bonds, but more factor diversification. VMOT if you want heavy factor exposure and trend instead of bonds. Agree that AOA is probably best for most people. There will be less tracking error regret.

[@OptimizedPortfolio]

Yea, big fan of AVMA. That or RSSB would prob be my personal desert island fund. But like leverage, I thought factors are probably too advanced for a broad rec for most people. I discussed AVMA a while back here: kzbin.info/www/bejne/haW3hpiniat3jsU

[@thejesser501]

AOA... Wow! That's a really awesome diversified ETF! Thanks for suggesting this one. 😊

[@OptimizedPortfolio]

Thanks for watching!

[@stefanschumacher6208]

I like $TRTY. Half global market portfolio, half trend followed, tilted towards value, momentum.

[@OptimizedPortfolio]

Thanks for sharing!

[@OlegScherbina]

up 7% over last 5 years. Is that a joke?

[@stefanschumacher6208]

@@OlegScherbina you’re looking at a price chart. That’s not the total return. It’s returned about 29% over the last five years, not that five years of performance data means anything. You should learn the difference between price and total return before chastising someone.

[@OlegScherbina]

@@stefanschumacher6208 you should stop telling people what to do, pots

[@ebrahimhabib477]

Great video indeed

[@OptimizedPortfolio]

Thanks!

[@FacemBaniSrl]

I suppose that for europeans Vanguard Life Strategy 80% can be the alternative of AOA?

[@OptimizedPortfolio]

Yea the Vanguard LifeStrategy Funds are similar.

[@FacemBaniSrl]

@@OptimizedPortfolio thank you from Romania! :D

[@keffey99]

Great video. Thanks for the video.

[@OptimizedPortfolio]

Thanks for watching!

[@brendanchang1161]

100% VTI is really all the individual investor needs! Now you could sprinkle in some VXUS to diversify beyond U.S. borders but it’s not terrible if you don’t. All that matters is consistency to ride out the high and lows of the market and keep investing! Good luck everyone!

[@OptimizedPortfolio]

For the record, I disagree that US stocks are "all the individual investor needs," and we can't know ahead of time that it won't be "terrible," but I've already explained that. But yes, a broad index fund is certainly better than a handful of stock picks.

[@celi4887]

Will definitely be looking into AOA; thanks!

[@OptimizedPortfolio]

Thanks for watching!

[@jakethewhale]

That is a great single ETF recommendation that I was previously unaware of. I would still prefer RSSB as a single fund solution, but the average, uninformed investor likely is better off without leverage.

[@OptimizedPortfolio]

Agreed. RSSB would probably be my personal desert island fund too, but I tried to briefly explain why that's probably not a great recommendation for a broad audience of mostly novices.

[@Goagao210]

Which type of account is best suited for AOA? Roth?

[@OptimizedPortfolio]

Tax efficiency is a spectrum. AOA isn't the most tax efficient, but US investors would also get foreign tax credits on its foreign holdings in taxable space.

[@YuriKhrustalev]

Came to the same conclusion after 7 years, and never changed my mind, AOA since now and on

[@OptimizedPortfolio]

Awesome! Thanks for sharing.

[@beng32112]

In the videos you said the Bogleheads 3 fund portfolio is for beginners and retirees. Is there a point where you grow out of this portfolio? I thought this was a hold forever portfolio, just changing the bond allocation over time.

[@OptimizedPortfolio]

There is not necessarily a point where one grows out of the Bogleheads 3 Fund Portfolio, no. Many retirees use it. Yes, you'd probably change the bond allocation over time. But even that is arguably unnecessary.

[@tiaoraitbg2347]

Are there any funds like this that also have a slight tilt to factor investing?

[@OptimizedPortfolio]

Yes: kzbin.info/www/bejne/haW3hpiniat3jsU

[@lucasd631]

Thanks for the video. I am new to investing and I have done some research on what stocks I want to use to help me retire. I have looked at multiple funds and was wondering your opinion on SCHD?

[@OptimizedPortfolio]

Thanks for watching! My SCHD video is here: kzbin.info/www/bejne/haWmqpKhZceKnpI

[@daviddempsay4930]

Why is this video using a 48 star U.S. flag as a graphic? (5:18)

[@OptimizedPortfolio]

Didn't even notice. Just grabbed one hastily online.

[@richardshipe4576]

AVUV is my one fund forever because I’m always waiting on the outperformance 😅

[@user-px2yi5ir4g]

Can you make a video/blog on the various financial instruments a long term investor could use to access leverage? I know you have talked about leveraged ETFs but im interested in how they perform compared to derivatives or using margin loans.

[@OptimizedPortfolio]

Thanks for the suggestion!

[@tungooska]

Appreciate the video! AOA, Vanguard's VASGX, and Fidelity's slightly more aggressive FFNOX are all great options! For those in the Thrift Savings Plan (TSP), the Lifecycle 2050 fund is a great choice for this asset allocation mix.

[@OptimizedPortfolio]

Thanks for sharing!

[@Alisters_Adventures]

Since the inception of AOA there’s not a single year it beat the SPY.

[@OptimizedPortfolio]

1. That's not true. 2. It's not supposed to beat SPY...

[@CoutureCW]

I would love to have your thoughts on Andrew Chen’s appearance on rational reminder recently, in a video or a blog post!

[@OptimizedPortfolio]

Still on my list to get to! Haven't listened yet.

[@cryengine_x]

back testing over the last ~10 yrs (free backtester limited to 10 yrs), aoa returned 8% voo returned 13%. that's a colossal difference when compounded aoa 1.7x, voo 2.8x since ~ january 2015. which i already knew it would, because the story of the past 15 yrs is sp500 killing everything. will it be the story of the next 15? who knows. diversification means always having to say youre sorry.

[@OptimizedPortfolio]

That's about what we would expect, as int'l stocks have suffered in recent years, and bonds - especially intermediates - have lower expected returns than stocks. The S&P 500 is not the appropriate benchmark for a global 80/20 portfolio. Indeed, as you noted, that also tells us nothing about the next 15 years.

[@cryengine_x]

@@OptimizedPortfolio yeah. it's just tough because you can do everything "right" and vastly, VASTLY underperform the sp500 plus grabbing a couple obvious momentum mag 7. personally, i dont like where the market, or the united states/west in general, is. i think gold may be a great play going forward, call me a right wing kook if you must. and china, even tho it's returns have sucked recently. thats another thing about investing, what matters is what the crowd does, not whats a good company. chinas is the right play, but as long as everybody think the usa big caps are, thats whats gonna make money, so whats right doesnt even matter.

[@miguelr2739]

Good video. I like AOK and IRTR

[@OptimizedPortfolio]

Thanks!

[@jrb3158]

How does the differ from a target date fund as for as holdings

[@OptimizedPortfolio]

Holdings themselves are probably the same as most target date funds, though of course a TDF will shift the allocation over time.

[@djayjp]

Treasuries or corporates?

[@OptimizedPortfolio]

I've noted in several videos that I prefer treasuries, but the total bond market funds here would be about 3:1 treasuries to corporates.

[@Native722]

I like VT/VTI + BND/BNDW

[@OptimizedPortfolio]

Similar, but a lot of overlap there. VTI is already inside VT and BND is inside BNDW. Thanks for watching.

[@RonaldKragnes]

My personal preference, for younger investors with a long time horizon (growth): VOO - Vanguard S&P 500 ETF 29.00% VTI - Vanguard Total Stock Market ETF 29.00% VGT - Vanguard Information Technology ETF 42.00% For retirees (income): SCHD - Schwab US Dividend Equity ETF 50.00% DGRO - iShares Core Dividend Growth ETF 50.00%

[@OptimizedPortfolio]

Way too much overlap with all that for my tastes.

[@danielwatkins877]

I'm OK with the overlap, since it overweights you in large high-quality companies, but what about times--like the one we're currently in--when bonds out-yield stocks? Why not do 30/30 for those and add in something like 20% each of schz and scho. Both are currently yielding more and are even cheaper. You get more income sometimes and more price stability all the time if dividends are what you're after. (Or 35/35/15/15 if you wanted to be a little bit more aggressive.) That's an easy tradeoff for the slight loss of equity growth potential in retirement--you don't get to know ahead of time if you're retiring into a decade like the 70's or a decade like the 80's. I'm not a CFP and none of that is fincial advice. Just hypothetical.

[@danielwatkins877]

Oh, and now I see. The overlap comment was actually even more about the pre-retirement portfolio. Yeah, that's a lot. And while I like the aggression (for youngsters) in the high growth choice, why would you want to limit all that growth potential to one sector? Why not a more general high growth etf? Once again, I'm not a CFP, and this isn't financial advice. Can't imagine what would've happened to that portfolio in March of 2000.

[@AK-ky3ou]

I’d personally skip the etf and use an index target date fund at target dat +10. Vanguard, fidelity, blackrock, doesn’t matter.

[@OptimizedPortfolio]

Target date funds are another great option. Blackrock/iShares recently launched target date ETFs: kzbin.info/www/bejne/nmOol6GHnNZsqZo

[@AK-ky3ou]

@@OptimizedPortfolio this is great, that’ll be my choice for a single etf.

[@mattmatt245]

I'll stay with SCHD.

[@OptimizedPortfolio]

cool

[@victorasul]

just buy S&P 500..don t overcomplicated

[@OptimizedPortfolio]

The S&P 500 is certainly better than a handful of stock picks, but it's still only 1 cap size of 1 asset class of 1 single country. Still quite low on the scale of diversification. Buying multiple cap sizes of multiple assets of multiple countries in a single fund is not "overcomplicating."

[@borisbojic]

Vanguard FTSE All World. Period 👌

[@OptimizedPortfolio]

😎

[@ebrahimhabib477]

Re watched this video again AOA yes it’s good Suggestion

[@OptimizedPortfolio]

Thanks for watching!

[@ivantsanov3650]

I guess ZIVB

[@OptimizedPortfolio]

Thanks for sharing!

[@hogue3666]

I have issues with this. Dividends have been winning out over bonds for the last decade and can help grow a portfolio better with a set it and forget it mindset. HYSAs are just as good as bonds right now and very liquid. The 3 ETF portfolio has to be doing better than 80/20.

[@OptimizedPortfolio]

So much wrong with your "issues" and proposed alternatives... Dividends and bonds are 2 completely different things. Period. Similarly, HYSA's and bonds are also 2 different things. Yes, the yield curve is currently inverted, but that won't always be the case. The young investor with a long horizon using an HYSA instead of bonds has simply traded much less price risk for far more reinvestment risk. Remember this is one fund to hold forever, not "one fund to use for market timing based on recent past performance." The Bogleheads 3 Fund Portfolio is using the exact same assets that AOA is holding, minus international bonds. Including them makes it the less popular Bogleheads 4 Fund Portfolio.

[@grigorirasputin425]

VOO/AVUV 70/30

[@OptimizedPortfolio]

Thanks for sharing!

[@thatguyoverthere54]

We have an amazing selection of asset allocation ETFs NOW. AOA is one of my favs Where would you put AVMA on the risk scale from AOK to AOA? I feel like it must be riskier than AOR given the higher equity allocation + the factor + the credit risk tilt. But I wonder if it's riskier or less risky than AOA

[@OptimizedPortfolio]

AVMA sits around 65/35, so it's closer to AOR.

[@ebrahimhabib477]

Yes AOA is good one

[@OptimizedPortfolio]

Thanks for watching!

[@ebrahimhabib477]

@@OptimizedPortfolio I always look for your Videos as I enjoy it very much it’s so helpful and informative and your presentation is excellent and you are a great person as well Thanks so much for your work and your efforts

[@OptimizedPortfolio]

@@ebrahimhabib477 Glad to hear it! Thank you!

[@brianmc6950]

.15 seems expensive, no?

[@OptimizedPortfolio]

"Expensive" compared to 0.03%. Cheap compared to 1.03%. It's all relative.

[@investirparaviverderenda]

ITDH 😅

[@OptimizedPortfolio]

Awesome!

[@bfboom22]

Eh, I see what you’re saying but still lower sortino and sharpe than spy

[@OptimizedPortfolio]

1. Not if we go back further than the fund's fairly recent inception. 2. Sharpe or Sortino alone should not inform portfolio construction. 3. Entirely possible that SPY doesn't align with one's risk tolerance; that's sort of the whole point.

[@Hazel66781]

If you don't plan to use any of the money for 30-plus years, then going all in on QQQM would make more sense because the fund's performance is the most important factor. It's the end result that matters. What will you have in the end? I don't care about what happens in between, just consistently dollar-cost average until retirement. Consistency is the key.

[@OptimizedPortfolio]

Past performance does not indicate future performance. QQQM is a handful of US large cap growth stocks. You say you don't care what happens in between, which sounds nice, until people find out they do care. I explained all this in the video.

[@Hazel66781]

​@@OptimizedPortfolio We all have different goals and risk tolerances, and while I agree that "past performance does not indicate future performance," I believe historical trends and patterns can still offer valuable insights. Although exact future outcomes can't be predicted, certain stocks or market sectors have consistently performed well over long periods. Understanding these trends can help investors make more informed decisions. For that reason, I favor QQQM. That said, AOA also appears to be a high-quality ETF. Thank you for sharing your opinion; I enjoyed your video.

[@OptimizedPortfolio]

​ @Hazel66781 You make my point for me. Asset allocation is inherently highly personal. QQQM is not suitable as a one-size-fits-most allocation to hold forever. It's a single cap size of a single asset class of a single country; quite the opposite of diversification. Yes, certain corners of the market have outperformed historically - small cap value, the precise opposite corner from QQQM, which is large cap growth. "Trends" = market timing, which tends to be more harmful than helpful. Again, watch out for recency bias and hindsight bias. Fundamentally, buying QQQM is also an inherent bet that Financials will underperform every other sector (the Nasdaq 100 Index excludes them) and a belief that the exchange on which a stock trades is related to its performance (the index only includes stocks that trade on the NASDAQ exchange). Hopefully the absurdity of these two ideas needs no further explanation.

[@bossballheaddawg2588]

lol AOA is not that good bro.. at all

[@OptimizedPortfolio]

Thanks for watching!

[@michaeldbouck]

BLNDX

[@OptimizedPortfolio]

Thanks for sharing!