Hi! 26yr old here. currently invested (DAC) in FSM RSP in VOO. am looking to further diversify my monthly investments in another fund but am unable to decide which would be best for me

Hi all! thanks for reading. i am currently invested in some US stocks (20%) & the rest are in (VOO). however i am looking to further diversify into another index fund. I plan to leave them invested for a good 15-20 years. i did some reasearch & was considering VT but that would lead to quite some overlapping. any help or advice would be greatly appreciated!

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thefrugalstudent

Edited 19 Aug 2021

Founder at thefrugalstudent.com

Hi Anon,

You're right - VT would result in very significant overlap with your VOO investment. So the question now is why do you want to diversify?

If it's just for the sake of not having all your investments in a single ETF, then I'd say there's no point. Simply diversifying for the sake of diversifying is pointless. In this case, you'd actually be worse off diversifying because you made things more complicated for yourself with no real value gained. And strictly speaking, having VOO and VT doesn't count as diversifying.

If it's to broaden your returns potential, then you should be seeking to invest in ETFs that cover markets which are not covered by VOO. Some good examples would be US small cap (VBR), China large cap (2801), or emerging markets (EIMI).

If it's to manage risk, then you need to be looking for investments in different asset classes, ie not stocks. This could be bonds, gold, or even cryptocurrency (although this is highly correlated with stocks, so probably not ideal for mitigating risk).

Hope this helps!

Regards, thefrugalstudent

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