In This Article:
Many investors start their journey toward financial security with stocks, and a successful investing strategy involves considering the risks, adapting, and thinking about the long-term rewards.
For some, a well-balanced portfolio contains stocks, bonds, and small-cap investments, while for others, a mix of international stocks and ETFs is a favorite approach since it offers broader diversification. Either way, a combo of these assets ensures both growth and protection against a market downturn and is a great strategy for those unwilling to risk their money unnecessarily.
Don't Miss:
-
Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Many are rushing to grab 4,000 of its pre-IPO shares for just $0.26/share!
A 30-year-old investor with a $65,000 portfolio has taken to Reddit to ask how to strike that balance in his portfolio. Primarily invested in Vanguard S&P 500 ETF (NYSE:VOO) and Invesco QQQ Trust (NASDAQ:QQQ), he also holds individual stocks like NVIDIA (NASDAQ:NVDA), Alphabet (NASDAQ:GOOG, GOOGL)), Meta Platforms (NASDAQ:META), and Microsoft (NASDAQ:MSFT), but plans to exit them soon.
“I am planning to change the composition moving forward and adding [Vanguard Total International Stock ETF (NASDAQ: VXUS)] (International exposure ETF), [iShares Core S&P Small-Cap ETF (NYSE: IJR)] (Small-cap stocks ETF), and [Vanguard Total Bond Market ETF (NASDAQ: BND] (Bonds exposure) along with my VOO and QQQ. I like it boring for my risk profile,” he said.
The poster’s main goal is long-term growth, but he’s open to feedback on improving diversification and managing risk. The r/Portfolios community has shared its thoughts in the comments, so let’s see those.
Trending: Are you rich? Here’s what Americans think you need to be considered wealthy.
How to Diversify a $65,000 Portfolio? Reddit Debates Possible Low-Risk Options
Overexposure to Large-Cap Growth Stocks Isn’t a Good Idea
Several Redditors pointed out that VOO and QQQ heavily overlap, meaning the investor’s portfolio is not as diversified as he thinks.
“You’re just long all the same s–t, large-cap equities. You want multiple return streams in case large-cap equities have a drawdown. If you work a job, own a house, and own equities, you are triple long on the same bet that would destroy you as all are affected by a recession,” a commenter says.
A Redditor pointed out that a mix of large-cap stocks isn’t a complete retirement portfolio, and suggested other assets to balance it.