After Talking to a Financial Advisor - Told to Diversify

General
1

I recently spoke to a financial advisor, and they suggested I diversify my portfolio more. Currently, I have a Trad IRA and a Roth IRA, both heavily tilted toward US large-cap equities. Here’s a breakdown:

  • ~70% VOO
  • ~10% VTI
  • ~4% QQQM
  • ~3% AVUV
  • ~3% VB
  • ~3% VXUS
  • ~3% VTV
  • ~3% VXF
  • ~3% IWB
  • ~3% VO

The advisor recommended adding emerging markets, commodities, and small-cap growth to further diversify. I understand my portfolio is largely overlapping (VOO/VTI, etc.) and focused on US large-cap blend, but I am hesitant to add asset classes like commodities due to their historically lower growth and high expense ratios.

I’m 30 years old, currently pausing new investments while paying off debt over the next 18 months, and I still have decades of growth ahead. I’m open to tilting more toward VTI over VOO or adding more VXUS for international exposure but don’t want to hedge too conservatively.

Is it worth diversifying into emerging markets or commodities? Should I simplify my allocation and reduce overlap? I’d appreciate advice or insights from others.

2

Your portfolio is heavy on US large caps with minimal diversification into other regions or asset classes. Switching to something like 80% VTI and 20% VXUS would simplify your allocation while adding international exposure.

3

Your allocation is fine but unnecessarily complex. Consolidating into a mix like 80% VTI and 20% VXUS would achieve the same diversification without the overlap. Keep it simple.

4

Is your financial advisor a fiduciary? If not, their suggestions may not align with your best interests.

5

Avoid commodities and emerging markets unless you want extra complexity. Stick with your current allocation and revisit diversification closer to retirement.

6

Don’t disregard commodities like gold entirely. They can provide stability during down markets. However, I’d avoid high-expense-ratio ETFs and focus on long-term equity growth.

7

Diversifying is smart, but you don’t need to overthink it. Moving toward a simpler allocation like VTI and VXUS is likely a good move. Think about what works for your timeline and comfort level with risk.

8

Consider 70% VTI, 20% VXUS, and 10% AVUV if you want to include small-cap value exposure. Too many overlapping funds dilute the effectiveness of your strategy.