So my wife and I have about $10K saved up for our almost 2-year-old. We’re planning to keep adding to this fund regularly and won’t need to touch it for about 25 years. I’ve been reading a lot about VOO here and I need some solid points to convince her that this could be a better option than just keeping it in a savings account. Any help would be greatly appreciated!
They have different risk profiles. If your wife isn’t okay with the risk of a loss, then VOO might not be the right choice for her.
For a 25-year investment, VOO will likely outperform a 4.5% APY (which could drop soon). Yes, stocks are riskier, but over time, that risk reduces. After 7-10 years, you’ll almost certainly break even, and by 25 years, you’ll likely outperform 4.5% growth.
You could split it. Half in VOO and half in savings.
West said:
You could split it. Half in VOO and half in savings.
Yeah, that sounds like a good balance for your marriage too.
West said:
You could split it. Half in VOO and half in savings.
Exactly, that works.
Just put half in VOO and half in savings, then check it after 5 years.
If you’re needing to ask random people online for advice on your wife, this could get tricky.
They serve different purposes. Before deciding, make sure you and your wife are clear on what this money is for. If it’s your emergency fund, an HYSA is safer. But if it’s for long-term growth and won’t be needed soon, then VOO could be better.
Markets only go up, right?
Jet said:
Markets only go up, right?
It’s true that the market has trended upward, but that doesn’t guarantee it will continue like that. If it changes, we’ll have much bigger concerns.
You can do both and check the return after some time. Then decide what’s working best.
Check how VOO compares to SGOV over the last 25 years. If your wife can handle the ups and downs of VOO, then the decision is clear.
A savings account can’t lose money, but VOO can. Is that something you’ve considered?
I do both. You could too. 
The market has historically gone up at a higher rate than a HYSA (around 7-10%). It’s also a fairly low-risk investment since it’s so diverse.
Darwin said:
The market has historically gone up at a higher rate than a HYSA (around 7-10%). It’s also a fairly low-risk investment since it’s so diverse.
But the market and savings account grow at similar rates over time, to be fair.
@Harlan
So how do I short the market’s downward trend?
VOO isn’t always perfect.
Harlem said:
VOO isn’t always perfect.
It depends on how the S&P 500 performs.