I just turned 18 and opened a Roth IRA, putting in $7,000, all in FXAIX. I’ve also managed to add $500 this year. Is this a bad idea? Should I split it into other funds to diversify? I also have $3,000 in an ETF, split between FXAIX and FFNOX. I work at a marina, so I don’t make a lot and have put everything I can into these. I’m nervous about messing it up since I’m new to all this. Any advice?
Yep, it’s totally fine. I’ve been 100% in VTSAX since 1996.
Vero said:
Yep, it’s totally fine. I’ve been 100% in VTSAX since 1996.
Wow, how’s it performed?
Vero said:
Yep, it’s totally fine. I’ve been 100% in VTSAX since 1996.
Wow, how’s it performed?
It’s averaged around 8.5%, though depending on when you started, it could be closer to 10%.
@Tal
The VTSAX Admiral shares started in 2000, so the timing wasn’t ideal for returns early on, but VTSMX (its earlier version) averaged closer to 11%.
Vero said:
Yep, it’s totally fine. I’ve been 100% in VTSAX since 1996.
So, about 10% annualized?
Vero said:
Yep, it’s totally fine. I’ve been 100% in VTSAX since 1996.
So, about 10% annualized?
Pretty close, yes.
FXAIX is a great fund. It tracks the S&P 500 and has super low fees. The real question is: Are you okay with being 100% in the S&P 500? It’s an excellent long-term strategy, but you need to be prepared for crashes. Markets dip—sometimes by 20-30%—but they recover if you stay invested.
You might consider adding international or small-cap funds for more diversification, but FXAIX alone is fine too. Over decades, you’re looking at an average 10% return per year, which means your investment doubles every 7-8 years.
@Blakeley
When it crashes, could I lose everything? Or do my shares just go down in value and eventually recover if I stay invested?
Jaden said:
@Blakeley
When it crashes, could I lose everything? Or do my shares just go down in value and eventually recover if I stay invested?
You won’t lose everything unless every company in the S&P 500 goes bankrupt—which would basically mean the end of the economy.
Jaden said:
@Blakeley
When it crashes, could I lose everything? Or do my shares just go down in value and eventually recover if I stay invested?
Even during a crash, you still own your shares. They just temporarily lose value. Over time, they’ll recover as the market grows.
FXAIX is essentially the S&P 500. It’s not a bad idea at all, especially since you’re young and have decades to let it grow.
At 18, FXAIX is a great choice. You have plenty of time for it to grow. Even if it drops during a crash, it’ll recover, and you’ll benefit in the long run. Keep adding to it when you can, and by retirement, you’ll have a solid nest egg.
You’re off to an amazing start! FXAIX is a solid choice. If you want to diversify more, consider adding small-cap or mid-cap funds, but at your age, it’s fine to stay focused on a broad fund like FXAIX. You’ve got time to learn and adjust as you go.
For now, FXAIX is totally fine. You’re just starting out, and you don’t need too much diversification with under $10K. As your portfolio grows, you can start adding international or small-cap funds for balance. Great job starting early!
Congrats on starting your investing journey! FXAIX is a great first step, but make sure you take the time to understand diversification and risk tolerance. It’ll help you make informed decisions as you keep building your portfolio.
Check out The Simple Path to Wealth. It’s a great resource for beginners and will help you understand investing better.
Adding an international fund like FZILX could diversify your portfolio more. While US stocks have dominated recently, international markets can outperform during certain periods. Maybe put 20-40% into international funds to balance things out.
I’m 100% in FXAIX, and it’s been working great for me.
Sticking with one fund is fine, especially when it’s something broad like FXAIX. If you want more variety, you can add small-cap, mid-cap, or international funds later on. For now, your plan is solid.