How can I enhance my 50/50 VOO and QUAL mix for diversification?

Mike Z

As a long-term investor, does my 50/50 mix of VOO and QUAL really provide enough diversification beyond large-cap U.S. equities, or should I add mid-caps, international exposure, or quality bonds to balance my risk over the next 10 years?

Kaile

Yes, a 50/50 split between VOO and QUAL is a solid way to invest in U.S. large-cap stocks, but you might want to be cautious about focusing too exclusively on the U.S. market. If you’re considering a long-term plan, such as ten years or so, think about adding some mid-cap funds, international stocks, or even some high-quality bonds. This can really help spread out your risk, prevent excessive fluctuations, and allow you to tap into growth in other markets. It’s all about making your portfolio more balanced and resilient for the long run.

Aleksander

I’ve put a good chunk of money into VOO and QUAL, and they’re really solid parts of my portfolio. Now, I'm wondering, when is it a good idea to put even more money into them to boost my returns? And when does adding more just make things messy?

Mike Z

@Kaile I'm worried that holding both VOO and QUAL is just doubling down on the same U.S. large caps. Am I actually diversifying, or am I just increasing my risk if the U.S. market stalls over the next decade? How much overlap is too much?

Kaile

@Mike-Z Honestly, having both VOO and QUAL in your portfolio isn't really diversifying that much. They actually share around 45-46% of the same big companies, so you're still pretty much invested in the same stuff in the U.S.

QUAL targets strong, profitable companies, while VOO includes many S&P 500 firms. They can work together to some extent, but there's still quite a bit of overlap.

To diversify effectively, consider investing in international stocks, bonds, real estate, or smaller companies. That way, you can spread out your risk instead of just doubling down on large U.S. companies.

So yeah, you’re sort of mixing things up a bit, but you’re still mostly tied to U.S. large caps. If you're worried about a U.S. slowdown, you might want to consider diversifying even further.