Some people ask me about how I feel when I invest in VOO, and they get a satisfied answer.
And it raises a question, what if I invest all my money into it? Maybe many of you are curious about it.
Here, I will elaborate the advantages and disadvantages of this way, and share my experience to tell you if it’s good to do this.
Let’s get started!
Advantages of all funds in VOO
Here are the advantages if you do this way:
You can hold longer without pressure
First, you can hold it longer than you think, maybe 10 years, 20 years, or even 50 years, and without pressure.
For such an ETF tied to index, especially S&P 500, can exist along with indexes for a very long time. As the index exists, so as in this ETF.
Also, the fluctuation isn’t as high as that in QQQ, which is representative of the tech industry. This makes us more comfortable when turmoil happens, and reduces a lot of mental pressure when holding it.
Risk can be shared more by other industrial
Second, the industries involved aren’t as centralized as that in QQQ, so the risk can be distributed by other industries.
If we take a look at the areas it distributed, you will see that tech companies account for less than 30%, other areas, like financial, health care, and customer discretionary, have over 10% shares on the composition (data from VOO, as of Jan. 31, 2024).
| Industrial | Weights |
| Information Technology | 29.50% |
| Financials | 13.10% |
| Health Care | 12.80% |
| Consumer Discretionary | 10.30% |
| Communication Services | 8.90% |
| Industrials | 8.60% |
| Consumer Staples | 6.10% |
| Energy | 3.80% |
| Real Estate | 2.40% |
| Materials | 2.30% |
| Utilities | 2.20% |
The higher weights on non-tech industries, the more significant the effect of reducing risk. This is good for helping us to hold long.
You can beat over 80% investors by just holding it
Finally, just by holding it, you can win over 80% of the investors in the market.
Until Feb. 29, 2024, its performance is as following：
| YTD | 1-year | 3-year | 5-year | 10-year | Since inception |
| 7.03% | 30.40% | 11.84% | 14.72% | 12.66% | 14.27% |
From a long term perspective, if you hold it longer than 10 years, you can earn over 12% return each year, a really high return.
How can you achieve such performance if you trade every, not mention your effort on market research and stock analysis?
If you don’t believe that, you can see this report in 2021 to get a better understanding.
Just holding VOO, you can easily beat 80% of your rivals.
Disadvantages of this way
Of course, there are some demerits you should know:
It can be damaged by macro economic issues
Even if you invest in VOO, there’s some damage when the macro issue occurs.
For example, if there’s some shock on the monetary policy or economic concerns, all the indexes will be dropped, as people tend to avert the risk, and sell their stock to keep their money safe.
The most recent case is in 2022, when the Fed started a fierce rate hike, and caused all the indexes to have 20% to 30% drops, as following charts shows:
When you encounter this, there’s nothing you can do, just keep waiting patiently.
You may profit slower than others
For some people, especially those who want to have multiple growth on money in a short time, VOO may not be a good choice for them.
You say 10% annual is so high, but it’s far from their standard, as they tend to chase a 30% or more annual return, that’s what they want.
ARM and Nvidia are the good cases in 2023 and 2024.
If you are this kind, then please don’t choose VOO as your investment.
The process is boring
The last one is what I deeply learned, the process is really boring.
Due to its simplicity, you don’t have to do some market research and analysis, and plan strategies, all you need to do is just keep buying and holding.
You may say “That’s it? So boring!”.
Yeah, that’s indeed so boring!
But due to this boredom, we can easily invest in VOO for a very long time, and help us focus on how to increase the investable amount, and our future development.
So is it good to invest funds all in VOO?
Now, let’s talk about my real insight about this question.
I will say it’s the best idea, and you should do it.
In my portfolio, VOO accounts for over 80%, and the remaining are QQQ and some individual stocks.
The most important thing is, it gives me a lot of time to chase what I want, like refining my skills for my job, reading, and developing site jobs. I don’t need to take time to get overwhelmed by the countless news, reports and discussions.
Also, even if the giants fall, like Apple, Nvidia or Tesla in the future, VOO still can be driven by the most powerful stock at that time, no need to be afraid of its fall.
Other traits, such as relatively low fluctuation, relatively high return from the market, are reasons to support investing most of the funds in it.
So, what are you waiting for? Let’s do it!