Why I move to VOO from QQQ? Here are the strong 3 reasons

Previously, I shared my thoughts about the funds allocation between VOO and QQQ, and in the last, I shared my portfolio of 80% and 20% on them.

But you may want to know what are the stories behind this arrangement, except the 3 aspects.

So here, I will explain more about my arrangement in more detail, including the 3 reasons behind it, and how I made such a change. Finally, I will share if I will continue to put more focus on VOO.

Now let’s start it!

3 Reasons to move from QQQ to VOO

Here’s the 3 reasons why I move to VOO:

My tolerance of risk is not so high as I through

Having awareness that I don’t have high tolerance is the first step to switch.

I remember when I started my investment, I put all of my money on QQQ, as its biggest attraction was its high returns, when it was in a bull market.

And that was the only consideration at that time, and the start of the miserables.

After undergoing several major corrections, especially since the onset of the COVID-19 pandemic in 2020, the market has experienced almost daily fluctuations of over 5%, with some days seeing fluctuations of over 20%. These extreme fluctuations can truly be heart-stopping.

Don’t even mention me, even the few stock market experts I know are overwhelmed by such volatility.

I realized that I can’t actually accept this level of volatility after these price turmoil, and decided to slowly convert my holdings to VOO once the stock price rebounds.

In the long run, it has not earned slower than QQQ.

After comparing VOO and QQQ, I found that VOO actually doesn’t earn much slower than QQQ.

If we only look at the performance of the past five and ten years, in terms of absolute value, it is clear that VOO has lost to QQQ (both are as of Feb. 29, 2024):

5 years10 years

However, from another perspective, if an ETF can contribute an average annual return of more than 12%, and it is held for a long time, then the accumulated return is actually quite considerable.

If we calculate based on 11%, if you buy it today and don’t touch it, its value will expand 2.84 times in 10 years, 8.06 times in 20 years, 22.89 times in 30 years, and 65 times in 40 years.

This is just calculating a single purchase, and it doesn’t even include the part of the future continuous purchase!

I have carefully calculated that if my assets can grow at this rate, and I continue to buy and hold, it is actually enough for me, and I don’t need to go too far to pursue higher performance.

However, please note that the current performance does not guarantee that it will continue in the future. It may be higher or lower.

Want to make your life easier

Wanting to make my life easier was also a key factor in my decision to switch to VOO.

As I mentioned before, my risk tolerance is not as high as I thought, so any major fluctuations can easily disrupt my life rhythm.

For example, whenever there is a big drop, I can’t eat lunch properly, I can’t concentrate on my work in the afternoon, and from the time I go home at night until I go to bed, I’m still worried about the trend of the US stock market…and so on. My life is almost tied to the stock price.

Of course, you may ask, is it easier after switching to VOO?

I have to say that after switching to VOO, my life is really easier, because I don’t have to be disturbed by such big fluctuations all the time, and I also know very well what VOO’s characteristics are.

How did I transfer from QQQ to VOO?

To be honest, there is an element of luck involved in transferring money to VOO.

After falling for two consecutive months in early 2020, the stock market fortunately started to recover. When QQQ’s total profit and loss reached a certain level, I sold most of it and transferred all of it to VOO, and I have held it until today.

Of course, I was just lucky enough to be able to wait for the recovery, and the VOO I bought has also risen a lot.

If I hadn’t encountered the subsequent large-scale recovery, I could only leave QQQ alone, and then invest all the subsequent funds in VOO until QQQ’s total profit and loss broke even.

Will I continue focusing more on VOO?

I have to say, yes.

After re-evaluating myself, I found that VOO is still the most suitable investment direction for me. It does not require taking too much risk, and it can also earn the average market return. In the long run, the speed of asset accumulation is actually not slower than QQQ, as long as you continue to invest and hold.

In the future, the regular fixed-amount investment will still be allocated to VOO and QQQ in a ratio of 80%/20%. Even if my salary is adjusted and the amount of money I can invest increases, it will still be the same.

As long as I am familiar enough with VOO, it will be the best way for me to accumulate assets.

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