Why not just VOO all the time?

At 57 I am getting closer to retirement. And I start to think about what I would do with my investments during my draw-down years, how would I change things up? The Bogleheads 3-fund portfolio peaks my interest, as does the target date funds like VTTHX, or even just a balanced fund. Keep things simple. But when I do backtests I always ask myself “why not just VOO, 100%, all the time?” When I backtest over the past 10 years it seems that none of those other funds gives me any protection in terms of max drawdown, but have significant underperformance in the good times. I don’t get it. Am I missing something?

Of those I could make a case for VTV just based on the short duration of that big drawdown (from Jan-Mar 2020, recovered by Dec). And VTTHX was the worst in that regard (from Jan-Sep 2022, recovered by Feb 2024!). The VOO had recovered 3 months faster than that.

My own IRA? It peaked in Nov 2021, hit a low in June of 2022 at 38% loss, and just fully recovered this month (7 months down, and another 2 years to recover). Not doing this in my retirement years!

Portfolio construction is a rabbit hole you can pursue as far as you like, but I believe there is a lot to be said for simplicity. I believe the Bogleheads 3 Fund is too conservative. International stocks traditionally aren’t as good as US stocks, and most big US companies are international anyway.

Bonds can lower volatility and improve returns, but not as much as you might expect. In cFIREsim, a traditional 75/25% portfolio survives 30 years 96% of the time. 90/10% survives 96.8%, and 100% stocks survives 95% of the time, and has the highest average ending value.

I don’t think you need a target date fund. You can create your own with trivial effort and lower costs.

I think you’d be fine with 90% VOO and 10% BND and rebalance once a year or so.

Edit: Periods were 30 years, not 20 years.


The S&P has beaten every major asset allocation strategy for the last 10 years. Megacap tech rules.
Backtests of an asset allocation strategy based on, say, above 10month moving averages, prevent losing huge amounts in slowly developing bear markets and re-enters well if there are reasonably slow recoveries. There haven’t been any of those for 10+ years - they’ve been elevator down followed by V bottoms, so those strategies don’t lose much less than VOO and lose out to the snapback bottoms. Hence the significant VOO outperformance.
(Edit: a 10 year backtest at Portfoliovisualizer of a typical moving average strategy against a 60/40 fund e.g. VBINX cuts the max drawdown in half and comes closer to the same CAGR, losing by 1+% on annual average).

One has to accept getting outperformed by said S&P500 as the price for avoiding a loss of 38% in 6 months which would crush a retirement plan - turning a 4% withdrawal rate into a 6.4% withdrawal rate, no longer close to “safe”. (FWIW I only lost @12% in 22 but haven’t quite reached par due to staying safe).

There are income producing funds out there that will almost self-fund the SWR with an allocation of 40-50%. Then risk of running out of money - the real retirement risk - is reduced.



I think you hit the main problem, that the last 10 years (even longer?) has been very unusual in terms of asset class performance. But regarding the above, this is what I see, the drawdown on VBINX is close to VOO but the CAGR is very different. I have a feeling a 20 or 30 year backtest would give results that you posted.

10 years is not a sufficient backtest for anything useful. Heck there are even those who argue that 110 years (like the early SWR* calculations used) isn’t sufficient.

But you probably will experience similar things in your retirement years. Maybe not quite a 38% drawdown, but almost surely a 25% one. You can’t prevent it unless your stock allocation is too low. That’s because you are young, let’s say you retire at age 60, that means that you likely have at least 30 years of retirement, and have to plan for 40 (it does depend a little on family longevity, of course). The key is to not panic during the inevitable drawdowns. History has shown that they usually only last about 2 years, and maximum 10-12 years. So if your calculations are correct, you will be fine even with a very long duration drawdown.

Keep in mind, the SWR statement is NOT “your money will last 30 years when you withdraw an inflation-adjusted 4%”. The correct SWR statement is “your money will last 30 years when you withdraw an inflation-adjusted 4% IF WE DON’T EXPERIENCE A SEQUENCE OF EVENTS WORSE THAN beginning in 1928 (“Great Depression”) or beginning in 1966 (“Great Stagflation”)”

* SWR = Safe Withdrawal Rate


It is not just about returns, it is about volatility too. What if you could get S&P 500 returns but with less volatility? Check out the link on QTAA. I used to do something very similar.

Like another said, you can find many rabbit holes to go down.

According to the 4% rule, the 4% WR based on the initial portfolio balance (adjusted for inflation), not the current balance. That WR would have survived any set of market conditions in the past. So unless a 38% loss in six months is worse than the past, the portfolio should survive.

One artifact of the 4% rule is that at the end of most 30 year periods the final portfolio value is many multiples of the initial portfolio value. There are only a small number of cases where the portfolio is trending towards zero at the end of the period.

The thing that kills portfolios is a poor sequence of returns early in the period. The portfolio trajectory is baked in by about year 7-10. You’ll know if it is going to the moon or to zero by then. For that reason, some analysts recommend a “rising equity glidepath” which basically instead of strict rebalancing, you spend down the bond portion of your portfolio early in the period, which leaves you with a high percentage of equities in the later years.


Just my opinion, 100% of any single idea or fund, would be too much for me. If I get really bored with investing, maybe I go 60-70% with one idea. But, I can’t see it ever being 80 -100%

QTAA: ^ this. Been doing it for over 10 years, now doing a customized “aggressive 4” version including dual momentum with total equity allocation capped at 50%. Why? going to try to retire early Q1 of next year. Why doing it? Bored ;-), needed something easier to do after finally terminating use of small cap MI screens. Results: I’ve underperformed VBINX by a point+ CAGR with much less downside - but even VBINX stays at a full equity allocation in bear markets so it enjoys those snapback V bottoms I tend to miss (except in '20, thanks Saul).

Here’s what I see as the big problem with the 4% rule: While it “only” barely failed a mid 1960s retirement, it “actually” failed miserably. Yeah, the 65 year old 1965 retiree did financially survive to 1995 if they actually lived to age 95. But half way through that, their portfolio, in real terms, was less than half of the starting value. They had no way of knowing that all they had to do was eat Wheaties and survive and it would be ok. No one would have continued on that path after 15 years of grinding devastation, year after year. My own thinking is that the present looks something like that. Huge demand for new spending (like LBJ’s “guns and butter”), huge snowballing debt and deficits and no will to fix the problem. It all has to end in some combination of inflation, depression, taxation and misery. I don’t think there is any solution to the problem…no place to hide. But for someone planning for a 30 year life expectancy, I think 4% is having your head in the sand.

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So, that begs the question: what “% rule” (if any) would you use? How would/will/do you take your distributions?



So you think it’ll be worse than The Great Depression and worse than The Great Stagflation. That’s a valid opinion to hold, and many people agree with it. However you still need to decide HOW BAD you think it’ll be so you can put a plan in motion.

I view it differently. If the next calamity occurs, and it may not, but if it does, it is more than likely that everything changes, and the very system gets damaged irreparably. So there’s no hiding from that. I mean, you have people who are creating bunkers and survival nests and arming themselves, but when the SHTF, truly when it all goes to he11, someone with bigger guns is going to kill you and take your resources, because when it comes to bare survival, it is the strongest and cleverest that survive, not necessarily the ones who had the better plans when things were still good or at least tolerable. So if there’s no hiding from that kind of calamity, may as well continue on the “normal path” assuming that any future calamities will be similar in magnitude to previous ones.

Maybe the short way of explaining the point is like this - “When the servers holding all your money are vaporized in an instant, who’s better off, the person withdrawing 1% or the person withdrawing 4%?”


To MarkR and MateroPete (reply to both of the most recent posts):

I actually agree with pretty much all of that. I guess I’m just in the “2.5 to 3 percent is the new 4 percent” camp.

For me, 4% is just the number that I use/d in order to evaluate, and run ‘what if’ models.
4% is the STARTING POINT for comparing, evaluating, and making plans.

We’ve (on this forum) had discussions in the past, about your question. IIRC, the answer I appreciated most was to ‘I do me, and you do you’. In other words, for a person (FAMILY) who is willing to run the ‘risk’ that 4% will be a ‘white knuckle’ ride for a few years… then go ahead.
It comes down to risk tolerance.

But, for someone who wants a ‘protective cushion’, then, wait till s/he will have enough ‘nest egg’ that 2.5% or 3% will supply all normal living needs/wants.
Using 2.5 or 3% is CERTAINLY A VALID GOAL. You do you!
You (and your SO, n other dependents) gotta sleep at night.
If it stresses you, then be more conservative.

4% is not THE ABSOLUTE… it’s a benchmark from which other decisions are made.



Agreed. And there is probably no one who doesn’t re-evaluate from time to time, regardless of initial withdrawal rate.

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Chart of SPY since inception 1/4/99 vs International stocks:

It took about 15 years for SPY to significantly beat international.

Could it be prudent to have some international stocks, just in case?

Sure, not the same growth as US, but not the same valuation either. They’re much cheaper on PE and PB. Plus, you get to own a piece of some pretty important global companies.

Not sure. We have some via DW’s IRAs - all in a target date fund - and some Avantis value ETFs I have.


No real argument from me. S&P500 is tech dominated, but international has a good shot of industrial and pharma, so you get diversification that way too.

For me, the under performance is to great to justify the advantages. Like I say, this is a rabbit hole. None of us will know the correct portfolio construction until 30 years from now.

I’ve never heard of anyone who does straight 4% rule. Everyone seems to have some sort of backup. But it is a solid starting point for planning purposes.


100% VOO all the time is aggressive, perhaps too aggressive unless you will have a company pension and dual household SS in the future. Even then, you have to feel comfortable with the balance of your portfolio enough to hold and not panic during the next swoon. Plenty of other factors regarding longevity, career length, retirement age, household expenses, single or dual SS income, pension, mortgage paid off or not, plans in retirement, charity, as well as current portfolio balance to meet all of your needs.

The target retirement fund you quote (the 2035) is the Boglehead Three Fund Portfolio of Total US, Total international, and Total US Bond with a dash of international bond. It currently is 47% total US, 27.7% total international, 21.2% total US bond, and 9.1% total international bond. Personally, I wouldn’t bother mirroring international bonds, but would use I Bonds or TIPS to make up that portion along with the total US bond fund.

Certainly the simplicity of the three fund portfolio has its merits, ease of monitoring, and captures the lion’s share of what the market provides regarding returns. By constructing it yourself compared to the target date fund, you can save a little bit on the expense ratio. Total US and S&P 500 more or less mirror each other, so for your US stock coverage one should consider that either will do. We prefer to use either an extended market fund, or a combo of mid-cap and small-cap funds with the S&P 500 in our retirement plans that don’t offer the total US fund to mirror its make up.

Regarding any changes to the investments within your accounts, you would be fine within your tax deferred accounts, but I wouldn’t advise selling and taking the hit in your taxable accounts if restructuring your portfolio. Best to do it in the tax deferred (and Roth) accounts, and with new contributions within any taxable accounts.

How many more years do you plan on working? Age 57 gives you a good 5-10 years of additional contributions to top off all of your accounts and get things adjusted to your liking.


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I am going to say that simplicity is something I will want in retirement. I mean, I think that will be the case right now, and I’m not expecting to change my mind when the time comes. I do need to figure out what to do with taxable account balances to minimize taxes, as you stated.

How many years to keep working? Tough call. 2 years minimum with retirement possible based on how my RSU’s go. More likely mid 60s though.

At some point around that time I will probably get a one-time session with a professional and create a plan. I will need to worry about taxable versus non-taxable funds and how to minimize RMDs in the very least.

Something to think about.

The 4% rule is a starting point. A portfolio with enough money never runs out if well managed.

This is quite obvious and is stated simply to keep us focused on the right thing.

If your requirements are well met with a 4% annual distribution (1% per quarter) and you have some room to flex spending forward or backward along this trend, then you don’t need to worry about a 38% to 50% drawdown…


Think about a 1% withdrawal every quarter. No more, no less.

If you have a lower balance and you can flex spending back by 90 days, you don’t even NEED to take the 1% draw.

Similarly, if you have flexibility to defer that draw for a year, then you only really need to take 3% for the year (or maybe 2.75%) if you are flexible.

If you think about 4% as a COMFORTABLE target including all manner of discretionary and nice to have budget items covered, simply tightening your belt for a couple quarters could afford you sufficient room to ford any deeper draw downs.

You aren’t withdrawing 4% in a static period, you are taking a draw WHEN you need it.

If your balance is down 38%, you aren’t required to withdraw at that moment, are you?

Along these lines, the short term cash and equivalents that you are likely to be drawing from are not floating along with the longer term investments, so they are not impacted by excessive momentary draw downs.

Let’s assume you are somewhat flexible with your spending above the mandatory minimum monthly and annual payments you must make to eat, retain housing, transportation, insurance, etc.

Also, lets assume that the total of those mandatory payments is comfortably below the 4% that your retirement nut can provide.

Further, let’s assume that you have roughly 5% of your funds in cash, short term equivalents and otherwise liquid like funds.

Now, let’s say on the day before you need to take your next draw, the market falls by 50% to become the largest such fall on record - ever.

Your 5% funds are now worth 10% of your total retirement nut.
Your mandatory expenses are now closer to 5% of your total balance (being more like 2.5% in good times)

Do you run out and withdraw all 5% at this very moment or do you pay out expenses as they come due over the course of 12 months?

In that 12 month period, does the market recover or continue to have PERMANENTLY lost that value?

Also in that period, do you choose to go without the nice to have additional funds or defer discretionary expenditures until the market prices your assets more closely to where you are comfortable selling an allocation?

In this disaster scenario, the 4% withdrawer is still covered for that 12 month period should they withdraw the total of their mandatory and elective expenditures. And they can do with without harming the larger pool of investments in the account.
(in fact, that person can make it 15 months with no issues if there is ANY flexibility)

With a modicum of sense and some concept of what is mandatory, that person can make it almost 2 years at the minimum draw before the non-cash portion of the portfolio is even drawn upon by simply drawing from their cash.

If the portfolio drawdown is permanent, there is no recourse except to reset the 4% budgetary number to the new reality. (effectively 2% of the prior balance)

If the draw down is anything like what we have seen in the last 50 years, it would return to somewhat higher levels over time, supporting incremental withdrawals of .75% per quarter until either the portfolio fully recovers or until you have a chance to realign your lifestyle with the new reality.

In this way, no catastrophic failure would occur in any sort of short time frame. (You can see the train coming and plan accordingly).

Depending on how dire the scenario becomes, any new standard of living commensurate with the new reality of the portfolio’s potential would be realigned with current circumstance and forecasts.

If everything resolves to the positive, then you have survived and are pleasantly surprised.

If conditions persist, you are still far from being a beggar on the street.

— If your portfolio had enough funds at the start–

There is no scenario that will save you from the poor house if a portfolio of insufficient size is your starting point (or retirement day +1)