Over 40: Is VTI better than VOO in 2027?

So, if you're over 40 years old and you're a beginner investor and you're trying to figure out is VOO or VTI better for you, then this is going to be the perfect video. So, if you take a look at my screen here, it does a little comparison between VOO and VTI. VOO is basically a Vanguard index fund, an ETF, an exchange-traded fund that tracks the S&P 500 or the Standards & Poor's 500, meaning that it tracks the top 500 companies in the United States like Nvidia Amazon Google Microsoft and so on and so forth. And VTI it not just only tracks the top 500 companies, it tracks around like 3,500 companies all at once. So, essentially, if you were to look at this diagram right here, when you invest in VTI, you are essentially investing in VOO because VOO takes maybe around like 80, sometimes 90% of VTI. The other 10 to 20% are going to be invested in these mid-caps, small-caps, micro-caps stocks, or maybe these smaller companies. But, essentially, if you want to invest in more companies, maybe like 3,000 something companies, then yeah, VTI is going to be better for you. But, if you want to just focus on these larger cap companies, then VOO is going to be a better for you. But, the next natural question is, well, what about performance? Like, what usually performs better? So, if you go over to Yahoo Finance and you type in the ticker symbol VOO, you can take a look at the one-year chart, the five-year chart, and an all, and you can see that VOO has been just going up over the last several several decades. Similarly, of course, if you look at VTI, if you take a look at the one-year chart, the five-year chart, and all, it's essentially the very similar graph. However, if you were to take a look at the actual performance, so if I go to the left on Yahoo Finance for VOO, you can see that over the last year or so, the ETF has performed around what, 19.5% over the last 3 years on average, it's around 19% per year. Last 5 years around 12.8% 13% and then the last 10 years or so the average has been around 15%. However, if we take a look at VTI and do the same thing click on performance go to the bottom right here the last 1 year it's around 19% 3 years 18% uh 5 years 11.75% and then 10 years around 14.53%. So it's a couple percentage points lower. If we go back to the graph because some of you you are more visual learners. For VOO over the last 5 years it has gone up around 74.4%. However, if you go to VTI the last 5 years has given us around 66.9 around 67%. So why does this actually happen? Like why does VOO usually outperform VTI? Well, it really just comes down to the actual companies the weight of uh what these funds actually hold. So if you go back to VOO and you click on holdings you can see that okay you have companies like Nvidia that make up 7.5% Apple around 6.5% Microsoft 4.29% Amazon around 3.6% and then Alphabet Google around 3.2%. If we compare this to say VTI do the same thing and click on holdings you can see that okay the top companies are essentially in the same exact order but the weight the percentage of how much these companies make up these funds is slightly less maybe just down by 1 percent or so. So Nvidia is around 6.3% Apple 5.8% Microsoft 3.8% Amazon 3.5% and Alphabet Google around run with VOO because institutions like these larger companies more of course they're going to put more of their capital towards these Nvidia's and Apple's Apple and Microsoft of the worlds and that's going to generally outperform the rest of these smaller companies, the small cap, mid cap, micro cap stocks in VTI. However, one small thing to note is that generally whenever there is a pullback, some sort of correction, typically VTI does perform slightly better than VOO. It's because these institutions, whenever there is some sort of market scare, they will sell off some of their higher risk assets like Nvidia, Microsoft, Amazon, and they won't really sell off these micro, mid cap stocks. They would just kind of keep the positions fairly the same. They might sell a couple of them, but you know, still keep the percentage about the same. But if you were to take a look at the long-term perspective, generally like what I said before, VOO will typically outperform VTI. So going back, well which one is best for you? Very similar to what I said, VOO is generally for me, in my opinion, I would pick VOO or an S&P 500 fund. I don't actually invest in VOO myself. I invest in SPYM, which is pretty much the same thing as VOO. The only difference is with VOO and VTI, yeah, their expense ratio is what, 0.03%? Meaning that you only pay 3 cents for every $100 invested. SPYM tracks the S&P 500, does the same thing, but the expense ratio is 0.02%. So it's slightly cheaper, and it's also cheaper per share. VOO is around $714 per share at the time of this recording, and if I were to look up SPYM, each share is around $91.92. So if you're someone who wants to invest more heavily into these larger companies, then VOO is going to be your choice. If you want to also diversify across maybe a couple of thousand companies more, these smaller companies, uh just to kind of balance out your portfolio, then yeah, you can also invest in VTI. But one thing to recognize is that again, because these two funds are very similar, there is going to be a lot of overlap if you were to invest in both of them at once. So, something that you can do by yourself is you can go to this website called etfrc.com. When you go there, just click on ETF tools on the left and click on fund overlap. When you do that, you can type in two funds that you're investing in right now to see how much of an overlap there is. So, I'll type in VOO for fund one and VTI for fund two. And then you can see, scroll down, you can see, okay, 87% of these funds have an overlap. So, a lot of times I meet a lot of people where they invest in pretty much the same funds over and over again. They have something like SPYM, SPY, VOO, and they basically invest in the same exact companies and they just don't recognize that they're investing in the same thing. They think in their minds that they're diversifying themselves with all of these ETFs, these 10, 15, 20 ETFs. But in reality, they're just overcomplicating their portfolio. Now, of course, if you're a complete beginner, you're over 40, you're trying to diversify your portfolio, I actually put together this spreadsheet sheet here. It's part of my $1 million investing roadmap where you can do a fund comparison of say the S&P 500, there's a SPY, IVV, SPYM. Again, I invest in SPYM, but you can invest in whatever you're comfortable with. There's also a tech and growth fund comparison like QQQ, QQQM, VUG, VGT. I personally invest in QQQM. And if you're someone who maybe you want to focus more on that dividend income growth, then you can invest in something like SCHD, VYMI, SPYD, and do a comparison here to see which one is best for you. And I already know someone's going to ask, "Steve, I am a complete beginner. I don't know how to get started with investing, how to open up my accounts." Then it's okay, I actually put together this guide right here step-by-step, even took all these screenshots and put these little red rectangles here to show you what to click on and how to open up your accounts. I spent a lot of time on doing this, so I really hope you find this helpful. I even go over the different accounts that you can open up, the pros and cons, differences here like what's the difference between a Roth IRA and a traditional IRA or Roth IRA and a taxable brokerage account. So, if you're interested in any of my free resources here, they're in my bio or they should be in the description down below. It's part of the $1 million investing road map. You can just put in your information here and I can send it to you right away. And of course, if you're over 40 or trying to catch up with investing, you have a larger sum of money, maybe over 50 or 100 or 200 thousand dollars that you want to put to work right now, you can actually get invited to my 5-day investing challenge within the $1 million investing road map. And if you still need help even with all the videos, all of my resources that I gave you, all the calculators, and you still want to talk to either me or one of my team members, and you want to build a personalized plan, uh you can book a call with us and we can kind of point you in the right direction and potentially invite you to uh our one-on-one coaching program if this is something that you're interested in. All right, I hope this video helps. Please let me know if you have any other questions and I will see you in the next video.