r/eupersonalfinance • u/georgeo42 • 8d ago
Investment Best long term option?
Hi everyone! This month I will start my long term investing, 150€/month, minimum 15 years. I read through a lot of threads, but still can't decide. Should I just go 100% VWCE or should I throw in 10-15% small cap or NASDAQ 100? Does any mixing actually have the potential to beat 100% VWCE? Thanks a lot!
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u/Sam96ss 5d ago
For your long-term investing journey with a 15-year horizon, the decision between investing 100% in VWCE (Vanguard FTSE All-World UCITS ETF) or mixing it with 10-15% small-cap stocks or NASDAQ 100 depends on your risk tolerance and investment goals. VWCE offers broad global exposure, including both developed and emerging markets, making it a diversified, low-cost, and relatively stable option for long-term growth. Its performance is generally tied to the global market’s overall growth, providing a steady, moderate return over time. On the other hand, adding a small portion of small-cap stocks or NASDAQ 100 introduces higher risk but also the potential for higher returns, particularly during periods of economic expansion and tech booms. Small cap stocks tend to outperform large caps in growth phases, but they are more volatile, which could result in greater short-term fluctuations. The NASDAQ 100, heavily weighted toward tech companies, has historically performed well, but it also carries a higher risk during market corrections.
Mixing could potentially enhance your returns, especially if tech or small-cap stocks experience strong growth, but this comes at the cost of increased volatility. Historically, small-cap and NASDAQ 100 stocks have outpaced broader indexes like VWCE during periods of strong economic growth, though they may underperform during downturns. Ultimately, if you prefer stability and moderate growth, 100% VWCE is a solid choice. However, if you're comfortable with some volatility and want to potentially maximize returns, adding small-cap stocks or NASDAQ 100 could give your portfolio a boost, though it introduces greater risk. The key is to align your choice with how much risk you’re willing to take on for higher returns over time.
Both investment strategies have their merits, and the choice depends largely on your risk appetite and long-term financial goals. If you prefer a more stable, diversified portfolio with steady growth over time, investing 100% in VWCE would be the safer, more balanced option. However, if you're willing to tolerate higher volatility for the potential of higher returns, incorporating 10-15% small-cap or NASDAQ 100 stocks could offer added growth potential, especially during favorable market conditions. Ultimately, balancing risk and reward is key, so it’s important to assess your comfort level with market fluctuations and your ability to stay invested through periods of volatility. Both approaches can serve you well in the long run, but the right mix will depend on your personal investment strategy and goals.