site banner
PaperclipPerfector  1mo ago (text post)   2910 thread views

Small-Scale Question Sunday for November 16, 2025

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

2
Top Bottom Old Controversial Comments
Jump in the discussion.

No email address required.

I am an inveterate saver, and due to a dirt-poor upbringing I am probably more financially conservative than 90% of the people on this board.

That said, I am trying to change that, and I'd like to take a few grand of my savings and put them to better work.

If you had ~$3,000 right now that you could use to try and get a better than 3.8% return from, what would you do with it?

Right now I can get 4.10% from a 9 month CD. I could, in theory, invest it, but I have some concerns about the economic fundamentals of the market right now.

Any advice would be appreciated.

I would go on a fun trip, perhaps snowboarding in Hokkaido. Best way to get more comfortable with your money is spending it. Preferably on something enjoyable.

If it had to be an investment, I'd do GOOGL or ONDS. GOOGL - They're kicking ass in AI and will continue to do so for the foreseeable future. ONDS - I think they'll get a lucrative government contract soon, currently undervalued imo.

I considered buying onds recently when it fell to $5 but felt I didn't know enough about their prospects. Do you have any insights? Why might they get a government contract?

Buy VTI with all of it as soon as you can. You should own assets, not dollars, unless you think the USD is going to deflate meaningfully in your lifetime.

I have some concerns about the economic fundamentals of the market right now.

People have been saying this since the instant the major indexes broke through the dot-com highs in 2013 or so. I (and many others!) have more than tripled what I socked away during the 2016 election cycle when others who are too smart for their own good were concerned about what Trump would do to the economy.

My sister sold everything in November 2016 and she is much poorer for it.

I gave aiislove similar advice, and I really hope he took it.

Yes I decided to just trim a tiny bit of my portfolio to pump my cash a little bit (I’m fine with about 8% of my portfolio in cash earning 3.5% interest as a very safe segment of my wealth even as I see cash as a pretty bad investment generally but I can’t stomach being 100% out of cash either.)

I am still squeamish about the market and the AI bubble as well as the commercial housing market but I am humble enough not to try to time the market and at my age I can just wait out any downturn or crash that isn’t completely apocalyptic

Why do you recommend VTI over VT or VOO, if you don't mind my asking?

If a friend said he was 100% allocated to any of those three, I wouldn’t tell him he needed to switch.

Honestly, I like VTI (or VTSAX) because it was what all the smart financial people online were talking about when I became interested in personal finance. That, plus when I was shopping funds on Vanguard all that time ago, I think it may have been performing better than VOO at the time. Now I’m pretty much married to it for tax reasons and simplicity’s sake.

I became uninterested in international stocks after watching them underperform for years (I know this year it’s a different story). I will reconsider if and when VT consistently outperforms VTI.

Can you explain your post for dumb people? I started working 2 years ago, but I haven't invested anything yet. What website do you use?

VTI (Vanguard Total Stock Market ETF) is an ETF (exchange-traded fund) that covers the entirety of the US stock market. VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares) is the mutual-fund equivalent. The previous commenter is recommending that you invest exclusively in US stocks. The more standard advice is to invest in a mixture that trends from 90/10 stocks/bonds (high reward but high risk) when you're working to 70/30 bonds/stocks (low risk but low reward) when you're retired—and also 60/40 US/foreign, so four different component funds in total.

Recommending bonds is dubious advice, even for retirees. They've performed badly over the last few decades and I don't see why that would change for the better now. If a safe, low % return is the goal, why not just go for money market funds or HYSA? You'd have to know what you were doing to benefit from bonds in a period of falling yields (bonds becoming more valuable as a result).

An r/bogleheads bigwig says otherwise.

The Cash Trap

The way it might play out if you switch from a total bond fund to a cash equivalent is as follows. The economy goes into a recession, and the Fed signals and then implements significant rate cuts—for example, −1.5% over 2 years. Now you’ll find your HYSA or MMF may be suddenly yielding less than 3% while the total bond fund, thanks to its 5–6 year duration, is still yielding close to 5%. So you think you’ll switch back to the total bond fund after that happens. But what you missed is that, when the Fed cut rates, BND’s holdings became more valuable and the price will have shot up. How much? I can’t say exactly. But, as one indication, at the end of October 2023, the Fed only signaled that they were stopping rate increases—not even a signal of actual cuts—and BND’s value jumped 8% in two months.

Think about it—you are contemplating moving money from BND to an MMF to earn maybe 0.75% more yield over the course of a whole year, and when the Fed signals rate pausing BND increases in value by 8% in just 2 months. The December 12–13 Fed meeting alone caused a +1.6% daily increase in BND’s value. So the decision to chase a little more yield could cost you years’ worth of the spread you were trying to capture. As described in this post:

The cash trap describes the risk of investing in short-term bonds or cash instruments at higher rates that ultimately prove temporary. The Federal Reserve eventually cuts rates, and the high short-term yields disappear. Because the securities have short maturities, falling rates do not lead to material price appreciation. Once the securities mature, the cash flow stream withers and investors are left with a much lower return outlook. However, if investors lock in longer-term rates, unlike the short-term options, the yields do not go away. Not only does the cash flow stream stay steady, but the reduction in market rates also leads to price appreciation. The result historically has been significantly higher returns on longer-term securities, despite the lower starting yield.

The point of bonds is that over the very long run they are not full correlated with equities, and have some positive risk prima above the risk-free rate. This means one can construct a Markowitz hyperbola with a combination of equities and bonds, and you can then construct a tangency portfolio that is superior to equities alone for any given tolerance for variance.

This is all, however, extremely theoretical and not useful to someone who jut wants to get started. Doing anything reasonable suggested here is better than holding cash. VTI, VT, or VOO, 60/40 to 100/0. (All of this not investing advice, on average over the last 50-150 years, past performance is not necessarily predictive of future performance, etc, etc.)

Or if you want the absolute simplest thing you could go for the index card advice and go for the single fund Vanguard Target Retirement 20XX Fund, and they'll do the thinking and rebalancing for you for a 0.08% annual fee. It wouldn't have been the best ex post performer over the last 10 years, but someone who followed the advice would have done fine and much better than cash. I don't know if it will be the best over the next 10 years, but I would be highly suspicious of anyone who says they know better for sure ex anti.

Not OP, but I use Vanguard.com. I barely know what I'm doing or how to adult, but I stuck a bunch of money in VTSAX (which is similar to VTI but slightly different in some way that I don't really understand), and it mostly sat there doing nothing for 4 years and then suddenly shot up a bunch making it worthwhile. I think right now I have an average gain of like 12% per year or so. I should probably stick some more money in it at some point.

My brother uses Robinhood a bunch for buying and selling individual stocks, but I don't have the mental or emotional energy/motivation to spend researching and buying and selling daily. I just stuck a bunch of money in there and then forget it exists. Vanguard is great for that. I can't speak to comparisons to other websites, since I've only ever used this one, and I can't say much about quality of use for most purposes since I do stuff on it less than once a year. But I stuck money in, and 5 years later I have almost twice as much money in there. Yay.

The market is choppy and looking a bit dodgy right now. It could keep going up for another year or it's already on the way down. Nobody knows for sure but there's been signs of weakness lately.

Imo... Wait for the next (bigger) correction/bear market and then put as much money as possible in shares of great companies. There's no shame in being in 100% cash, waiting for a fresher bull market. The most important part of patience comes before buying stock, rather than after. But don't worry about hitting the exact bottom. It's impossible and foolish to try.

This is my feeling, but there's a non-zero chance Trump wakes up one morning and ditches all the tariffs, and shit moons.

Or some nerd cracks a new LLM/AI algorithm/paradigm and stuff mega-moons

Etc etc

Timing the market is RISKY

Personally, I do actually intend on not buying any more S&P ETFs for a bit, I'll probably get some more world-market equity and keep back a bit in cash

You can set alerts and buy in asap if the rocketing starts. It's ok to miss the first 10%. If something major happens it's not like the entirety of the new money will pile in during 5 minutes. It takes time, especially where institutions, who account for 80% of the money in the markets, are concerned. They buy in over the course of weeks.

Timing the market is where the real money is made. By jumping out before the worst of the bear market happens (there are signs - distribution days) you save your wallet, your confidence and your nights sleep from a lot of damage.

What is this place?

This website is a place for people who want to move past shady thinking and test their ideas in a court of people who don't all share the same biases. Our goal is to optimize for light, not heat; this is a group effort, and all commentators are asked to do their part.

The weekly Culture War threads host the most controversial topics and are the most visible aspect of The Motte. However, many other topics are appropriate here. We encourage people to post anything related to science, politics, or philosophy; if in doubt, post!

Check out The Vault for an archive of old quality posts. You are encouraged to crosspost these elsewhere.


Why are you called The Motte?

A motte is a stone keep on a raised earthwork common in early medieval fortifications. More pertinently, it's an element in a rhetorical move called a "Motte-and-Bailey", originally identified by philosopher Nicholas Shackel. It describes the tendency in discourse for people to move from a controversial but high value claim to a defensible but less exciting one upon any resistance to the former. He likens this to the medieval fortification, where a desirable land (the bailey) is abandoned when in danger for the more easily defended motte. In Shackel's words, "The Motte represents the defensible but undesired propositions to which one retreats when hard pressed."

On The Motte, always attempt to remain inside your defensible territory, even if you are not being pressed.


New post guidelines

If you're posting something that isn't related to the culture war, we encourage you to post a thread for it. A submission statement is highly appreciated, but isn't necessary for text posts or links to largely-text posts such as blogs or news articles; if we're unsure of the value of your post, we might remove it until you add a submission statement. A submission statement is required for non-text sources (videos, podcasts, images).

Culture war posts go in the culture war thread; all links must either include a submission statement or significant commentary. Bare links without those will be removed.

If in doubt, please post it!


Rules


Recommended Posts And Communities

Recommended Realtime Chats