I'm about to start dollar-cost averaging into ETFs: what weights did you use for the S&P 500 and Nasdaq?
Now that I’m in my third year at work, I’ve started thinking I should prepare for retirement. I’m planning to start dollar-cost averaging into ETFs with about 500,000 KRW a month, but when I search, opinions differ—some say S&P 500, others Nasdaq 100.
Right now I’m thinking about going roughly 70% S&P 500 / 30% Nasdaq. I’m curious how those already doing this allocate their weights. I’m also curious whether you chose currency-hedged products because of exchange rates.
For reference, this isn’t money I’ll need within 5 years—I plan to leave it invested for 15+ years. Any advice would be appreciated.
6 answers
Well, if you're in your third year and putting in 50 a month, you've made a good start, but 30% in Nasdaq seems a bit aggressive. In a downturn, if it drops -30%, a lot of people can't handle it and stop contributing. For the first 1–2 years, just putting money into the S&P 500 and getting a feel for it is also an option.
I’ve been dollar-cost averaging 100% into the S&P 500 for five years now. I went through two -20% drawdowns along the way, but since I didn’t sell and kept contributing, it all recovered in the end. If I’d mixed in some Nasdaq, the returns would’ve been better, sure. But I just didn’t trust myself to hold through those drops... In the end, just decide based on your own mental fortitude and sleep quality lol.
Agreed, I'm curious too.
If it's 70% S&P 500 / 30% Nasdaq, you're ultimately all-in on US large caps, and since more than half the holdings overlap between the two indices, it's practically no different from 100% S&P 500 lol. If you're going to include Nasdaq, I think it's better to give it a meaningful weight or leave it out entirely.
I see currency hedging a bit differently. Many people say that if you're investing for 15 years or more, currency exposure is better, but that's partly because the won's weakness in the past lasted for a long stretch. Hedged products also come with higher fees. In the end, it's a question of whether you can tolerate currency risk yourself, so there's no single right answer.
Any source for this? Everyone says “over the long term, currency exposure is better” like they’re copy-pasting it, but I’ve seen the results flip depending on how you set the backtest period.