I have ~$400k invested in SPY and VFIAX tracking the S&P 500, which is essentially my entire net worth. How dumb is it to have my money invested like this, noting that I plan to hold over a 35 year timeline? I'm single, 23, and in my second year as an IB analyst in NYC. Save about $1k a month and just add it to my Vanguard.
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We kind of need to know more information - how old are you? What's your yearly income and expenses? What's your living/family situation like?
If you dont need the liquidity, it's the right way to go
If you plan on working at a PE/HF where they allow employees to buy in, then I wouldn't keep anything in the S&P500, at all.
you would be better off owning a basket of REITs that pay dividends above 6-8%
It's "technically" dumb because you don't benefit from diversification by owning 500 stocks. Buying SPY or something like it will generate beta returns of large cap US equity, but you could get that with just 15-30 stocks (the marginal benefit of owning the 100th or 500th stock is close to 0). I recommend finding some uncorrelated assets and using a risk parity optimization approach to set your weights. Your goal should be to generate returns from uncorrelated cash flows (to benefit from diversification) which will give you a better payoff over a 30+ year period. Equity risk premia (actually any assets risk premia) fluctuates decade-by-decade and can be negative for stretches of time (US equities had negative risk premia 3 times over the past 100 years). Note: this is really more of a framework than real logistical advice. You could probably ask someone on the AM side of your firm if they have a risk parity solution and then just invest in that (assuming they are good at executing RP).
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