I don't think VTSAX is crazy. Here is my question... why add so much in international stock funds? Seems that the returns for the last 10 years have been pretty poor, whereas the US second largest financial meltdown seemed to happens 8-9 years ago- and the US equity returns far outpace the international result.
I understand one might say "Well what if the US has a huge collapse and you lose everything at 70..." while this may be true - if it is indeed that bad for a 80-90% drop in the Stock market- we have larger issues. And if that if your fear- why not invest in CDs or Gold or bullets. What makes the international stock market so different?
You also have to consider the opportunity cost in loss of revenue by putting 50% of your portfolio in international that has grew 2% compounded over 10 years. Also to take into consideration- most all of the S&P 500 companies are now global companies- in that global current events can affect them, thus there is some international exposure there.
Just curious as that is my stand of US Equity Index funds... thoughts?
Pretty common topic, you should search for it. A few reasons:
Adding about 30% non-US has historically been the sweet spot to minimize volatility in an all-stock retirement fund. Minimizing volatility is important when you need to regularly sell stocks to fund retirement, as volatility can make a portfolio decline even in a generally rising market if it is high enough and you are selling. It is less important or even beneficial when you are regularly buying.
The US has been doing comparitively well the last 10 and even 30 years, but there have been times in the past and there will be times in the future when the US underperformed other countries for decades. People like to imagine 90% crashes for some reason, but I see extra-US stocks as being useful for a decade period where for example the US stock market gains only 3% compounded annually, but an international index gains 5%. That could really help keep a retiree afloat.
It reduces deep risk, the sort that does not appear in spreadsheets of the recent past. This doesn't have to be something apocalyptic, perhaps the US stupidly engages in trade and currency wars for a while and finds itself stagnating and not having the international trade presence it does now. Anything is possible, and gold and CD's might not be bad to have around either in small amounts.
Oh right.... I expect the US to continue to do very well, and my family, house, and job are here. As long as the US is doing well I will be ok too. But there is always the possibility things won't be like I expect. I see it as being similar to the guideline to not buy stock from the company you work in, because you don't want to lose your job and your money at the same time if it doesn't succeed. I am far more invested in the US than my measly few thousand dollars in index funds, so it is good to diversify.