Author Topic: Allocation Question  (Read 1455 times)

FIRE-Man

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Allocation Question
« on: March 17, 2016, 02:37:49 PM »
MMM Community,

I'm sure to some extent this has been proposed before, but is a simple allocation of 70% VTSAX, and 30% VBTLX with re-balancing 1 percent a year a sufficient way forward ? I realize I'm not invested internationally, but is this critical to the success of a portfolio ? Im at least 10 years from retirement, if this factors into the equation.

Trip

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Re: Allocation Question
« Reply #1 on: March 17, 2016, 03:05:46 PM »
 I would say that you're probably in the right ballpark as you are weighted more towards stucks, but it is a little conservative for my personal taste. Only you know the right mix for you though.

Currently I am 100% in stocks. If you are willing to ride the waves, stocks tend to do well in a 10 year period. However, if you aren't willing to ride the waves, then shift further towards bonds. As John Bogle said, “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.”

thedayisbrave

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Re: Allocation Question
« Reply #2 on: March 17, 2016, 05:47:11 PM »
John Bogle doesn't believe in international diversification.  You do have some international exposure in VTSAX from multinationals that generate a large portion of earnings from outside of the US.

I personally still allocate 30% to international. 

MustacheAndaHalf

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Re: Allocation Question
« Reply #3 on: March 18, 2016, 12:49:10 AM »
In John Bogle's recent interview (March 2016), he mentioned US multi-nationals as one reason to stick with just US companies.  But he also pointed to the structure of the US markets, regulations, etc.  He believes the US has a better structure than emerging markets - where you might not get your money back.  While I diversify internationally, I think John Bogle makes a much stronger case when he's allowed to present his argument in an interview format.

Bogle also pointed out that in (developed) international markets, 48% of your money goes to 3 countries: Japan(22%), UK(18%), and France(8%).
https://personal.vanguard.com/us/funds/snapshot?FundId=0936&FundIntExt=INT#tab=2

While I believe in international investing, I think if you go with 0% international you should have the confidence to stick out that decision.  Hopefully some of the reasons John Bogle lists could help you do that.