The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: BethMI on December 30, 2019, 01:36:20 PM
-
I'm really starting to get my Vanguard account beefed up.
Currently, I have everything in VTI.
I see that Vanguard recommends having VTI, VXUS, BND and BNDX to cover all bases....is this a good idea or should I stick to just the VTI?
Thanks!!
-
For taxable accounts: just VTI
For retirement accounts: VTI and BND in the asset allocation that you’ve decided you’re comfortable with. For me, my total asset allocation is 90% stock and 10% bond, but for tax optimization I don’t hold my bonds in taxable accounts, so taxable is all VTI and retirement accounts have more than 10% BND to even it out.
I don’t invest in the VXUS or BNDX. For stocks, I feel like I get plenty of international exposure with just buying the US market since companies do business globally. And by not explicitly purchasing on international markets, I feel better protected since the US markets have more regulation in place to protect against companies cooking the books and other things that can cause massive price crashes. As for bonds, I’m buying bonds to reduce my total portfolio’s exposure to risk, so I don’t buy international bonds because I don’t feel that they’re less risky than US bonds.
-
There's a lot of "target date" funds on the market - and all of them allocate to international. So that's what experts do with billions of dollars invested for people's retirement. If they mess it up, they can be sued. So that's stronger advice than anything you'll see.
There's also Vanguard's white paper on the topic, suggesting 20-40% international. The highest chance of a diversification benefit occurs up to 20%. Up to 40%, you may need more patience.
https://www.vanguard.com/pdf/ISGGEB.pdf
Most people agree with diversifying to international - an ETF like VXUS.
-
On the Vanguard front, I have VTI, VOO, and VGT.
I wonder why VTI has a 4-star rating at Morningstar and VOO has a 5-star rating?