Author Topic: Your international percentage  (Read 1492 times)

Pomegranate12

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Your international percentage
« on: April 07, 2021, 05:39:20 AM »
In your asset mix what is your international vs domestic percentage and your reasoning


MustacheAndaHalf

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Re: Your international percentage
« Reply #1 on: April 07, 2021, 06:31:19 AM »
My mix of stocks and calls causes Vanguard to give up on telling me my portfolio's international percentage.

But before the pandemic, I had an equal 50/50 split in equities.  Vanguard has a white paper showing 20% international has the most certain benefit, with additional diversification benefit up to 40%.  Besides that, I see U.S. and international trade off who wins each decade, which is another reason to favor that mix.

A counter argument is the degree that American companies trade internationally.  That's Warren Buffet's approach, that 100% U.S. stocks is enough diversification (and it was Vanguard founder John Bogle's view, too).  Over the past 20 years, it seems U.S. tech stocks in particular aren't going to be caught by European competitors anytime soon... but Chinese tech giants might.  So I also have a tilt to emerging markets.

SeattleCPA

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Re: Your international percentage
« Reply #2 on: April 07, 2021, 07:28:55 AM »
I use David Swensen's asset allocation recipe which sets developed markets to 15% and emerging markets to 10%.

Note my total allocation to equities is 70%, and the other 30% is treasuries... FWIW...

RWD

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Re: Your international percentage
« Reply #3 on: April 07, 2021, 07:34:28 AM »
I had been doing a 70/30 (US/international) but recently I've been shifting to 60/40 as that more closely matches the global market. I just use VTSAX and VTIAX (or equivalents).

SeattleCPA

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Re: Your international percentage
« Reply #4 on: April 07, 2021, 07:42:43 AM »
I had been doing a 70/30 (US/international) but recently I've been shifting to 60/40 as that more closely matches the global market. I just use VTSAX and VTIAX (or equivalents).

Swensen's allocation is roughly based on global market. E.g., 25%/70% is slightly less than 40%.

I think Bill Sharpe also says weight based on global capitalizations. FWIW...

rab-bit

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Re: Your international percentage
« Reply #5 on: April 07, 2021, 07:45:35 AM »
I am also 60/40 domestic/international since I use only Vanguard LifeStrategy and Target Retirement funds. Their choice of international allocation is based on the research summarized in the following link, which made sense to me when I read it.

https://personal.vanguard.com/pdf/ISGGEB.pdf

RWD

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Re: Your international percentage
« Reply #6 on: April 07, 2021, 07:55:27 AM »
I had been doing a 70/30 (US/international) but recently I've been shifting to 60/40 as that more closely matches the global market. I just use VTSAX and VTIAX (or equivalents).

Swensen's allocation is roughly based on global market. E.g., 25%/70% is slightly less than 40%.

I think Bill Sharpe also says weight based on global capitalizations. FWIW...

I not sure I follow. Are you saying I'm not matching the global market with my equity allocation or are you confirming that you are doing the same?

EvenSteven

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Re: Your international percentage
« Reply #7 on: April 07, 2021, 08:05:00 AM »
My equities are split 66% domestic (US) and 33% international.

Anywhere between 0% international and market weight is reasonable. It will be more helpful to your overall financial picture to optimize your savings rate than it will be to try and optimize your international allocation.

chasesfish

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Re: Your international percentage
« Reply #8 on: April 07, 2021, 08:07:32 AM »
I'm 1/8th of my portfolio in international and only want to own active managed funds in the emerging market space.

FLBiker

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Re: Your international percentage
« Reply #9 on: April 07, 2021, 08:55:38 AM »
We're 90/10 stocks and bonds.  Of that 90% stocks, we're 58% domestic, 42% international.  I don't have a strong rationale for those exact percentages, but I like the idea of being close to the actual market makeup.  I haven't checked what that actually is for a while, though.  We also do a 33% international bond in our bond holding.  And we're all low cost index.


secondcor521

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Re: Your international percentage
« Reply #10 on: April 07, 2021, 09:01:41 AM »
0% international because I believe in American exceptionalism.

I may be wrong on that, of course, but if so I am pretty sure I won't be wrong enough to where it will matter.

PDXTabs

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Re: Your international percentage
« Reply #11 on: April 07, 2021, 09:35:03 AM »
0% international because I believe in American exceptionalism.

I'm market cap weighted, because I don't believe in American exceptionalism. I hold VT and VT equivalents. Right now that makes me 57/43 US/RoW with quarterly or so rebalances, of course.

Telecaster

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Re: Your international percentage
« Reply #12 on: April 07, 2021, 09:53:32 AM »
0% international because I believe in American exceptionalism.

I may be wrong on that, of course, but if so I am pretty sure I won't be wrong enough to where it will matter.

I tend to agree, not so much that Americans are exceptional, but many overseas business philosophies aren't as shareholder focused, and profits tend to flow into the pockets of the early owners and not so much into the pockets of regular shareholders.    A few people have mentioned they want their stock portfolio to look like the world market.  Nothing wrong with that, but not every place in the world is an equally good place to do business. 

FLBiker

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Re: Your international percentage
« Reply #13 on: April 07, 2021, 09:59:56 AM »
0% international because I believe in American exceptionalism.

I may be wrong on that, of course, but if so I am pretty sure I won't be wrong enough to where it will matter.

I tend to agree, not so much that Americans are exceptional, but many overseas business philosophies aren't as shareholder focused, and profits tend to flow into the pockets of the early owners and not so much into the pockets of regular shareholders.    A few people have mentioned they want their stock portfolio to look like the world market.  Nothing wrong with that, but not every place in the world is an equally good place to do business.

It is undoubtedly true that not every place in the world is an equally good place to do business, but the reason I attempt to follow the market cap is simply that I don't know what regions will be good or bad to do business in over the next 50 or so years.

The 585

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Re: Your international percentage
« Reply #14 on: April 07, 2021, 10:38:53 AM »
Global cap, VTWAX makes it easy.

vand

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Re: Your international percentage
« Reply #15 on: April 08, 2021, 02:33:31 AM »
About 40% equities, of which

20% US
50% dev ex-US
30% EM


BicycleB

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Re: Your international percentage
« Reply #16 on: April 08, 2021, 02:58:44 PM »
Financial assets are about 70% stock, 30% bonds/cash. Stock is about 70% US, 30% international (24% developed 6% or so emerging).

Since I spend almost entirely in US, am comfortable having some local bias. Overall portfolio includes home with low leverage (equity is close to half of portfolio, LTV under 40%), renting out rooms in my home (over half my income!) and a defined-benefit pension account. The international stocks are partly a cushion against US collapse, overlapping with an assumption of steadier returns through diversification. I am 50something and not from long-lived family, so am less volatility-friendly than some Mustachians; therefore the "steadier returns" have value for me. Like the US stocks, the international stocks keep me in the game.
« Last Edit: April 08, 2021, 03:00:47 PM by BicycleB »

shinn497

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Re: Your international percentage
« Reply #17 on: April 12, 2021, 08:34:17 AM »
Betterment's is ~41 since that is the approximate proportion of the entire world.

EliteZags

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Re: Your international percentage
« Reply #18 on: April 15, 2021, 02:30:32 AM »
I had always thought something around 20% international was reasonable, but then heading into 2020 I realized how heavy in international the target date funds I was blindly pouring my retirement accounts into were and I was well over 30%.

Around then I was also hearing a lot of the "US market has plenty of international exposure on it's own" philosophy, and combined with the poor performance of international I chose the right time to aggressively start shifting my all target date funds over to VTSAX/VIGAX/Russell 3000 etc throughout the crash and pandemic, now I'm well under 10% international and have doubled my net worth since 2020

I figure diversification/hedging/reducing volatility is a big reason a lot put so much into international, but seeing how little I  panicked through last years crash and given my time horizon I feel I can stomach any volatility to come and would rather maximize potential gains taking on more risk
« Last Edit: April 15, 2021, 02:34:27 AM by EliteZags »

ChpBstrd

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Re: Your international percentage
« Reply #19 on: April 19, 2021, 08:14:14 AM »
0% international because I believe in American exceptionalism.

I'm very US-heavy as well, but the extent of my "exceptionalism" is the realization that the US has the world's reserve currency and has learned to control its monetary velocity with a precision not seen anywhere else. 2020 was the proof. The US can extract value from other countries in exchange for these tokens they create, simply because it is the world's most stable and liquid token and therefore preferred for a majority of trade. The US's trade deficit funds its budget deficit, which reduces the requirement for taxation on the budget side and reduces the pressure for high interest rates on the trade side. This virtuous cycle could have decades to go, unless the Chinese persuade people around the world to save in and trade with their new digital yuan. There are few investments that would do well in that scenario anyway.

bwall

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Re: Your international percentage
« Reply #20 on: April 19, 2021, 08:44:41 AM »
0% international because I believe in American exceptionalism.

I'm very US-heavy as well, but the extent of my "exceptionalism" is the realization that the US has the world's reserve currency and has learned to control its monetary velocity with a precision not seen anywhere else. 2020 was the proof. The US can extract value from other countries in exchange for these tokens they create, simply because it is the world's most stable and liquid token and therefore preferred for a majority of trade. The US's trade deficit funds its budget deficit, which reduces the requirement for taxation on the budget side and reduces the pressure for high interest rates on the trade side. This virtuous cycle could have decades to go, unless the Chinese persuade people around the world to save in and trade with their new digital yuan. There are few investments that would do well in that scenario anyway.

With China holding $3 trillion(?) USD in reserves, even a 1% annual inflation rate results in a $30 billion annual wealth transfer from China to the USA. Same for the EU countries and Japan. It's an enormous privilege that most Americans are oblivious of.

No wonder the Chinese are working to end the US based world order and replace it with a China based world order. In the meantime, they need to float their currency and abolish capital controls.

 

Wow, a phone plan for fifteen bucks!