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I've recently moved to Australia for the long term with my US-based company. Paid in US dollars, with housing provided. Plan is to be here indefinitely, but minimum is two years. However, assume a return stateside is probable around ten years out.
Had an IPS back in the states. 6 mo cash reserve. 75/25 stocks/bonds with stocks split at 65/35 us/international.
I've now placed 1/4 of cash reserve in AUD, and will slowly increase that ratio. 75% of my monthly expenses are in AUD. Best guess is a 50-75% probability of any emergency expenses would also be in AUD.
Any thoughts tilting towards AUD stock index to mitigate currency risk for investments? I suppose the answer lies in whether I think I'll withdraw those investments to spend in AUD or USD.
We're all nuts, but Pistachios are my favorite.
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It seems like you've thought this out well already, but a few questions:
1. When you say, "75/25 stocks/bonds with stocks split at 65/35 us/international," what are you talking about? Is that your savings, not counting cash reserve or retirement savings? Or does that include your retirement savings?
2. How safe is your job? If you were laid off, would you have better job opportunities in Australia, or in the US? How quickly would you move back in that case?
If you're planning to retire in the US, then of course there's no reason to move any retirement savings into AUD or, say, an ASX 200 fund.
Your approach with the cash reserve makes sense, although it depends on question #2.
For non-retirement, non-emergency fund dollars, it depends what you might use it for. As you said, "the answer lies in whether I think I'll withdraw those investments to spend in AUD or USD." If it's to buy a vacation home in Port Douglas, then I'm jealous.
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