Total Stock Market Fund or Total International Fund?

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Total Stock Market Fund or Total International Fund?

Postby BrianJone » Wed Apr 03, 2013 6:21 pm

Starting my Roth IRA for the first time, my funds are limited. I only have enough to invest of one of these two funds, the Vanguard Total Stock Market Index Fund or Vanguard Total International Stock Index Fund. I already have savings bonds so i want my initial investment in a Roth to be focused all on stocks. If anyone knows of an option to get both these index funds in the same place on Vanguard, please let me know. And if not, which of the two do you recommend for me? Keep in mind this will only be imbalanced for a year as I will contribute to my Roth next year and in the future also. So where do I start and which may be the better option for the next few quarters?
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Re: Total Stock Market Fund or Total International Fund?

Postby boggler » Wed Apr 03, 2013 6:25 pm

BrianJone wrote:Starting my Roth IRA for the first time, my funds are limited. I only have enough to invest of one of these two funds, the Vanguard Total Stock Market Index Fund or Vanguard Total International Stock Index Fund. I already have savings bonds so i want my initial investment in a Roth to be focused all on stocks. If anyone knows of an option to get both these index funds in the same place on Vanguard, please let me know. And if not, which of the two do you recommend for me? Keep in mind this will only be imbalanced for a year as I will contribute to my Roth next year and in the future also. So where do I start and which may be the better option for the next few quarters?


I'd suggest VTWSX or the ETF version (VT). The ETF version has lower fees. It's a market-cap-weighted combination of the two you mentioned.
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Re: Total Stock Market Fund or Total International Fund?

Postby Peter Foley » Wed Apr 03, 2013 6:36 pm

I would not worry about being unbalanced the first few years when you are starting out. It will be easy to rebalance with future contributions. I personally would start with international and then add US - only because US has done so well compared to international over the past 3 months. (Recency bias?) I have no objection to boggler's recommendation.
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Re: Total Stock Market Fund or Total International Fund?

Postby WHL » Wed Apr 03, 2013 6:38 pm

If I was starting from scratch right now without enough money to qualify for Admiral shares, I would buy into a Target Retirement fund.
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Re: Total Stock Market Fund or Total International Fund?

Postby BrianJone » Wed Apr 03, 2013 6:44 pm

Peter Foley wrote: I personally would start with international and then add US - only because US has done so well compared to international over the past 3 months.


And to this point you mean the international can be purchased at a lower price as of today?
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Re: Total Stock Market Fund or Total International Fund?

Postby BrianJone » Wed Apr 03, 2013 6:45 pm

WHL wrote:If I was starting from scratch right now without enough money to qualify for Admiral shares, I would buy into a Target Retirement fund.


Do all the target retirement funds include bonds?
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Re: Total Stock Market Fund or Total International Fund?

Postby BrianJone » Wed Apr 03, 2013 6:50 pm

boggler wrote:I'd suggest VTWSX or the ETF version (VT). The ETF version has lower fees. It's a market-cap-weighted combination of the two you mentioned.


I am new to investing, can you tell me a little about the difference between these two please and what is an ETF, is there a reason it has a lower expense ratio (which means I pay less in fees each year, right)?
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Re: Total Stock Market Fund or Total International Fund?

Postby ram » Wed Apr 03, 2013 6:53 pm

Lets say I like meat and potatoes. I am going to the store knowing fully well that I have only enough money to buy meat OR potatoes.
What would I do?
I would walk in the store and see what is on sale and buy that.

What you buy does not matter much as you are going to balance it soon. However right now international is on sale.
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Re: Total Stock Market Fund or Total International Fund?

Postby Xanadu » Wed Apr 03, 2013 6:53 pm

It appears that the most aggressive target fund is the 2060 fund, which is about 90% stocks

https://personal.vanguard.com/us/funds/vanguard/TargetRetirementList#targetAnchor
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Re: Total Stock Market Fund or Total International Fund?

Postby Xanadu » Wed Apr 03, 2013 6:57 pm

BrianJone wrote:
Peter Foley wrote: I personally would start with international and then add US - only because US has done so well compared to international over the past 3 months.


And to this point you mean the international can be purchased at a lower price as of today?


Yes, I believe international stocks are right now priced cheaper relative to earnings compared to U.S. stocks
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Re: Total Stock Market Fund or Total International Fund?

Postby Xanadu » Wed Apr 03, 2013 7:00 pm

BrianJone wrote:
boggler wrote:I'd suggest VTWSX or the ETF version (VT). The ETF version has lower fees. It's a market-cap-weighted combination of the two you mentioned.


I am new to investing, can you tell me a little about the difference between these two please and what is an ETF, is there a reason it has a lower expense ratio (which means I pay less in fees each year, right)?



see wiki here for ETF's:
http://www.bogleheads.org/wiki/Category:ETFs
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Re: Total Stock Market Fund or Total International Fund?

Postby BrianJone » Wed Apr 03, 2013 7:09 pm

ram wrote:However right now international is on sale.


If I buy international today, can I transfer it (staying within my Roth Account) to US Stock Index Fund at a later date for free, or is there a charge to switch funds like that?
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Re: Total Stock Market Fund or Total International Fund?

Postby Xanadu » Wed Apr 03, 2013 7:13 pm

BrianJone wrote:
ram wrote:However right now international is on sale.


If I buy international today, can I transfer it (staying within my Roth Account) to US Stock Index Fund at a later date for free, or is there a charge to switch funds like that?


No fee if you are using vanguard funds within vanguard, but there will be a brokerage fee if you are using an ETF
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Re: Total Stock Market Fund or Total International Fund?

Postby lmpmd » Wed Apr 03, 2013 7:18 pm

Brian, what's wrong with the TR 2016? Any reasons for not liking it? It's good to remember - don't let the perfect be the enemy of the good. There's nothing terrible about the Total stock market index fund if you want all the money to go into stocks. It's "the good". Don't be an enemy of the good. If you are new to investing and scared - put some money in bonds. Have you looked at the Star fund? Other TR funds? Transferring money from one fund to another could have tax implications - but prob not in retirement accounts. Others will comment.

If you are new to investing - have a plan in mind if you go all into stocks and lose 40% of your money in a market decline 5 yrs from now. This is my advice. Don't come up with the plan when the money goes down.
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Re: Total Stock Market Fund or Total International Fund?

Postby BrianJone » Wed Apr 03, 2013 7:47 pm

lmpmd wrote:Brian, what's wrong with the TR 2016? Any reasons for not liking it?


I have no personal problem with it, but it includes Bonds and I already have a lot of money (gifted to me) in the form of Savings Bonds, so to start ballancing my retirement I thought it would be best to focus on total market index funds until my total stock index investment is at least half if not 2/3 of all my investment money including the bonds. Is this a bad idea?
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Re: Total Stock Market Fund or Total International Fund?

Postby WHL » Wed Apr 03, 2013 8:45 pm

BrianJone wrote:
WHL wrote:If I was starting from scratch right now without enough money to qualify for Admiral shares, I would buy into a Target Retirement fund.


Do all the target retirement funds include bonds?


Well, you'd need to do that research yourself, but I would assume yes. The most aggressive I'm aware of, around a 90/10 split, has been posted by someone else in this thread.
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Re: Total Stock Market Fund or Total International Fund?

Postby billjohnson » Wed Apr 03, 2013 9:02 pm

BrianJone wrote:I want my initial investment in a Roth to be focused all on stocks.

If this is 100% requirement, then go with boggler on the VTWSX [45% US, 55% Int].

Otherwise, you could do a lot worse than any of the 2040-2060 target funds. On those target funds, you're looking at roughly [62% US, 27% Int, 9% bonds, 2% cash]. Good luck...
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Re: Total Stock Market Fund or Total International Fund?

Postby BrianJone » Fri Apr 05, 2013 11:10 pm

billjohnson wrote:
BrianJone wrote:I want my initial investment in a Roth to be focused all on stocks.

If this is 100% requirement, then go with boggler on the VTWSX [45% US, 55% Int].

Otherwise, you could do a lot worse than any of the 2040-2060 target funds. On those target funds, you're looking at roughly [62% US, 27% Int, 9% bonds, 2% cash]. Good luck...


It isn't a requirement, but I have a lot invested in savings bonds and nothing in the index funds of the market. I am trying to start getting that a bit more ballanced and if I invested in funds which include bond funds, then it will take a long time for me to get the ratio I would like. Eventually I will invest in those target funds, but for now I would like to focus on the total market index funds (USA and Others). Is this a bad idea? or can anyone else offer suggestions how I can best do this please?
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Re: Total Stock Market Fund or Total International Fund?

Postby momar » Fri Apr 05, 2013 11:35 pm

Having a few hundred dollars in bonds using one of the TR funds is pretty insignificant. I wouldn't worry about it.

By which I mean, it's not going to change your return by an appreciable amount.
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Re: Total Stock Market Fund or Total International Fund?

Postby Xanadu » Fri Apr 05, 2013 11:37 pm

If it were me I would throw it all at total international. But that's only because my target asset allocation calls for 50% international, and given that If I had to pick between the two funds and I believe that international stocks are priced better than u.s., then total international it is. However if my AA was greater than 50% of equities in u.s. then I would put it in u.s.

But that's just me. No one can tell you what you should do because you haven't given us enough information. I suggest reading the link below on asking portfolio questions, and reposting your questions with more complete information. I promise you will get much better suggestions! :happy

http://www.bogleheads.org/forum/viewtopic.php?t=6212
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Re: Total Stock Market Fund or Total International Fund?

Postby BrianJone » Sat Apr 06, 2013 7:37 am

momar wrote:Having a few hundred dollars in bonds using one of the TR funds is pretty insignificant. I wouldn't worry about it.

By which I mean, it's not going to change your return by an appreciable amount.


the amount of money doesn't matter does it? Isn't it the percentages? And the bonds I already own total in the thousands, that is the area I'm looking to ballance. But are you saying in a 90/10 or 80/20 that I should just take another few years to ballance everything rather than ballance it sooner with total stock index investing?
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Re: Total Stock Market Fund or Total International Fund?

Postby ruralavalon » Sat Apr 06, 2013 8:56 am

BrianJone wrote: . . . . I only have enough to invest of one of these two funds, the Vanguard Total Stock Market Index Fund or Vanguard Total International Stock Index Fund. I already have savings bonds so i want my initial investment in a Roth to be focused all on stocks. . . . . So where do I start and which may be the better option for the next few quarters?

Since you already have bonds and want just one stock fund, I would suggest Vanguard Total Stock Market Index Fund.

Some peole, including Mr. Bogle, don't think that international is ever necessary. Its only relatively recently that good low cost international funds existed, so for a long time lots of people did well with only domestic equities. So you can get along just fine without international for the short time you have in mind.
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Re: Total Stock Market Fund or Total International Fund?

Postby trademil » Sat Apr 06, 2013 10:26 am

If you use ETFs you can split your 3000$ between VTI and VXUS.
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Re: Total Stock Market Fund or Total International Fund?

Postby momar » Sat Apr 06, 2013 10:29 am

BrianJone wrote:
momar wrote:Having a few hundred dollars in bonds using one of the TR funds is pretty insignificant. I wouldn't worry about it.

By which I mean, it's not going to change your return by an appreciable amount.


the amount of money doesn't matter does it? Isn't it the percentages? And the bonds I already own total in the thousands, that is the area I'm looking to ballance. But are you saying in a 90/10 or 80/20 that I should just take another few years to ballance everything rather than ballance it sooner with total stock index investing?

As precise as everyone here likes to be, differences in allocation of up to 10% matter very little IMO. It is almost meaningless precision.

If you buy a TR fund, what will your allocation be? What will it be if you buy TSM?
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Re: Total Stock Market Fund or Total International Fund?

Postby BrianJone » Sun Apr 07, 2013 8:00 am

ruralavalon wrote:Since you already have bonds and want just one stock fund, I would suggest Vanguard Total Stock Market Index Fund.

Some peole, including Mr. Bogle, don't think that international is ever necessary.



What is the reason for international funds included in so many Vanguard Funds? Is it to protect against a "down market" in the US?

if things will be only domestic, How does the Total Stock Market Fund relate to a SP 500 Index Fund?
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Re: Total Stock Market Fund or Total International Fund?

Postby InvestorNewb » Sun Apr 07, 2013 8:13 am

BrianJone wrote:How does the Total Stock Market Fund relate to a SP 500 Index Fund?


They are practically identical...

I read that over the long term, VTI is likely to outperform S&P 500 because of the inclusion of small/mid caps.

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Re: Total Stock Market Fund or Total International Fund?

Postby stemikger » Sun Apr 07, 2013 8:23 am

BrianJone wrote:
ruralavalon wrote:Since you already have bonds and want just one stock fund, I would suggest Vanguard Total Stock Market Index Fund.

Some peole, including Mr. Bogle, don't think that international is ever necessary.



What is the reason for international funds included in so many Vanguard Funds? Is it to protect against a "down market" in the US?

if things will be only domestic, How does the Total Stock Market Fund relate to a SP 500 Index Fund?


You should pick up Common Sense on Mutual Funds by John Bogle. You can get a copy on ebay for under $5. It's one of his older books but still very relevant today. He devotes an entire chapter on why he does not think you even need international. Many here don't agree and their reasons are valid, but if you are just starting out I would just stick with the Total Market Index Fund and then as you build that up you can always transfer some in the Total International. Mr. Bogle says if you feel you need to have an international allocation don't do more than 20%.

The reason for international investing is for risk and not returns. Many believe international may do well when the U.S. is not and will give you a smoother ride going forward. I personally feel we are a global economy and by investing in the Total Market and/or S&P you have some form of international automatically built in. Again many here don’t buy that but Mr. Bogle does explain it in the book I recommended.

The S&P is just the 500 largest U.S. companies and the Total Market is the entire U.S. stock market. If you look at a chart you will see in the long term their returns are almost identical, but with the Total Market you get more diversification. If I had a choice I would go with the Total Market.

And finally, I would not rule out The Target Retirement Fund. If you buy the date that has 10% bonds that is not a big deal and you can get a piece of the international that you would like.

P.S. I am 48 and have been investing (mostly the max) in my 401K for 20 years and do not own any international other than what I get from the companies that have a global presence in the S&P.

P.P.S. Mr. Bogle probably has more money invested then anyone on this board and he does not own any international. And we are talking about a large amount of money. It is all in Vanguard Funds.

FYI, I just saw that chart up there after I posted this but it backs up the point I made.
Last edited by stemikger on Sun Apr 07, 2013 8:34 am, edited 2 times in total.
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Re: Total Stock Market Fund or Total International Fund?

Postby Joe S. » Sun Apr 07, 2013 8:28 am

BrianJone wrote:What is the reason for international funds included in so many Vanguard Funds? Is it to protect against a "down market" in the US?

Sometimes when U.S. stocks go down, the International Stocks don't go down, or go down less. This provides partial protection for your U.S. stocks. However the protective effect is somewhat weak, as U.S. stocks and international stocks frequently drop together. Vanguard suggests about 70% U.S. stocks and 30% International stocks. (We argue over what the best percentage is.) Of the two funds you mention, I would recommend The U.S. stock fund, as it should be the major fund in your portfolio. Another option would be the Vanguard Total World Stock Index Fund. This has about 50% U.S. stocks and 50% International Stocks, but has a higher International percentage than I like.
https://personal.vanguard.com/us/funds/ ... IntExt=INT
BrianJone wrote:if things will be only domestic, How does the Total Stock Market Fund relate to a S&P 500 Index Fund?

Roughly speaking the S&P 500 fund contains the 500 largest stocks.
The Total Stock Market also invests in thousands of small companies as well.
However the Total Stock Market puts about 80% of its money into the large stocks of the S&P 500 and only about 20% of its money in the small stocks. That means Total Stock Market and the S&P 500 funds are very similar.
http://www.bogleheads.org/wiki/Approxim ... ock_Market
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Re: Total Stock Market Fund or Total International Fund?

Postby stemikger » Sun Apr 07, 2013 8:32 am

Joe S. wrote:
BrianJone wrote:What is the reason for international funds included in so many Vanguard Funds? Is it to protect against a "down market" in the US?

Sometimes when U.S. stocks go down, the International Stocks don't go down, or go down less. This provides partial protection for your U.S. stocks. However the protective effect is somewhat weak, as U.S. stocks and international stocks frequently drop together. Vanguard suggests about 70% U.S. stocks and 30% International stocks. (We argue over what the best percentage is.) Of the two funds you mention, I would recommend The U.S. stock fund, as it should be the major fund in your portfolio. Another option would be the Vanguard Total World Stock Index Fund. This has about 50% U.S. stocks and 50% International Stocks, but has a higher International percentage than I like.
https://personal.vanguard.com/us/funds/ ... IntExt=INT
BrianJone wrote:if things will be only domestic, How does the Total Stock Market Fund relate to a S&P 500 Index Fund?

Roughly speaking the S&P 500 fund contains the 500 largest stocks.
The Total Stock Market also invests in thousands of small companies as well.
However the Total Stock Market puts about 80% of its money into the large stocks of the S&P 500 and only about 20% of its money in the small stocks. That means Total Stock Market and the S&P 500 funds are very similar.
http://www.bogleheads.org/wiki/Approxim ... ock_Market


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Re: Total Stock Market Fund or Total International Fund?

Postby Trev H » Sun Apr 07, 2013 8:36 am

Adding asset classes, 1 component at a time... building a S&D Portfolio

Yr 1 = FTSE X-US International Small Market
Yr 2 = US Small Value Index
Yr 3 = Total International Index
Yr 4 = US Large Cap Index

When ready for bonds... add...

InterTerm Treasury Bonds
TIPS

If you are going to be a Lumper instead of a Splitter...

Yr 1 = Total International Index
Yr 2 = Total Stock Market Index

Me Personally... I would not invest in Total Stock Market Index because I am a Splitter.
If you are going to hold separate components for Large and Small it's best (correlation wise) NOT to get your Large via the Total Market... but instead use Large Market Index and Small Value Index.

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Re: Total Stock Market Fund or Total International Fund?

Postby YDNAL » Sun Apr 07, 2013 8:53 am

BrianJone wrote:Starting my Roth IRA for the first time, my funds are limited. I only have enough to invest of one of these two funds, the Vanguard Total Stock Market Index Fund or Vanguard Total International Stock Index Fund. I already have savings bonds so i want my initial investment in a Roth to be focused all on stocks.

Brian,

For discussion purposes, say you have a couple thousand in savings bonds and putting a couple thousand in Roth IRA.

    $2,000 Savings Bonds
    $2,000 Vanguard Target Retirement 2050 Fund (VFIFX)
    This is 45/55 Stocks/Bonds

    $2,000 Savings Bonds
    $2,000 ALL Stock choice (whatever that is)
    This is 50/50 Stocks/Bonds

    NO material difference.
Choose VFIFX and work on your savings rate since you said "my funds are limited" and discontinue over-thinking the small stuff.
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Re: Total Stock Market Fund or Total International Fund?

Postby ruralavalon » Sun Apr 07, 2013 9:38 am

Brian --

Choose any one of the funds discussed and work on your savings rate since you said "my funds are limited" and discontinue over-thinking the small stuff.
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Re: Total Stock Market Fund or Total International Fund?

Postby BrianJone » Sun Apr 07, 2013 10:18 am

Trev H wrote:If you are going to be a Lumper instead of a Splitter...


I do not understand the differences, what is a Lumper vs. Splitter? and what case could be made for someone to be one over the other?




Trev H wrote:Adding asset classes, 1 component at a time... building a S&D Portfolio

Yr 1 = FTSE X-US International Small Market
Yr 2 = US Small Value Index
Yr 3 = Total International Index
Yr 4 = US Large Cap Index



When you build one asset class per year, what is the reason for starting international this year?
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Re: Total Stock Market Fund or Total International Fund?

Postby BrianJone » Sun Apr 07, 2013 10:23 am

ruralavalon wrote:discontinue over-thinking the small stuff.


You are totally right! I will be making a decision early this week as to how I start and then not touch it for decades. No need to over-thing the small stuff, thank you.
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Re: Total Stock Market Fund or Total International Fund?

Postby grabiner » Sun Apr 07, 2013 12:39 pm

Trev H wrote:Adding asset classes, 1 component at a time... building a S&D Portfolio

Yr 1 = FTSE X-US International Small Market
Yr 2 = US Small Value Index
Yr 3 = Total International Index
Yr 4 = US Large Cap Index


While I like this strategy, I would recommend doing it in the other order, particularly for a new investor: start with a conventional portfolio, and then add the riskier special-purpose assets later.
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Re: Total Stock Market Fund or Total International Fund?

Postby Default User BR » Sun Apr 07, 2013 1:47 pm

BrianJone wrote:I do not understand the differences, what is a Lumper vs. Splitter? and what case could be made for someone to be one over the other?

See the Wiki: http://www.bogleheads.org/wiki/Slice_and_Dice


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Re: Total Stock Market Fund or Total International Fund?

Postby Trev H » Sun Apr 07, 2013 2:09 pm

Brian...

There is really no way to know what is going to do best the next few quarters, years, etc...

Most of the time when you place that bet you are going to end up wrong.

Your best bet is to simply diversify and stay the course (rebalancing occasionally)...

I would suggest you consider a US / International Split at or very near Global proportions.

Me Personally... I invest 50/50 on US/International.

When it comes to equities, you should not only consider the US / International split, but also Size and Price diversification (this is called 3 Factor Diversification).

A splitter gives some weight to not only the Large Market, but also to small stocks and value stocks. (diversifying by size and price).

A very simple way to do that would be to invest as I instructed you above.

On equities simply invest 25% each in US Large Market, US Small Value, International Large Market, International Small Market (speaking of options at Vanguard using low cost index funds).

On the order of which you invest in first. My suggestion was that you get this mix over the next 4 years adding one at a time (if that remains to be your own limitation).

1 - International Small Market (most risky of the 4 components, but why not take more risk when you are younger and have more time invested)... second thing to consider is that the International Funds are more diversified (investing in Europe, Pacific Rim, Middle East, Emerging Markets, Canada)... rather than in one country (the good ole USA).

2.. US Small Value - the next most risky asset in the mix... but paired up with the first component, increases diversification greatly... (1 and 2 have extremely low correlations, which is a bonus).

3.. International Large Market, Broad Diversification, BETA or Market exposure (lower expected return than the previous 2).

4.. US Large market, completes the mix, US BETA exposusure, lowest expected return of the 4.

Note... this may not be the average US biased investors "conventional portfolio"...

But based on what is the average US biased investors "conventional portfolio" if you lived in Japan, you would invest 80% in Japan.

Conventional wisedom that is based on Home Country Bias... should be questioned, and diversification should rule !

Good Luck !

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Re: Total Stock Market Fund or Total International Fund?

Postby Artsdoctor » Sun Apr 07, 2013 8:00 pm

Brian,

All of these suggestions are good. But it sounds as if you're just starting out and the amount of money is extremely small. If you put it in Total Stock Market Index and it drops 90% the next day, you probably won't even remember the event 10 years from now. Are you buying $5000? Losing $4000 will not matter in the long run.

What matters is that you're getting started. Keep it simple and keep it cheap. I would opt for Total Stock Market and just let it go. Next year, you can add your next distribution and start dividing things up. In no time, you'll have a nicely diversified portfolio but just try for simplicity and keep things in perspective.

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Re: Total Stock Market Fund or Total International Fund?

Postby Joe S. » Wed Apr 17, 2013 3:30 pm

Default User BR wrote:
BrianJone wrote:I do not understand the differences, what is a Lumper vs. Splitter? and what case could be made for someone to be one over the other?

See the Wiki: http://www.bogleheads.org/wiki/Slice_and_Dice
Brian


A Lumper is someone who puts all his retirement into 3 lumps.
A Total Stock Market Fund
A Total International Fund
and
A Total Bond Market fund.

Some of them will even leave off the Total International Fund.

A Splitter is some one who says:" I think some subsets of the market might do better like Value Stocks and Small Stocks. I am not sure they will do better, but I want to split off some money to invest in value stocks or small stocks or both." Some splitters like to put a little extra into REITs. Some splitters may like some other category. Slice and dice is another term we use for some splitters.

A Splitter is not a Boglehead purist, but a lot of us stray a bit from purity. The Boglehead community is not monolithic in its beliefs.
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Re: Total Stock Market Fund or Total International Fund?

Postby vesalius » Wed Apr 17, 2013 4:55 pm

Like already mentioned I would just go with the Vanguard Total World Stock ETF for now. Low cost, well diversified, all stock and split about 50/50 us/international. Then, if you want different percentages of US to international stock, after you have saved enough sell VT and purchase the necessary amounts of total US and total international to meet your desired asset allocation.
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Re: Total Stock Market Fund or Total International Fund?

Postby John3754 » Wed Apr 17, 2013 6:41 pm

It's not tax efficient to hold international in a Roth, for whatever that's worth.
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Re: Total Stock Market Fund or Total International Fund?

Postby Artsdoctor » Wed Apr 17, 2013 7:19 pm

John,

Grabiner has done an excellent job this topic, looking at tax "efficiency" of many of the popular funds. For the international fund, you will miss out on the foreign tax credit if the fund is held in the Roth. But if you're in a high tax bracket (federal and/or state), you'll need to understand that the dividends are higher with the international fund and that they are not all qualified.

With the current (2013) tax law in place, what may have been considered tax efficient last year, may be less so this year and beyond.

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