Question about International Stock Allocation

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Don46
Posts: 198
Joined: Sun Feb 24, 2013 5:53 pm

Question about International Stock Allocation

Post by Don46 »

I'm transitioning from a managed account that had no international exposure. I am 67, moving (slowly) toward retirement in the next two or three years, and in good shape financially. I am impressed by the case for international diversification, but I'm also not yet comfortable with how to deploy assets. I'm with Schwab and am impressed with their very low cost ETF, SCHF which has an ER of .09 and seems to track tightly with the broad international market. Is there some disadvantage I don't know about in using an ETF in international investing?

I'm going to begin with a 5 percent allocation and wade in deeper as I sell off some of the stocks left from my managed portfolio.
I welcome your advice.
pkcrafter
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Re: Question about International Stock Allocation

Post by pkcrafter »

Don,
SCHF is a decent international low cost ETF, but it doesn't contain Canada, emerging markets, or small caps. You could add EM and small caps with Schwab ETFs, but you will get good international exposure with just the one EFT and it keeps the portfolio simple. Your final target should be between 20-40% of stock allocation for SCHF.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Taylor Larimore
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Location: Miami FL

Re: Question about International Stock Allocation

Post by Taylor Larimore »

Don46 wrote:I'm transitioning from a managed account that had no international exposure. I am 67, moving (slowly) toward retirement in the next two or three years, and in good shape financially. I am impressed by the case for international diversification, but I'm also not yet comfortable with how to deploy assets. I'm with Schwab and am impressed with their very low cost ETF, SCHF which has an ER of .09 and seems to track tightly with the broad international market. Is there some disadvantage I don't know about in using an ETF in international investing?

I'm going to begin with a 5 percent allocation and wade in deeper as I sell off some of the stocks left from my managed portfolio.
I welcome your advice.
Don:

In my opinion, Schwab International Equity ETF SCHF should be an excellent ETF for international equity exposure.

Vanguard research recommends an international equity allocation between 20% and the U.S.world allocation (about 50%).

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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