VTSAX or VTWAX over the next 35 years?

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GoneOnTilt
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Re: VTSAX or VTWAX over the next 35 years?

Post by GoneOnTilt »

40 Years' Gatherin's wrote: Sun Jun 13, 2021 9:05 pm Then why not defer to the master himself Jack Bogle who said US investors should cap International at 20%?
"Defer to the master"? That's kind of creepy. I don't recall Jack Bogle speaking Ex Cathedra with a claim of infallibility. And I've never seen "Imprimatur" or "Nihil Obstat" stamped inside his books (just a little old-time Catholic humor; showing my age).

The point is that we all have to make our own decisions on the issue. For the record, I'm 92% US, with the 8% being due to a LifeStrategy Fund I use in one of my accounts for convenience.
RobLyons
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Re: VTSAX or VTWAX over the next 35 years?

Post by RobLyons »

The short and simple answer is: Nobody knows. Both are great choices. They are both low cost and diverse. Over the next 35 years my personal spending and investing habits will matter 100x more than any difference in the performance of these two funds.
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bgf
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Re: VTSAX or VTWAX over the next 35 years?

Post by bgf »

For those that have this or that assumption about US markets v international markets, including governance and regulation, Rick Ferri's recent Bogleheads podcast had an interesting tidbit.

Chinese regulation is FAR more rigorous for listing than the US. The regulators in China have personal responsibility for their decisions. This actually leads to the weaker Chinese companies listing in the US, as opposed to their market. In the US, they can get away with it.

When I think of the US I don't think of a country where the regulators have the power or incentive to, you know, really do their jobs.
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Re: VTSAX or VTWAX over the next 35 years?

Post by Pepper11 »

lostdog wrote: Thu May 16, 2019 10:32 am
oldzey wrote: Wed May 15, 2019 9:10 pm
guyesmith wrote: Wed May 15, 2019 10:05 am VTSAX or VTWAX over the next 35 years?

That's Vanguard Total Stock Market Index Fund or the Vanguard Total World Stock Index Fund.

What do you think?
In 2054, we'll know the answer.

In the meantime...

Image
Out of date advice. Actually really bad advice.

VTWAX and chill.
Since when is VTSAX out of date and really bad advice. Come on. These recent international threads really bringing out some bad takes.
Jerry476
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Re: VTSAX or VTWAX over the next 35 years?

Post by Jerry476 »

The bottom line is that some of us will side with Taylor while others on this forum will go with what they consider a more forward looking approach. As I intend to be in the world to come in 35 years, I won’t see the outcome. Good luck to everyone.
whereskyle
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Re: VTSAX or VTWAX over the next 35 years?

Post by whereskyle »

You can always just invest in both. Every Monday I put an equal amount of cash in VTSAX and VTWAX.

No complaints so far!
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
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TierArtz
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Re: VTSAX or VTWAX over the next 35 years?

Post by TierArtz »

VTWAX!

I don't own any, but I adjust holdings, via contributions, to VTSAX, VFIAX (US), and/or VTIAX (exUS) in IRAs and taxable to emulate VTWAX (Global) per M* X-ray (57% US; 43% exUS).
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Re: VTSAX or VTWAX over the next 35 years?

Post by Da5id »

Flannelbeard wrote: Mon Jun 14, 2021 12:58 pm It's not a bad fund. It is bad advice to recommend a 100% VTSAX portfolio though. Especially to young investors.
I don't think 100% VTSAX is "bad" advice. I own 40% international, and think having at least 20% international is rather better advice than 100% VTSAX. But in the universe of investing options, 100% VTSAX is vastly better than most of the other options for a young investor IMO. A young investor hearing all the noise of Stonks, crypto, etc would indeed be quite decently served by 100% VTSAX.
40 Years' Gatherin's
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Re: VTSAX or VTWAX over the next 35 years?

Post by 40 Years' Gatherin's »

GoneOnTilt wrote: Mon Jun 14, 2021 5:48 am
40 Years' Gatherin's wrote: Sun Jun 13, 2021 9:05 pm Then why not defer to the master himself Jack Bogle who said US investors should cap International at 20%?
"Defer to the master"? That's kind of creepy. I don't recall Jack Bogle speaking Ex Cathedra with a claim of infallibility. And I've never seen "Imprimatur" or "Nihil Obstat" stamped inside his books (just a little old-time Catholic humor; showing my age).

The point is that we all have to make our own decisions on the issue. For the record, I'm 92% US, with the 8% being due to a LifeStrategy Fund I use in one of my accounts for convenience.
Ah yes, it's real creepy to defer to the man who created the whole reason for while we are all here on this forum: Index Investing.
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Re: VTSAX or VTWAX over the next 35 years?

Post by 40 Years' Gatherin's »

Flannelbeard wrote: Mon Jun 14, 2021 12:58 pm
Pepper11 wrote: Mon Jun 14, 2021 10:39 am Since when is VTSAX out of date and really bad advice. Come on. These recent international threads really bringing out some bad takes.
It's not a bad fund. It is bad advice to recommend a 100% VTSAX portfolio though. Especially to young investors.

Of course everyone giving this bad advice will claim that it's good advice. Such is the effect of psychological biases.
So Jack Bogle and Warren Buffett are giving bad advice? What makes your advice anymore sound than theirs?
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Re: VTSAX or VTWAX over the next 35 years?

Post by RobLyons »

Flannelbeard wrote: Mon Jun 14, 2021 7:24 am
RobLyons wrote: Mon Jun 14, 2021 6:18 am The short and simple answer is: Nobody knows. Both are great choices. They are both low cost and diverse. Over the next 35 years my personal spending and investing habits will matter 100x more than any difference in the performance of these two funds.
Your last sentence contradicts the first.

No it doesn't.
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Re: VTSAX or VTWAX over the next 35 years?

Post by HootingSloth »

guyesmith wrote: Wed May 15, 2019 10:05 am VTSAX or VTWAX over the next 35 years?
Yes.
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esteen
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Re: VTSAX or VTWAX over the next 35 years?

Post by esteen »

There are a few in this thread who have pointed out that, over the next 35 years, there are many factors (saving/spending rates, general AA, income growth, etc) that matter way more than this US/International debate. Thank you for bringing a heated topic into perspective. It's fun to discuss/debate, and I like to debate it too, but at the end of the day it's relative peanuts compared to many other things that will better your financial or non-financial life.
Flannelbeard wrote: Mon Jun 14, 2021 12:58 pm
Pepper11 wrote: Mon Jun 14, 2021 10:39 am Since when is VTSAX out of date and really bad advice. Come on. These recent international threads really bringing out some bad takes.
It's not a bad fund. It is bad advice to recommend a 100% VTSAX portfolio though. Especially to young investors.

Of course everyone giving this bad advice will claim that it's good advice. Such is the effect of psychological biases.
Marking someone who doesn't agree with your opinion as having "psychological bias" is a good example of moving the debate away from a healthy sharing of ideas and toward exclusivity and labeling. Let's all encourage the facts, opinions, and prognostications on each side and so everyone can decide for themselves.

For what it's worth I have 25% of my equities allocation in international (ex-US), and 75% in US. Because that's the exact right percentage that will outperform all other tilts, and the rest of you are doomed to paltry future returns. J/k... it's because it lets me sleep well at night :wink:
esteen
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Re: VTSAX or VTWAX over the next 35 years?

Post by esteen »

RobLyons wrote: Thu Jun 17, 2021 8:33 pm
Flannelbeard wrote: Mon Jun 14, 2021 7:24 am
RobLyons wrote: Mon Jun 14, 2021 6:18 am The short and simple answer is: Nobody knows. Both are great choices. They are both low cost and diverse. Over the next 35 years my personal spending and investing habits will matter 100x more than any difference in the performance of these two funds.
Your last sentence contradicts the first.

No it doesn't.
I think by "investing habits" RobLyons meant savings rates and/or general AA? Just guessing.
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Re: VTSAX or VTWAX over the next 35 years?

Post by Prahasaurus »

40 Years' Gatherin's wrote: Sun Jun 13, 2021 8:59 pm
Prahasaurus wrote: Wed May 15, 2019 12:14 pm I agree VTWAX is the way to go, especially if you want to follow a purer Bogleheads strategy. The 3-fund portfolio should really now be the 2-fund portfolio: VTWAX (total world stocks) and VBTLX (total US bonds), for US investors.

I also agree that replacing VTWAX with a combination of stock indices, e.g. VTSAX (US) and VTIAX (International) in some combination (80-20, 60-40, etc.), is placing bets. But having said that, so what? There is nothing wrong with placing bets. If you strongly believe the US will outperform the rest of the world over the next 35 years, then by all means go for it.

I only use VTWAX in my taxable portfolio, along with VBTLX and VWIUX (Muni Bonds). I like that approach. It seems to be less stress for me. Tax wise I do better with municipal bonds, but I like having a bit of diversification with VBTLX. So in the end, I have a 3 fund portfolio. But only 1 fund for stocks: VTWAX.

Having said that, I also invest in individual stocks in my Roth IRA, so I do place bets.
"I agree VTWAX is the way to go, especially if you want to follow a purer Bogleheads strategy."

The Total World Fund debuted in 2008, 11 years before Jack passed on. Why, over those 11 years, did Jack never endorse that fund? Doesn't sound to me like Total World is the "Bogle way".
VTSAX and Chill, people. That is all.
Not to be overly pedantic, but I didn't say it was the "Bogle way," but a "purer Bogleheads strategy." Big difference, if you believe we are here to learn, grow, and constantly improve. If you believe we are here to mimic the actions of one man, i.e. to fall for the logical fallacy of Argument from Authority, then of course you may have a good point, or at the very least an interesting observation.
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Taylor Larimore
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Re: VTSAX or VTWAX over the next 35 years?

Post by Taylor Larimore »

Prahasaurus:

What did you mean when you wrote this:
If you believe we are here to mimic the actions of one man, i.e. to fall for the logical fallacy of Argument from Authority, then of course you may have a good point, or at the very least an interesting observation.
Thank you

Taylor
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Re: VTSAX or VTWAX over the next 35 years?

Post by esteen »

Flannelbeard wrote: Fri Jun 18, 2021 8:30 am
esteen wrote: Thu Jun 17, 2021 11:38 pm There are a few in this thread who have pointed out that, over the next 35 years, there are many factors (saving/spending rates, general AA, income growth, etc) that matter way more than this US/International debate. Thank you for bringing a heated topic into perspective. It's fun to discuss/debate, and I like to debate it too, but at the end of the day it's relative peanuts compared to many other things that will better your financial or non-financial life.
It's your bet that it's peanuts. That's really the crux of this debate. 100% US investors claim it doesn't matter at all and take an active bet to back that horse, whereas world market cap investors take action to diversify because it might matter.

I wonder if in some alternate universe, with the web coming to fruition a couple decades earlier, and Jack Bogle born in Japan, if we could peer into 1990 www.bogleheads.jp. Recall at the time that Japan was viewed as a rising economic powerhouse, and their stock market was around 40% of the world stock market capitalization, having eclipsed the US a couple years prior. Without the benefit of hindsight to claim that it was a bubble, let's look back to the prevailing opinion outside Japan at the time which was that Japan was eating the world despite being a small nation due to the Japanese peoples' high intelligence and ironclad, unbeatable work ethic. One Japanese worker had to be equal to two, maybe three Americans. There was something special about them, something inherent to their country and/or culture which explained why they were the new top dog and would continue to be so. Sound familiar?

I wonder, would Bogleheads Japan look much like this site does today, the arguments substituted nearly word for word to swap the two countries?
"You could invest outside Japan. In the end it doesn't matter. Jack said so."
"The regulatory environment and company structure in Japan is simply superior to the rest of the world."
"Japanese companies get a large portion of their revenue internationally, so you've already got significant international exposure from the Nikkei."
esteen wrote: Thu Jun 17, 2021 11:38 pm Marking someone who doesn't agree with your opinion as having "psychological bias" is a good example of moving the debate away from a healthy sharing of ideas and toward exclusivity and labeling. Let's all encourage the facts, opinions, and prognostications on each side and so everyone can decide for themselves.

For what it's worth I have 25% of my equities allocation in international (ex-US), and 75% in US. Because that's the exact right percentage that will outperform all other tilts, and the rest of you are doomed to paltry future returns. J/k... it's because it lets me sleep well at night :wink:
I disagree. Let's call a spade a spade, within forum guidelines of course. Psychological biases are an incredibly relevant part of the discussion. Let's put all the cards on the table, because hiding some of the most important ones only benefits one side here.
I suppose I'm saying it's peanuts because my expectation is if the world (ex-US) outperforms the US, or vice versa, they'll still be within a few percentage points of each other. I'm not expecting a Japan-like catastrophe. You postulate the US could have one... and I guess they could! But of course the argument could be made about the developed ex-US world. What if, for example, Europe and China markets went into a 30 year spiral when the US did not? What do we think are the relative chances of one versus the other? Plus, everyone always brings up Japan when comparing the US to Japan is apples-to-oranges for so many reasons. Huge differences in population, natural resources, military might, influence on other developed nations, agriculture, oil, etc etc. The US has a lot more to fall back on.

I'm not saying the US will remain the preeminent world power forever. In fact I personally believe we'll fall out of favor at some point, just like other empires/civilizations always have in the past. Because people are people, no matter which country they're in, and it only takes a few super-special game changers to alter the path of a world power or create a new one. But I can't imagine that happening overnight. I can't even imagine it happening in 10 years. I could see some outperformance, but a countrywide catastrophe (that didn't also significantly affect non-US markets) seems far-fetched. Is there US exceptionalism? To me, I don't believe there is lasting exceptionalism (again, because people are people everywhere). But I think the last century has provided evidence of recent exceptionalism. And that is hard to go away overnight.

All that said, even if the US grossly underperformed, savings/spending rate and general asset allocation are STILL more important. For example, what does it matter if you picked VTWAX if your savings rate was $1/year? You've got to save to invest.

In some ways all of it is "active bets" because, for example, by having your AA in more stocks and less real estate, you're betting stocks will provide better growth (you may not; just an example). Or you bet that market cap weights are the best way to capture growth potential, rather than equal weighting or some other weighting strategy. There's a difference between making an "active bet" on a single stock (AAPL!) or ETF (ARKK!) and arguing diversification benefits of 3,500 stocks vs 8,500 stocks. It just doesn't have the same incremental diversification benefit. It feels to me you assign risk to all US stocks at the level of a single security. But I guess it boils down to how risky you think one nation is. I don't think the US is that risky.

On psychological biases, they are definitely a huge part of investing, but I don't understand your explanation. Calling a spade a spade and putting all cards on the table... I don't get what that has to do with psychological biases for US vs World investing. For example if someone says "I think the US has certain advantages that will continue to allow it's myriad companies to enjoy growth above the average non-US nation", that is not a psychological bias at all. It's an opinion, it's based on some historical data and some conjecture, and you can't say it's "true" or "false". It's a guess.

All this stuff is a guess. Even VTWAX.
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Re: VTSAX or VTWAX over the next 35 years?

Post by NYC_Guy »

Trader Joe wrote: Wed May 15, 2019 11:17 am
guyesmith wrote: Wed May 15, 2019 10:05 am VTSAX or VTWAX over the next 35 years?

That's Vanguard Total Stock Market Index Fund or the Vanguard Total World Stock Index Fund.

What do you think?
This is an easy question to answer. Either VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares) or VFIAX (Vanguard 500 Index Fund Admiral Shares).
As PT Barnum said…
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Re: VTSAX or VTWAX over the next 35 years?

Post by NYC_Guy »

40 Years' Gatherin's wrote: Mon Jun 14, 2021 4:23 pm
Flannelbeard wrote: Mon Jun 14, 2021 12:58 pm
Pepper11 wrote: Mon Jun 14, 2021 10:39 am Since when is VTSAX out of date and really bad advice. Come on. These recent international threads really bringing out some bad takes.
It's not a bad fund. It is bad advice to recommend a 100% VTSAX portfolio though. Especially to young investors.

Of course everyone giving this bad advice will claim that it's good advice. Such is the effect of psychological biases.
So Jack Bogle and Warren Buffett are giving bad advice? What makes your advice anymore sound than theirs?
They were raised in a world where the US was 60% of the world’s production?
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Re: VTSAX or VTWAX over the next 35 years?

Post by etfan »

esteen wrote: Fri Jun 18, 2021 11:18 pm What if, for example, Europe and China markets went into a 30 year spiral when the US did not?
Isn't that the whole point with "whole world" funds? You don't bet on any one country and you protect yourself should any specific country not do well, through diversification.
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Re: VTSAX or VTWAX over the next 35 years?

Post by etfan »

Related question: Suppose someone owns US and ex-US funds in a taxable account and wants to convert to a single "whole world" fund. Are there any tricks to doing that while reducing the tax impact, or is the process so costly that that person is just better off emulating "whole world" by continuing to rebalance the two funds manually forever?
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Re: VTSAX or VTWAX over the next 35 years?

Post by Northern Flicker »

guyesmith wrote: Wed May 15, 2019 10:05 am VTSAX or VTWAX over the next 35 years?

That's Vanguard Total Stock Market Index Fund or the Vanguard Total World Stock Index Fund.

What do you think?
In a taxable account you may prefer holding VTSAX/VTI and either VXUS/VTIAX or IXUS. VTWAX in a taxable account often will not be eligible for the foreign tax credit.

One other detail is that VXUS/VTIAX now includes Chinese A-shares. I don't believe that VTWAX has included them (yet).
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: VTSAX or VTWAX over the next 35 years?

Post by RobLyons »

esteen wrote: Thu Jun 17, 2021 11:39 pm
RobLyons wrote: Thu Jun 17, 2021 8:33 pm
Flannelbeard wrote: Mon Jun 14, 2021 7:24 am
RobLyons wrote: Mon Jun 14, 2021 6:18 am The short and simple answer is: Nobody knows. Both are great choices. They are both low cost and diverse. Over the next 35 years my personal spending and investing habits will matter 100x more than any difference in the performance of these two funds.
Your last sentence contradicts the first.

No it doesn't.
I think by "investing habits" RobLyons meant savings rates and/or general AA? Just guessing.

This is correct. Thanks for clarifying for me :D
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Re: VTSAX or VTWAX over the next 35 years?

Post by AlwaysLearningMore »

lostdog wrote: Wed May 15, 2019 1:39 pm
Taylor Larimore wrote: Wed May 15, 2019 1:28 pm
guyesmith wrote: Wed May 15, 2019 10:05 am VTSAX or VTWAX over the next 35 years?

That's Vanguard Total Stock Market Index Fund or the Vanguard Total World Stock Index Fund.

What do you think?
guyesmith:

I have considered simplifying The Three Fund Portfolio to a Two Fund Portfolio (Total World + Total Bond Market). However, keeping Total U.S. Stock Market and Total International Stock Market separate has several advantages:

Lower (combined) Expense Ratios (Admiral Shares): Total Stock Market (VTSAX) = 0.04%; Total International (VTIAX) = 0.11%; Total World (VTWAX) = 0.10%.

Lower Turnover (hidden costs): Total Stock Market = 3.4%; Total International = 3.4%; Total World Admiral 8.9%.

Better diversification (lower risk): Total U.S. Stock Market and Total International (combined) hold 9,900 stocks. Total World holds 8,125.

Flexibility: The best allocation between U.S. Total Stock Market and Total International is very controversial. Separate stock funds allow investors to choose their desired allocation.

Note: Figures are from February.

Best wishes.
Taylor

Negligible.
Negligible for smaller accounts.
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Re: VTSAX or VTWAX over the next 35 years?

Post by tvubpwcisla »

Does the higher expense ratio of VTWAX matter?
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Re: VTSAX or VTWAX over the next 35 years?

Post by Da5id »

tvubpwcisla wrote: Sat Jun 19, 2021 7:01 pm Does the higher expense ratio of VTWAX matter?
Marginally at best. "Costs matter" can be pushed to silly lengths, as 0.1% expense ratio isn't bad.
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Re: VTSAX or VTWAX over the next 35 years?

Post by invest2bfree »

guyesmith wrote: Wed May 15, 2019 10:05 am VTSAX or VTWAX over the next 35 years?

That's Vanguard Total Stock Market Index Fund or the Vanguard Total World Stock Index Fund.

What do you think?
Neither have it 50% in vti and 50% in vxus and rebalance every year.

No country should be more than 50% of ones portfolio including your own.

Us is already at 58% and is very over valued compared to non us with long term average around 45%.
60% VT, 40% BND.
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Re: VTSAX or VTWAX over the next 35 years?

Post by SavinMaven »

Any rationale for choosing either VTIAX or VTWAX over the other?
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Re: VTSAX or VTWAX over the next 35 years?

Post by 40 Years' Gatherin's »

SavinMaven wrote: Sun Jun 20, 2021 10:55 am Any rationale for choosing either VTIAX or VTWAX over the other?
Yes. Choosing VTIAX allows you to control your International allocation and limit it to the 20% recommended by Mr. Bogle. The World Index is something like 45% ex-US. That is just too much in my opinion. I would say just stick with VTSAX (or VFIAX) and leave it at that.
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Re: VTSAX or VTWAX over the next 35 years?

Post by pokebowl »

SavinMaven wrote: Sun Jun 20, 2021 10:55 am Any rationale for choosing either VTIAX or VTWAX over the other?
I would choose VTIAX in taxable and VTWAX in tax deferred or tax exempt space. VTWAX doesn't always pass along the foreign tax credit to investors. Last time it did I believe was 2018, due to this VTIAX would probably be a more efficient holding in taxable. Additionally breaking apart VTWAX in taxable allows you to control the allocation towards international, which for large portfolios gives you better control come tax time for IRS adventures such as IRS form 1116.

My own portfolio has VTWAX held in my IRAs and HSA, with my taxable broken up into VTSAX and VTIAX allocated at the same weightings as VTWAX. I do this for tax simplicity.
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Re: VTSAX or VTWAX over the next 35 years?

Post by abuss368 »

guyesmith wrote: Wed May 15, 2019 10:05 am VTSAX or VTWAX over the next 35 years?

That's Vanguard Total Stock Market Index Fund or the Vanguard Total World Stock Index Fund.

What do you think?
Hi guyesmith -

I have no idea! In fact, I am partial to that investment saying “I don’t know and I don’t care”.

I am confident that the world’s investment markets will be much higher in 35 years.

Best.
Tony
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Re: VTSAX or VTWAX over the next 35 years?

Post by abuss368 »

vineviz wrote: Wed May 15, 2019 10:08 am VTWAX obviously.
Hi Vince -

Would you recommend Vanguard Total World considering the loss of the Foreign Tax Credit (if held in a taxable account) or the separate Total Stock and Total International Stock?

I would suspect investor behavior may also enter into the decision making process. That is if individual circumstances would point to a higher likelihood the investor staying the course with a one fund equity solution and avoiding tinkering.

Best.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: VTSAX or VTWAX over the next 35 years?

Post by gubernaculum »

Few years ago I drove across USA. From Pittsburgh to San Francisco. I realized how EMPTY USA is. USA has so much more to grow. VTSAX ALL THE WAY!!
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Re: VTSAX or VTWAX over the next 35 years?

Post by Da5id »

gubernaculum wrote: Tue Jun 22, 2021 9:14 pm Few years ago I drove across USA. From Pittsburgh to San Francisco. I realized how EMPTY USA is. USA has so much more to grow. VTSAX ALL THE WAY!!
This is a strange rationale to invest by. Just consider how empty Australia is. And Canada too...
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Re: VTSAX or VTWAX over the next 35 years?

Post by gubernaculum »

But they are nowhere as powerful as USA.
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Re: VTSAX or VTWAX over the next 35 years?

Post by Da5id »

gubernaculum wrote: Tue Jun 22, 2021 10:39 pm But they are nowhere as powerful as USA.
Also a strange rationale to invest by. US power is widely known. To the extent that it influences stock performance I'd assume it is reflected in valuations.
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Re: VTSAX or VTWAX over the next 35 years?

Post by glamdring269 »

etfan wrote: Fri Jun 18, 2021 11:49 pm Related question: Suppose someone owns US and ex-US funds in a taxable account and wants to convert to a single "whole world" fund. Are there any tricks to doing that while reducing the tax impact, or is the process so costly that that person is just better off emulating "whole world" by continuing to rebalance the two funds manually forever?
I have a similar question to this. My taxable is currently 100% VTSAX but I've thought about diversifying it a bit. Not in a rush to get to this money as I do not foresee a need for at least 10 years but not sure I want to keep it all in VTSAX. With that said, is it better to rebalance what is in there now or to basically influence a rebalance through monthly investments? For example let's say I have 100k in VTSAX and want to get to 20% VTWAX (or other). If investing a fresh $2k/mo then maybe the cleanest way would be to just shift to 100% VTWAX on the new deposits until the overall balance is to my liking. Any thoughts on this? Thanks all.
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Re: VTSAX or VTWAX over the next 35 years?

Post by BlueMoonXD »

I agree this is a dead horse that has been well and truly beaten at this point.

I will just say that as a younger person with an investment horizon of 50+ years, and as someone who has lurked a lot of these threads - I find the rationale for a VTWAX or VTSAX + VTIAX approach to be a lot more compelling to me personally.

The general trend I have observed is that the proponents of US-only equities allocations seem to be older, more established members here (e.g closer to retirement) and there tends to be more reliance on authoritative figures or past performance rather than the types of rigorous logical analysis I'm used to seeing here.

The argument for including ex-US stocks in one's allocation seem to be very much in line with the overall philosophy of this forum. Especially for young people looking at a half century or more of market exposure, it seems a bit arrogant to me to try and pretend I have an understanding how the world's economy and geopolitics will evolve.

So I prefer to just own a broader slice of the market. Even if I am wrong, the performance of an internationally diversified portfolio will only be modestly worse, and certainly still enough to achieve my financial goals.

I don't believe the purpose of index based investing is to achieve the best possible returns. It's to achieve acceptable returns while minimizing worry and decision fatigue. For me this is best achieved by knowing I am better prepared for whatever unknown shifts may occur in the world economy.
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Re: VTSAX or VTWAX over the next 35 years?

Post by BlueMoonXD »

glamdring269 wrote: Wed Jun 23, 2021 11:32 am I have a similar question to this. My taxable is currently 100% VTSAX but I've thought about diversifying it a bit. Not in a rush to get to this money as I do not foresee a need for at least 10 years but not sure I want to keep it all in VTSAX. With that said, is it better to rebalance what is in there now or to basically influence a rebalance through monthly investments? For example let's say I have 100k in VTSAX and want to get to 20% VTWAX (or other). If investing a fresh $2k/mo then maybe the cleanest way would be to just shift to 100% VTWAX on the new deposits until the overall balance is to my liking. Any thoughts on this? Thanks all.
Yes, I would much prefer to rebalance through new investments rather than incur gains in a taxable account. Whatever the benefits of the increased diversification, clearly this thread shows it is minimal enough (particularly in the short term) that it will not outweigh the tax drag.

As a side note I'll also say I don't really understand the strategy of VTSAX + VTWAX. If you want to own the total world, then just buy that. If you prefer a fixed allocation to ex-US stocks (my personal preference), then set it, buy VTIAX, and maintain it as you do with the rest of your allocation. Mixing total world and total US funds doesn't seem to accomplish anything other than confusing what your actual allocation is.

I understand in your case it's complicated by the fact that you already own VTSAX. Given that, I'd personally just pick an allocation to VTIAX that approximates the weight of ex-US stocks in VTWAX and call it a day. You can always revisit your allocation every 10 years or so if the global market shifts.
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Re: VTSAX or VTWAX over the next 35 years?

Post by 1789 »

35 years is short. US should survive into next 35 years. So VTSAX is enough for me.
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Re: VTSAX or VTWAX over the next 35 years?

Post by etfan »

BlueMoonXD wrote: Wed Jun 23, 2021 2:03 pm As a side note I'll also say I don't really understand the strategy of VTSAX + VTWAX. If you want to own the total world, then just buy that.
I think VTSAX+VTWAX as a permanent allocation doesn't make sense, but if it's a "transitional" allocation, then it makes sense. Essentially, start buying VTWAX and slowly selling VTSAX and moving to VTWAX until the transition is complete.
I understand in your case it's complicated by the fact that you already own VTSAX. Given that, I'd personally just pick an allocation to VTIAX that approximates the weight of ex-US stocks in VTWAX and call it a day.
This will keep the rebalancing tax costs.
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Re: VTSAX or VTWAX over the next 35 years?

Post by etfan »

1789 wrote: Wed Jun 23, 2021 2:09 pm 35 years is short. US should survive into next 35 years. So VTSAX is enough for me.
You're betting that the downturn will be slow and prolonged and foreseeable. That may or may not be true.
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Re: VTSAX or VTWAX over the next 35 years?

Post by BlueMoonXD »

etfan wrote: Wed Jun 23, 2021 2:27 pm
BlueMoonXD wrote: Wed Jun 23, 2021 2:03 pm As a side note I'll also say I don't really understand the strategy of VTSAX + VTWAX. If you want to own the total world, then just buy that.
I think VTSAX+VTWAX as a permanent allocation doesn't make sense, but if it's a "transitional" allocation, then it makes sense. Essentially, start buying VTWAX and slowly selling VTSAX and moving to VTWAX until the transition is complete.
I understand in your case it's complicated by the fact that you already own VTSAX. Given that, I'd personally just pick an allocation to VTIAX that approximates the weight of ex-US stocks in VTWAX and call it a day.
This will keep the rebalancing tax costs.
My suggestion would be to just direct all new investment towards VTIAX until you've achieved the desired allocation. This way you never incur any tax costs at all and you end up with the same goal of an approximate world-market allocation.

But yes, if someone would prefer to eventually end up with a 1 or 2 fund portfolio eventually then the transition you described is perfectly sensible as well.
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Re: VTSAX or VTWAX over the next 35 years?

Post by greenway23 »

Question for Bogleheads in the withdrawal phase:

I am trying to get a sense of how much importance to place on simplicity during the withdrawal phase, specifically in a taxable account. I currently invest in VTSAX (75-80%) and VTIAX (20-25%) in my taxable account. However, the idea of only having to deal with one position in my taxable account during the withdrawal phase is potentially very appealing to me. (Bond funds would presumably be in 401k only.) I figure that even if I personally think VTWAX has too high an allocation to international, I could always adjust my tax advantaged accounts accordingly. My question is: How much of a simplicity advantage would this provide during withdrawal phase versus a two fund (VTSAX + VTIAX) portfolio in taxable. My unrealized capital gains are still low enough that I could start over without significant tax consequences.
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Re: VTSAX or VTWAX over the next 35 years?

Post by lakpr »

greenway23 wrote: Wed Jul 14, 2021 11:59 pm My question is: How much of a simplicity advantage would this provide during withdrawal phase versus a two fund (VTSAX + VTIAX) portfolio in taxable. My unrealized capital gains are still low enough that I could start over without significant tax consequences.
I am not in withdrawal phase, but having separate funds for US equities and International equities will let you capture the Foreign Tax Credit on your tax returns. That is not possible if the funds have less than 50% of the investments in international equities, which is the case with VTWAX.
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Re: VTSAX or VTWAX over the next 35 years?

Post by Marseille07 »

VTSAX and chill.
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Re: VTSAX or VTWAX over the next 35 years?

Post by LFKB »

VTSAX easily

Never underestimate American entrepreneurialism, innovation, work ethic and our system of capital. Anyone who has done so has always been wrong.
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Re: VTSAX or VTWAX over the next 35 years?

Post by phantom0308 »

LFKB wrote: Thu Jul 15, 2021 12:44 am VTSAX easily

Never underestimate American entrepreneurialism, innovation, work ethic and our system of capital. Anyone who has done so has always been wrong.
Unless they happened to have retired in 1968. They were right because from 1968-1984 stocks had ~ zero real return over that period and they didn’t stick around to see it magically reappear.

Barring the end of civilization as we know it, eventually productivity will increase. That doesn’t mean the US will increase faster than the rest of the world over all investing periods relevant to you and I. Also, key aspects of the US and the rest of the world change over time like the size of the state, the level of competition, and openness to foreign entrepreneurs/workers. It seems unlikely the US would manage to maintain the business friendly crown consistently forever.
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Re: VTSAX or VTWAX over the next 35 years?

Post by Noobvestor »

Good to see the old 'US versus global' debate going strong. I suppose it's my own filter, but every pro-US comment reads like propaganda to me. Even if all the US-is-better arguments hold water, surely they're priced in. Buy the haystack or don't, I suppose. As to Jack, he had this to say on the matter:
"If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself"
viewtopic.php?t=104781

TL;DR VTWAX and chill :beer
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Re: VTSAX or VTWAX over the next 35 years?

Post by Noobvestor »

LFKB wrote: Thu Jul 15, 2021 12:44 am VTSAX easily

Never underestimate American entrepreneurialism, innovation, work ethic and our system of capital. Anyone who has done so has always been wrong.
Now replace 'American' with 'Roman' or 'British' and change the century and ... well you get the idea :shock:
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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