Int'l Investing as % of Total Equity Side

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tomd37
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Int'l Investing as % of Total Equity Side

Postby tomd37 » Fri May 19, 2017 9:47 am

As an 80 year-old, I basically have a 3-fund portfolio consisting of Total Stock Market Index (VTSAX), Intermediate-Term Bond Index (VBILX) and REIT Index (VGSLX) and those funds are invested in a 40/60 stock/bond ratio. I have opted not to follow Vanguard's general guidance of 40% of equities in international. Nor have I opted to follow Jack Bogle's comments that if you feel you must have international equities it probably should be limited to no more than 20% of equity investments.

My question is if I was to consider 20% of equities in international, would that 8% really have any impact on the total portfolio and its performance over my remaining years of maybe 15?
Tom D.

rkhusky
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Re: Int'l Investing as % of Total Equity Side

Postby rkhusky » Fri May 19, 2017 10:43 am

tomd37 wrote:As an 80 year-old, I basically have a 3-fund portfolio consisting of Total Stock Market Index (VTSAX), Intermediate-Term Bond Index (VBILX) and REIT Index (VGSLX) and those funds are invested in a 40/60 stock/bond ratio. I have opted not to follow Vanguard's general guidance of 40% of equities in international. Nor have I opted to follow Jack Bogle's comments that if you feel you must have international equities it probably should be limited to no more than 20% of equity investments.

My question is if I was to consider 20% of equities in international, would that 8% really have any impact on the total portfolio and its performance over my remaining years of maybe 15?


Probably not, unless you are living on the edge right now.

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SpringMan
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Re: Int'l Investing as % of Total Equity Side

Postby SpringMan » Fri May 19, 2017 11:01 am

I think you are following Jack Bogle's recommendation. He prefaces his statement with "if you must have international" and 0% is less than 20%. I see no reason to change. Keep in mind VGSLX is tax inefficient and is best held in a tax advantaged account, ditto for VBILX.
Best Wishes, SpringMan

badger42
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Re: Int'l Investing as % of Total Equity Side

Postby badger42 » Fri May 19, 2017 11:05 am

The efficient frontier for domestic vs international assumes a pretty long time horizon. If what you have works for you, I wouldn't touch it, particularly when only 40% of your portfolio is equities to begin with.

At less than half your age, I have 28% of equities in developed international and 7% in emerging markets.

Miriam2
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Re: Int'l Investing as % of Total Equity Side

Postby Miriam2 » Fri May 19, 2017 11:22 am

Tom,
Here is a 2014 Vanguard white paper on international investing and a recent thread on this:

"Global equities: Balancing home bias and diversification."

viewtopic.php?f=10&t=196956 - "How Much International Stock? A Suggestion."

bigred77
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Re: Int'l Investing as % of Total Equity Side

Postby bigred77 » Fri May 19, 2017 12:45 pm

I'm a very strong proponent of holding US and International fairly close to their market weight. I think most are usually better off holding US and INTL in a 50/50 split rather than 100/0.

In your specific case, I think it's fine to just leave it alone. Your investment time frame is on the shorter side, your equity component is on the lower side, and your considering a relatively small allocation of your equities to international. I don't think it's optimal, but it's certainly sufficient.

I don't think that 8% of your portfolio will make a material impact to your bottom line at this point.

Valuethinker
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Re: Int'l Investing as % of Total Equity Side

Postby Valuethinker » Sat May 20, 2017 12:52 pm

tomd37 wrote:As an 80 year-old, I basically have a 3-fund portfolio consisting of Total Stock Market Index (VTSAX), Intermediate-Term Bond Index (VBILX) and REIT Index (VGSLX) and those funds are invested in a 40/60 stock/bond ratio. I have opted not to follow Vanguard's general guidance of 40% of equities in international. Nor have I opted to follow Jack Bogle's comments that if you feel you must have international equities it probably should be limited to no more than 20% of equity investments.

My question is if I was to consider 20% of equities in international, would that 8% really have any impact on the total portfolio and its performance over my remaining years of maybe 15?


Given your age, it would seem best to just leave it alone.

8% is unlikely to have a huge impact. With 60% bonds, the diversification benefit (of 8% in equities in foreign equities) is small.

tomd37
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Location: Brentwood, TN

Re: Int'l Investing as % of Total Equity Side

Postby tomd37 » Sun May 21, 2017 8:20 pm

Thanks to all who responded and I apologize for the delay in responding. While I am willing and have the ability to take risk, I no longer have the need to take risk. As Bill B. and Larry S. say, if you have won the game there is no need to continue playing. The utility of worth curve has flattened out for me. In view of the recent bond and equity conditions, a couple of years ago I reduced my equity position to forty percent and I plan on keeping it around that level.

As mentioned there does not appear anything really to be gained by including international equities at this stage of life so I just plan on keeping things as they are. It is nice though to sometimes bounce my thoughts off others and see how they view things. Again thanks for your considerations and thoughts.
Tom D.


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