Floating Net Worth w/ VT after 5 Years

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princetontiger
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Floating Net Worth w/ VT after 5 Years

Post by princetontiger » Sat Apr 21, 2018 5:58 pm

Hey guys,

Just wanted to let people know that about 5 years ago, I had an idea: floating nearly every penny of my net worth in an ETF. I decided on VT. It's been a stressfree ride since.

While VT would most likely underperform small and midcap ETFs, and perhaps the S&P 500 (US markets still have highest ROE of all countries), I wanted something that would preserve purchasing power. VT has been a stud.

Does anyone else put money into a 100% stock basket?

I think that the US will ultimately decline in power and status by 2050, and potentially partition by 2100 (various demographics/geopolitical factors will influence this). Therefore, VT could one day beat the S&P 500 as another country takes its place... the best part about an index is that I don't have to guess.

lostdog
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Re: Floating Net Worth w/ VT after 5 Years

Post by lostdog » Sat Apr 21, 2018 6:21 pm

I only use VTWSX/VT. It's the most bogleheadish fund there is. No home country bias, no guessing what is the best domestic and international allocation and mostly simplicity.

Buy the haystack.
Last edited by lostdog on Sat Apr 21, 2018 6:27 pm, edited 1 time in total.

bloom2708
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Re: Floating Net Worth w/ VT after 5 Years

Post by bloom2708 » Sat Apr 21, 2018 6:27 pm

Your run up occurred in a long bull market. Pretty easy when it is up, up, up.

Consider adding 20% Total US Bond and 30% Total International. 30% of your 80%.

Your 2050 and 2100 predictions are “interesting “. :shock:
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

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Alexa9
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Re: Floating Net Worth w/ VT after 5 Years

Post by Alexa9 » Sat Apr 21, 2018 6:34 pm

That's a great equity allocation. I would be anxious without at least 20% bonds.

drk
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Re: Floating Net Worth w/ VT after 5 Years

Post by drk » Sat Apr 21, 2018 6:43 pm

bloom2708 wrote:
Sat Apr 21, 2018 6:27 pm
Your run up occurred in a long bull market. Pretty easy when it is up, up, up.

Consider adding 20% Total US Bond and 30% Total International. 30% of your 80%.
VT is Vanguard Total World, so princetontiger has 48.3% allocated to Total International as of March 31.

bloom2708
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Re: Floating Net Worth w/ VT after 5 Years

Post by bloom2708 » Sat Apr 21, 2018 6:51 pm

drk wrote:
Sat Apr 21, 2018 6:43 pm
bloom2708 wrote:
Sat Apr 21, 2018 6:27 pm
Your run up occurred in a long bull market. Pretty easy when it is up, up, up.

Consider adding 20% Total US Bond and 30% Total International. 30% of your 80%.
VT is Vanguard Total World, so princetontiger has 48.3% allocated to Total International as of March 31.
Check. Then just add bonds. :(

Or don’t.
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

drk
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Re: Floating Net Worth w/ VT after 5 Years

Post by drk » Sat Apr 21, 2018 7:25 pm

bloom2708 wrote:
Sat Apr 21, 2018 6:51 pm
drk wrote:
Sat Apr 21, 2018 6:43 pm
bloom2708 wrote:
Sat Apr 21, 2018 6:27 pm
Your run up occurred in a long bull market. Pretty easy when it is up, up, up.

Consider adding 20% Total US Bond and 30% Total International. 30% of your 80%.
VT is Vanguard Total World, so princetontiger has 48.3% allocated to Total International as of March 31.
Check. Then just add bonds. :(

Or don’t.
Yeah, I'll leave that recommendation up to the OP because I don't think I can find any bonds buried in VT's portfolio. :wink:

Grasshopper
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Re: Floating Net Worth w/ VT after 5 Years

Post by Grasshopper » Sun Apr 22, 2018 6:53 am

I use 100% VT for my taxable account and Wellington with its bond component for 100% of my retirement accounts. A perfect 2 fund portfolio.

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Re: Floating Net Worth w/ VT after 5 Years

Post by bgf » Sun Apr 22, 2018 7:45 am

Yes, I use VT as my portfolio benchmark, which my actual portfolio tracks closely.

Bonds have expected returns of less than 4%, and I dont think the benefit of decreased short term volatility is worth the cost of lower return given my time horizon.
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JoMoney
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Re: Floating Net Worth w/ VT after 5 Years

Post by JoMoney » Sun Apr 22, 2018 8:07 am

100% of my investment money is simply in a low-cost S&P 500 index fund... and 100% of my shorter-term savings is in savings accounts, money market, and bonds.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Floating Net Worth w/ VT after 5 Years

Post by guyesmith » Sun Apr 22, 2018 8:29 am

I'm considering 100% VT/VTWSX too. Right now I have it only in my SEP IRA.

The tough part about 5 years stress free (which is wonderful) is that the Total US Stock Market outperformed Total World. That's short term. If your 2050 prediction is true you're on the right track. There's a good chance it is true as the world economy and global middle class grows. I actually hope for the sake of humanity's living standards you're right.

To buy the 'world market' or weight a home-bias. That is the big question many of us are struggling with as VTWSX expense ratio drops and it nears its 10 year anniversary.

I think it'd be safe either way. 100% US or 100% world...it's a global economy. BUT, if the US takes a hard downward spiral for 10-20 years international would be a smart diversification. Honestly, it seems like Vanguard is pushing harder towards greater international diversification. Used to be everyone was all about 20% international. Now the Target Retirement Funds are more like 40% international. In that case, the Total World Fund is not all that much different at 55/45 NorthAmerica/World.

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princetontiger
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Re: Floating Net Worth w/ VT after 5 Years

Post by princetontiger » Sun Apr 22, 2018 3:32 pm

The number of strategies that will beat VT are maybe less than 10. The S&P 500 will indeed beat VT if US stocks outperform the rest of the world. Since 2008, that has been the case.

The US has the highest ROE than all countries... I think the UK and Sweden rival the US, however, the US has great multinationals. I suspect Europe to eventually get its act together, although ROE is a little lower in Europe since the eurozone crisis and the general business climate is a little less 'shareholders first' than in the US (which is fine). VT is 2/3 US and Europe, and the rest everywhere else.

US Small and midcap VALUE beat everythingelse, but this is historical and the trend may not always be there.

So... yes, SPY is up 350%, VT is up 200%... MDY is up over 400%.

VT, to me, 'adjusts' my net worth with inflation or (hopefully not) deflation.

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Re: Floating Net Worth w/ VT after 5 Years

Post by asset_chaos » Sun Apr 22, 2018 8:02 pm

Since it opened in 2008, I've invested in total world (in the old fashioned mutual fund form) as my core stock holding. I have reasons, but they're very different from the OP's. I have no predictions of US decline, relative or absolute. Stocks may hedge inflation over the long term, but I think the evidence says stocks and inflation have low correlation in the short to medium terms. I invest in total world because I think broad diversification is the best way to invest in stocks. I neither know what businesses or sectors will rise and fall over my lifetime, nor what countries, markets, or currencies, nor really anything. Total world more or less obliterates all the ways to slice and dice the stock market and hides the relative gyrations of market subsectors. Is foreign doing better or worse than domestic; unless I make a specific effort to look it up, I neither know nor care. What I do know is that I don't know where the major innovations will come from that will shape stock returns of the future. Total world, I think, maximizes my chances of earning a fair share of those future returns. But most of all, I find it comfortable and easy to hold total world. It fits my temperament and pleases me. That makes total world, for me, much easier to stay the course with.
Regards, | | Guy

lostdog
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Re: Floating Net Worth w/ VT after 5 Years

Post by lostdog » Sun Apr 22, 2018 8:42 pm

asset_chaos wrote:
Sun Apr 22, 2018 8:02 pm
Since it opened in 2008, I've invested in total world (in the old fashioned mutual fund form) as my core stock holding. I have reasons, but they're very different from the OP's. I have no predictions of US decline, relative or absolute. Stocks may hedge inflation over the long term, but I think the evidence says stocks and inflation have low correlation in the short to medium terms. I invest in total world because I think broad diversification is the best way to invest in stocks. I neither know what businesses or sectors will rise and fall over my lifetime, nor what countries, markets, or currencies, nor really anything. Total world more or less obliterates all the ways to slice and dice the stock market and hides the relative gyrations of market subsectors. Is foreign doing better or worse than domestic; unless I make a specific effort to look it up, I neither know nor care. What I do know is that I don't know where the major innovations will come from that will shape stock returns of the future. Total world, I think, maximizes my chances of earning a fair share of those future returns. But most of all, I find it comfortable and easy to hold total world. It fits my temperament and pleases me. That makes total world, for me, much easier to stay the course with.
+1. You pretty much, in a very good way, explained why I hold Total World. Well said!

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Re: Floating Net Worth w/ VT after 5 Years

Post by balofagus » Sun Apr 22, 2018 8:58 pm

asset_chaos wrote:
Sun Apr 22, 2018 8:02 pm
But most of all, I find it comfortable and easy to hold total world. It fits my temperament and pleases me. That makes total world, for me, much easier to stay the course with.
My aunt pointed me to Total World and said “You want to buy some stocks? How does ‘all of them’ sound?” Resonated with me then, and still does!

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zaboomafoozarg
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Re: Floating Net Worth w/ VT after 5 Years

Post by zaboomafoozarg » Sun Apr 22, 2018 9:13 pm

Sometimes I wish I could stop fretting over my slice & dice asset allocation and just do a simple one like 75% VT (all-world equity) + 25% VFIUX (US intermediate treasury bonds).

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Re: Floating Net Worth w/ VT after 5 Years

Post by ThePrince » Sun Apr 22, 2018 10:06 pm

zaboomafoozarg wrote:
Sun Apr 22, 2018 9:13 pm
Sometimes I wish I could stop fretting over my slice & dice asset allocation and just do a simple one like 75% VT (all-world equity) + 25% VFIUX (US intermediate treasury bonds).
+1

Leesbro63
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Re: Floating Net Worth w/ VT after 5 Years

Post by Leesbro63 » Mon Apr 23, 2018 6:57 am

The “go to” stock fund for Bogleheads has been Vanguard Total Market (USA). Vanguard Total World makes sense to me. What would be the argument against it (in other words, sticking with Vanguard Total Market/stocking with USA vs World).

Tamalak
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Re: Floating Net Worth w/ VT after 5 Years

Post by Tamalak » Mon Apr 23, 2018 7:12 am

Yep. 100% of my net worth is in VT other than a few thousand in cash for expenses management. That's the way it's been for years and that's how it's gonna stay. No regrets. Rebalancing, what's that?

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Re: Floating Net Worth w/ VT after 5 Years

Post by UpperNwGuy » Mon Apr 23, 2018 8:23 am

I wish Vanguard would open up an Admiral Shares class for Total World.

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Re: Floating Net Worth w/ VT after 5 Years

Post by guyesmith » Mon Apr 23, 2018 8:40 am

UpperNwGuy wrote:
Mon Apr 23, 2018 8:23 am
I wish Vanguard would open up an Admiral Shares class for Total World.
That would make getting 100% on board an easier decision.

Does anyone know why total world has less stocks than if you combine total us and total international?

Tamalak
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Re: Floating Net Worth w/ VT after 5 Years

Post by Tamalak » Mon Apr 23, 2018 8:40 am

guyesmith wrote:
Mon Apr 23, 2018 8:40 am
UpperNwGuy wrote:
Mon Apr 23, 2018 8:23 am
I wish Vanguard would open up an Admiral Shares class for Total World.
That would make getting 100% on board an easier decision.

Does anyone know why total world has less stocks than if you combine total us and total international?
This, and the expense ratio difference is why I'm not actually in VT, I simulate it with VTI/VXUS

lostdog
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Re: Floating Net Worth w/ VT after 5 Years

Post by lostdog » Mon Apr 23, 2018 8:47 am

Tamalak wrote:
Mon Apr 23, 2018 8:40 am
guyesmith wrote:
Mon Apr 23, 2018 8:40 am
UpperNwGuy wrote:
Mon Apr 23, 2018 8:23 am
I wish Vanguard would open up an Admiral Shares class for Total World.
That would make getting 100% on board an easier decision.

Does anyone know why total world has less stocks than if you combine total us and total international?
This, and the expense ratio difference is why I'm not actually in VT, I simulate it with VTI/VXUS
At first I simulated it also but if and when fund gives access to admiral shares I did not want to make a possible expensive exchange in my taxable account. I just went ahead and made the change before I had huge capital gains. No regrets. The simplicity, ease and contentment is worth the extra cost. The fund is low cost.

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Re: Floating Net Worth w/ VT after 5 Years

Post by pascalwager » Mon Apr 23, 2018 10:06 am

guyesmith wrote:
Mon Apr 23, 2018 8:40 am
UpperNwGuy wrote:
Mon Apr 23, 2018 8:23 am
I wish Vanguard would open up an Admiral Shares class for Total World.
That would make getting 100% on board an easier decision.

Does anyone know why total world has less stocks than if you combine total us and total international?
That's just the way the FTSE index is constituted. The fund prospectus indicates that they may go to a broader index someday, when one becomes available.

pascalwager
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Re: Floating Net Worth w/ VT after 5 Years

Post by pascalwager » Mon Apr 23, 2018 10:11 am

Tamalak wrote:
Mon Apr 23, 2018 8:40 am
guyesmith wrote:
Mon Apr 23, 2018 8:40 am
UpperNwGuy wrote:
Mon Apr 23, 2018 8:23 am
I wish Vanguard would open up an Admiral Shares class for Total World.
That would make getting 100% on board an easier decision.

Does anyone know why total world has less stocks than if you combine total us and total international?
This, and the expense ratio difference is why I'm not actually in VT, I simulate it with VTI/VXUS
I also simulate, using the two mutual funds. Saves me over $400 per year. As the ER declines I'll probably switch to TWS (in my tax-deferred accounts) someday for simplicity, especially with an improved index.

pascalwager
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Re: Floating Net Worth w/ VT after 5 Years

Post by pascalwager » Mon Apr 23, 2018 10:23 am

zaboomafoozarg wrote:
Sun Apr 22, 2018 9:13 pm
Sometimes I wish I could stop fretting over my slice & dice asset allocation and just do a simple one like 75% VT (all-world equity) + 25% VFIUX (US intermediate treasury bonds).
My TWS allocation actually evolved from a longtime 50/20/30 (S&P 500/SC/EAFE) workplace portfolio. I guess I should have stayed the course for consistency when I rolled over at VG, but I decided to go 50/50 to match the larger part of my overall portfolio: a global, tilted, large value, small company portfolio. I also was influenced to change by the ebook (The Elements of Investing) Vanguard sent out several years ago which recommended using the TWS approach with either one or two funds.

lostdog
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Re: Floating Net Worth w/ VT after 5 Years

Post by lostdog » Mon Apr 23, 2018 10:24 am

I guess the question is what do you value more? Cost or more simplicity with extra cost?

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Re: Floating Net Worth w/ VT after 5 Years

Post by HomerJ » Mon Apr 23, 2018 10:27 am

princetontiger wrote:
Sat Apr 21, 2018 5:58 pm
While VT would most likely underperform small and midcap ETFs, and perhaps the S&P 500 (US markets still have highest ROE of all countries), I wanted something that would preserve purchasing power. VT has been a stud.
100% stocks is NOT the way to preserve purchasing power. You've been very lucky that it's been a "stressfree ride". It will not always be so. A crash WILL happen. We don't know when, but there is no "if". Your purchasing power will not be preserved, at least temporarily. Are you ready for that?

$10,000 invested 5 years ago is worth $16,000 today. Very nice.

$10,000 invested 5 years ago in U.S. only would be worth $24,500 today.

Not sure why you think VT has been a "stud". It's a good solid way to invest, for sure, and I'm sure it will have its day. At some point, the U.S. may under-perform the rest of the world, and you'll be happy you made this choice.

But again, I hope your goals are long-term, because 100% stocks is NOT the way to "preserve purchasing power" in the short-run.

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Re: Floating Net Worth w/ VT after 5 Years

Post by WanderingDoc » Mon Apr 23, 2018 10:41 am

bloom2708 wrote:
Sat Apr 21, 2018 6:27 pm
Your run up occurred in a long bull market. Pretty easy when it is up, up, up.

Consider adding 20% Total US Bond and 30% Total International. 30% of your 80%.

Your 2050 and 2100 predictions are “interesting “. :shock:
I agree. No one reading this thread will be alive in 2100, so who really cares about those predictions? No one is in the position that decisions based on 2100 or 2075 will affect them in any material way.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

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Re: Floating Net Worth w/ VT after 5 Years

Post by Jags4186 » Mon Apr 23, 2018 11:51 am

There is no mechanism for “splitting” the United States. One time there was a thought that states could secede. It was determined that that wasn’t allowed. I think there was a big to-do about it but I can’t quite remember what it was :wink:

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Re: Floating Net Worth w/ VT after 5 Years

Post by bgf » Mon Apr 23, 2018 1:41 pm

HomerJ wrote:
Mon Apr 23, 2018 10:27 am
princetontiger wrote:
Sat Apr 21, 2018 5:58 pm
While VT would most likely underperform small and midcap ETFs, and perhaps the S&P 500 (US markets still have highest ROE of all countries), I wanted something that would preserve purchasing power. VT has been a stud.

Not sure why you think VT has been a "stud". It's a good solid way to invest, for sure, and I'm sure it will have its day. At some point, the U.S. may under-perform the rest of the world, and you'll be happy you made this choice.
you mean, like, last year? Emerging Markets 37.8%, International 25.6%.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

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princetontiger
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Re: Floating Net Worth w/ VT after 5 Years

Post by princetontiger » Mon Apr 23, 2018 7:16 pm

VT has beat SPY by a very slim margin the past 2 years.

I suspect VT could outperform SPY this year... but, who cares? I think we'll have a rally all the way through the end of 2019. Europe, which has lagged, should catch up. Also, EM should finally break above is highs set in 2000 and 2008.

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Re: Floating Net Worth w/ VT after 5 Years

Post by TimeRunner » Mon Apr 23, 2018 7:53 pm

VT's a great fund and expense ratio has been steadily dropping as it grows. Automatic rebalancing takes timing off the table. Most of my equity holding is VT, bonds in TSP G Fund as a former Fed. (70/30).
"What'd ya expect in an opera, a happy ending?" -Bugs Bunny. "You gotta fight for your right to party!" -Beastie Boys

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Re: Floating Net Worth w/ VT after 5 Years

Post by david1082b » Mon Apr 23, 2018 8:51 pm

princetontiger wrote:
Mon Apr 23, 2018 7:16 pm
VT has beat SPY by a very slim margin the past 2 years.

I suspect VT could outperform SPY this year... but, who cares? I think we'll have a rally all the way through the end of 2019. Europe, which has lagged, should catch up. Also, EM should finally break above is highs set in 2000 and 2008.
I think EM went above its 2000 high in 2004 and never went back to it. http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

In nominal terms the EM fund seems to have broken above the 2007 high slightly. 1997 also seemed to be a slightly higher peak than 2000.

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Re: Floating Net Worth w/ VT after 5 Years

Post by pascalwager » Mon Apr 23, 2018 10:29 pm

guyesmith wrote:
Sun Apr 22, 2018 8:29 am
I'm considering 100% VT/VTWSX too. Right now I have it only in my SEP IRA.

The tough part about 5 years stress free (which is wonderful) is that the Total US Stock Market outperformed Total World. That's short term. If your 2050 prediction is true you're on the right track. There's a good chance it is true as the world economy and global middle class grows. I actually hope for the sake of humanity's living standards you're right.

To buy the 'world market' or weight a home-bias. That is the big question many of us are struggling with as VTWSX expense ratio drops and it nears its 10 year anniversary.

I think it'd be safe either way. 100% US or 100% world...it's a global economy. BUT, if the US takes a hard downward spiral for 10-20 years international would be a smart diversification. Honestly, it seems like Vanguard is pushing harder towards greater international diversification. Used to be everyone was all about 20% international. Now the Target Retirement Funds are more like 40% international. In that case, the Total World Fund is not all that much different at 55/45 NorthAmerica/World.
Considering your comments, I guess my early personal allocations were a real outlier. I began investing in 1995 under an advisor and a sub-advisor. The sub-advisor was an intermediary and the advisor managed the accounts. My US/non-US allocations were 51/49 and 47/53 for two accounts and a 40/60 account was also available. Knowing nothing about investing beyond the advisor's tutorial literature, I accepted these allocations as normal from the very beginning and nowadays an over-weighted US portfolio just doesn't feel right to me.

Even more of an outlier, my assets were mainly large value and small caps. So holding large company growth stocks in TWS also seems odd. Actually, for me, a large value/small cap portfolio is the investing center of gravity and TWS is always going to feel unnatural. When I have doubts, I remind myself that TWS contains lots of prominent large companies that I would not otherwise own.

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Re: Floating Net Worth w/ VT after 5 Years

Post by guyesmith » Tue Apr 24, 2018 7:25 am

pascalwager wrote:
Mon Apr 23, 2018 10:29 pm
guyesmith wrote:
Sun Apr 22, 2018 8:29 am
I'm considering 100% VT/VTWSX too. Right now I have it only in my SEP IRA.

The tough part about 5 years stress free (which is wonderful) is that the Total US Stock Market outperformed Total World. That's short term. If your 2050 prediction is true you're on the right track. There's a good chance it is true as the world economy and global middle class grows. I actually hope for the sake of humanity's living standards you're right.

To buy the 'world market' or weight a home-bias. That is the big question many of us are struggling with as VTWSX expense ratio drops and it nears its 10 year anniversary.

I think it'd be safe either way. 100% US or 100% world...it's a global economy. BUT, if the US takes a hard downward spiral for 10-20 years international would be a smart diversification. Honestly, it seems like Vanguard is pushing harder towards greater international diversification. Used to be everyone was all about 20% international. Now the Target Retirement Funds are more like 40% international. In that case, the Total World Fund is not all that much different at 55/45 NorthAmerica/World.
Considering your comments, I guess my early personal allocations were a real outlier. I began investing in 1995 under an advisor and a sub-advisor. The sub-advisor was an intermediary and the advisor managed the accounts. My US/non-US allocations were 51/49 and 47/53 for two accounts and a 40/60 account was also available. Knowing nothing about investing beyond the advisor's tutorial literature, I accepted these allocations as normal from the very beginning and nowadays an over-weighted US portfolio just doesn't feel right to me.

Even more of an outlier, my assets were mainly large value and small caps. So holding large company growth stocks in TWS also seems odd. Actually, for me, a large value/small cap portfolio is the investing center of gravity and TWS is always going to feel unnatural. When I have doubts, I remind myself that TWS contains lots of prominent large companies that I would not otherwise own.
Interesting. How many years has this been and how has it worked out for you? Average return?

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spdoublebass
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Re: Floating Net Worth w/ VT after 5 Years

Post by spdoublebass » Tue Apr 24, 2018 12:13 pm

I'm only posting this here because it hasn't been brought up in this thread as of yet. I found this very interesting.

Siamond posted this on the Bogleheads Blog.

https://finpage.blog/2017/03/25/investi ... ld-part-3/
I'm trying to think, but nothing happens

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Re: Floating Net Worth w/ VT after 5 Years

Post by David Jay » Tue Apr 24, 2018 12:33 pm

Jags4186 wrote:
Mon Apr 23, 2018 11:51 am
There is no mechanism for “splitting” the United States. One time there was a thought that states could secede. It was determined that that wasn’t allowed. I think there was a big to-do about it but I can’t quite remember what it was :wink:
And it's JAGS for the score! (4 score)
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Re: Floating Net Worth w/ VT after 5 Years

Post by guyesmith » Tue Apr 24, 2018 3:05 pm

spdoublebass wrote:
Tue Apr 24, 2018 12:13 pm
I'm only posting this here because it hasn't been brought up in this thread as of yet. I found this very interesting.

Siamond posted this on the Bogleheads Blog.

https://finpage.blog/2017/03/25/investi ... ld-part-3/
Great article.

So this is their conclusion: "The author believes that this study makes a convincing case to seek a fairly high exposure to global (or international) equities, while keeping a significant tilt towards domestic equities."

I don't fully follow the rationale. Say US is 52% of the world's cap (according to VT it is), is the author against mirroring that? It keeps saying to go high on global but tilt towards domestic, but all the examples are the other direction.

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Re: Floating Net Worth w/ VT after 5 Years

Post by Thesaints » Tue Apr 24, 2018 3:11 pm

princetontiger wrote:
Sat Apr 21, 2018 5:58 pm
Hey guys,

Just wanted to let people know that about 5 years ago, I had an idea: floating nearly every penny of my net worth in an ETF. I decided on VT. It's been a stressfree ride since.

While VT would most likely underperform small and midcap ETFs, and perhaps the S&P 500 (US markets still have highest ROE of all countries), I wanted something that would preserve purchasing power. VT has been a stud.

Does anyone else put money into a 100% stock basket?

I think that the US will ultimately decline in power and status by 2050, and potentially partition by 2100 (various demographics/geopolitical factors will influence this). Therefore, VT could one day beat the S&P 500 as another country takes its place... the best part about an index is that I don't have to guess.
Hopefully, you did not get used to the last five years. You haven't seen yet what a 100% stock investment looks like.

pascalwager
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Re: Floating Net Worth w/ VT after 5 Years

Post by pascalwager » Tue Apr 24, 2018 3:20 pm

guyesmith wrote:
Tue Apr 24, 2018 3:05 pm
spdoublebass wrote:
Tue Apr 24, 2018 12:13 pm
I'm only posting this here because it hasn't been brought up in this thread as of yet. I found this very interesting.

Siamond posted this on the Bogleheads Blog.

https://finpage.blog/2017/03/25/investi ... ld-part-3/
Great article.

So this is their conclusion: "The author believes that this study makes a convincing case to seek a fairly high exposure to global (or international) equities, while keeping a significant tilt towards domestic equities."

I don't fully follow the rationale. Say US is 52% of the world's cap (according to VT it is), is the author against mirroring that? It keeps saying to go high on global but tilt towards domestic, but all the examples are the other direction.
The term "global" may be incorrectly used in the article. Global actually means the entire world, but seems to be used to mean only "non-US" in the article.

guyesmith
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Re: Floating Net Worth w/ VT after 5 Years

Post by guyesmith » Tue Apr 24, 2018 4:21 pm

pascalwager wrote:
Tue Apr 24, 2018 3:20 pm
guyesmith wrote:
Tue Apr 24, 2018 3:05 pm
spdoublebass wrote:
Tue Apr 24, 2018 12:13 pm
I'm only posting this here because it hasn't been brought up in this thread as of yet. I found this very interesting.

Siamond posted this on the Bogleheads Blog.

https://finpage.blog/2017/03/25/investi ... ld-part-3/
Great article.

So this is their conclusion: "The author believes that this study makes a convincing case to seek a fairly high exposure to global (or international) equities, while keeping a significant tilt towards domestic equities."

I don't fully follow the rationale. Say US is 52% of the world's cap (according to VT it is), is the author against mirroring that? It keeps saying to go high on global but tilt towards domestic, but all the examples are the other direction.
The term "global" may be incorrectly used in the article. Global actually means the entire world, but seems to be used to mean only "non-US" in the article.
I noticed that too. It seems he recommends 75% non-home county and 25% home country no matter where you live. Am I accurate on that?

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Re: Floating Net Worth w/ VT after 5 Years

Post by spdoublebass » Tue Apr 24, 2018 4:22 pm

There are three parts to that article. You can get to the other parts at the bottom.

I took it to mean that (per that study) the sweet spot is 75% at Global market weight and 25% Domestic Tilt. Which would mean is US is 52% of global market weight, you'd be at around 64% US overall.

I think they are basing this off many things...such as currency, where you'll retire, etc.

I'm going from memory here I can't remember every detail. I think the point is that overall, if you are one of the top 3 large countries, then it doesn't really matter, but if you are a smaller one, it does matter more.

I don't know where US will end up, I have high hopes, but you never know. I do as the above article states.

Not that anyone's asking, but I decided on the following:
I hold a Global Portfolio with 70% of my portfolio. Then I tilt US to the other 30%.
I also do this with the fixed income. I hold 70% of it (split between TBM and TIBM) at the Global weight as per Sharpe, then I hold 30% of it in a stable Value fund.
When It grows, I may split the Total World if they never get an Admiral class, but I don't really care right now. I know I could probably do something better, but I'm at peace with this and I haven't had the urge to tinker. Many Roads to Dublin an all that.

Basically, It's a three fund portfolio, but I wanted some give with the international. I'm ok with it being more it that's what the Market Weight is, that's why I like having a portion of my portfolio that fluctuates.
I'm trying to think, but nothing happens

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Re: Floating Net Worth w/ VT after 5 Years

Post by spdoublebass » Tue Apr 24, 2018 4:25 pm

guyesmith wrote:
Tue Apr 24, 2018 4:21 pm
pascalwager wrote:
Tue Apr 24, 2018 3:20 pm
guyesmith wrote:
Tue Apr 24, 2018 3:05 pm
spdoublebass wrote:
Tue Apr 24, 2018 12:13 pm
I'm only posting this here because it hasn't been brought up in this thread as of yet. I found this very interesting.

Siamond posted this on the Bogleheads Blog.

https://finpage.blog/2017/03/25/investi ... ld-part-3/
Great article.

So this is their conclusion: "The author believes that this study makes a convincing case to seek a fairly high exposure to global (or international) equities, while keeping a significant tilt towards domestic equities."

I don't fully follow the rationale. Say US is 52% of the world's cap (according to VT it is), is the author against mirroring that? It keeps saying to go high on global but tilt towards domestic, but all the examples are the other direction.
The term "global" may be incorrectly used in the article. Global actually means the entire world, but seems to be used to mean only "non-US" in the article.
I noticed that too. It seems he recommends 75% non-home county and 25% home country no matter where you live. Am I accurate on that?
This is at the top of Part 3:

In other words, we’re starting from a global position (World) and adding a tilt towards the domestic market of interest. Let’s take a few examples:

100% World and 0% Domestic means a domestic exposure corresponding to the current market capitalization of the country (which varies over time).

-100% Domestic is trivial, full home country exposure, nothing else.

-Say a country represents 25% of the world’s market cap. Then a 75% World + 25% Domestic asset allocation means 44% domestic exposure (and the rest is international).

-Say a country represents 50% of the world’s market cap (US today, Japan at some point in the 80s).

-Then a 75% World + 25% Domestic asset allocation means 62% domestic exposure (and the rest is international).
I'm trying to think, but nothing happens

pascalwager
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Re: Floating Net Worth w/ VT after 5 Years

Post by pascalwager » Tue Apr 24, 2018 7:40 pm

guyesmith wrote:
Tue Apr 24, 2018 4:21 pm
pascalwager wrote:
Tue Apr 24, 2018 3:20 pm
guyesmith wrote:
Tue Apr 24, 2018 3:05 pm
spdoublebass wrote:
Tue Apr 24, 2018 12:13 pm
I'm only posting this here because it hasn't been brought up in this thread as of yet. I found this very interesting.

Siamond posted this on the Bogleheads Blog.

https://finpage.blog/2017/03/25/investi ... ld-part-3/
Great article.

So this is their conclusion: "The author believes that this study makes a convincing case to seek a fairly high exposure to global (or international) equities, while keeping a significant tilt towards domestic equities."

I don't fully follow the rationale. Say US is 52% of the world's cap (according to VT it is), is the author against mirroring that? It keeps saying to go high on global but tilt towards domestic, but all the examples are the other direction.
The term "global" may be incorrectly used in the article. Global actually means the entire world, but seems to be used to mean only "non-US" in the article.
I noticed that too. It seems he recommends 75% non-home county and 25% home country no matter where you live. Am I accurate on that?
Sorry, I can't answer that. I'm not going to complete the article as I don't know what the author means by Global.

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Re: Floating Net Worth w/ VT after 5 Years

Post by spdoublebass » Tue Apr 24, 2018 8:42 pm

pascalwager wrote:
Tue Apr 24, 2018 7:40 pm

Sorry, I can't answer that. I'm not going to complete the article as I don't know what the author means by Global.
See my post directly above yours. Global is clearly defined as the entire World.
I'm trying to think, but nothing happens

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Re: Floating Net Worth w/ VT after 5 Years

Post by bayview » Tue Apr 24, 2018 9:56 pm

Tamalak wrote:
Mon Apr 23, 2018 8:40 am
guyesmith wrote:
Mon Apr 23, 2018 8:40 am
UpperNwGuy wrote:
Mon Apr 23, 2018 8:23 am
I wish Vanguard would open up an Admiral Shares class for Total World.
That would make getting 100% on board an easier decision.

Does anyone know why total world has less stocks than if you combine total us and total international?
This, and the expense ratio difference is why I'm not actually in VT, I simulate it with VTI/VXUS
+1
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

pascalwager
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Re: Floating Net Worth w/ VT after 5 Years

Post by pascalwager » Tue Apr 24, 2018 10:22 pm

guyesmith wrote:
Tue Apr 24, 2018 7:25 am
pascalwager wrote:
Mon Apr 23, 2018 10:29 pm
guyesmith wrote:
Sun Apr 22, 2018 8:29 am
I'm considering 100% VT/VTWSX too. Right now I have it only in my SEP IRA.

The tough part about 5 years stress free (which is wonderful) is that the Total US Stock Market outperformed Total World. That's short term. If your 2050 prediction is true you're on the right track. There's a good chance it is true as the world economy and global middle class grows. I actually hope for the sake of humanity's living standards you're right.

To buy the 'world market' or weight a home-bias. That is the big question many of us are struggling with as VTWSX expense ratio drops and it nears its 10 year anniversary.

I think it'd be safe either way. 100% US or 100% world...it's a global economy. BUT, if the US takes a hard downward spiral for 10-20 years international would be a smart diversification. Honestly, it seems like Vanguard is pushing harder towards greater international diversification. Used to be everyone was all about 20% international. Now the Target Retirement Funds are more like 40% international. In that case, the Total World Fund is not all that much different at 55/45 NorthAmerica/World.
Considering your comments, I guess my early personal allocations were a real outlier. I began investing in 1995 under an advisor and a sub-advisor. The sub-advisor was an intermediary and the advisor managed the accounts. My US/non-US allocations were 51/49 and 47/53 for two accounts and a 40/60 account was also available. Knowing nothing about investing beyond the advisor's tutorial literature, I accepted these allocations as normal from the very beginning and nowadays an over-weighted US portfolio just doesn't feel right to me.

Even more of an outlier, my assets were mainly large value and small caps. So holding large company growth stocks in TWS also seems odd. Actually, for me, a large value/small cap portfolio is the investing center of gravity and TWS is always going to feel unnatural. When I have doubts, I remind myself that TWS contains lots of prominent large companies that I would not otherwise own.
Interesting. How many years has this been and how has it worked out for you? Average return?
Most of my DFA stocks were purchased in 1995 from 15 years of T-bill accumulation, and I slowly began to build more of a world market portfolio at work. In the late 90's a barber shop customer mentioned that he took his family to Hawaii twice using his S&P 500 gains, but I still had few market shares and never left the mainland. During the "lost decade" I did make about 7% annualized compared to a flat market. But nowadays, when I check the M* curves, DFA global large value and small cap did not beat the market over the last 23 years; but my retirement portfolio is adequate for my needs, and bolstered as it is by a pension. Maybe my heir will see the DFA funds rise strongly and even impressively.

At least I stayed the course. Let's call that a behavioral victory!

pascalwager
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Re: Floating Net Worth w/ VT after 5 Years

Post by pascalwager » Wed Apr 25, 2018 1:34 am

spdoublebass wrote:
Tue Apr 24, 2018 8:42 pm
pascalwager wrote:
Tue Apr 24, 2018 7:40 pm

Sorry, I can't answer that. I'm not going to complete the article as I don't know what the author means by Global.
See my post directly above yours. Global is clearly defined as the entire World.
Okay, you're right. By global he means the entire world. So I'll continue reading the article. I'm interested now.

pascalwager
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Re: Floating Net Worth w/ VT after 5 Years

Post by pascalwager » Wed Apr 25, 2018 3:20 pm

spdoublebass wrote:
Tue Apr 24, 2018 4:22 pm
There are three parts to that article. You can get to the other parts at the bottom.

I took it to mean that (per that study) the sweet spot is 75% at Global market weight and 25% Domestic Tilt. Which would mean is US is 52% of global market weight, you'd be at around 64% US overall.

I think they are basing this off many things...such as currency, where you'll retire, etc.

I'm going from memory here I can't remember every detail. I think the point is that overall, if you are one of the top 3 large countries, then it doesn't really matter, but if you are a smaller one, it does matter more.

I don't know where US will end up, I have high hopes, but you never know. I do as the above article states.

Not that anyone's asking, but I decided on the following:
I hold a Global Portfolio with 70% of my portfolio. Then I tilt US to the other 30%.
I also do this with the fixed income. I hold 70% of it (split between TBM and TIBM) at the Global weight as per Sharpe, then I hold 30% of it in a stable Value fund.
When It grows, I may split the Total World if they never get an Admiral class, but I don't really care right now. I know I could probably do something better, but I'm at peace with this and I haven't had the urge to tinker. Many Roads to Dublin an all that.

Basically, It's a three fund portfolio, but I wanted some give with the international. I'm ok with it being more it that's what the Market Weight is, that's why I like having a portion of my portfolio that fluctuates.
Seems like you started doing this last year, but at 50/50. Then I thought it was only an unusual personal preference, but now I better recognize the tilting aspect. Would be easier using TWS and TSM together, of course. Will think some more about this idea. I recall Rick Ferri saying correct tilting begins with a total market fund (e.g., TSM and small value).

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