VTSAX or VTWAX over the next 35 years?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
WhiteMaxima
Posts: 1818
Joined: Thu May 19, 2016 5:04 pm

Re: VTSAX or VTWAX over the next 35 years?

Post by WhiteMaxima » Fri May 17, 2019 6:17 pm

oldzey wrote:
Fri May 17, 2019 6:09 pm
If you're a U.S. investor, invested in a S&P 500 or Total Market U.S.index fund, half of your revenues already come from outside the U.S.

So, you have an international fund, minus the risks (e.g. currency, sovereign, stability) and fees associated with investing in international funds.

Works for me! :beer
JoMoney wrote:
Fri Mar 30, 2018 8:07 pm
MarketWatch(2015): S&P 500 companies generate barely over half their revenue at home
Image
but I enjoy driving my BMW and fill Shell gasoline. S&P doesn't have these coompanies.

ChrisV
Posts: 15
Joined: Thu Oct 18, 2012 6:53 pm

Re: VTSAX or VTWAX over the next 35 years?

Post by ChrisV » Fri May 17, 2019 7:02 pm

This chart shows a good reason to go with WAX over SAX:

https://www.factorinvestor.com/blog/inv ... 2491_33267

Some time periods US outperforms international; other time periods international outperforms US.

As of today, we have experienced 10+ years of US outperformance.

Maybe that US outperformance will continue for the next 10 or 20 years.

I don't know, but history (and let's face it, that's really all we have to go on) says it won't. At some point (I have no idea when) international stocks will again outperform US.

At the very least, if you're already retired, it seems to me that having a significant allocation to international stocks would help mitigate sequence of returns risk.

User avatar
Crushtheturtle
Posts: 158
Joined: Sat Mar 15, 2014 10:29 pm
Location: South Cackalacky

Re: VTSAX or VTWAX over the next 35 years?

Post by Crushtheturtle » Fri May 17, 2019 7:11 pm

As I see it, the power of index fund investing comes from the ability to own as many different companies as possible. Consider that the Market's long-term expansion is driven by only a small minority of its constituent businesses, with the remaining majority staying the same size, going down, or going bankrupt. Without knowing which is which, one should seek to own as many as possible in order to maximize the probability of participating in the long-term growth.

To cite an oft-used example, if a foreign company like Samsung comes to dominate its industry and consume sizable market share from a US company like Apple, what good does it do me that Apple also sells smart phones in Asia?

Of the two, I would recommend VTWAX.
Beware the advice of successful people; they do not seek company. - Scott Adams

RJC
Posts: 175
Joined: Fri Dec 14, 2018 1:40 pm

Re: VTSAX or VTWAX over the next 35 years?

Post by RJC » Fri May 17, 2019 7:34 pm

VTWAX isn't 100% international. About half of the composition is the US. We are talking about a fraction of a fraction of one's portfolio when bonds are added.

This is why I don't understand some of the harsh and dismissive language in these threads. We are debating over the smallest of *potential* margins here.

User avatar
Taylor Larimore
Advisory Board
Posts: 28165
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: VTSAX or VTWAX over the next 35 years?

Post by Taylor Larimore » Fri May 17, 2019 7:56 pm

Bogleheads:

There is more than one road to Dublin.

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

Ferdinand2014
Posts: 264
Joined: Mon Dec 17, 2018 6:49 pm
Location: New England

Re: VTSAX or VTWAX over the next 35 years?

Post by Ferdinand2014 » Fri May 17, 2019 8:08 pm

I just made some popcorn and can't find anything on Netflix. Don't stop now. This is like watching a really bad fight in a Wal Mart parking lot. I just can't look away.

In all seriousness though, I feel very blessed to live in the U.S. where we have the ability to invest in whatever we want, all over the world, at super low cost with the ability to have open discussions like this without consequence or concern.

For that we owe people like Taylor and Jack and many others for their efforts and sacrifices. We stand truly on the shoulders of giants.

User avatar
UpsetRaptor
Posts: 335
Joined: Tue Jan 19, 2016 5:15 pm

Re: VTSAX or VTWAX over the next 35 years?

Post by UpsetRaptor » Fri May 17, 2019 11:10 pm

ChrisV wrote:
Fri May 17, 2019 7:02 pm
This chart shows a good reason to go with WAX over SAX:

https://www.factorinvestor.com/blog/inv ... 2491_33267

Some time periods US outperforms international; other time periods international outperforms US.

As of today, we have experienced centuries of US outperformance.

Maybe that US outperformance will continue for the next 10 or 20 years.

I don't know, but history (and let's face it, that's really all we have to go on) says it won't. At some point (I have no idea when) international stocks will again outperform US.

At the very least, if you're already retired, it seems to me that having a significant allocation to international stocks would help mitigate sequence of returns risk.
FTFY

User avatar
ruralavalon
Posts: 15438
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: VTSAX or VTWAX over the next 35 years?

Post by ruralavalon » Sat May 18, 2019 8:32 am

WhiteMaxima wrote:
Fri May 17, 2019 6:17 pm
oldzey wrote:
Fri May 17, 2019 6:09 pm
If you're a U.S. investor, invested in a S&P 500 or Total Market U.S.index fund, half of your revenues already come from outside the U.S.

So, you have an international fund, minus the risks (e.g. currency, sovereign, stability) and fees associated with investing in international funds.

Works for me! :beer
JoMoney wrote:
Fri Mar 30, 2018 8:07 pm
MarketWatch(2015): S&P 500 companies generate barely over half their revenue at home
Image
but I enjoy driving my BMW and fill Shell gasoline. S&P doesn't have these coompanies.
You also miss Samsung, Roche, Unilever, Nestle, Novartis, and HSBC Holdings.

That's a nice colorful pie chart, illustrating international diversification of companies headquartered in the U.S.
UpsetRaptor wrote:
Fri May 17, 2019 11:10 pm
ChrisV wrote:
Fri May 17, 2019 7:02 pm
This chart shows a good reason to go with WAX over SAX:

https://www.factorinvestor.com/blog/inv ... 2491_33267

Some time periods US outperforms international; other time periods international outperforms US.

As of today, we have experienced centuries of US outperformance.

Maybe that US outperformance will continue for the next 10 or 20 years.

I don't know, but history (and let's face it, that's really all we have to go on) says it won't. At some point (I have no idea when) international stocks will again outperform US.

At the very least, if you're already retired, it seems to me that having a significant allocation to international stocks would help mitigate sequence of returns risk.
FTFY
I agree that it is wise to consider historical fact in forming our opinions about what the future might bring, in spite of the adage "past performance does not . . . ."

In my opinion the graph of U.S. vs foreign performance since 1969, and showing alternating streaks of outperformance, illustrates the potential benefit of adding an international stock allocation. But in my opinion the graph is not proof that market weight (VFWAX) will be better than some other domestic/internatioal mix. From the article "While market level valuation metrics can be useful as a first pass, they tend to obfuscate risk and reward within broad averages."
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

visualguy
Posts: 1227
Joined: Thu Jan 30, 2014 1:32 am

Re: VTSAX or VTWAX over the next 35 years?

Post by visualguy » Sat May 18, 2019 10:05 am

VTSAX plus rental properties.

User avatar
oldzey
Posts: 1206
Joined: Sun Apr 13, 2014 8:38 pm
Location: Land of Lincoln

Re: VTSAX or VTWAX over the next 35 years?

Post by oldzey » Sat May 18, 2019 5:28 pm

VTSAX plus coffee.

Image
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

BWildt
Posts: 37
Joined: Fri Jan 05, 2018 7:40 pm

Re: VTSAX or VTWAX over the next 35 years?

Post by BWildt » Sat May 18, 2019 7:21 pm

oldzey wrote:
Sat May 18, 2019 5:28 pm
VTSAX plus coffee.

Image
Lol. Where can I find that mug?

User avatar
oldzey
Posts: 1206
Joined: Sun Apr 13, 2014 8:38 pm
Location: Land of Lincoln

Re: VTSAX or VTWAX over the next 35 years?

Post by oldzey » Sat May 18, 2019 9:28 pm

BWildt wrote:
Sat May 18, 2019 7:21 pm
Lol. Where can I find that mug?
PM sent.
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

NotTooDeepLearning
Posts: 45
Joined: Wed Oct 24, 2018 2:04 pm

Re: VTSAX or VTWAX over the next 35 years?

Post by NotTooDeepLearning » Sat May 18, 2019 11:21 pm

My opinion is that it doesn't matter. Staying the course, saving enough, and generally indexing matters.

visualguy
Posts: 1227
Joined: Thu Jan 30, 2014 1:32 am

Re: VTSAX or VTWAX over the next 35 years?

Post by visualguy » Sun May 19, 2019 1:51 am

NotTooDeepLearning wrote:
Sat May 18, 2019 11:21 pm
My opinion is that it doesn't matter. Staying the course, saving enough, and generally indexing matters.
It has made a significant difference so far. Also, there is no virtue in staying on a bad course. It's better to change course in that case.

lostdog
Posts: 1696
Joined: Thu Feb 04, 2016 2:15 pm

Re: VTSAX or VTWAX over the next 35 years?

Post by lostdog » Sun May 19, 2019 6:35 am

visualguy wrote:
Sun May 19, 2019 1:51 am
NotTooDeepLearning wrote:
Sat May 18, 2019 11:21 pm
My opinion is that it doesn't matter. Staying the course, saving enough, and generally indexing matters.
It has made a significant difference so far. Also, there is no virtue in staying on a bad course. It's better to change course in that case.
In other words throwing the boglehead principals out the window and investing in the rear view mirror. Are you going to "change course" when international starts out-performing? I know you're going to use your crystal ball and say it won't, like you have in other threads and dodge the question, but answer this question seriously.
I don't invest looking in the rear view mirror and I know absolutely nothing about the future. I invest in Vanguard Total World Stock Index.

visualguy
Posts: 1227
Joined: Thu Jan 30, 2014 1:32 am

Re: VTSAX or VTWAX over the next 35 years?

Post by visualguy » Sun May 19, 2019 8:29 am

lostdog wrote:
Sun May 19, 2019 6:35 am
visualguy wrote:
Sun May 19, 2019 1:51 am
NotTooDeepLearning wrote:
Sat May 18, 2019 11:21 pm
My opinion is that it doesn't matter. Staying the course, saving enough, and generally indexing matters.
It has made a significant difference so far. Also, there is no virtue in staying on a bad course. It's better to change course in that case.
In other words throwing the boglehead principals out the window and investing in the rear view mirror. Are you going to "change course" when international starts out-performing? I know you're going to use your crystal ball and say it won't, like you have in other threads and dodge the question, but answer this question seriously.
No, because ex-US out-performance over a few years has never compensated for its long-term poor performance, so no temptation. The only thing that would make me change course is radical changes in Europe, Japan, China, etc. that would make their stock markets able to be competitive with that of the US, but that would take too long for my limited remaining lifetime if it ever happens. Human life is short, sadly... Also, remember that Bogle was actually against investing in the ex-US index, so I consider myself a very good Boglehead indeed.

User avatar
ruralavalon
Posts: 15438
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: VTSAX or VTWAX over the next 35 years?

Post by ruralavalon » Sun May 19, 2019 9:56 am

oldzey wrote:
Sat May 18, 2019 5:28 pm
VTSAX plus coffee.

Image
VTSAX plus VSIAX plus coffee :)
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

X528
Posts: 29
Joined: Fri Nov 30, 2018 8:51 am

Re: VTSAX or VTWAX over the next 35 years?

Post by X528 » Sun May 19, 2019 10:00 am

visualguy wrote:
Sun May 19, 2019 8:29 am
lostdog wrote:
Sun May 19, 2019 6:35 am
visualguy wrote:
Sun May 19, 2019 1:51 am
NotTooDeepLearning wrote:
Sat May 18, 2019 11:21 pm
My opinion is that it doesn't matter. Staying the course, saving enough, and generally indexing matters.
It has made a significant difference so far. Also, there is no virtue in staying on a bad course. It's better to change course in that case.
In other words throwing the boglehead principals out the window and investing in the rear view mirror. Are you going to "change course" when international starts out-performing? I know you're going to use your crystal ball and say it won't, like you have in other threads and dodge the question, but answer this question seriously.
No, because ex-US out-performance over a few years has never compensated for its long-term poor performance, so no temptation. The only thing that would make me change course is radical changes in Europe, Japan, China, etc. that would make their stock markets able to be competitive with that of the US, but that would take too long for my limited remaining lifetime if it ever happens. Human life is short, sadly... Also, remember that Bogle was actually against investing in the ex-US index, so I consider myself a very good Boglehead indeed.
Don't the studies by Vanguard and many others clearly show the benefits of investing globally?

NotTooDeepLearning
Posts: 45
Joined: Wed Oct 24, 2018 2:04 pm

Re: VTSAX or VTWAX over the next 35 years?

Post by NotTooDeepLearning » Tue May 21, 2019 4:28 pm

visualguy wrote:
Sun May 19, 2019 1:51 am
NotTooDeepLearning wrote:
Sat May 18, 2019 11:21 pm
My opinion is that it doesn't matter. Staying the course, saving enough, and generally indexing matters.
It has made a significant difference so far. Also, there is no virtue in staying on a bad course. It's better to change course in that case.
The past is hardly relevant, and certainly not a single 35 year period. America is not going to repeat the past 35 years. Nor is the rest of the world. Governments and economies will likely radically change in the future. But I guess it boils down to what you believe. If you believe in American exceptionalism and that it will continue for your lifetime then all US is the right path. I'm just starting my career and and think it'd be silly to go all US with most of my future investments.

User avatar
vineviz
Posts: 3530
Joined: Tue May 15, 2018 1:55 pm

Re: VTSAX or VTWAX over the next 35 years?

Post by vineviz » Tue May 21, 2019 4:55 pm

X528 wrote:
Sun May 19, 2019 10:00 am
Don't the studies by Vanguard and many others clearly show the benefits of investing globally?
Yes, very much so.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

ChrisV
Posts: 15
Joined: Thu Oct 18, 2012 6:53 pm

Re: VTSAX or VTWAX over the next 35 years?

Post by ChrisV » Tue May 21, 2019 5:41 pm

visualguy wrote:
Sun May 19, 2019 8:29 am
lostdog wrote:
Sun May 19, 2019 6:35 am
visualguy wrote:
Sun May 19, 2019 1:51 am
NotTooDeepLearning wrote:
Sat May 18, 2019 11:21 pm
My opinion is that it doesn't matter. Staying the course, saving enough, and generally indexing matters.
It has made a significant difference so far. Also, there is no virtue in staying on a bad course. It's better to change course in that case.
In other words throwing the boglehead principals out the window and investing in the rear view mirror. Are you going to "change course" when international starts out-performing? I know you're going to use your crystal ball and say it won't, like you have in other threads and dodge the question, but answer this question seriously.
No, because ex-US out-performance over a few years has never compensated for its long-term poor performance, so no temptation. The only thing that would make me change course is radical changes in Europe, Japan, China, etc. that would make their stock markets able to be competitive with that of the US, but that would take too long for my limited remaining lifetime if it ever happens. Human life is short, sadly... Also, remember that Bogle was actually against investing in the ex-US index, so I consider myself a very good Boglehead indeed.
If long-term outperformance was the only criteria we used when choosing our investments, then we would all be 100% small cap value. :happy

Oakwood42
Posts: 119
Joined: Thu Dec 08, 2016 10:48 pm
Location: Philadelphia

Re: VTSAX or VTWAX over the next 35 years?

Post by Oakwood42 » Tue May 21, 2019 6:00 pm

Triple digit golfer wrote:
Thu May 16, 2019 8:21 pm
Oakwood42 wrote:
Thu May 16, 2019 6:06 pm
lostdog wrote:
Wed May 15, 2019 11:11 am
VTWAX. It has 8032 stocks vs 3500 (VTSAX).

Don't be swayed by american exceptionalism, politics, past performance, ideologies, american nationalism, make believe crystal balls that can see into the future and many more weak arguments... Don't fall into this trap touted by some on this forum. Good luck with your choice.
reminds of a quote I once red from someone who knows a little about investing:

"For 240 years it's been a terrible mistake to bet against America, and now is no time to start."
Allocating some money to non U.S. equities is not a bet against America. It is a hedge for it.
Very fair point - thank you.

arf30
Posts: 482
Joined: Sat Dec 28, 2013 11:55 am

Re: VTSAX or VTWAX over the next 35 years?

Post by arf30 » Tue May 21, 2019 6:08 pm

My taxable portfolio is 100% VTSAX/VTIAX but if I was starting out today I'd be 100% VTWAX.

My VTIAX cost basis is small enough that I could exchange it for VTWAX and just fund that in the future, I might end up going that route.

Post Reply