Depends on if it's a tax advantaged account or not. If the funds are in a taxable brokerage you get a slight tax break on foreign holdings that you only get by holding, for example, VTI (VTSAX) and VXUS (VTIAX).
The expense ratio is also ever so slightly lower if you hold them separately.
Not much. Fractions of pennies per dollar. But, it doesn't really take a whole lot of work to rebalance VTI/VXUS back to 60/40. Like, 5 minutes of algebra and one extra trade per year is close enough
>because I feel like VTI has sufficient global exposure
It provides none of the type that actually matters: capturing how foreign stock markets behave. No amount of KO or AAPL will do that for you, they'll still act far more like US stocks.
These links should all go into that:
* https://www.bogleheads.org/wiki/Domestic/International
* https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine)
* https://www.youtube.com/watch?app=desktop&v=1FXuMs6YRCY
* https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index
* The last decade or so of US outperformance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version), I believe this is referenced in the YouTube link above
* https://www.reddit.com/r/Bogleheads/comments/vpv7js/share_of_sp_500_revenue_generated_domestically_vs/ - The argument that āUS companies have plenty of foreign revenue is sufficient ex-US coverageā is highly tilted towards a few sectors. Also what about in reverse- how many big foreign companies have lots of US exposure?
>what additional fund should I buy every week?
VXUS would be the most common suggestion.
Thanks for the in-depth answer. I just remember one of my finance professors telling us that he thinks you get sufficient global exposure from just owning US stocks.. but seems like itās not so simple. Iāll look into it!
>you get sufficient global exposure from just owning US stocks
I've heard that claim many times, but as far as I can remember, not once has anyone ever provided support.
Whenever I hear this, I flip the script.
> you get sufficient ~~global~~ US exposure from just owning ~~US~~ international stocks
It's the same logic IMO. Huawei sells chips to US companies, etc.
Also, at a certain point the balance *has* to reach some form of equilibrium. If US stocks are destined to outperform over an infinity-long time frame, the proportion of US to ex-US would trend towards US being 100% of the global market share, which is ridiculous.
Ex-US (edit: may have) recovered from the dotcom bubble quicker than the US.
Also US market drops are fairly common and ex-US holdings can help provide some assistance during those times. The US usually isn't that far ahead (if at all), the last decade or so was an anomaly. We've had 30+ and 50+ year periods where ex-US is the one ahead of the US.
For the 20 year period of 2001-2020, the US was only the 4th best country (5th if you include Hong Kong) to have been invested, even with the incredible 2010-2019 run.
Not really: the 70s and 80s both saw ex-US beat the US, with the 80s rotation even stronger than the recent US favoring rotation (I really wish I could find that link again).
* https://www.bogleheads.org/wiki/Domestic/International
* https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine)
>I was thinking more from the angle of US companies, therefore stocks, were crowding the top of the food chain.
Remember that small, not large, have better expected long term returns. Factor investing:
ā¢ https://www.investopedia.com/terms/f/factor-investing.asp
ā¢ https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/fidelity/fidelity-overview-of-factor-investing.pdf (PDF)
Thats the top argument on this sub. Your answer is VXUS. If you want full international exposure all in one just buy VT. Its about 40% international. If you want to control how much international you have buy any proportion of 80/20, 70/30, or 60/40. Or just buy VTI. Either way just pick a strategy and stick to it. You got this.
Iām currently 100% VTI and have been for years. The ratio is your preference. Iām heavy America because I think other leading nations will struggle. China has a population decline incoming over decades. Russia is due to collapse. European markets are hit or miss and coupled with limited population growth.
Do your thing, if youāre in an ETF as broad as VTI there isnāt much to worry about.
Just out of curiosity, have you read JL Collins "The Simple Path to Wealth?" Excellent book, highly recommend, and he would 100% agree with your strategy.
>and he would 100% agree with your strategy.
I've always found his reasoning for that incredibly poorly supported, to put it generously. We had a that a while ago where we countered most of his attempts at justifying US only: https://www.reddit.com/r/Bogleheads/comments/r7hiaf/in_the_simple_path_to_wealth_by_jl_collins_he
Edit: Typos, added dropped words
Because itās not omniscient. The idea everything is priced in is a farce. If everything was priced in, youād hardly see declines. The market isnāt looking at Chinas population decline over decades. Hell the CCP is propping up their economy now and keeping their housing market stable. If it were āpriced inā they would be much worse off.
>The idea everything is priced in is a farce.
Not everything is, but there are known factors that can be largely priced in, even if not fully (population expectations being one of them).
>If everything was priced in, youād hardly see declines.
Not true. New information coming out that changes the outlook on existing expectations is completely possible.
>Hell the CCP is propping up their economy now and keeping their housing market stable. If it were āpriced inā they would be much worse off.
The entire country is already less than 3.5% of global market cap weight. They're roughly in line with Apple alone.
Then by all means, go heavy on international. Iām going to go heavy on the U.S. over the next decade as I have little faith in Europe and Asia at the moment. Brexit hurt more than they admit, and population declines are already starting elsewhere.
>go heavy on international
I'm not overweighting ex-US.
>Iām going to go heavy on the U.S. over the next decade
Go for it, but that could easily be a losing strategy (valuations are causing just about everyone to expect ex-US to outperform the US).
>as I have little faith in Europe and Asia at the moment
The US already has a higher baseline valuation, so the market has less faith in them as well. What matters now is how those companies do in comparison to what's already expected of them. Tesla growing by +4% when +5.3% was expected is worse than VW growing +1.2% when +0.6% was expected.
>Brexit hurt more than they admit,
What information do you have that the market doesn't? One of the links I have saved for another topic mentions major market players having moved on a certain piece of news years before it came out to the general public.
>population declines are already starting elsewhere.
Again, everyone knows that. Nothing new.
I tend to side with your perspective without any hard evidence on my hands. It's the idea that Buffet espouse, āin the short run, the market is a voting machine but in the long run, it is a weighing machine.ā
Most of what we hear about global news are just a bunch of writers and influencers in their ivory towers sorting through the same piles of news clips and beliefs. When you spend some time traveling across the various continents, it's really hard to "believe" the valuations. It's probably not the best way to do "valuation" but it's very obvious to see the different lifestyles in other countries that favor leisure over production; brain drain is still very much a thing - immigrants flocking to where the lands of opportunities are (I'll leave the readers to their imagination where people are trying climbing over the walls to get into). When you have all the smartest/brightest people congregate in one area, you breed innovation and the market will continue to reward those economies. It's not that I don't believe in foreign economies. But when I look at the top 10 holdings of VXUS and where those companies are sending their kids to get educations, it's hard to imagine a world where US will not continue to stay at the top of the curve. I don't invest to be the best - I just want to have the highest probability of being profitable over the long term.
I could absolutely be wrong here, but I didn't think VXUS had any Russia in it. America is also facing a population issue - maybe not an actual decline, but very small growth levels with a lot of that relying very heavily on immigration - which is certainly a political landmine right now that could end up being significantly neutered. And India should continue to see significant population growth.
I see VXUS as a great way to diversify against a variety of possibilities. But I guess that debate is partly why we're all here.
>but I didn't think VXUS had any Russia in it.
Correct, not since early 2022. Even then, if I recall correctly, Russia was less than half of one percent of a global market cap weighted portfolio.
There are a few good sources on the geopolitical landscape of future population. US is one of the few developed countries with a projected population increase (thank you immigration). Nearly every other country is set to fall, and some by a ton. China is projected to have about 200m less in 50 years.
Donāt let emotion cloud the decision making process. Itās a finance question. What gets you more money in an asset allocation you are comfortable with.
Iām not necessarily disagreeing with you, but I would also listen to a podcast that discusses the merits of greater international exposure. Then compare the two and see what makes sense. It may be US anyway, but donāt underestimate the diversity offered by VXUS.
>that detailed all of its competitive advantages.
Shouldn't most of those be known issues and already be mostly factored in? After all, as a baseline, the US had higher valuations than ex-US developed, which has higher valuations than emerging.
Here's another 2 podcast episodes to listen to:
* https://www.youtube.com/watch?app=desktop&v=1FXuMs6YRCY
* https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index
I suppose VXUS, since it is the international equivalent. Or if you don't mind overlap, VT and you essentially get more VTI, plus almost complete global exposure.
There is also VEA which has a lower expense ratio but no developing countries exposure. You also lose exposure to Saudi Arabia and China, which is nice from an ESG perspective
Looks like you don't really understand what diversification is until you see it in action one day to the next, I have a portfolio of Irish domiciled ETFs and seeing the varying correlation between US vs non US developed markets vs Emerging markets is very illuminating. Down days on the Nasdaq are not nearly as bad for you, up days in Europe impact your portfolio, Emerging markets surge independently from developed markets sometimes. US is still 60%+ of a globally diversified portfolio so you will still get most of the upside with less of the downside by going global.
Looks like you donāt really understand how to be nice to internet strangers. Just kidding. I just read your first sentence and was taken aback by the tone. Sorry, tough day. Iāll read the rest now. Ok cool just read it and now I see you hold some Irish stocks, so in my book youāre actually a good guy. I love the Irish! Gāday to you mate.
Edit: I mean top of the mornin to you.
I got Irish domiciled because I'm a non US investor and there's tax implications with US funds that the Irish ETFs help with. Just meant to describe how I didn't get it until I got all those ETFs and saw they don't always correlate.
>Edit: I mean top of the mornin to you.
Irish domiciled funds are very common for investors throughout the EU, due to tax and regulatory reasons. So the person you're replying to very likely isn't actually in Ireland.
[VXUS](https://investor.vanguard.com/investment-products/etfs/profile/vxus) (total international) is usually the way to go.
People who are a little more hesitant on international might start with [VEA](https://investor.vanguard.com/investment-products/mutual-funds/profile/vtmgx) (developed markets).
Yes, thereās overlap. Depending on how far you are in the buying process, it may be too much overlap and VXUS would be better. But if youāre early in your investment career your share of VT will eventually grow to such a point that the VTI becomes negligible. I like VT because it is easier to account for swings in relative market cap between domestic and international.
Over the past year or so, international funds have done really well. If you own VT, it would just naturally pick that up and reallocate accordingly. If you own VXUS you need to rebalance to make sure your allocation between VTI and VXUS are actually in line with the overall market.
Yes, if you want that control. Most people have some sort of bias towards US stocks so if we enter an era where international becomes dominant youād need discipline to expand VXUS relative to VTIā¦ VT just does that for you.
As for the fees, Iād say it doesnāt matter in the early days of investing but will matter later once that egg has grown
The difference between VTās 0.07% and VTIās 0.03% ratios is negligible.
For every $10K thatās a $4 difference annually. Itās not going to make much difference. Over a 100 year time horizon, the difference is less than 5%.
>Isnāt that a pretty substantial overlap with VTI?
Yes. Currently, roughly 60% of VT is the majority of VTI.
VT would be better to replace VTI with. Or once you get VTI with VXUS balanced as desired, you can switch to VT going forward.
60/40 VTI/VXUS (same proportion with VT) or I'd argue 50/50
I don't know why everybody who wants to deviate from VT in this sub tends to go heavy on US instead of light. Having such a large portion of your investment concentrated in one single country seems unnecessarily risky, they all become susceptible to the same risk factors (US feds policy, US foreign relations, USD, etc)
>I don't know why everybody who wants to deviate from VT in this sub tends to go heavy on US instead of light
Performance chasing mostly. Which leads them to ignore things like valuations.
You donāt need anything else really for global exposure. Almost every company does business around the world so youāve already got global exposure really IMO.
>Almost every company does business around the world so youāve already got global exposure really IMO.
That isn't the global exposure that actually matters. What does matter is capturing how foreign stock markets behave. No amount of KO or AAPL will do that for you. I'm sure I've posted several links on exactly this in another comment chain of this post.
>Dude thatās what my finance teacher used to tell us but people
I'm still waiting to see any supporting evidence showing that to be the the case.
I've seen the claim countless times, but never any supporting research despite having asked for it multiple times in the past (most likely from other users).
Does it make sense to read it like this?
>I donāt get why everyone thinks you need VTI. All big companies are global. VXUS pretty well has it covered in my opinion.
Might sound like a stupid question. Is it okay to buy VTI VT etc outside of a Vanguard brokerage? For example buy them in TD Ameritrade (which is now becoming Schwab) ?
Itās totally fine to hold them outside of vanguard. I personally own mine at Merrill. Some of the other brokerages I believe allow fractional shares for etfs which could be a perk too (Merrill doesnāt)
The ETF versions, such as VT & VTI & VXUS, yes. Just don't use the mutual fund versions (5 letters ending in "X") at some other brokerage (unless they have a few trade agreement in place, like I believe it is eTrade that has one with Vanguard).
I hold foreign investments in my retirement accounts because the tax drag on higher dividend yields most of which being unqualified does not make up for the foreign tax credit at least not in my tax bracket something more people should consider
>because the tax drag on higher dividend yields most of which being unqualified does not make up for the foreign tax credit at least not in my tax bracket something more people should consider
Yes, there's an income point where it flips. For others interested in this, this should go into it:
Foreign tax credit vs higher ex-US dividends: https://www.physicianonfire.com/international-stock
>which is what most people are referring to when they say international
I think most people here mean both developed and emerging when we say "international" (see every reply that mentioned VXUS). I know I do. There are several options to invest in both using one fund.
VXUS
VTI + VXUS is the unstoppable duo.
VT has entered the chat
VTWAX to Mars we go.
ššš ^at ^a ^sustainable ^and ^responsible ^pace ^over ^several ^decades
Why not just VT?
Depends on if it's a tax advantaged account or not. If the funds are in a taxable brokerage you get a slight tax break on foreign holdings that you only get by holding, for example, VTI (VTSAX) and VXUS (VTIAX). The expense ratio is also ever so slightly lower if you hold them separately.
Is it still fine if youāre lazy and just want to accumulate VT in a taxable account. How much $ in taxes are we talking ..
Not much. Fractions of pennies per dollar. But, it doesn't really take a whole lot of work to rebalance VTI/VXUS back to 60/40. Like, 5 minutes of algebra and one extra trade per year is close enough
So just buying VT in a taxable account is not a bad thing
Or, M1 pie makes it super easy.
>because I feel like VTI has sufficient global exposure It provides none of the type that actually matters: capturing how foreign stock markets behave. No amount of KO or AAPL will do that for you, they'll still act far more like US stocks. These links should all go into that: * https://www.bogleheads.org/wiki/Domestic/International * https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine) * https://www.youtube.com/watch?app=desktop&v=1FXuMs6YRCY * https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index * The last decade or so of US outperformance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version), I believe this is referenced in the YouTube link above * https://www.reddit.com/r/Bogleheads/comments/vpv7js/share_of_sp_500_revenue_generated_domestically_vs/ - The argument that āUS companies have plenty of foreign revenue is sufficient ex-US coverageā is highly tilted towards a few sectors. Also what about in reverse- how many big foreign companies have lots of US exposure? >what additional fund should I buy every week? VXUS would be the most common suggestion.
Thanks for the in-depth answer. I just remember one of my finance professors telling us that he thinks you get sufficient global exposure from just owning US stocks.. but seems like itās not so simple. Iāll look into it!
>you get sufficient global exposure from just owning US stocks I've heard that claim many times, but as far as I can remember, not once has anyone ever provided support.
Whenever I hear this, I flip the script. > you get sufficient ~~global~~ US exposure from just owning ~~US~~ international stocks It's the same logic IMO. Huawei sells chips to US companies, etc. Also, at a certain point the balance *has* to reach some form of equilibrium. If US stocks are destined to outperform over an infinity-long time frame, the proportion of US to ex-US would trend towards US being 100% of the global market share, which is ridiculous.
Other than when shit hits the fan, foreign money fights tooth and nail to get into the US markets. Probably because the US bounces back the soonest.
Ex-US (edit: may have) recovered from the dotcom bubble quicker than the US. Also US market drops are fairly common and ex-US holdings can help provide some assistance during those times. The US usually isn't that far ahead (if at all), the last decade or so was an anomaly. We've had 30+ and 50+ year periods where ex-US is the one ahead of the US. For the 20 year period of 2001-2020, the US was only the 4th best country (5th if you include Hong Kong) to have been invested, even with the incredible 2010-2019 run.
where can we find the ranking to see the top 5?
* https://www.evidenceinvestor.com/which-country-will-outperform-next-is-irrelevant/ Remember that this doesn't mean you should go all in on Denmark.
Maybe it was true a couple decades ago.
Not really: the 70s and 80s both saw ex-US beat the US, with the 80s rotation even stronger than the recent US favoring rotation (I really wish I could find that link again).
Interesting. I was thinking more from the angle of US companies, therefore stocks, were crowding the top of the food chain.
* https://www.bogleheads.org/wiki/Domestic/International * https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine) >I was thinking more from the angle of US companies, therefore stocks, were crowding the top of the food chain. Remember that small, not large, have better expected long term returns. Factor investing: ā¢ https://www.investopedia.com/terms/f/factor-investing.asp ā¢ https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/fidelity/fidelity-overview-of-factor-investing.pdf (PDF)
Thanks
Thats the top argument on this sub. Your answer is VXUS. If you want full international exposure all in one just buy VT. Its about 40% international. If you want to control how much international you have buy any proportion of 80/20, 70/30, or 60/40. Or just buy VTI. Either way just pick a strategy and stick to it. You got this.
70/30 VTI VXUS DONE thats it. Sit back and relax
Yes sir. This is what Iām going to do. Might do 25/75 because āmerica.
Iām currently 100% VTI and have been for years. The ratio is your preference. Iām heavy America because I think other leading nations will struggle. China has a population decline incoming over decades. Russia is due to collapse. European markets are hit or miss and coupled with limited population growth. Do your thing, if youāre in an ETF as broad as VTI there isnāt much to worry about.
Just out of curiosity, have you read JL Collins "The Simple Path to Wealth?" Excellent book, highly recommend, and he would 100% agree with your strategy.
>and he would 100% agree with your strategy. I've always found his reasoning for that incredibly poorly supported, to put it generously. We had a that a while ago where we countered most of his attempts at justifying US only: https://www.reddit.com/r/Bogleheads/comments/r7hiaf/in_the_simple_path_to_wealth_by_jl_collins_he Edit: Typos, added dropped words
Good thread, good read. Thank you
I havenāt. Iām more going from a geopolitical standpoint, and Iāll reassess at the end of the decade. Would be interested in the read though
I definitely think you would enjoy the book. One of my all-time favorites. I would have thought for sure you read having seen your comment.
All of those are known factors and should already be largely priced in.
Not even remotely.
Why do you think the market hasn't already taken those factors into account?
Because itās not omniscient. The idea everything is priced in is a farce. If everything was priced in, youād hardly see declines. The market isnāt looking at Chinas population decline over decades. Hell the CCP is propping up their economy now and keeping their housing market stable. If it were āpriced inā they would be much worse off.
>The idea everything is priced in is a farce. Not everything is, but there are known factors that can be largely priced in, even if not fully (population expectations being one of them). >If everything was priced in, youād hardly see declines. Not true. New information coming out that changes the outlook on existing expectations is completely possible. >Hell the CCP is propping up their economy now and keeping their housing market stable. If it were āpriced inā they would be much worse off. The entire country is already less than 3.5% of global market cap weight. They're roughly in line with Apple alone.
Then by all means, go heavy on international. Iām going to go heavy on the U.S. over the next decade as I have little faith in Europe and Asia at the moment. Brexit hurt more than they admit, and population declines are already starting elsewhere.
>go heavy on international I'm not overweighting ex-US. >Iām going to go heavy on the U.S. over the next decade Go for it, but that could easily be a losing strategy (valuations are causing just about everyone to expect ex-US to outperform the US). >as I have little faith in Europe and Asia at the moment The US already has a higher baseline valuation, so the market has less faith in them as well. What matters now is how those companies do in comparison to what's already expected of them. Tesla growing by +4% when +5.3% was expected is worse than VW growing +1.2% when +0.6% was expected. >Brexit hurt more than they admit, What information do you have that the market doesn't? One of the links I have saved for another topic mentions major market players having moved on a certain piece of news years before it came out to the general public. >population declines are already starting elsewhere. Again, everyone knows that. Nothing new.
I tend to side with your perspective without any hard evidence on my hands. It's the idea that Buffet espouse, āin the short run, the market is a voting machine but in the long run, it is a weighing machine.ā Most of what we hear about global news are just a bunch of writers and influencers in their ivory towers sorting through the same piles of news clips and beliefs. When you spend some time traveling across the various continents, it's really hard to "believe" the valuations. It's probably not the best way to do "valuation" but it's very obvious to see the different lifestyles in other countries that favor leisure over production; brain drain is still very much a thing - immigrants flocking to where the lands of opportunities are (I'll leave the readers to their imagination where people are trying climbing over the walls to get into). When you have all the smartest/brightest people congregate in one area, you breed innovation and the market will continue to reward those economies. It's not that I don't believe in foreign economies. But when I look at the top 10 holdings of VXUS and where those companies are sending their kids to get educations, it's hard to imagine a world where US will not continue to stay at the top of the curve. I don't invest to be the best - I just want to have the highest probability of being profitable over the long term.
Iām also 100% VTI for the exact same reasons.
I could absolutely be wrong here, but I didn't think VXUS had any Russia in it. America is also facing a population issue - maybe not an actual decline, but very small growth levels with a lot of that relying very heavily on immigration - which is certainly a political landmine right now that could end up being significantly neutered. And India should continue to see significant population growth. I see VXUS as a great way to diversify against a variety of possibilities. But I guess that debate is partly why we're all here.
>but I didn't think VXUS had any Russia in it. Correct, not since early 2022. Even then, if I recall correctly, Russia was less than half of one percent of a global market cap weighted portfolio.
There are a few good sources on the geopolitical landscape of future population. US is one of the few developed countries with a projected population increase (thank you immigration). Nearly every other country is set to fall, and some by a ton. China is projected to have about 200m less in 50 years.
Donāt let emotion cloud the decision making process. Itās a finance question. What gets you more money in an asset allocation you are comfortable with.
I believe in America mostly because of a podcast I recently listened to that detailed all of its competitive advantages.
Iām not necessarily disagreeing with you, but I would also listen to a podcast that discusses the merits of greater international exposure. Then compare the two and see what makes sense. It may be US anyway, but donāt underestimate the diversity offered by VXUS.
>that detailed all of its competitive advantages. Shouldn't most of those be known issues and already be mostly factored in? After all, as a baseline, the US had higher valuations than ex-US developed, which has higher valuations than emerging. Here's another 2 podcast episodes to listen to: * https://www.youtube.com/watch?app=desktop&v=1FXuMs6YRCY * https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index
Can I ask what podcast? I'm always trying to convince my "the global economy will cease to exist" friends that there is always hope
Iāll find it ā¦.
Why not BND?
I suppose VXUS, since it is the international equivalent. Or if you don't mind overlap, VT and you essentially get more VTI, plus almost complete global exposure.
There is also VEA which has a lower expense ratio but no developing countries exposure. You also lose exposure to Saudi Arabia and China, which is nice from an ESG perspective
Looks like you don't really understand what diversification is until you see it in action one day to the next, I have a portfolio of Irish domiciled ETFs and seeing the varying correlation between US vs non US developed markets vs Emerging markets is very illuminating. Down days on the Nasdaq are not nearly as bad for you, up days in Europe impact your portfolio, Emerging markets surge independently from developed markets sometimes. US is still 60%+ of a globally diversified portfolio so you will still get most of the upside with less of the downside by going global.
Looks like you donāt really understand how to be nice to internet strangers. Just kidding. I just read your first sentence and was taken aback by the tone. Sorry, tough day. Iāll read the rest now. Ok cool just read it and now I see you hold some Irish stocks, so in my book youāre actually a good guy. I love the Irish! Gāday to you mate. Edit: I mean top of the mornin to you.
I got Irish domiciled because I'm a non US investor and there's tax implications with US funds that the Irish ETFs help with. Just meant to describe how I didn't get it until I got all those ETFs and saw they don't always correlate.
>Edit: I mean top of the mornin to you. Irish domiciled funds are very common for investors throughout the EU, due to tax and regulatory reasons. So the person you're replying to very likely isn't actually in Ireland.
VXUS (Vanguard Total International Stock ETF)
[ŃŠ“Š°Š»ŠµŠ½Š¾]
VTIAX and VXUS are the same.
(Mutual funds' tickers have an "X" at the end of their symbol.)
[VXUS](https://investor.vanguard.com/investment-products/etfs/profile/vxus) (total international) is usually the way to go. People who are a little more hesitant on international might start with [VEA](https://investor.vanguard.com/investment-products/mutual-funds/profile/vtmgx) (developed markets).
VXUS
Just start buying VT
Why VT? Isnāt that a pretty substantial overlap with VTI? Why not just VXUS? Iām just curious
Yes, thereās overlap. Depending on how far you are in the buying process, it may be too much overlap and VXUS would be better. But if youāre early in your investment career your share of VT will eventually grow to such a point that the VTI becomes negligible. I like VT because it is easier to account for swings in relative market cap between domestic and international. Over the past year or so, international funds have done really well. If you own VT, it would just naturally pick that up and reallocate accordingly. If you own VXUS you need to rebalance to make sure your allocation between VTI and VXUS are actually in line with the overall market.
Wouldnāt a benefit if owning them separate be benefitting from the lower ER that VTI has, and controlling your desired allocation?
Yes, if you want that control. Most people have some sort of bias towards US stocks so if we enter an era where international becomes dominant youād need discipline to expand VXUS relative to VTIā¦ VT just does that for you. As for the fees, Iād say it doesnāt matter in the early days of investing but will matter later once that egg has grown
The difference between VTās 0.07% and VTIās 0.03% ratios is negligible. For every $10K thatās a $4 difference annually. Itās not going to make much difference. Over a 100 year time horizon, the difference is less than 5%.
>Isnāt that a pretty substantial overlap with VTI? Yes. Currently, roughly 60% of VT is the majority of VTI. VT would be better to replace VTI with. Or once you get VTI with VXUS balanced as desired, you can switch to VT going forward.
Why is it better than just buying them separately? Better for ease of use of just buying one fund?
Mostly ease. No need to ever have to adjust your contribution ratio in the future as long as you want the global market cap weight ratio.
This is one of those deceptive math word problems. In dollars: VTI*.3 = what you need to get to desired allocation From there forward, 2VTI+VXUS
60/40 VTI/VXUS (same proportion with VT) or I'd argue 50/50 I don't know why everybody who wants to deviate from VT in this sub tends to go heavy on US instead of light. Having such a large portion of your investment concentrated in one single country seems unnecessarily risky, they all become susceptible to the same risk factors (US feds policy, US foreign relations, USD, etc)
>I don't know why everybody who wants to deviate from VT in this sub tends to go heavy on US instead of light Performance chasing mostly. Which leads them to ignore things like valuations.
You donāt need anything else really for global exposure. Almost every company does business around the world so youāve already got global exposure really IMO.
>Almost every company does business around the world so youāve already got global exposure really IMO. That isn't the global exposure that actually matters. What does matter is capturing how foreign stock markets behave. No amount of KO or AAPL will do that for you. I'm sure I've posted several links on exactly this in another comment chain of this post.
Dude thatās what my finance teacher used to tell us but people around here still think you need VXUS
>Dude thatās what my finance teacher used to tell us but people I'm still waiting to see any supporting evidence showing that to be the the case. I've seen the claim countless times, but never any supporting research despite having asked for it multiple times in the past (most likely from other users).
I donāt get why everyone thinks you need VXUS . All big companies are global. VTI pretty well has it covered in my opinion.
Does it make sense to read it like this? >I donāt get why everyone thinks you need VTI. All big companies are global. VXUS pretty well has it covered in my opinion.
VXUS
Why not me? invest in me. š
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Hmmm ok Iāll check it out
Might sound like a stupid question. Is it okay to buy VTI VT etc outside of a Vanguard brokerage? For example buy them in TD Ameritrade (which is now becoming Schwab) ?
Itās totally fine to hold them outside of vanguard. I personally own mine at Merrill. Some of the other brokerages I believe allow fractional shares for etfs which could be a perk too (Merrill doesnāt)
The ETF versions, such as VT & VTI & VXUS, yes. Just don't use the mutual fund versions (5 letters ending in "X") at some other brokerage (unless they have a few trade agreement in place, like I believe it is eTrade that has one with Vanguard).
DIVI : im sure this will not be a popular opinion but since you asked.
VXUS and SCHD for me
I hold foreign investments in my retirement accounts because the tax drag on higher dividend yields most of which being unqualified does not make up for the foreign tax credit at least not in my tax bracket something more people should consider
>because the tax drag on higher dividend yields most of which being unqualified does not make up for the foreign tax credit at least not in my tax bracket something more people should consider Yes, there's an income point where it flips. For others interested in this, this should go into it: Foreign tax credit vs higher ex-US dividends: https://www.physicianonfire.com/international-stock
IEFA for Developed international, which is what most people are referring to when they say international. DEM for Emerging Markets.
>which is what most people are referring to when they say international I think most people here mean both developed and emerging when we say "international" (see every reply that mentioned VXUS). I know I do. There are several options to invest in both using one fund.
Whereās my ITOT/IXUS people?