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What do people mean when they say "index funds"? There are so many... which ones are you taking into account? Before you point to S&P 500: I'm from/in Europe,

by tasuki 6y ago

What do people mean when they say "index funds"? There are so many... which ones are you taking into account? Before you point to S&P 500: I'm from/in Europe, please account for that in your reasoning :)

unreal37 6y ago
There's no law that says you have to invest in Europe, right? The US stock market outperforms any European or Canadian stock market in the past 10 years, and there's no reason that won't continue. This is because the US is where tech stocks are listed. So, invest in the US even if you live outside the US. YMMV.
- sxyuan 6y ago
  Investing outside your region leads to currency risk. Currency hedged funds tend to incur slightly higher costs. I don't know if there are additional tax implications as well. Not only is historical performance no guarantee of future performance, 10 years is a pretty short time span to look back - it doesn't even take you back to the '08 recession. The US did well in the 1990s and 2010s, but both ex-US developed markets and emerging markets did better in the 2000s: https://www.ishares.com/us/strategies/international-etfs https://www.ishares.com/us/strategies/international-etfs It's good to diversify internationally, and that probably does mean holding some US equities ETF even if you're in Europe. As for what else to buy, this may be a good starting point: https://www.lynalden.com/best-etfs/ https://www.lynalden.com/best-etfs/
  - marketgod 6y ago
    You can hedge your currency risk but the U.S. dollar is the world currency. For example in Canada in 96 when you were making USD it was killing you until about 2003 but if you didn't dip into it that money doubled on its own as the USD is much stronger today.
    - tasuki 6y ago
      Yes, the USD is currently the foremost reserve currency. See eg https://marketcap.com.au/wp-content/uploads/2018/11/WRCurrency.gif https://marketcap.com.au/wp-content/uploads/2018/11/WRCurren...
- atombender 6y ago
  International markets outperform the US about half the time: https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths https://www.fidelity.com/viewpoints/investing-ideas/internat...
- tasuki 6y ago
  Yes, for the past 10 years this was a wonderful piece of advice. What leads you to believe it's just as wonderful for the upcoming 10 years? How long are tech stocks going to outperform the market?
  - colinmhayes 6y ago
    Until the end of time. Tech is the future.
sobani 6y ago
https://www.justetf.com/en/find-etf.html?assetClass=class-equity&groupField=none&region=World&sortField=fundSize&sortOrder=desc https://www.justetf.com/en/find-etf.html?assetClass=class-eq... Here is a link to ETFs available in Europe that have a worldwide focus. If you have no clue or preference, go for the top one. It's large, cheap and doesn't try to do anything fancy. Keep in mind that even world wide indexes have a large portion in the US, since the US market is so large. On the flip side, there are many companies in the US that are internationally diversified themselves. Coca Cola sells its sugar all over the world, not just in the US. Just ETF is focused on showing only ETFs that are available in Europe (not all ETFs abide by EU regulation).
- tasuki 6y ago
  Two thirds of iShares Core MSCI World is in US stocks [0]. That seems to me like a rather large proportion. But good point that many of those companies are international! [0] https://www.ishares.com/uk/individual/en/products/251882/ishares-msci-world-ucits-etf-acc-fund https://www.ishares.com/uk/individual/en/products/251882/ish... (search for "Exposure Breakdowns", then choose "Geography")

by tasuki 6y ago

unreal37 6y ago

There's no law that says you have to invest in Europe, right? The US stock market outperforms any European or Canadian stock market in the past 10 years, and there's no reason that won't continue. This is because the US is where tech stocks are listed. So, invest in the US even if you live outside the US. YMMV.

sxyuan 6y ago
Investing outside your region leads to currency risk. Currency hedged funds tend to incur slightly higher costs. I don't know if there are additional tax implications as well. Not only is historical performance no guarantee of future performance, 10 years is a pretty short time span to look back - it doesn't even take you back to the '08 recession. The US did well in the 1990s and 2010s, but both ex-US developed markets and emerging markets did better in the 2000s: https://www.ishares.com/us/strategies/international-etfs https://www.ishares.com/us/strategies/international-etfs It's good to diversify internationally, and that probably does mean holding some US equities ETF even if you're in Europe. As for what else to buy, this may be a good starting point: https://www.lynalden.com/best-etfs/ https://www.lynalden.com/best-etfs/
- marketgod 6y ago
  You can hedge your currency risk but the U.S. dollar is the world currency. For example in Canada in 96 when you were making USD it was killing you until about 2003 but if you didn't dip into it that money doubled on its own as the USD is much stronger today.
  - tasuki 6y ago
    Yes, the USD is currently the foremost reserve currency. See eg https://marketcap.com.au/wp-content/uploads/2018/11/WRCurrency.gif https://marketcap.com.au/wp-content/uploads/2018/11/WRCurren...
atombender 6y ago
International markets outperform the US about half the time: https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths https://www.fidelity.com/viewpoints/investing-ideas/internat...
tasuki 6y ago
Yes, for the past 10 years this was a wonderful piece of advice. What leads you to believe it's just as wonderful for the upcoming 10 years? How long are tech stocks going to outperform the market?
- colinmhayes 6y ago
  Until the end of time. Tech is the future.

sobani 6y ago

https://www.justetf.com/en/find-etf.html?assetClass=class-equity&groupField=none&region=World&sortField=fundSize&sortOrder=desc https://www.justetf.com/en/find-etf.html?assetClass=class-eq... Here is a link to ETFs available in Europe that have a worldwide focus. If you have no clue or preference, go for the top one. It's large, cheap and doesn't try to do anything fancy. Keep in mind that even world wide indexes have a large portion in the US, since the US market is so large. On the flip side, there are many companies in the US that are internationally diversified themselves. Coca Cola sells its sugar all over the world, not just in the US. Just ETF is focused on showing only ETFs that are available in Europe (not all ETFs abide by EU regulation).

tasuki 6y ago
Two thirds of iShares Core MSCI World is in US stocks [0]. That seems to me like a rather large proportion. But good point that many of those companies are international! [0] https://www.ishares.com/uk/individual/en/products/251882/ishares-msci-world-ucits-etf-acc-fund https://www.ishares.com/uk/individual/en/products/251882/ish... (search for "Exposure Breakdowns", then choose "Geography")