6 ms·

Wild times we live in. Trying to explain to my adult daughter where to invest her retirement savings ... looking like foreign stocks (VXUS) are not a bad idea

Wild times we live in. Trying to explain to my adult daughter where to invest her retirement savings ... looking like foreign stocks (VXUS) are not a bad idea after all.

MilnerRoute 2y ago
Or, buy U.S. stocks on the dip? I don't know how many years until your daughter retires, but it only makes sense to move out of the U.S. market if you predict it will never, ever recover from, say, a bad four years...
- yareally 2y ago
  Definitely should be dollar cost averaging. One just has to look at the s&p 500 chart[0] to see where it's going over time. Looking at the charts it's way more inclusive informative than articles like this. The market is always up eventually and unless one is close to retirement, nothing to worry about. We get a correction like this almost every year and it's nowhere close yet to the correction we had in 2022[0] [0] https://www.tradingview.com/x/wfl18NU5 https://www.tradingview.com/x/wfl18NU5
  - danielhep 2y ago
    I’m not sure such a prediction is valid in a world post Pax Americana.
    - adventured 2y ago
      That post pax world isn't inbound anytime soon, despite the irrational hysteria going on right now. Trump has 3.x years remaining. People are acting like he's going to remain for decades. There is no next Trump, he has a unique hold over the MAGA base that was key to his election. For now post Pax America is merely a fantasy that reveals a lot about the people that think it's happening now (they're showing their personal preference). The same things were said due to Trump's first term also. Instead the US got more powerful and far richer in the time since then. Back in reality, the 1860s, 1930s and 1970s were worse for the US than anything going on now. The 1930s were drastically worse. The US as superpower has survived far worse than Trump and it'll do it again.
      - thecopy 2y ago
        Trump will go away at some point (hopefully he does not seek a 3rd term). However, i am concerned about the fact that the GOP has been mired in the MAGA culture for a decade now, and what that does to the people seeking membership and the people being promoted to leadership. When Trump leaves, the people which have been promoted and been successful in GOP under him still stays. For what virtues are you being promoted for in the GOP? The entire structure is corrupted.
      - exceptione 2y ago
        There is no next Trump, there will be a next Putin. America will be poor. You cannot rule out it will be in expansion wars. It is not about MAGA, they were a tool, they are not critical anymore. You are looking at a new fascist rule, with complete state capture. It is not completely done yet, and there is still a change the coup will fail. But people are complying out of fear, the military leadership has been purged and cleansing is still going on everywhere. So the window of opportunity is closing. Do not focus on Trump. He is a Chaos Actor and he will be disposed of when he can't deliver of is not needed anymore. > post Pax America is merely a fantasy I recommend reading the news, preferably outside of the USA. > they're showing their personal preference This is an example of a binary belief trap.
        zikduruqe 2y ago
        I mean it was all laid out in front of everyone... https://www.project2025.observer https://www.project2025.observer
      - netsharc 2y ago
        If I were to bet between Dems being able to return in 2028, or the entire MAGAified (and DOGEified) system being rigged to put Vance (or some other couchfucker) there, I'd bet the latter. Is voter disfranchisement a thing? Will the US have more of it? Will the "activist judges" brought in by the MAGA party let it happen? All of the above?
      - SR2Z 2y ago
        He has already screamed bloody murder about an election not going his way, and recent Supreme Court decisions about basic stuff (i.e. the government must honor its contractual obligations) have been 5-4. All it will take is one more SC justice and we'll be in a full blown crisis. Yes, Trump isn't the worst president we've ever had - but he's kind of unique in that he clearly doesn't give a damn about the rule of law or the Republic as a government.
jdlshore 2y ago
A balanced strategy is best. I use the advice in A Random Walk Down Wall Street, which is a mix of real estate (VGSLX), bonds (VBTLX), and stocks, with the stocks split 50/50 between US (VTSAX) and international (VTIAX and VEMAX). I was prepared to take a bath after seeing the news this past week, but I’m actually up a bit—VTSAX is down, but the others are all up.
- Salgat 2y ago
  The gains from VTSAX over the past 5 years are so high that it would have to permanently drop by 50% to match international indexes like VTIAX.
  - jdlshore 2y ago
    The point of passive investing and a balanced strategy is that you can’t predict what will happen. So, yes, the past five years were good for VTSAX. But if you’re investing today, then it’s the next five years that matter, not the past five years, and nobody can predict what will happen. (Well, to be more accurate, some fund managers will predict correctly, but you can’t predict which ones. Just like you know ~50 out of 100 coins will land heads, but you can’t predict which ones, not even if you choose the one that landed heads in the last 6 throws.)
    - Salgat 2y ago
      I'd still stay with VTSAX if you're investing long term given the 8% expected long term returns.
- atombender 2y ago
  Note that a market-cap-weighted total market index fund like VTSAX will have a fair amount of real estate (currently about 4%). This means that if you combine VTSAX and VGSLX, you end up overweighting real estate. If you also own a home, you're further overweighting that asset class. Such a strategy might make sense if you think real estate will outperform non-real-estate stocks in the long run (which, if you believe the Boglehead school of passive index investing, you shouldn't), or if you think the real estate market is not correlated with the stock market (which isn't the case), of course. Ben Felix has a good video about it [1]. A 50/50 split between US and international means you're overweighting international. By market cap, the US is about 60% of the world and ex-US is 40%. (Around 1990 ago it was 30% US, 70% ex-US.) If you want a "passive" approach, the solution is to buy VTWAX (Vanguard Total World Stock Index Fund Admiral Shares), or its ETF version, VT. [1] https://youtu.be/IzK5x3LlsUU?si=DK6AfUi_8GvroO-R https://youtu.be/IzK5x3LlsUU?si=DK6AfUi_8GvroO-R
fullshark 2y ago
It was never a bad idea, chasing trends based on vague "articles" like this is a bad idea though.

Wild times we live in. Trying to explain to my adult daughter where to invest her retirement savings ... looking like foreign stocks (VXUS) are not a bad idea after all.

MilnerRoute 2y ago

Or, buy U.S. stocks on the dip? I don't know how many years until your daughter retires, but it only makes sense to move out of the U.S. market if you predict it will never, ever recover from, say, a bad four years...

yareally 2y ago
Definitely should be dollar cost averaging. One just has to look at the s&p 500 chart[0] to see where it's going over time. Looking at the charts it's way more inclusive informative than articles like this. The market is always up eventually and unless one is close to retirement, nothing to worry about. We get a correction like this almost every year and it's nowhere close yet to the correction we had in 2022[0] [0] https://www.tradingview.com/x/wfl18NU5 https://www.tradingview.com/x/wfl18NU5
- danielhep 2y ago
  I’m not sure such a prediction is valid in a world post Pax Americana.
  - adventured 2y ago
    That post pax world isn't inbound anytime soon, despite the irrational hysteria going on right now. Trump has 3.x years remaining. People are acting like he's going to remain for decades. There is no next Trump, he has a unique hold over the MAGA base that was key to his election. For now post Pax America is merely a fantasy that reveals a lot about the people that think it's happening now (they're showing their personal preference). The same things were said due to Trump's first term also. Instead the US got more powerful and far richer in the time since then. Back in reality, the 1860s, 1930s and 1970s were worse for the US than anything going on now. The 1930s were drastically worse. The US as superpower has survived far worse than Trump and it'll do it again.
    - thecopy 2y ago
      Trump will go away at some point (hopefully he does not seek a 3rd term). However, i am concerned about the fact that the GOP has been mired in the MAGA culture for a decade now, and what that does to the people seeking membership and the people being promoted to leadership. When Trump leaves, the people which have been promoted and been successful in GOP under him still stays. For what virtues are you being promoted for in the GOP? The entire structure is corrupted.
    - exceptione 2y ago
      There is no next Trump, there will be a next Putin. America will be poor. You cannot rule out it will be in expansion wars. It is not about MAGA, they were a tool, they are not critical anymore. You are looking at a new fascist rule, with complete state capture. It is not completely done yet, and there is still a change the coup will fail. But people are complying out of fear, the military leadership has been purged and cleansing is still going on everywhere. So the window of opportunity is closing. Do not focus on Trump. He is a Chaos Actor and he will be disposed of when he can't deliver of is not needed anymore. > post Pax America is merely a fantasy I recommend reading the news, preferably outside of the USA. > they're showing their personal preference This is an example of a binary belief trap.
      - zikduruqe 2y ago
        I mean it was all laid out in front of everyone... https://www.project2025.observer https://www.project2025.observer
    - netsharc 2y ago
      If I were to bet between Dems being able to return in 2028, or the entire MAGAified (and DOGEified) system being rigged to put Vance (or some other couchfucker) there, I'd bet the latter. Is voter disfranchisement a thing? Will the US have more of it? Will the "activist judges" brought in by the MAGA party let it happen? All of the above?
    - SR2Z 2y ago
      He has already screamed bloody murder about an election not going his way, and recent Supreme Court decisions about basic stuff (i.e. the government must honor its contractual obligations) have been 5-4. All it will take is one more SC justice and we'll be in a full blown crisis. Yes, Trump isn't the worst president we've ever had - but he's kind of unique in that he clearly doesn't give a damn about the rule of law or the Republic as a government.

jdlshore 2y ago

A balanced strategy is best. I use the advice in A Random Walk Down Wall Street, which is a mix of real estate (VGSLX), bonds (VBTLX), and stocks, with the stocks split 50/50 between US (VTSAX) and international (VTIAX and VEMAX). I was prepared to take a bath after seeing the news this past week, but I’m actually up a bit—VTSAX is down, but the others are all up.

Salgat 2y ago
The gains from VTSAX over the past 5 years are so high that it would have to permanently drop by 50% to match international indexes like VTIAX.
- jdlshore 2y ago
  The point of passive investing and a balanced strategy is that you can’t predict what will happen. So, yes, the past five years were good for VTSAX. But if you’re investing today, then it’s the next five years that matter, not the past five years, and nobody can predict what will happen. (Well, to be more accurate, some fund managers will predict correctly, but you can’t predict which ones. Just like you know ~50 out of 100 coins will land heads, but you can’t predict which ones, not even if you choose the one that landed heads in the last 6 throws.)
  - Salgat 2y ago
    I'd still stay with VTSAX if you're investing long term given the 8% expected long term returns.
atombender 2y ago
Note that a market-cap-weighted total market index fund like VTSAX will have a fair amount of real estate (currently about 4%). This means that if you combine VTSAX and VGSLX, you end up overweighting real estate. If you also own a home, you're further overweighting that asset class. Such a strategy might make sense if you think real estate will outperform non-real-estate stocks in the long run (which, if you believe the Boglehead school of passive index investing, you shouldn't), or if you think the real estate market is not correlated with the stock market (which isn't the case), of course. Ben Felix has a good video about it [1]. A 50/50 split between US and international means you're overweighting international. By market cap, the US is about 60% of the world and ex-US is 40%. (Around 1990 ago it was 30% US, 70% ex-US.) If you want a "passive" approach, the solution is to buy VTWAX (Vanguard Total World Stock Index Fund Admiral Shares), or its ETF version, VT. [1] https://youtu.be/IzK5x3LlsUU?si=DK6AfUi_8GvroO-R https://youtu.be/IzK5x3LlsUU?si=DK6AfUi_8GvroO-R

fullshark 2y ago

It was never a bad idea, chasing trends based on vague "articles" like this is a bad idea though.