Michael wrote:Eyeballing the chart, it also appears sometimes the fund's domestic to international ratio tilts toward domestic as it ages, which I don't completely understand. With Vanguard's target fund the domestic to international ratio is static, while equities to bond ratio adjusts over time, which makes sense to me. Maybe my eyes are playing tricks on me.
Don't international investments, on average, carry more risk for the at equivalent returns because of currency risk? Diversification from the non-correlation to the U.S. will still improve portfolio risk-adjusted returns, but because of the added risk, couldn't you bring down portfolio risk with age on the foreign/domestic axis as well is the bonds/equities one? Have not looked into whether it makes sense to proceed on just one or both of those.
You might be right, but it appears the fund ends with the same 34 to 66 ratio so I'm not sure that's it. It's in the middle where it looks different. Again, maybe my eyes are tricking me and the ratio is actually static. FWIW, over the long run currency risk with international equities has been minimal, but to your point, it can add short term volatility.
Arthur Dent wrote:Somewhat relatedly, do you know anything about Vanguard's international bond allocation in their target funds? Seems like international bonds would be a worse deal than international stocks as the exact same currency risk gets added on but at a lower average return.
Honestly, I'm not convinced international bond indexes are worth the hassle. I do have some international bonds because of the vanguard target date fund I own, but that's it. Here's Vanguard's perspective on the matter. I may change in the future, but right now I think the upside is limited and I like to keep things simple by owning only 3 funds.
Vanguard and other target funds have been upping their international equity and bond allocations in the past few years. I think it's an interesting topic that I might post about some day.
Re: Our financial system is crumbling this week.
Posted: July 25 17, 5:53 pm
by Arthur Dent
Michael wrote:Vanguard and other target funds have been upping their international equity and bond allocations in the past few years. I think it's an interesting topic that I might post about some day.
Personally, I don't find the benefits to be super convincing. I mean, I don't think intl bonds are a terrible idea, but they are most likely not worth the hassle.
Yeah, don't hype my international investing thoughts. You'll be disappointed once you see them ha ha
edit - this post summarizes my feelings on the international bond subject. The poster, Taylor Larimore, wrote the boglehead books.
Re: Our financial system is crumbling this week.
Posted: July 26 17, 12:56 pm
by TheoSqua
I'm 31 and I feel like i'm not near adult enough for the direction this thread is taking.
Re: Our financial system is crumbling this week.
Posted: September 26 17, 9:23 am
by Freed Roger
Michael wrote:
Freed Roger wrote:Aah. Yea-no historic correlation. I will revamp.
Good. With a 1-2 time frame you should be looking at money markets and/or CDs. The performance isn't great, but that's what you should do.
Freed Roger wrote:A caveat to the chart- housing is hard to affix a national # to as busts and slumps tend to range a lot by region and even suburb vs more urban. . 2008 obviously hit the FL AZ NV type areas harder than Stl. For some reason, I think STL in general will take a hit next time.
Sure, but STL could be even worse. Don't gamble with your future.
well. we are going back into a house and liquidating the funds now. I had pulled back a third of it into CDs and MM, but ended up gambling with the most of it.... And made 11% annualized rate of return**. That's right, take that Vegas Boy!
**pre tax debbie downer
Now to get soaked in house costs and fixits. I swear, it's amazing how every time you come out ahead on something, bam - there will be an unexpected financial cost kicking the arse ( i.e. will have to buy a new car - can only drive with holes in the floorbard so long)
