I just switched up my Roth IRA to 50% SCHD, 25% SCHX, and 20% VXUS. My Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement in 5 years.
Agreed, I'm in line with having an advisor oversee my day-to-day investing cos, my job doesn't permit me the time to analyze stocks myself. Thankfully, my portfolio has 5X in barely 5 years, summing up nearly $1m as of today.
Can't divulge much, I delegate my excesses to someone of great expertise ''Karen Lynne Chess'' preferably you can look up the name on the web, her qualifications speak for itself.
glad to have stumbled upon this, curiously inputted Karen Lynne Chess on the web, easily spotted her consulting page and was able to schedule a call session. Ive seen commentary about advisers but not this phenomenal
Rebalancing with your contributions is a great way to buy the underperforming asset class. Aka “buying low”. Do it. And if you don’t, at least rebalance ever year or two. Rebalancing, either with your monthly contributions or once every year, is a way to “buy low and sell high”. Rebalancing also forces you to bring your portfolio back in to alignment with your financial plan.
Rebalancing is more about controlling volatility than it is about performance. This may or may not be important to you. There are a lot of conflicting opinions on rebalancing in the financial world (as there is with just about every topic in investing). One of the few times I will agree with Dave on an investment topic. It's not going to have this amazing effect on your portfolio. Do it. Don't do it. It's not really going to make or break you.
What Dave says at the end is most important. It's your actual contributions that matter most. A bunch of folks at my job worry to death about which fund is best, without putting much into it. Meanwhile I max out everthing, and have way more in my accounts than them.
I personally agree with Warren Buffet that the need to invest in international funds is less than in prior years since most of the S&P 500 companies have an international presence. This means that investing in the S&P 500 is not only a diversified fund, but it's also a global fund.
The problem is that international stocks are also getting more of their presence in the USA. Furthermore, according to Blackrock (and research Vanguard, Fidelity, etc.) the share of profits made in international market is more and more taken by international companies and less and less taken by US companies. So the trend is negative for USA companies to take profits offshore. You're only looking at it one way without looking at the reverse.
The opposite is also true. International business also does business in the US. The biggest problem is valuations in the States are way higher than international, hence you can expected a higher return in international on a going-forward basis.
@@DavidHongNU Vanguard has been wrong about every prediction in the last two decades. They were banging the drum claiming that emerging markets would "take off". That was a decade ago. If you listened to Vanguard's ridiculous predictions, you missed out on the longest US market bull run in the history of modern finance.
Why do people always say that international funds are good for when us is in a downturn? Have you ever looked at the performance history? Almost every international fund follows the same downturns as us funds, yet doesn’t get the benefit of great returns in an upswing.
Both International and US crashed hard in the early 00's, but International recovered much stronger than the US, up until the 2008 recession. Of course the US being mired in stupid wars combined with an inept Bush administration didn't help matters.
When they look back over the long run, they outperform. Sometimes that means not dipping as much, sometimes that means better gains. Sure doesn't feel that way in the short term.
A lot of the underperformance is because US p/e ratios have expanded and international p/e ratios have contracted over the past few decades. This cannot continue forever obviously.
This is a tough question. International has done nothing in the past but looks very promising in the future. Massive gains have been made in many smaller countries. Once they fully iron out their systems the gains should be massive. Tons of billionaires pour money into Chinese companies. They are all as big as Amazon, Facebook, etc but are trading at next to nothing right now.
@@Brian-hd4rb Isn't Alibaba the company whose CEO Jack Ma was kidnapped by the CCP and sent to a reeducation camp? Can you imagine is Biden did that to Jeff Bezos?
@@Brian-hd4rb No, but it has everything to do with the tight control the CCP has over businesses in China. US companies have much less regulation. The United States, at least among the large nations, is still the epicenter of Free Market Capitalism, and I don’t see that changing anytime soon.
I’m a Dave follower for life, but I will never be 25% in international. I ran so many backtests with so many different funds. Never once found a portfolio where international helped it at all
@Kam you are correct, but Dave says that his smartvestor pro ran the numbers and the portfolio performed better with international funds every single time. I can’t make it do that even once without consciously manipulating timelines that I run the backtests on. I invest in international, but I don’t think it needs to be such a large part of someone’s portfolio and I also don’t think Dave should tell people that their portfolio will perform better with international in it
3:20 this isn't weird, I mean maybe to a general audience. But investing in uncorrelated assets to boost your return over time is a basic concept. It's where hedge funds got their name before the majority of them just became over-priced wealth management schemes. (Buy index funds not some hedge fund) Same goes for gold and Bitcoin. It's probably not the best idea to put all your money into either of these. But a certain allocation can do wonders for building an uncorrelated portfolio.
Owning international is basically a hedge in case the USA Loses it’s crown as #1 economic and world power. If we lose, some other country/group of countries will be #1.
you can make money by Investing internationally as well. American companies are not the only great ones in the world. As Charlie munger says: "I don't care if the cat is black or white as long as it catches mice"
Yes the USA stock market has out performed every stock market on the planet the last 10 years. However, past performance is not indicative of future results.
It's too risky to only be US. Ultimately returns will correlate with country risk premiums and the US has outperformed because of falling risk premium. Not sure it has much more to fall so you can't expect the same for the next 20 years. Edit: Also I do not believe Munger agrees with Buffett on S&P only.
With VTSAX you have international exposure. American companies make money from international customers. Investing directly in international funds causes you more risk then just a VtSAX risk due to the added currency risk you are taking.
I first added the international stocks on the early 401K. Found out how bad it was. Under perform for over 5 years. Took it out and never looked back. The 401K will depend on your income and how much you contribute to it. Plus company match. Company match from 6% and later it was down to 3%. I mainly contribute the minimum. During the 2 cycles of downturn we have, I contribute over 30 percent. I made nothing on my paycheck because it went toward expense like mortgage, electricity, utility, insurance, and then it funnel down to the 401K. Where I live, the average job does not pay much, but at least I have some saving in the 401K.
Additionally..take a look at a 20yr (you might as well call that, FOREVER) chart of VTSMX (all U.S.) index vs. VGTSX (all international) markets. There is not ONE time period, when U.S. was declining and international was ascending. NOT, ONE. And, vice-versa. Not to mention..ALL international stock-index funds (that I'm aware of) carry a higher expense ratio..AND..if you hold an international-index fund in a TAXABLE account..you owe FOREIGN TAXES, which are not as favorable as U.S. income taxes.
Sure, if you ignore that international stocks fell less than US stocks did for the whole decade starting in 2000. Non-correlation helps boost returns per unit of risk. It doesn’t have to be anti correlation.
I believe it’s a mistake to come out fully of the international sector. Truth is population growth, middle class growth and economic expansion is happening at a faster rate internationally than it is in the west. I’m not saying to bet the house on the sector but definitely should be invested somewhat.
a broke uncle of mine made a good point. years ago china rode bicycles around now they buy cars and they are getting "less poor"... Hmm is this financial growth potential?
I love Dave’s advice most of the time, but I hate international funds so much. They simply don’t generate long term profit. In the last 20 years, you’d have made more money buying bonds or in a high yield savings account than buying international funds
@@theotherview1716 keep investing in an international mutual fund and enjoy your 1-2% return for the next 20 years as we all own apple and big tech making 65-100% a year.
Glad I came across this video. I'd still do International over bonds any day of the week. Thinking of doing something like VYMI for all my international needs, since the dividend payout is really good. Expense ratio is a little higher than the other International stuff at 0.22%, but still good and still way lower than the actively managed stuff.
I'm kind of torn on dividend-focused funds. You sacrifice performance for dividends. I would rather have higher returns than higher dividends. I look back at some of the high dividend paying individual stocks I used to own years ago, and they have done absolutely nothing. Ford comes to mind as a stock that just sits there and does nothing indefinitely.
@@mplslawnguy3389 my international stuff is mainly SCHF and SCHE right now. They have enough growth plus dividend yield for overall rate of return to keep me happy.
When an investment advisor does not recommend rebalancing then it is time to fire your advisor because what exactly are they doing for you? Why everyone should pay someone to get started ( if needed) and diy going forward. Stop wasting your money on high MER,s in mutual funds so that you can pay an advisor to do absolutely nothing!
@@Markjacobs4477 *past performance is not indicative of future performance If you're a long-term investor, there is real evidence that owning international stocks strengthens a portfolio quite significantly. The trick is to not get emotional and make emotional decisions. Stay the course for 30 or 40 years. There is new evidence that an all-equity portfolio consisting of a 50/50 mix of domestic and international stock outperforms TDF's and 100% domestic stock funds by a wide margin.
When domestic stocks are doing bad I can see that it would be a tendency for investors to chase the market, by adding more to international, when the investor should have been allocating a percentage to international prior to the downturn in domestic stocks all along. Historically, there have been times where international has outperformed domestic stocks, so why not capture those gains as well.
The only reason I invest in international is just incase the american market crashes, you will still have 20% of your money. Basically a safety net incase the american market takes a dump like 1929
Invest early and often. Then you won't have to worry much about diversification. International funds have out-performed the US Market so seldomly in very unique circumstances. Definitely not enough to justify 25% in a portfolio. You're leaving a lot of potential gains behind, especially if you start investing in your 20's.
That's not true, there were long periods where international outperformed domestic. When you factor in the overpriced domestic market, having some international exposure is a good thing. There is a lot of evidence that an all equity portfolio consisting of 50/50 domestic to international stock is the more resilient and has the lowest failure rate of any other portfolio such as TDFs or even an all equity US-only portfolio.
Just buy VOO, youll be ok long term. America should keep on doimg whay its been doimg since 1776, growing and getting bigger and stronger economically.
The math I've done, and regression analysis, rebalancing with new contributions gives you about 2% better returns as all new money is always in something down. i.e. NOT selling to rebalance, rebalance with only new contributions to meet your allocation percent. As a slightly uncorrelated index, in plain English, that means you buy a ton of it while "on sale", so that when it's time for it to go up, you have more shares to go on a tear.
Makes sense if you believe in value investing, but momentum investing has historically outperformed compared to value investing. Compare the past performance of IWMO.L with IWVL.L.
Serious question: Why not just do CDs if their interest is lower than some CDs? Furthermore, aren’t most of these international funds owned by U.S. Brokerage/Banking Companies so you’re still trusting the U.S.?
I have been thinking of dumping international as well. I have been watching it stink it up. I was hoping in 5 years it would catch up, but maybe it won’t .
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Lourd-Bab However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments
I'm going to have to disagree with Dave here. It's not worth getting international funds when their performance is so poor. It doesn't even matter if they go up a bit when US stocks take a dive. The performance over time is all that matters, and they have a terrible track record with comparison to an S&P 500 index fund, and it's not even close.
There is new evidence in a research paper that says otherwise. The traditional portfolio of domestic stocks and bonds has a much higher failure rate than an all equity portfolio with 50/50 domestic to international stock. The trick is you have to have the stomach for the drawdowns and not make stupid decisions. This is a long term strategy, as in 30 years plus, which is what everyone's strategy should be.
No other markets perform as well as the US market. Not worth putting more than 5-10% max in an international mutual fund. Could try an international based ‘emerging markets’ mutual fund? Might get better results, if you manage to stay on the rollercoaster.
Dave is right. You don't invest in an int'l fund to beat the market, as much as you invest in it as a hedge of the US market! He doesn't get specific but for anyone curious, according to lazy portfolio int'tl stocks have outperformed the US market 50% of the time spanning 1970 to 2022, that's a reasonable investment. So in theory you're not buying it for the returns as much as for the fairly uncorrelated asset class. That said, I think Mr. Dave is painting a broad brush here, yes, many countries like Israel & Spain aren't even bond material. But that said, Saudi Arabia is rock solid, Tawian is solid, Switzerland solid, Denmark beats the S&P. If you know what you're doing you can find the blue chips of developed economies.
International bothers me with the shutdowns and mandates. I set up 3 account for the grandkids and that section is losing while the others are averaging 25 plus percent over the S&P500. I'll decide what to do at the beginning of new year when I have the full year report. BTW. I'm old and retired with a bundle of bucks. Baby steps etc don't apply.
But that stuff is priced in... It's because of shutdowns and everything else that makes international stock so affordable VS. US stocks that get more and more expensive in relation to intrinsic value. The pendulum will eventually swing and when it does all the international stock you purchased at low prices will make you rich.
Dave, you're too smart to be bamboozled by financial advisors. Stop recommending active funds already. The dirty little secret is financial advisors uses index funds. I'm 100% VTSAX and chill in all my accounts. 40% of revenues from the S&P 500 come from overseas anyway. There's your foreign diversification. I avoid currency risk this way as well.
Dave gets a cut from the smartvestor pros or whatever he calls them. That's why he pimps them so hard, though he mysteriously never tells you which specific funds are the best.
@@kevins6468 82% of actively managed funds lose to the market over a 5 year period, and it only gets worse from there. Your financial advisor loves you because you're making him rich!
@@braceyourselvesfortruth2492 that’s false lol I don’t use a financial advisor. It’s so easy to find funds that out perform the market. Use the search function at fidelity there are thousands of funds that perform over 11%. The trick is to not use an advisor do the research yourself a monkey could do it it’s so easy
International markets have been moving sideways for decades and they'll likely continue to do so due to more laws, protections for their employees, higher taxes and regulations in other countries vs the USA, maybe good for the workers but not for the investor. I'd stay out of them.
@@lukemurphy9831 well you explain why the FTSE (Europe) only returned 4% over the past five years or the nikkei (Japan) only returned 50% VS the S&P (America) which returned over 100% in the same time...don't get me wrong I'd love to visit other countries or possibly even live in them one day. The only conclusion I could come to for the difference is they put people over profits more so than we do which is an amazing thing, but not the best for an investor or business owner/ entrepreneur, why do you think Elon Musk is here and didn't stay in his country, and many others who came here to become millionaires and billionaires.
@@user-jy7yw5kw3w I get what you are saying, but that is already reflected in prices. US is one of the most business friendly countries, but that is not a secret to the market, everyone knows it, this is why US is so much more expensive than international. Look at price to book and PE ratio’s, they are way higher in the US than international which is primarily a reflection of the point you are making. It is less risky to invest in the US (and growth prospects better). Big Difference between good companies and good investments. Return over the long-run is price paid for future profits, in which international is more attractive than US based on valuations. Not saying that US won’t perform well, it just makes more sense to diversify across countries, you will get a much more reliable result. Look at Japan, they were the economic powerhouse and have had flat returns for the last 30 years. Valuation is important. Too much randomness/unpredictability to bet on one countries market IMO.
S and p , large growth trying to get my base set first Then I'll go international ( zero China and I mean zero ) Looking into other countries first like India
The S&P is comprised of the largest companies. To become large they have to sell internationally. Boom there's all the international exposure you need. If you want to mess with emerging markets you can. But don't do it under the guise of getting international exposure
@@lukemurphy9831 I thought the purpose of diversification was to hedge against a market downturn? International funds all dip at the same time as US funds. Most have a larger percentage dip also. There is such thing as over diversification.
@@sd0753 purpose of diversification is to get a more reliable investment outcome. Betting on one country, decreases the reliability of the result. Makes more sense to invest in all geographical markets so you are more likely to capture market risk premiums. Individual countries can have very long periods of negative returns, which is possible for a global portfolio also, but a lot less likely. You will probably get a good result only investing in US, though.
My just checked my funds and my international one is the only one that's green LOL. I think it's still worthwhile but maybe do only 15% or 20% instead of 25%.
I had a financial investment firm (well-known) that advised 40% international, and even a range beyond that. I followed their advice for about three years and International barely made anything. I've since re-blanaced my portfolio 80/20 US/International.
Have you ever looked under the hood of some of these target date funds? Take the Fidelity 2025 fund, it has 31 % in US stocks and 27% in international and it's toll return for the year is around 10% while the S&P is up around 26%, so even though the fund has 60% in stocks it didn't even do half as well as the S&P. Maybe if they dropped their international holdings down to 10% the fund would do better. Many of these funds seem to hold a far too high of a percentage in international stocks. One would have done better having 50% in stocks and 50% in cash this year.
If you're going to invest in international companies, keep your cultural values in consideration; Timothy Plan and Inspire have a line of funds that invest based on adherence to biblical values, and I invest in their international stock ETFs
Mutual funds charge high fees. Avoid them! Dave makes money recommending them. They are a rip off. Index funds and ETFs are much better because of the low 1% fee and they do better than mutual funds.
Mutual funds outperform the market even when the funds have high expense ratios. It isn’t even close in the long term. Most mutual funds fees are between .25 and .75% which isn’t ridiculous and even then the higher returns make up 5-10x in the long term
Nix the guesswork and scrolling. We’ll connect you with investment pros we trust: bit.ly/3kwqrhf
Buy india 🇮🇳 etf INDA
Or, please don't.
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, and 20% VXUS. My Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement in 5 years.
these are dividend stocks not growth, but not bad for 350k. consider financial advisory so you don’t keep switching it up!
Agreed, I'm in line with having an advisor oversee my day-to-day investing cos, my job doesn't permit me the time to analyze stocks myself. Thankfully, my portfolio has 5X in barely 5 years, summing up nearly $1m as of today.
@@everceen this is huge! mind revealing info of your advisor here please? in dire need of portfolio rebalancing
Can't divulge much, I delegate my excesses to someone of great expertise ''Karen Lynne Chess'' preferably you can look up the name on the web, her qualifications speak for itself.
glad to have stumbled upon this, curiously inputted Karen Lynne Chess on the web, easily spotted her consulting page and was able to schedule a call session. Ive seen commentary about advisers but not this phenomenal
Rebalancing with your contributions is a great way to buy the underperforming asset class. Aka “buying low”. Do it. And if you don’t, at least rebalance ever year or two. Rebalancing, either with your monthly contributions or once every year, is a way to “buy low and sell high”. Rebalancing also forces you to bring your portfolio back in to alignment with your financial plan.
Thanks for pointing this out!
Rebalancing is more about controlling volatility than it is about performance. This may or may not be important to you. There are a lot of conflicting opinions on rebalancing in the financial world (as there is with just about every topic in investing). One of the few times I will agree with Dave on an investment topic. It's not going to have this amazing effect on your portfolio. Do it. Don't do it. It's not really going to make or break you.
What Dave says at the end is most important. It's your actual contributions that matter most. A bunch of folks at my job worry to death about which fund is best, without putting much into it. Meanwhile I max out everthing, and have way more in my accounts than them.
Or you can do both...
okay, want a pat on the back?
I personally agree with Warren Buffet that the need to invest in international funds is less than in prior years since most of the S&P 500 companies have an international presence. This means that investing in the S&P 500 is not only a diversified fund, but it's also a global fund.
The problem is that international stocks are also getting more of their presence in the USA. Furthermore, according to Blackrock (and research Vanguard, Fidelity, etc.) the share of profits made in international market is more and more taken by international companies and less and less taken by US companies. So the trend is negative for USA companies to take profits offshore. You're only looking at it one way without looking at the reverse.
The opposite is also true. International business also does business in the US. The biggest problem is valuations in the States are way higher than international, hence you can expected a higher return in international on a going-forward basis.
stay out of international you wont get any returns for many years dont listen to these brainwashed sheep
@@DavidHongNU Vanguard has been wrong about every prediction in the last two decades. They were banging the drum claiming that emerging markets would "take off". That was a decade ago. If you listened to Vanguard's ridiculous predictions, you missed out on the longest US market bull run in the history of modern finance.
Buffet is missing the point of international with that argument
Why do people always say that international funds are good for when us is in a downturn? Have you ever looked at the performance history? Almost every international fund follows the same downturns as us funds, yet doesn’t get the benefit of great returns in an upswing.
Both International and US crashed hard in the early 00's, but International recovered much stronger than the US, up until the 2008 recession. Of course the US being mired in stupid wars combined with an inept Bush administration didn't help matters.
When they look back over the long run, they outperform. Sometimes that means not dipping as much, sometimes that means better gains. Sure doesn't feel that way in the short term.
Yes, US is patient zero in bad times and in good times drap others up.
Look back to the 1990s. Vanguard's International mutual fund (created in 1996) outperformed the S&P 500 10 out of the 28 past years.
A lot of the underperformance is because US p/e ratios have expanded and international p/e ratios have contracted over the past few decades. This cannot continue forever obviously.
Still waiting for the day when international outperforms US only portfolio.
@@afridgetoofar1818Look at 2000-2009 then
Yeah I cut international out awhile ago, never looked back.
I became confident and ditch all the mutual and index funds all together. Currently a godly amount above market
Me too. Can't get into international anymore. Twenty bad years has tried my patience.
Same I went with a Large mid small growth and a technology fund.
VTSAX (mostly) & Chill.
Have any of you heard of the term, dollar cost averaging? I spread out my risk everywhere as well just to be on the safe side
I have 80% U.S. and 20% international. My portfolio is doing great with a bit of diversification
You'd be doing just as well with 100% US
And it would be better if it were in US ONLY 😃
international definitely hasn't been doing great
Look back to the 1990s. Vanguard's International mutual fund (created in 1996) outperformed the S&P 500 10 out of the 28 past years.
This is a tough question. International has done nothing in the past but looks very promising in the future. Massive gains have been made in many smaller countries. Once they fully iron out their systems the gains should be massive. Tons of billionaires pour money into Chinese companies. They are all as big as Amazon, Facebook, etc but are trading at next to nothing right now.
I agree. I'm balls deep on Alibaba right now. Value investing at its finest
My opinion is I do not trust Chinese stocks at all. Id trust European, Japanese, Indian stocks before China.
@@Brian-hd4rb Isn't Alibaba the company whose CEO Jack Ma was kidnapped by the CCP and sent to a reeducation camp? Can you imagine is Biden did that to Jeff Bezos?
@@afridgetoofar1818 Yeah, that has nothing to do with the company. I'm still holding and adding more shares
@@Brian-hd4rb No, but it has everything to do with the tight control the CCP has over businesses in China. US companies have much less regulation. The United States, at least among the large nations, is still the epicenter of Free Market Capitalism, and I don’t see that changing anytime soon.
I’m a Dave follower for life, but I will never be 25% in international. I ran so many backtests with so many different funds. Never once found a portfolio where international helped it at all
Can you talk a little more about the tests you ran? I'm hoping to get more insight because investing in international doesn't make much sense to me.
We don't know the future
Then you back tested improperly. International has had entire decades of outperforming US stocks.
What "back-tests" did you run? And, how did these inform your estimation of the future?
@Kam you are correct, but Dave says that his smartvestor pro ran the numbers and the portfolio performed better with international funds every single time. I can’t make it do that even once without consciously manipulating timelines that I run the backtests on. I invest in international, but I don’t think it needs to be such a large part of someone’s portfolio and I also don’t think Dave should tell people that their portfolio will perform better with international in it
3:20 this isn't weird, I mean maybe to a general audience. But investing in uncorrelated assets to boost your return over time is a basic concept. It's where hedge funds got their name before the majority of them just became over-priced wealth management schemes. (Buy index funds not some hedge fund)
Same goes for gold and Bitcoin. It's probably not the best idea to put all your money into either of these. But a certain allocation can do wonders for building an uncorrelated portfolio.
Owning international is basically a hedge in case the USA Loses it’s crown as #1 economic and world power. If we lose, some other country/group of countries will be #1.
That’s not going to happen in our lifetimes.
@@brianmcg321 I'm not so sure about that,it may happen in our lifetimes,we cant tell what will happen in 50 yrs.
That's what I have been thinking. In the past there was tons of issues but the future for international seems very bright.
you can make money by Investing internationally as well. American companies are not the only great ones in the world. As Charlie munger says: "I don't care if the cat is black or white as long as it catches mice"
Rule #1 never bet against the US. Capitalism always prevails over other governments.
I think I have 10% of my retirement in an international emerging markets fund. It's not a hedge against the US, it's diversification.
"diversification are for idiots" - Warren Buffett
@@Hboogie182 Except Buffet recommends the S&P 500 which has a good amount of diversification compared to single stocks
@@chase4116 he likes the S&P500 but he doesn't like international funds. US stocks have averaged higher returns compared to international stocks.
Wth? Do you invest in heroine addicts to diversity?
@@Hboogie182in the recent past.
‘Performed not as well” is an understatement
I do 20% international. Everything else is domestic.
Yes the USA stock market has out performed every stock market on the planet the last 10 years. However, past performance is not indicative of future results.
I follow Warren Buffett and Jack Bogles advice. No need for international investing. They have been proven right for twenty years. I’m 100% VTSAX.
I do the same, except I do VTI because my brokerage doesn't offer MUTFs; they only offer ETFs
@@coachvik yeah I scrapped VXUS, sucks hard
It's too risky to only be US. Ultimately returns will correlate with country risk premiums and the US has outperformed because of falling risk premium. Not sure it has much more to fall so you can't expect the same for the next 20 years. Edit: Also I do not believe Munger agrees with Buffett on S&P only.
Vtv is the only way to invest in currently returning 8 % after 20 years !
With VTSAX you have international exposure. American companies make money from international customers. Investing directly in international funds causes you more risk then just a VtSAX risk due to the added currency risk you are taking.
Interesting. My ROTH IRA allocation is 90% VTSAX (Total U.S. stock market index); 7% VSS (Small & midcap international); 3% IAU (Gold). No complaints.
For what it’s worth, 60-20-20: Large Cap, Small Cap, Int funds has been working great.
international funds has definitely not been working great
@@Markjacobs4477 int index YTD 12.8%
That’s what I have I was thinking of doing 80-10-10 tho or 70-20-10
I invest in my 401K, 33% in small cap, 33% in mid cap and 34% in large cap, good look guys.
I have 25% small cap, 25% mid cap and 50& Large cap 0% international
Sam here 50% Lrg 25% Mid & 25% small.
Dave is incorrect. Global markets have a high correlation. The reason to buy international is the benefit of diversification.
That's pretty much what he said !?!
@@jakebrown9829 no Dave said they were uncorrelated.
@@djpuplex he said they were inversely correlated. when domestic sucks international does better.
@@nicholashomler1494 yes he said that, but that's not true
@@djpuplex I don't think you understand diversification. You diversify so when one does poor the others cover the poor outcome
I first added the international stocks on the early 401K. Found out how bad it was. Under perform for over 5 years. Took it out and never looked back. The 401K will depend on your income and how much you contribute to it. Plus company match. Company match from 6% and later it was down to 3%. I mainly contribute the minimum. During the 2 cycles of downturn we have, I contribute over 30 percent. I made nothing on my paycheck because it went toward expense like mortgage, electricity, utility, insurance, and then it funnel down to the 401K. Where I live, the average job does not pay much, but at least I have some saving in the 401K.
Additionally..take a look at a 20yr (you might as well call that, FOREVER) chart of VTSMX (all U.S.) index vs. VGTSX (all international) markets. There is not ONE time period, when U.S. was declining and international was ascending. NOT, ONE. And, vice-versa. Not to mention..ALL international stock-index funds (that I'm aware of) carry a higher expense ratio..AND..if you hold an international-index fund in a TAXABLE account..you owe FOREIGN TAXES, which are not as favorable as U.S. income taxes.
Sure, if you ignore that international stocks fell less than US stocks did for the whole decade starting in 2000. Non-correlation helps boost returns per unit of risk. It doesn’t have to be anti correlation.
I believe it’s a mistake to come out fully of the international sector. Truth is population growth, middle class growth and economic expansion is happening at a faster rate internationally than it is in the west. I’m not saying to bet the house on the sector but definitely should be invested somewhat.
I agree,
a broke uncle of mine made a good point. years ago china rode bicycles around now they buy cars and they are getting "less poor"... Hmm is this financial growth potential?
its not a mistake, you only believe that because dave ramsey says so, you will have like 2-3% return in 10 years when you could have had 12%
I love Dave’s advice most of the time, but I hate international funds so much. They simply don’t generate long term profit. In the last 20 years, you’d have made more money buying bonds or in a high yield savings account than buying international funds
You’re cherry picking. The 20 years before that international was stronger than US
@@theotherview1716 I’m cherry picking the entire 21st century?
@@tylersanders2388 the stock market started in the 21st century?
@@theotherview1716 keep investing in an international mutual fund and enjoy your 1-2% return for the next 20 years as we all own apple and big tech making 65-100% a year.
@@theotherview1716Cherry pick all you want, but over the long run US has left International in the dust.
If you are talking about a taxable account, it can make more sense to rebalsnce with new contributions like the caller was doing.
Glad I came across this video. I'd still do International over bonds any day of the week. Thinking of doing something like VYMI for all my international needs, since the dividend payout is really good. Expense ratio is a little higher than the other International stuff at 0.22%, but still good and still way lower than the actively managed stuff.
I'm kind of torn on dividend-focused funds. You sacrifice performance for dividends. I would rather have higher returns than higher dividends. I look back at some of the high dividend paying individual stocks I used to own years ago, and they have done absolutely nothing. Ford comes to mind as a stock that just sits there and does nothing indefinitely.
@@mplslawnguy3389 my international stuff is mainly SCHF and SCHE right now. They have enough growth plus dividend yield for overall rate of return to keep me happy.
Looking on the bright side, the International index funds and ETFs I invest in all have dividend yields of 3%+
When an investment advisor does not recommend rebalancing then it is time to fire your advisor because what exactly are they doing for you? Why everyone should pay someone to get started ( if needed) and diy going forward. Stop wasting your money on high MER,s in mutual funds so that you can pay an advisor to do absolutely nothing!
You could always do a world market index over the international something like VXUS.
sure if you want extremely low returns while you could have owned the sp500 making 10 percent a year
@@Markjacobs4477 *past performance is not indicative of future performance
If you're a long-term investor, there is real evidence that owning international stocks strengthens a portfolio quite significantly. The trick is to not get emotional and make emotional decisions. Stay the course for 30 or 40 years. There is new evidence that an all-equity portfolio consisting of a 50/50 mix of domestic and international stock outperforms TDF's and 100% domestic stock funds by a wide margin.
When domestic stocks are doing bad I can see that it would be a tendency for investors to chase the market, by adding more to international, when the investor should have been allocating a percentage to international prior to the downturn in domestic stocks all along. Historically, there have been times where international has outperformed domestic stocks, so why not capture those gains as well.
You just need to get it into the right buckets of international mixes. So far mine are doing quite well.
Vxus?
what is the 4 category they are talknig about?
Growth
Growth and Income'
Aggressive Growth
International
@@damondiehl5637 3 growth funds? I love growth funds so I can get behind that.
Learned something new here. Didn't know I don't have to rebalance. Thanks Dave
You don't have to rebalance, but you should. Make sure mort of your international is in developed markets, only a little in emerging.
The only reason I invest in international is just incase the american market crashes, you will still have 20% of your money. Basically a safety net incase the american market takes a dump like 1929
If American crashes, international will too. That’s what happened in 2008.
@@artemkalinchuk Yeah I guess I could see a ripple effect. I'll look more into it, thanks for the insight.
get out of international
@@artemkalinchukare we going to ignore that ex-US stocks outperformed US stocks for the entirety of the 2000s?
If the US crash I will buy more US for cheap.
Now, it's one year since this video..and the international category, STILL sucks! I abandoned the category, years ago.
What is in his international funds? I had funds and stocks is SE Asia India and Japan all are preforming. You still need to pick good companies.
Invest early and often. Then you won't have to worry much about diversification. International funds have out-performed the US Market so seldomly in very unique circumstances. Definitely not enough to justify 25% in a portfolio. You're leaving a lot of potential gains behind, especially if you start investing in your 20's.
dont invest international, no other stock market in the world even comes to the US's returns long term, its stupid.
That's not true, there were long periods where international outperformed domestic. When you factor in the overpriced domestic market, having some international exposure is a good thing. There is a lot of evidence that an all equity portfolio consisting of 50/50 domestic to international stock is the more resilient and has the lowest failure rate of any other portfolio such as TDFs or even an all equity US-only portfolio.
I see comments like this and understand why the average investor underperforms the market.
I have 10% international, 45% AMC, 45% GME
Lol
Just buy VOO, youll be ok long term. America should keep on doimg whay its been doimg since 1776, growing and getting bigger and stronger economically.
The math I've done, and regression analysis, rebalancing with new contributions gives you about 2% better returns as all new money is always in something down. i.e. NOT selling to rebalance, rebalance with only new contributions to meet your allocation percent.
As a slightly uncorrelated index, in plain English, that means you buy a ton of it while "on sale", so that when it's time for it to go up, you have more shares to go on a tear.
Makes sense if you believe in value investing, but momentum investing has historically outperformed compared to value investing. Compare the past performance of IWMO.L with IWVL.L.
Serious question:
Why not just do CDs if their interest is lower than some CDs? Furthermore, aren’t most of these international funds owned by U.S. Brokerage/Banking Companies so you’re still trusting the U.S.?
QQQ crushes them all
Actually TQQQ crushes them all.
My 401k is 100% in Total Market Index. Life on easy street
It's crazy not to have at least 15 to 20% in international
Invest in India 🇮🇳 etf INDA. It’s the next big country after US for skilled labor, technology and opportunities
I invested in SMIN and EPI just a few months ago
VXUS rocks if you dollar cost average into it
The dividends are pretty hot
We have zero in our portfolio in international.
Interesting topic. I cut international about 10 years ago but I was doing a yearly rebalance as well.
I have been thinking of dumping international as well. I have been watching it stink it up. I was hoping in 5 years it would catch up, but maybe it won’t .
it wont, stay out
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Lourd-Bab However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments
@@lennoxmutterick6434 Oh please I’d love that. Thanks!
@@Lourd-Bab Clementina Abate Russo is her name
Lookup with her name on the webpage.
International has just been a buy the last decade. Buy low, sell high
I don't touch international. Just can't see what is great about it
diversify
@@Native722yea lets be real. If US stocks goes bad, then its taking the rest of the world with it. Pure and simple.
Rebalancing seems like a pain
It's also a stupid idea
Unfortunately i believe international is about out perform our own market
lol
There have been periods where this is true. I think it's shortsighted to not see the value in having at least some international in your portfolio.
I'm going to have to disagree with Dave here. It's not worth getting international funds when their performance is so poor. It doesn't even matter if they go up a bit when US stocks take a dive. The performance over time is all that matters, and they have a terrible track record with comparison to an S&P 500 index fund, and it's not even close.
If I’m 27 and I plan to invest for 40 years I’m not confident that the US stays on top.
@@theotherview1716 Sure, if you want to speculate, but I'd rather go off the historical data.
@@theotherview1716 lol sp500 destroys every stock market in the world 10 fold over the long run, stupid investing.
There is new evidence in a research paper that says otherwise. The traditional portfolio of domestic stocks and bonds has a much higher failure rate than an all equity portfolio with 50/50 domestic to international stock. The trick is you have to have the stomach for the drawdowns and not make stupid decisions. This is a long term strategy, as in 30 years plus, which is what everyone's strategy should be.
@@mplslawnguy3389that paper has to do with bonds, not us vs intl, and has serious flaws. Read Cliff Asness’s response “Why Not 100% equities”
Us stocks are expensive cape ratio shows it in for rough time.
Great question!
Buy some from the swedish market. We are up more than you guys for the year.
I would not buy the fish they are in the red (dad joke)
난 vti + vxus + vtip
이렇게 투자함
일단 버핏 존보글도 미국만한 나라는 없다고 했으니
존 템플턴 필립피셔 처럼 공부 할 자신이없다
그냥 buy and hold vti!!!
Joanie Dam
No other markets perform as well as the US market. Not worth putting more than 5-10% max in an international mutual fund. Could try an international based ‘emerging markets’ mutual fund? Might get better results, if you manage to stay on the rollercoaster.
Dave is right. You don't invest in an int'l fund to beat the market, as much as you invest in it as a hedge of the US market! He doesn't get specific but for anyone curious, according to lazy portfolio int'tl stocks have outperformed the US market 50% of the time spanning 1970 to 2022, that's a reasonable investment. So in theory you're not buying it for the returns as much as for the fairly uncorrelated asset class.
That said, I think Mr. Dave is painting a broad brush here, yes, many countries like Israel & Spain aren't even bond material. But that said, Saudi Arabia is rock solid, Tawian is solid, Switzerland solid, Denmark beats the S&P. If you know what you're doing you can find the blue chips of developed economies.
International bothers me with the shutdowns and mandates. I set up 3 account for the grandkids and that section is losing while the others are averaging 25 plus percent over the S&P500. I'll decide what to do at the beginning of new year when I have the full year report. BTW. I'm old and retired with a bundle of bucks. Baby steps etc don't apply.
But that stuff is priced in... It's because of shutdowns and everything else that makes international stock so affordable VS. US stocks that get more and more expensive in relation to intrinsic value. The pendulum will eventually swing and when it does all the international stock you purchased at low prices will make you rich.
@@sterlingcampbell2116 yeah no it wont, stupid low return investing
The International Markets are being heavily regulated.
What percentage would you put into international markets?
Casey the Spammer!!!
@@cooleobrad Casey, is that you? 😂
Chinese stocks are a bargain right now📈
Dave, you're too smart to be bamboozled by financial advisors. Stop recommending active funds already. The dirty little secret is financial advisors uses index funds. I'm 100% VTSAX and chill in all my accounts. 40% of revenues from the S&P 500 come from overseas anyway. There's your foreign diversification. I avoid currency risk this way as well.
That’s just false active mutual funds will out earn significantly over time you do what you want but you’re losing money
Dave gets a cut from the smartvestor pros or whatever he calls them. That's why he pimps them so hard, though he mysteriously never tells you which specific funds are the best.
@@kevins6468 82% of actively managed funds lose to the market over a 5 year period, and it only gets worse from there. Your financial advisor loves you because you're making him rich!
@@braceyourselvesfortruth2492 that’s false lol I don’t use a financial advisor. It’s so easy to find funds that out perform the market. Use the search function at fidelity there are thousands of funds that perform over 11%. The trick is to not use an advisor do the research yourself a monkey could do it it’s so easy
The funds I use average 15.2% over the last 50 years
International stocks return average 4%. Just invest in growth. Either VOO or SCHG or both.
SPY and VTI mix. Call it a day. Low fees and matches the market. VTI gives international exposure to hedge against domestic downturn.
Just buy the S&P 500 and never look back
International markets have been moving sideways for decades and they'll likely continue to do so due to more laws, protections for their employees, higher taxes and regulations in other countries vs the USA, maybe good for the workers but not for the investor. I'd stay out of them.
So are you saying Dave's advise is wrong?
Lol if this was true, it would be priced into the markets. Always room for international allocation in a portfolio.
@@lukemurphy9831 well you explain why the FTSE (Europe) only returned 4% over the past five years or the nikkei (Japan) only returned 50% VS the S&P (America) which returned over 100% in the same time...don't get me wrong I'd love to visit other countries or possibly even live in them one day. The only conclusion I could come to for the difference is they put people over profits more so than we do which is an amazing thing, but not the best for an investor or business owner/ entrepreneur, why do you think Elon Musk is here and didn't stay in his country, and many others who came here to become millionaires and billionaires.
@@user-jy7yw5kw3w I get what you are saying, but that is already reflected in prices. US is one of the most business friendly countries, but that is not a secret to the market, everyone knows it, this is why US is so much more expensive than international. Look at price to book and PE ratio’s, they are way higher in the US than international which is primarily a reflection of the point you are making. It is less risky to invest in the US (and growth prospects better).
Big Difference between good companies and good investments. Return over the long-run is price paid for future profits, in which international is more attractive than US based on valuations.
Not saying that US won’t perform well, it just makes more sense to diversify across countries, you will get a much more reliable result. Look at Japan, they were the economic powerhouse and have had flat returns for the last 30 years. Valuation is important. Too much randomness/unpredictability to bet on one countries market IMO.
🤦♂️🤦♂️🤦♂️
With the dollar being abandoned the foreign funds may do better.
lol
The US dollar will be fine
I only do like 5-10% in international
get out of international, nothing beats the US over the long run or short term. its stupid.
Jack Bogle and Warren Buffet said No to international
They also own companies and don't even touch their investments. They are not depending on their 401K to power their retirement 30 years or more.
Nio 🚀
VTSAX & Chill.
International is killing it.
bull
@@Markjacobs4477 not bull 😂
Also did you take the time to look when I commented this, 7 months ago to see ? Lol we’re still up today tho so bull nothing 😂
@@MrKyle2432Your comment has aged poorly.
S and p , large growth trying to get my base set first
Then I'll go international ( zero China and I mean zero )
Looking into other countries first like India
The S&P is comprised of the largest companies. To become large they have to sell internationally. Boom there's all the international exposure you need. If you want to mess with emerging markets you can. But don't do it under the guise of getting international exposure
@@sd0753 Yeah that is not true, there is still diversification benefits of buying international.
@@lukemurphy9831 I thought the purpose of diversification was to hedge against a market downturn? International funds all dip at the same time as US funds. Most have a larger percentage dip also. There is such thing as over diversification.
@@sd0753 purpose of diversification is to get a more reliable investment outcome. Betting on one country, decreases the reliability of the result. Makes more sense to invest in all geographical markets so you are more likely to capture market risk premiums. Individual countries can have very long periods of negative returns, which is possible for a global portfolio also, but a lot less likely. You will probably get a good result only investing in US, though.
Buy high sell low.
Don't water the weeds.
Ken's living dangerously having a taller cup than Dave...
I continue to invest 10% in an International mutual fund that excludes China.
My just checked my funds and my international one is the only one that's green LOL. I think it's still worthwhile but maybe do only 15% or 20% instead of 25%.
Why?
Dave is really not a sophisticated investor
World equally divided as 33,4% VTI / 33,3% VEA / 33,3% VWO not to miss a thing - and counting...
Emerging markets are trash.
Jesus Dave…
I had a financial investment firm (well-known) that advised 40% international, and even a range beyond that. I followed their advice for about three years and International barely made anything. I've since re-blanaced my portfolio 80/20 US/International.
Three years is not a lot of time
10% to 20% max in international is perfect
get out of international you will make way more money long and short term dont listen to these boneheads.
Dave probably doesn't have Chinese tires on his Toyota?
Wait...
Have you ever looked under the hood of some of these target date funds? Take the Fidelity 2025 fund, it has 31 % in US stocks and 27% in international and it's toll return for the year is around 10% while the S&P is up around 26%, so even though the fund has 60% in stocks it didn't even do half as well as the S&P. Maybe if they dropped their international holdings down to 10% the fund would do better. Many of these funds seem to hold a far too high of a percentage in international stocks. One would have done better having 50% in stocks and 50% in cash this year.
My thoughts exactly.
@@channelmixerdid you just agree with yourself?
there's no sense in investing "international" at all! if you are investing in majour US corporations then you are already invested internationally!
If you're going to invest in international companies, keep your cultural values in consideration; Timothy Plan and Inspire have a line of funds that invest based on adherence to biblical values, and I invest in their international stock ETFs
If it sucks, why invest in it than?
Cause people like you exist. Go for it, Saul.
Let your winners be winners! Don't rebalance!
Who's here March 2023😂
2 years later, and it still sucks... I wonder if Dave has changed his tune yet.
The Fidelity 500 is the same thing as VTSAX but theres no load and its less to operate
VTSAX has no load. What are you talking about?
Your comment is quite uninformed.
Just use BTC as your international.
oh god, what a stupid advice
Davis David Walker Laura Lewis Angela
Mutual funds charge high fees. Avoid them! Dave makes money recommending them. They are a rip off. Index funds and ETFs are much better because of the low 1% fee and they do better than mutual funds.
Wrong
@@kevins6468 explain?
A 1% fee is insanely high. The Vanguard S&P500 admiral index fund has an expense ratio of 0.04%.
Mutual funds outperform the market even when the funds have high expense ratios. It isn’t even close in the long term. Most mutual funds fees are between .25 and .75% which isn’t ridiculous and even then the higher returns make up 5-10x in the long term
I'm with fidelity
They four zero fee funds
I have no funds that high
1% is not good at all
My higher charged funds are doing the best