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Need some advice. What percentages of your stocks are U.S and international?
Old 12-30-2010, 03:16 PM   #1
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Need some advice. What percentages of your stocks are U.S and international?

Recently, my wife and I have been getting our finances in order and have read a few books about investing. Each of us, 33 and 36 years old, have a 403b and a Roth IRA that we started 6 years ago, but now that we have some more knowledge we may have to change our asset allocations.
From what i read i should be investing in more stocks than bonds, but how much should i put into international and U.S? I feel i'm pretty aggressive since i have 30 years until i retire, so should i think about having 40-50% of my stocks as international or should i stick with something like 20%? Right now both our Roths are with Vanguard and here's the break down of our asset allocations:

Stocks 90% (Vanguard total stock market index 72%, Vanguard Total International Index Funds 18%)

Bonds 10% (vanguard total bond market II)


Should i stick with these or make any changes to my U.S. and international funds? How much do you put into U.S and international?

We are currently in the process of moving our 403bs to Fidelity, so i haven't decided which funds to have in my portfolio, but the Spartan funds look pretty good. Should i put the same percentages into fidelity that i have in vanguard?

thanks
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Old 12-30-2010, 03:43 PM   #2
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I think it is best to look at AA for all investments combined rather than by account. That said, I have my bond allocation all in tax deferred accounts (401K and IRAs in my case) so the interest distributions are not currently taxed and my taxable investments are a combination of bonds and equitiies which generate less taxable income.

On stock, I'm 80% US and 20% foreign and have been for a number of years, but I'm 20 years older than you. The thing to remember though is that even a totally domestic fund will have significant foreign exposure in a backwards way because many of the "domestic" companies are multinational and have operations around the globe. Thus, while some would recommend a higher allocations to foreign funds, I haven't fretted too much about my 80% allocation to domestic equities since I know that it implicitly includes significant additional foreign exposure.
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Old 12-30-2010, 03:53 PM   #3
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From what i read i should be investing in more stocks than bonds, but how much should i put into international and U.S? I feel i'm pretty aggressive since i have 30 years until i retire, so should i think about having 40-50% of my stocks as international or should i stick with something like 20%?
I agree with pb4uski that it is best to look at all investments combined, and that is what I do too.

Personally, 30% of my stocks are international and that is in a very conservative portfolio. I am retired and not very risk tolerant at all, plus I am partial to U.S. stocks for patriotic reasons.

I think the idea of increasing your international percentage is certainly worth some consideration. When I was in accumulation phase and had your percentages of stocks vs bonds, 50% of my stocks were international. But then I am no investment guru, and I think probably every one of us has an investment portfolio that is different from every other one of us. There are a million ways to skin a cat, in other words.
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Old 12-30-2010, 03:58 PM   #4
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About 50% of our equities are foreign and about 50% are US. This means that we are slightly overweighted to US equities based on world market weights.
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Old 12-30-2010, 04:03 PM   #5
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I think it is best to look at AA for all investments combined rather than by account.
I agree. Look at the AA of all investments combined. Place the investments in the accounts where you find the best deals (both expense-ratio wise, and tax wise).

As for US/Foreign equity split, I personally target a 50/50 split. That has worked out pretty nicely this past decade, but was not so much fun in the late 90's.

Personally I recommend picking one of the simpler Couch Potato portfolios such as Scott Burn's Margarita portfolio, and sticking with it. Use all new investments, and all redemptions to move your portfolio towards your target allocation.
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Old 12-30-2010, 04:20 PM   #6
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How do I do that when i have funds with two different companies? I obviously need a little help with overall portfolio asset allocation.
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Old 12-30-2010, 04:23 PM   #7
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50/50. See Paul Merriman's Sound Advice.
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Old 12-30-2010, 04:25 PM   #8
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How do I do that when i have funds with two different companies? I obviously need a little help with overall portfolio asset allocation.
Here's exactly how: Asset allocation tutorial?
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Old 12-30-2010, 04:45 PM   #9
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From what i read i should be investing in more stocks than bonds, but how much should i put into international and U.S? I feel i'm pretty aggressive since i have 30 years until i retire, so should i think about having 40-50% of my stocks as international or should i stick with something like 20%?

thanks
Total International is about 75% Europe and Japan and 25% Emerging Markets. Europe and Japan may or may not out perform the US but like the US they are mature economies. If I wanted to be "aggressive" I would consider over-weighting emerging markets.

My allocation is 55% US and 45% International but I don't think there is a right or wrong answer. I think that anything between 20% and 50% International is ok.

I suppose that the EMH true-believers (Boggle being and exception) would suggest weighting it based on market size and IRRC the US is about 45% of the total world market. But we spend dollars and that is a counter argument for over weighting the US compared to the rest of the world.
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Old 12-30-2010, 04:51 PM   #10
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Each of us have different expectations and risk tolerances. But FWIW, I'm 65% equities/30% bonds/5% cash. Of the 65% in equities, breaks down to 46% domestic and 19% foreign (international can include domestic by some definitions).
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