International investing, or not?

[ERObjd]

There are lots of options for investing. I am with you on the simple. being kind of a set and forget it type i just select a low fee mutual fund or 2 and leave it alone. I maybe log onto my Vanguard account every 2-3 months. I dont have or want a tv but i do listen to the top of hour news on radio and they usually tell how the DOW S&P and NASDAC is doing for the day. sometimes it is up sometimes down so if the DOW and SP are up or down then so is my fund so no need for me to log on every or even every month. Out of curiosity I just logged onto my Vanguard and looked at my VBIAX and year to date it has been about 9.23% since mine is all in taxable ,I have to figure about 2% less. I also have some $$ in Vanguard wellington as well (about 2K and it runs about 11% so far this year, but most of mine $$ is in VBIAX and it will do the heavy lifting. My 21 yr old daughter just set up a fidelity roth 100% in FZROZ and she plans to stick with it for a very long time and maybe add a total bond fund in 20 years or so. She young enough to take a bull market when it happens and still recover when the next bear comes around.

 

[steelyman]

Normally I’d have rebalanced into my international funds already this year but decided to hold off. It shows (positively) in YTD returns. I’m preferring not putting any “new” money into international at this time.

 

[Markola]

Normally I’d have rebalanced into my international funds already this year but decided to hold off. It shows (positively) in YTD returns. I’m preferring not putting any “new” money into international at this time.

From a computational perspective, it’s interesting that it makes virtually no difference when one rebalances to a target allocation.

From Portfolio Visualizer, image 1 shows a 50% domestic/50% international stock portfolio rebalanced monthly.

 

[steelyman]

From a computational perspective, it’s interesting that it makes virtually no difference when one rebalances to a target allocation.

From Portfolio Visualizer, image 1 shows a 50% domestic/50% international stock portfolio rebalanced monthly.

Image 2 is the same portfolio that uses rebalancing bands, which is roughly what you described.

Of course, the key is a fixed allocation target.

I believe it. I slice my retirement portfolio two ways: one in the usual stock/bond split, the other in 8 smaller asset classes, two of which are international (developed and emerging stocks). When viewed the first way it’s still within bands even though the int’l component has been performing poorly. So hands off it is.

 

[Markola]

^^^^^^I’ve just been surprised to learn that WHEN one rebalances to a target allocation makes so little difference over longer periods. I’ve seen authors write that rebalancing is “selling high and buying low.” I guess that’s technically true in the short term but there is no financial advantage long term to doing it.

I did a similar exercise between a 60/40 portfolio that rebalances every day vs. a 60/40 one that NEVER rebalances and found that they track each other closely over time and periodically meet in the same place, though the latter endured more volatility.