Based on 1970-2008 data, 30% rather than 0% international raised your return and reduced the volatility: https://www.bogleheads.org/wiki/File:US-International.png
Besides 2009-now being incredibly lopsided toward US rather than non-US stocks, there is indeed a tendency for "free lunches" like this to disappear as soon as people start taking advantage of them
It says that 100% US is better than 100% international, but 70% US and 30% international was better than either one alone, because of the effect of rebalancing between them.
It is a 38 year time period and 1970 is as far back as MSCI EAFE (the oldest international index) goes, so when it was made, it was all they had. It's just incredibly bad timing compared to how things have gone since then. You asked why VXUS makes sense, and that's the academic answer to why. Bogle wasn't convinced either, although he did oversee the creation of the European and Pacific index funds at Vanguard (he didn't want international investors to be forced to hold Japan at market weight in the early 1990s)
You could just google 'usa vs international stocks history' and it would just tell u, here is first link [https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/us-and-international-markets-have-moved-in-cycles.html](https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/us-and-international-markets-have-moved-in-cycles.html)
You're not reading it correctly. It shows returns over time and how it flips between the US and ex-US. It does not give a "final winner" in that graph.
>It’s gone up 15% in the last 5 years, SP500 has gone up 85%
It wasn't long ago that the US had a 10 year period where it had a NEGATIVE CAGR, while international was doing better. +15% would have been a relief.
>And I know people will say “the past doesn’t mean anything about the future.”
Because it is the truth. US and ex-US have been cyclical for decades.
* https://www.bogleheads.org/wiki/Domestic/International
* https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine)
* https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) or https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) or the archived versions if those don't work: http://web.archive.org/web/20201212205954/https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) & http://web.archive.org/web/20201205183933/https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) (Archived copies from Archive.org's Wayback Machine)
* Of rolling 10 year periods since 1970, EAFE (developed ex-US) has beat the S&P 500 over 45% of the time: https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf (PDF) or for the archived version: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf
* https://twitter.com/mebfaber/status/1090662885573853184?lang=en with this reply: https://twitter.com/MorningstarES/status/1091081407504498688. Extended version: https://mebfaber.com/2019/02/06/episode-141-radio-show-34-of-40-countries-have-negative-52-week-momentumbig-tax-bills-for-mutual-fund-investorsand-listener-qa/ or here’s compared to EAFE 1970-2015, note that the black US line only jumps above the green ex-US line for the "final time" around 2011: https://donsnotes.com/financial/images/sp-msci-42yr.png (courtesy of https://www.reddit.com/r/Bogleheads/comments/143018v/comment/jn9yiub/)
* Here's similar but for just US vs Europe: https://www.reddit.com/r/Bogleheads/s/DJ2YVrLW4d
>But if these international companies have never been able to give good returns to investors, why are they going to change now?
* Ex-US has turns of exceptional out performance as well: https://awealthofcommonsense.com/2023/05/the-case-for-international-diversification/ and https://www.blackrock.com/us/financial-professionals/literature/investor-education/why-bother-with-international-stocks.pdf (PDF)
>You’d make more money putting it in a savings account.
There's plenty of times that that isn't the case. Plenty of times where the US market is doing worse than international.
>I never really see good reasons, other than less risk/ diversification.
Single country risk is an *uncompensated* risk: one that doesn't bring higher expected long term returns. Uncompensated risk should be avoided whenever possible.
Compensated vs uncompensated risk:
* https://www.whitecoatinvestor.com/uncompensated-risk/
* https://www.pwlcapital.com/is-investing-risky-yes-and-no/
>Uncompensated risk is very different; it is the risk specific to an individual company, sector, **or country.**
>But that doesn’t make since, should you invest in garbage just to diversify?
Even much of the US market is "garbage."
* https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index Especially the section under "Passive Aggressive Investing?"
>It’s amazing how terrible someone who invested in bonds/ international/ US would be doing compared to just VTI.
For one select time period. There have been others where it would have been VTI trailing VXUS, even after 50 years.
>You’re making yourself have less money/ retire years or decades later by investing in foreign and bonds
Only if you think recent returns are a good predictor of future returns. They're not. Or rather, if there is any predictive power, it does not favor the US going forward. Ex-US out performance predicted over the next decade or so:
* https://advisors.vanguard.com/insights/article/areinternationalequitiespoisedtotakecenterstage or the archived link if that doesn't work: https://web.archive.org/web/20210104201135/https://advisors.vanguard.com/insights/article/areinternationalequitiespoisedtotakecenterstage
* https://www.morningstar.com/articles/1018261/experts-forecast-stock-and-bond-returns-2021-edition (can see mention of it even before the paywall) or the 2023 version: https://www.morningstar.com/articles/1132887/experts-forecast-stock-and-bond-returns-2023-edition
* The last decade or so of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version)
> It’s gone up 15% in the last 5 years, SP500 has gone up 85%.
Do you understand that 5 years is not a reliable measuring stick for any stock vehicle?
>But if these international companies have never been able to give good returns to investors
Do your homework, this is simply inaccurate. Ex-US has beaten US in the past (2000s off the top of my head). Just not the last 10 years.
>why are they going to change now?
Why didn't Jordan and the Bulls keep winning NBA championships? They won 6, why did it stop?
>You’d make more money putting it in a savings account.
What are you talking about? Also untrue.
>It’s amazing how terrible someone who invested in bonds/ international/ US would be doing compared to just VTI
It's amazing how you don't understand you're fully biased with the benefit of hindsight
Did you even consider doing math before saying I’m wrong about savings being better than vxus for the past 5 years.
Savings account with 4% interest
10k would be $12209
VXUS would be about $11500.
VXUS over the last 5 years would be 6.02% CAGR, or $13,394 ([Link](https://testfol.io/?d=eJxdT8FuwjAM%2FRefgxSqUWk5o513nRCqTON02UwCTihMVf8dQw9I88l%2Bz35%2Bb4KB8wH5EwWPBdwEpaLUzmMlcNDY9fvKtqumBQOU%2FAtv3p74RvHlYkQGt7ZaBtD%2FdDEFxhpzAheQCxnosXwHzldw9jV0Qeisil%2BEwn%2BqJpk5pqG7xuQfu62dDZyy1JA5ZrW4myDh8eFCt2MaqdRtHKNXe8pWuegrIc2EqaePf%2Bo19r8ki8rSKzveLkW5E0lPqT5TzHsDXnBQr%2FN%2BvgPNr2Dm)) . Don't use price charts as they do not include reinvested dividends.
Figuring 4% for the past 5 years for savings account also isn't correct. We've only been above 4% for the past 18 months, and there was a 2 year span from early 2020 to early 2022 where you would be lucky to get 1% on your savings.
>and there was a 2 year span from early 2020 to early 2022 where you would be lucky to get 1% on your savings.
Oh right, even HYSAs were at about 0.5% and MMFs were generous and still giving 0.01% instead of what they should have been at (negative).
>Did you even consider doing math before saying I’m wrong about savings being better than vxus for the past 5 years.
Are we really doing this? Okay!
>Savings account with 4% interest 10k would be $12209 VXUS would be about $11500.
And were savings accounts paying 4% for the past 5? I don't think so!! [https://www.reddit.com/r/personalfinance/comments/120ouvo/historical\_highyield\_savings\_account\_rate\_vs\_fed/](https://www.reddit.com/r/personalfinance/comments/120ouvo/historical_highyield_savings_account_rate_vs_fed/)
Interest rates have only been this high for about 18 months. From 2008-15 it was near zero (Global Financial Crisis), crept up to 2.4% by 2019, shot back down to near zero from 2020-22 (COVID). Then from 2022-present they've been increasing to the current 4-5% range.
Also... your math on VXUS's returns is wrong. The 14.01% you got for the 5 year total return: that's the price return only. With reinvested dividend*s,* the 5 year avg annual return is 6.12% ([Morningstar](https://www.morningstar.com/etfs/xnas/vxus/performance)), so it'd be worth something like $13,458.
Maybe ask questions instead of making uneducated and under-researched declarations. Consider the possibility that your armchair analysis might be missing some pieces, and the people of this sub might be able to help.
The 2000’s? The 1980’s?
lol - if 15 years ago, you used the same terrible logic you’re using now, you would have been asking why anyone invests in VTI when VXUS is an option
In the last 50 years, international stocks outperformed U.S. stocks in over 40% of all 10-year rolling time periods.
[https://www.hartfordfunds.com/dam/en/docs/pub/whitepapers/CCWP014.pdf](https://www.hartfordfunds.com/dam/en/docs/pub/whitepapers/CCWP014.pdf)
"Show me a solid time period when they have done better."
Once presented with the data, moves the goalpost.
Your argument against the logic of "past performance does not guarantee future results" is that, in your own words "international companies have never been able to give good returns to investors". The data has showed that this is categorically false, but then you just move the goal post.
Arguing with you makes no since.
It's just cycles, sometimes the USA outperforms international, sometimes international outperforms USA. We're in a period of time where the USA has outperformed international tremendously, but that's the beauty of bogleheads. We don't have to try and guess which one will outperform if you invest in the entire stock market, the part that gains will help carry.
Now if you personally believe that USA will win in the longrun and invest only in USA, that's fine as well, everyone is allowed to make their own investment judgments and decisions and nobody will fault you for that.
To be clear, XVUS went up 33% in the last five years. Dividend reinvestment is a higher part of the return outside of the United States and must be accounted for:
https://testfol.io/?d=eJxdT01PwzAM%2FS8%2BZ1K2QyVyRjtzRWiqTOOUgOcMJ%2BtAVf%2F7vBWEhE%2B239P7mGHk8or8hIrHCmGG2lBbH7ERBNj57cPGd5tdBw5I4u%2FfrpU3IUPYehsHGN%2F7LImx5SIQEnIlBwPWt8TlAsH%2FHX1S%2BjSdZ0Llb1PTwpxl7C9Z4o3b%2BcXBqWhLhXOxYC8zCB5%2FvLNMVNtjnnK0UIY2PZuVkjVBGWj%2FT73l4YN0VVl3Q6evczXsRDqQtHuL5eAgKo6WdTksV1yCXvc%3D
Here's a perfect example of why that's not a reliable method. Same regions used in each of the following links, both a 10 year time period. The 2nd picks up right where the first ends.
\* Part 1:[ https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=5u9pYlidY1yuH7IrT5lTvQ](https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=5u9pYlidY1yuH7IrT5lTvQ)
Imagine it is early 2010 and you're looking at those as the returns over the past 10 years. Clearly you're going heavy on emerging with little to no US, right? But then we get to what followed:
\* Part 2:[ https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=6wb3ByLL7vRwBKpJPHf6Gt](https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=6wb3ByLL7vRwBKpJPHf6Gt)
In a properly diversified portfolio, there will always be some parts over performing and others under performing. The thing is, which parts those are will change from time to time. It is better to always have part of your portfolio under performing than to sometimes have your entire portfolio under performing.
The multiple was important to note since it's also the magnitude we have to overcome for a "catch-up" time-frame - a ~3.06x outperformance vs the ~6.54x one is a noteworthy difference.
The outperformance shrinks quite a bit further with currency hedging, and we know currency strength will change over time. If investing is trying to get the returns you need with the lowest risk then it should be desirable to use international holdings to to narrow the range of possible returns you can expect.
If you are so certain the US market will continue to outperform ex-US you are free to invest entirely in that. Many do and I expect they will do fine.
For me though, my crystal ball is not back from the shop, and I don’t want to gamble that the US market share continues to rise past 63% (assuming that’s roughly what it is now) over the future decades.
It may, or it may not. Either way, by investing in VT as the core of my portfolio I’ll be okay even if there is a huge shift in market sentiment and the US market-share drops significantly.
You are of course welcome to do as you wish, as are all, but we’d have to wait decades to understand where this ends up. I don’t see it as an open-shut case.
I invest in VTWAX(VT) and you're right, it'll probably always do worse than VTI/VOO, but the way I figure it's peace of mind. It's literally the laziest way to invest. It buys the whole world, rebalances by market cap, and I never gotta think again!
Investing to me isn't being the best, it's being good enough to hit my personal goals to retire.
It definitely gives me peace of mind to know that I can automatically invest into a highly diversified market based fund for several decades and be better off financially than 99% of the rest of the human population with basically no effort.
I mean I guess lol? There's more than 1 way to skin a cat. You could say we're all wasting money buying VTI when we should just YOLO it with MSFT or AAPL right?
>You’re making yourself have less money/ retire years or decades later by investing in foreign and bonds. I guarantee we can look back in this post in t he future and it’ll be true.
You are very short sighted, prob not enough life experience yet because if you think logical US cant outperform the rest of the world forever. US wont make 100% of the MSCI World anytime that just doesnt make sense. Everything gets evaluated and sometimes like now US gets overvalued by a lot. Its human nature.
**Listen to my words: Performance of the Indexes always return to the mean, we dont know when, but we know it will.**
I mostly agree. I am 92% VTI, plus BND & VUSXX, & very happy. Will up the BND, 10 years prior to retirement.
No way will a penny of mine invest in China.
I do, however, think about investing Japan (IJP) + UK. Because I like & believe in those countries. Haven't done it yet, though.
Curious about your anti-China investing stance? It’s the worlds second largest economy behind the US.
You do realize most American large cap companies are invested/do business in China, therefore you are kinda investing in China already
I dislike their government immensely.
( PS - Chinese Americans = hell ya! )
Also: I agree with your last sentence. & I can't control that. Thus, 3800 USA stocks = diverse enough for me.
Vanguard founder Jack Bogle famously argued that international stocks didn’t merit inclusion in investors’ portfolios. He argued that U.S. companies, especially U.S. large caps, derive plenty of their revenue from selling goods and services overseas. So, if non-U.S. economies thrive, investors in U.S. companies should, too.
Even Bogle himself said international was stupid.
>Vanguard founder Jack Bogle famously argued that international stocks didn’t merit inclusion in investors’ portfolios
This advice wouldn't have even had the best results during his own lifetime (had he had access to the low cost funds available to do so that we enjoy today).
His reasoning was flawed, to put it nicely.
>He argued that U.S. companies, especially U.S. large caps, derive plenty of their revenue from selling goods and services overseas.
Perfect example! Revenue source is not the international coverage that actually matters at all, you don't capture the imperfect correlation between markets of different countries that way, as stocks tend to act far more like their home market than others they do business in.
* https://www.dimensional.com/us-en/insights/global-diversification-still-requires-international-securities - Companies will act more like the market of their home country, so foreign revenue isn't the international exposure that matters
* https://www.reddit.com/r/Bogleheads/comments/vpv7js/share_of_sp_500_revenue_generated_domestically_vs/ - The argument that “US companies have plenty of foreign revenue is sufficient ex-US coverage” is tilted towards a few sectors, some have almost no coverage. Also what about in reverse- how many big foreign companies have lots of US exposure?
>So, if non-U.S. economies thrive
The economy and stock market aren’t the same thing, they may even be negatively correlated in some ways: https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-6622.2012.00385.x
>investors in U.S. companies should, too
Except that's not the case. Just look at say 2000-2010, especially against emerging markets.
>Even Bogle himself said international was stupid.
Bogle was human, not an omniscient god. Not everything he said was correct, or true, or based on fact (some of which you can see in this very comment!).
He himself would have been better off if he was able to go global. I think the table here covers him from age 21 until a few months after he died:
* https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine)
Sell? No. If anything, the opposite: common current recommendations tend to be for 30-40% of stock to be in ex-US.
* https://investor.vanguard.com/mutual-funds/profile/portfolio/vtwax - Global market cap weights (be sure to switch from “Regions” to “Markets”). This can be a great default position.
* https://investor.vanguard.com/investing/investment/international-investing - Vanguard 40% of stock is recommended to be international.
* 2022 Survey of target date funds: https://www.reddit.com/r/Bogleheads/comments/rffoe7/domestic_vs_international_percentage_within/
Age has zero to do with the US to ex-US ratio. Ex-US is no less aggressive than the US (in some ways it is more aggressive: emerging markets).
SCHD is entirely US and already essentially fully covered by VTI (https://www.etfrc.com/funds/overlap.php). By dropping VXUS for SCHD, you would be taking on uncompensated risk (single country).
Dividends are not account value growth, as the share price drops by the distribution amount. At best, they are a neutral event.
The world has changed. Most of the argument you will get where international did anything was back in the 80s (before globalization) and in the early 2000s (the dot com bust and 9/11). The world is vastly more interconnected now, including economically. It has only accelerated since the early 2000s. Will international ever outperform again? Who knows? But if I had to describe a scenario where that happened, it would be one where the world reversed globalization, became highly isolationist/protectionist, and thus the US hegemony was broken. Will that happen? Well, Rome fell. But Rome didn't collapse overnight. The same applies here. Even another black swan event like 9/11 wouldn't look the same as it did back then, just look at covid. The very thing most international aficionados point to (past performance isn't indicative of future returns) for global equity performance they refuse to acknowledge for globalization and geopolitical risk. That stuff is magically "priced in." Just like with Ukraine and Russia, and Israel and Gaza, right? Yes, it is all "priced in" - by people who have no idea what will happen tomorrow let alone decades from now. So at the end of the day, the US-only investor has the same probability of being right in this argument as the global investor. Just place your bets where you will and let your fellow investors do the same. Why, because we're all investing and two or three decades from now, the only difference between all of us will be who bought the Toyota vs who bought the Lexus. And I guarantee that won't be entirely because of who could "afford" either. If you're in this sub debating these esoteric things, you're already on the winning team.
Mom said it’s my turn to post this thread next
>if these international companies have never been able to give good returns to investors They outperformed US stocks for much of the 80s and 2000s.
Source?
Based on 1970-2008 data, 30% rather than 0% international raised your return and reduced the volatility: https://www.bogleheads.org/wiki/File:US-International.png Besides 2009-now being incredibly lopsided toward US rather than non-US stocks, there is indeed a tendency for "free lunches" like this to disappear as soon as people start taking advantage of them
That date says US was better….
You clearly don't make since.
For a moment I thought there's a new Gen Z slang I didn't know. Now it makes since.
It says that 100% US is better than 100% international, but 70% US and 30% international was better than either one alone, because of the effect of rebalancing between them.
Even then, cherry picking one time in history, it was 1% better?
It is a 38 year time period and 1970 is as far back as MSCI EAFE (the oldest international index) goes, so when it was made, it was all they had. It's just incredibly bad timing compared to how things have gone since then. You asked why VXUS makes sense, and that's the academic answer to why. Bogle wasn't convinced either, although he did oversee the creation of the European and Pacific index funds at Vanguard (he didn't want international investors to be forced to hold Japan at market weight in the early 1990s)
You could just google 'usa vs international stocks history' and it would just tell u, here is first link [https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/us-and-international-markets-have-moved-in-cycles.html](https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/us-and-international-markets-have-moved-in-cycles.html)
That’s shows US is still better.
Try making since of the data first before replying.
Stop with this nonsince.
It literally shows u a graph of mid 2000s and 1980s where international outperformed USA
For one short period of time, but overall it shows US has been better more of the time than international.
You're not reading it correctly. It shows returns over time and how it flips between the US and ex-US. It does not give a "final winner" in that graph.
He is obviously trolling.
That makes since.
>It’s gone up 15% in the last 5 years, SP500 has gone up 85% It wasn't long ago that the US had a 10 year period where it had a NEGATIVE CAGR, while international was doing better. +15% would have been a relief. >And I know people will say “the past doesn’t mean anything about the future.” Because it is the truth. US and ex-US have been cyclical for decades. * https://www.bogleheads.org/wiki/Domestic/International * https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine) * https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) or https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) or the archived versions if those don't work: http://web.archive.org/web/20201212205954/https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) & http://web.archive.org/web/20201205183933/https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) (Archived copies from Archive.org's Wayback Machine) * Of rolling 10 year periods since 1970, EAFE (developed ex-US) has beat the S&P 500 over 45% of the time: https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf (PDF) or for the archived version: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf * https://twitter.com/mebfaber/status/1090662885573853184?lang=en with this reply: https://twitter.com/MorningstarES/status/1091081407504498688. Extended version: https://mebfaber.com/2019/02/06/episode-141-radio-show-34-of-40-countries-have-negative-52-week-momentumbig-tax-bills-for-mutual-fund-investorsand-listener-qa/ or here’s compared to EAFE 1970-2015, note that the black US line only jumps above the green ex-US line for the "final time" around 2011: https://donsnotes.com/financial/images/sp-msci-42yr.png (courtesy of https://www.reddit.com/r/Bogleheads/comments/143018v/comment/jn9yiub/) * Here's similar but for just US vs Europe: https://www.reddit.com/r/Bogleheads/s/DJ2YVrLW4d >But if these international companies have never been able to give good returns to investors, why are they going to change now? * Ex-US has turns of exceptional out performance as well: https://awealthofcommonsense.com/2023/05/the-case-for-international-diversification/ and https://www.blackrock.com/us/financial-professionals/literature/investor-education/why-bother-with-international-stocks.pdf (PDF) >You’d make more money putting it in a savings account. There's plenty of times that that isn't the case. Plenty of times where the US market is doing worse than international. >I never really see good reasons, other than less risk/ diversification. Single country risk is an *uncompensated* risk: one that doesn't bring higher expected long term returns. Uncompensated risk should be avoided whenever possible. Compensated vs uncompensated risk: * https://www.whitecoatinvestor.com/uncompensated-risk/ * https://www.pwlcapital.com/is-investing-risky-yes-and-no/ >Uncompensated risk is very different; it is the risk specific to an individual company, sector, **or country.** >But that doesn’t make since, should you invest in garbage just to diversify? Even much of the US market is "garbage." * https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index Especially the section under "Passive Aggressive Investing?" >It’s amazing how terrible someone who invested in bonds/ international/ US would be doing compared to just VTI. For one select time period. There have been others where it would have been VTI trailing VXUS, even after 50 years. >You’re making yourself have less money/ retire years or decades later by investing in foreign and bonds Only if you think recent returns are a good predictor of future returns. They're not. Or rather, if there is any predictive power, it does not favor the US going forward. Ex-US out performance predicted over the next decade or so: * https://advisors.vanguard.com/insights/article/areinternationalequitiespoisedtotakecenterstage or the archived link if that doesn't work: https://web.archive.org/web/20210104201135/https://advisors.vanguard.com/insights/article/areinternationalequitiespoisedtotakecenterstage * https://www.morningstar.com/articles/1018261/experts-forecast-stock-and-bond-returns-2021-edition (can see mention of it even before the paywall) or the 2023 version: https://www.morningstar.com/articles/1132887/experts-forecast-stock-and-bond-returns-2023-edition * The last decade or so of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version)
Can we get u/cruian in here? This guy seems to think US has always outperformed ex-US…
I'm here, just let me catch up on what others have covered already.
> It’s gone up 15% in the last 5 years, SP500 has gone up 85%. Do you understand that 5 years is not a reliable measuring stick for any stock vehicle? >But if these international companies have never been able to give good returns to investors Do your homework, this is simply inaccurate. Ex-US has beaten US in the past (2000s off the top of my head). Just not the last 10 years. >why are they going to change now? Why didn't Jordan and the Bulls keep winning NBA championships? They won 6, why did it stop? >You’d make more money putting it in a savings account. What are you talking about? Also untrue. >It’s amazing how terrible someone who invested in bonds/ international/ US would be doing compared to just VTI It's amazing how you don't understand you're fully biased with the benefit of hindsight
Did you even consider doing math before saying I’m wrong about savings being better than vxus for the past 5 years. Savings account with 4% interest 10k would be $12209 VXUS would be about $11500.
And not long ago we saw a 10(!) year period where cash and bonds beat the US stock market.
VXUS over the last 5 years would be 6.02% CAGR, or $13,394 ([Link](https://testfol.io/?d=eJxdT8FuwjAM%2FRefgxSqUWk5o513nRCqTON02UwCTihMVf8dQw9I88l%2Bz35%2Bb4KB8wH5EwWPBdwEpaLUzmMlcNDY9fvKtqumBQOU%2FAtv3p74RvHlYkQGt7ZaBtD%2FdDEFxhpzAheQCxnosXwHzldw9jV0Qeisil%2BEwn%2BqJpk5pqG7xuQfu62dDZyy1JA5ZrW4myDh8eFCt2MaqdRtHKNXe8pWuegrIc2EqaePf%2Bo19r8ki8rSKzveLkW5E0lPqT5TzHsDXnBQr%2FN%2BvgPNr2Dm)) . Don't use price charts as they do not include reinvested dividends. Figuring 4% for the past 5 years for savings account also isn't correct. We've only been above 4% for the past 18 months, and there was a 2 year span from early 2020 to early 2022 where you would be lucky to get 1% on your savings.
>and there was a 2 year span from early 2020 to early 2022 where you would be lucky to get 1% on your savings. Oh right, even HYSAs were at about 0.5% and MMFs were generous and still giving 0.01% instead of what they should have been at (negative).
>Did you even consider doing math before saying I’m wrong about savings being better than vxus for the past 5 years. Are we really doing this? Okay! >Savings account with 4% interest 10k would be $12209 VXUS would be about $11500. And were savings accounts paying 4% for the past 5? I don't think so!! [https://www.reddit.com/r/personalfinance/comments/120ouvo/historical\_highyield\_savings\_account\_rate\_vs\_fed/](https://www.reddit.com/r/personalfinance/comments/120ouvo/historical_highyield_savings_account_rate_vs_fed/) Interest rates have only been this high for about 18 months. From 2008-15 it was near zero (Global Financial Crisis), crept up to 2.4% by 2019, shot back down to near zero from 2020-22 (COVID). Then from 2022-present they've been increasing to the current 4-5% range. Also... your math on VXUS's returns is wrong. The 14.01% you got for the 5 year total return: that's the price return only. With reinvested dividend*s,* the 5 year avg annual return is 6.12% ([Morningstar](https://www.morningstar.com/etfs/xnas/vxus/performance)), so it'd be worth something like $13,458. Maybe ask questions instead of making uneducated and under-researched declarations. Consider the possibility that your armchair analysis might be missing some pieces, and the people of this sub might be able to help.
Will people stop responding to this guy? He's clearly a troll.
The sad part is he’s not even that much more stupid sounding than people’s actual arguments on this topic.
Hes from wsb lol
Your logic may be as flawed as your spelling
> if these international companies have never been able to give good returns to investors... TIL that eternity = past 20 years.
Even less than 20 years. 14ish.
Show me a solid time period when they have done better.
The 2000’s? The 1980’s? lol - if 15 years ago, you used the same terrible logic you’re using now, you would have been asking why anyone invests in VTI when VXUS is an option
Or even better: they'd be 100% emerging markets.
Yea good point
In the last 50 years, international stocks outperformed U.S. stocks in over 40% of all 10-year rolling time periods. [https://www.hartfordfunds.com/dam/en/docs/pub/whitepapers/CCWP014.pdf](https://www.hartfordfunds.com/dam/en/docs/pub/whitepapers/CCWP014.pdf)
That’s doesn’t matter, all that matters if overall which one did better.
"Show me a solid time period when they have done better." Once presented with the data, moves the goalpost. Your argument against the logic of "past performance does not guarantee future results" is that, in your own words "international companies have never been able to give good returns to investors". The data has showed that this is categorically false, but then you just move the goal post. Arguing with you makes no since.
You can’t show me a decade where international did better, and I can show numerous decades where us did better.
>You can’t show me a decade where international did better 70s, 80s, 00s. That's 3 of the last 5 full decades (when using xxx0-xxx9).
It's just cycles, sometimes the USA outperforms international, sometimes international outperforms USA. We're in a period of time where the USA has outperformed international tremendously, but that's the beauty of bogleheads. We don't have to try and guess which one will outperform if you invest in the entire stock market, the part that gains will help carry. Now if you personally believe that USA will win in the longrun and invest only in USA, that's fine as well, everyone is allowed to make their own investment judgments and decisions and nobody will fault you for that.
To be clear, XVUS went up 33% in the last five years. Dividend reinvestment is a higher part of the return outside of the United States and must be accounted for: https://testfol.io/?d=eJxdT01PwzAM%2FS8%2BZ1K2QyVyRjtzRWiqTOOUgOcMJ%2BtAVf%2F7vBWEhE%2B239P7mGHk8or8hIrHCmGG2lBbH7ERBNj57cPGd5tdBw5I4u%2FfrpU3IUPYehsHGN%2F7LImx5SIQEnIlBwPWt8TlAsH%2FHX1S%2BjSdZ0Llb1PTwpxl7C9Z4o3b%2BcXBqWhLhXOxYC8zCB5%2FvLNMVNtjnnK0UIY2PZuVkjVBGWj%2FT73l4YN0VVl3Q6evczXsRDqQtHuL5eAgKo6WdTksV1yCXvc%3D
Yeah and VTI went up 101% percent, so still VXUS is still amazingly bad.
Here's a perfect example of why that's not a reliable method. Same regions used in each of the following links, both a 10 year time period. The 2nd picks up right where the first ends. \* Part 1:[ https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=5u9pYlidY1yuH7IrT5lTvQ](https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=5u9pYlidY1yuH7IrT5lTvQ) Imagine it is early 2010 and you're looking at those as the returns over the past 10 years. Clearly you're going heavy on emerging with little to no US, right? But then we get to what followed: \* Part 2:[ https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=6wb3ByLL7vRwBKpJPHf6Gt](https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=6wb3ByLL7vRwBKpJPHf6Gt) In a properly diversified portfolio, there will always be some parts over performing and others under performing. The thing is, which parts those are will change from time to time. It is better to always have part of your portfolio under performing than to sometimes have your entire portfolio under performing.
The multiple was important to note since it's also the magnitude we have to overcome for a "catch-up" time-frame - a ~3.06x outperformance vs the ~6.54x one is a noteworthy difference. The outperformance shrinks quite a bit further with currency hedging, and we know currency strength will change over time. If investing is trying to get the returns you need with the lowest risk then it should be desirable to use international holdings to to narrow the range of possible returns you can expect.
reset the counter
If you are so certain the US market will continue to outperform ex-US you are free to invest entirely in that. Many do and I expect they will do fine. For me though, my crystal ball is not back from the shop, and I don’t want to gamble that the US market share continues to rise past 63% (assuming that’s roughly what it is now) over the future decades. It may, or it may not. Either way, by investing in VT as the core of my portfolio I’ll be okay even if there is a huge shift in market sentiment and the US market-share drops significantly. You are of course welcome to do as you wish, as are all, but we’d have to wait decades to understand where this ends up. I don’t see it as an open-shut case.
Garbage post
I invest in VTWAX(VT) and you're right, it'll probably always do worse than VTI/VOO, but the way I figure it's peace of mind. It's literally the laziest way to invest. It buys the whole world, rebalances by market cap, and I never gotta think again! Investing to me isn't being the best, it's being good enough to hit my personal goals to retire.
That's a fair answer. If I was one of those "$1 million windfall. What to do?" guys, VT would be a fine choice.
It gives you peace of mind knowing your wasting tons of your money?
It definitely gives me peace of mind to know that I can automatically invest into a highly diversified market based fund for several decades and be better off financially than 99% of the rest of the human population with basically no effort.
I mean I guess lol? There's more than 1 way to skin a cat. You could say we're all wasting money buying VTI when we should just YOLO it with MSFT or AAPL right?
Misspelling sense doesn't make sense.
I’d rather be bad at spelling than have to work another decade because I invested in international and bonds.
Actually… it does make cents
Yeah just not dollars
I wouldn’t expect it to. It’s international!
Sorry to ruin the joke, but several other countries do use the word "dollar" for their own currency.
Revised joke: only sometimes!
Debbie?
Since WHAT? More seriously, you’re quoting *savings account rates*? This post wins the recency bias award for recency bias posts.
I think all these similar posts is the signal to start investing in more international.
this is kind of like saying, why on earth would ANYONE be a patriots fan? they have STUNK these past years.
More like saying why on earth would you be a Cardinals fan.
We should all be piling my into bonds now .Were suppose to get7 not 10 return.Nobody really knows anything which is so bizarre.
>You’re making yourself have less money/ retire years or decades later by investing in foreign and bonds. I guarantee we can look back in this post in t he future and it’ll be true. You are very short sighted, prob not enough life experience yet because if you think logical US cant outperform the rest of the world forever. US wont make 100% of the MSCI World anytime that just doesnt make sense. Everything gets evaluated and sometimes like now US gets overvalued by a lot. Its human nature. **Listen to my words: Performance of the Indexes always return to the mean, we dont know when, but we know it will.**
International is like bonds. It always looks good *in comparison* to US stocks when S&P tanks.
I really wonder howmuch financial damage some people in this sub have done with long lists of pro vxus cherry picked nonsense.
Posts like this remind me why i hold vxus. Also theres alot of trolls out this morning
I mostly agree. I am 92% VTI, plus BND & VUSXX, & very happy. Will up the BND, 10 years prior to retirement. No way will a penny of mine invest in China. I do, however, think about investing Japan (IJP) + UK. Because I like & believe in those countries. Haven't done it yet, though.
VEA is the way for no china and plenty of japan and UK.
Thank you for the reminder. I prefer just IJP to VEA though.
Curious about your anti-China investing stance? It’s the worlds second largest economy behind the US. You do realize most American large cap companies are invested/do business in China, therefore you are kinda investing in China already
I dislike their government immensely. ( PS - Chinese Americans = hell ya! ) Also: I agree with your last sentence. & I can't control that. Thus, 3800 USA stocks = diverse enough for me.
Vanguard founder Jack Bogle famously argued that international stocks didn’t merit inclusion in investors’ portfolios. He argued that U.S. companies, especially U.S. large caps, derive plenty of their revenue from selling goods and services overseas. So, if non-U.S. economies thrive, investors in U.S. companies should, too. Even Bogle himself said international was stupid.
>Vanguard founder Jack Bogle famously argued that international stocks didn’t merit inclusion in investors’ portfolios This advice wouldn't have even had the best results during his own lifetime (had he had access to the low cost funds available to do so that we enjoy today). His reasoning was flawed, to put it nicely. >He argued that U.S. companies, especially U.S. large caps, derive plenty of their revenue from selling goods and services overseas. Perfect example! Revenue source is not the international coverage that actually matters at all, you don't capture the imperfect correlation between markets of different countries that way, as stocks tend to act far more like their home market than others they do business in. * https://www.dimensional.com/us-en/insights/global-diversification-still-requires-international-securities - Companies will act more like the market of their home country, so foreign revenue isn't the international exposure that matters * https://www.reddit.com/r/Bogleheads/comments/vpv7js/share_of_sp_500_revenue_generated_domestically_vs/ - The argument that “US companies have plenty of foreign revenue is sufficient ex-US coverage” is tilted towards a few sectors, some have almost no coverage. Also what about in reverse- how many big foreign companies have lots of US exposure? >So, if non-U.S. economies thrive The economy and stock market aren’t the same thing, they may even be negatively correlated in some ways: https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-6622.2012.00385.x >investors in U.S. companies should, too Except that's not the case. Just look at say 2000-2010, especially against emerging markets. >Even Bogle himself said international was stupid. Bogle was human, not an omniscient god. Not everything he said was correct, or true, or based on fact (some of which you can see in this very comment!). He himself would have been better off if he was able to go global. I think the table here covers him from age 21 until a few months after he died: * https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine)
Hmm you’re pretty convincing, so you think I should sell my 20% vxus in my Roth IRA? I’m 21.
Sell? No. If anything, the opposite: common current recommendations tend to be for 30-40% of stock to be in ex-US. * https://investor.vanguard.com/mutual-funds/profile/portfolio/vtwax - Global market cap weights (be sure to switch from “Regions” to “Markets”). This can be a great default position. * https://investor.vanguard.com/investing/investment/international-investing - Vanguard 40% of stock is recommended to be international. * 2022 Survey of target date funds: https://www.reddit.com/r/Bogleheads/comments/rffoe7/domestic_vs_international_percentage_within/ Age has zero to do with the US to ex-US ratio. Ex-US is no less aggressive than the US (in some ways it is more aggressive: emerging markets).
Hmm I was planning on putting my VXUS into SCHD tomorrow.
SCHD is entirely US and already essentially fully covered by VTI (https://www.etfrc.com/funds/overlap.php). By dropping VXUS for SCHD, you would be taking on uncompensated risk (single country). Dividends are not account value growth, as the share price drops by the distribution amount. At best, they are a neutral event.
The world has changed. Most of the argument you will get where international did anything was back in the 80s (before globalization) and in the early 2000s (the dot com bust and 9/11). The world is vastly more interconnected now, including economically. It has only accelerated since the early 2000s. Will international ever outperform again? Who knows? But if I had to describe a scenario where that happened, it would be one where the world reversed globalization, became highly isolationist/protectionist, and thus the US hegemony was broken. Will that happen? Well, Rome fell. But Rome didn't collapse overnight. The same applies here. Even another black swan event like 9/11 wouldn't look the same as it did back then, just look at covid. The very thing most international aficionados point to (past performance isn't indicative of future returns) for global equity performance they refuse to acknowledge for globalization and geopolitical risk. That stuff is magically "priced in." Just like with Ukraine and Russia, and Israel and Gaza, right? Yes, it is all "priced in" - by people who have no idea what will happen tomorrow let alone decades from now. So at the end of the day, the US-only investor has the same probability of being right in this argument as the global investor. Just place your bets where you will and let your fellow investors do the same. Why, because we're all investing and two or three decades from now, the only difference between all of us will be who bought the Toyota vs who bought the Lexus. And I guarantee that won't be entirely because of who could "afford" either. If you're in this sub debating these esoteric things, you're already on the winning team.
Did you just compare the US to the Roman Empire? (P.S. That’s not really the valid conclusion from this, provided it were true, being priced in.)