International Stock Index Allocation
Hi Terry – my wife and I self manage a 70/30 index fund based portfolio and are 56 yo planning to retire at 60. All of the stock allocation is in US based index funds (e.g, VTSAX) and has been for over 25 years now. Historically it looks like we should have some of our 70% allocated to Int’l stock ex-US. We plan to stay 70/30 at least through 65 maybe even 70. How do we determine what % of Intl Stock exposure we should have? Or do you feel Int’l exposure isn’t necessary in a diversification stratgey?
Terry Says
That all depends on how sophisticated and strategic you want your investments to be. I’ve noticed over the years that if the US stock market (and economy) have problems, then most of the rest of the world does too. Long ago, I successfully used some international funds to more widely diversify my investments, but I’ve backed away at this stage of my life.
There’s some interesting research to suggest this diversification is needed and improves overall performance. Read this article in Forbes, for example.
And if you really want some sophisticated answers to your question, read this from Morningstar — the “bible” of investment diversification!
https://www.morningstar.com/portfolios/is-international-diversification-necessary
