Quote:
Originally Posted by HockeyIlliterate
Sorry about the typo: meant 40% on US stocks. So essentially a 50/50 stock bond split.
I don’t really see straying from my current split except as noted in the ETA below. 10% international is 20% of my total equity allocation, and I’m comfortable with that. A lot of people (experts, real and armchair) suggest anywhere from 10 to 33% of equities be in international, so 20% is a happy medium for me.
Plus, many US companies have a lot of international exposure already, so even my 40% us stock holding has a bit of a hidden and embedded international component to it.
ETA: also, at some point, one cares more about maintaining the portfolio than growing it significantly. I may be there now, where I care more about a return of the portfolio than a return on the portfolio, which explains the rather conservative asset allocation. I could end getting killed by inflation, for example, but I’m willing to take that risk now. If inflation really spikes or I feel comfortable with the annual spend, I may drift to a 60/40 portfolio, but I don’t think anyone can really market time inflation and portfolio drift is probably a few years away anyway.
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That is a US centric view, by the way. Outside the US, the balance between US and non-US is more proportional.
Currently, the US stock market is a little more than 50% of the global market (because the US has performed well over the last year), but as a general rule, the US is about half the global market. And that being the case, 50/50 exposure seems more appropriate (and is what you are more likely to see from asset managers outside the US).
Are you American or Canadian?
The reason I ask is the fact that, if you are Canadian, you are also carrying a lot of USD currency exposure. Yes, it is easily hedged, but a) most people don't hedge, and b) hedging isn't free. However, if you go 50/50 global/US, you also have a more balanced currency exposure (most currencies move against the USD, and being weighted 50% US, 50% global, tends to balance pretty well over time).
Just some things to think about.