Is International Stock Index Safer?

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Chitowncameraman
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Is International Stock Index Safer?

Post by Chitowncameraman » Mon Oct 30, 2017 8:44 am

We are 64 and 59, recently retired, and are getting worried about our 34% AA in Fidelity's US Total Stock Market Index, the other stock percentage of 13% is in Fidelity's International Stock Index. We look to stocks for growth, we have enough revenue streams for 80% of our recurring needs, we need the stocks to throw off revenue for the 20%.

With all the doom and gloom articles about a coming correction, is it safer to move from the US to International?

Meanwhile we are considering moving into Vanguard Intermediate Term Treasury Fund (VFITX), currently yielding 1.6 percent as recommended by Kiplinger. What do you folks suggest?

Thanks,

Nick

Johm221122
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Re: Is International Stock Index Safer?

Post by Johm221122 » Mon Oct 30, 2017 8:52 am

For a minute don't think about what funds you have or funds you feel will do better

What stock /bond mix do you want?
How much international do you want?
What kind of fixed income do you want?
What kind of tilt or sectors do you want?

What ever your answers are to those questions,pick appropriate funds and turn off noise

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unclescrooge
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Re: Is International Stock Index Safer?

Post by unclescrooge » Mon Oct 30, 2017 8:54 am

While no one can predict the future, the U.S. Markets are more expensive than international developed and emerging markets.

I prefer to tilt towards value, and I see more value abroad. So my U.S.exposure is 50% of my total stock exposure. With the rest split among developed and emerging markets.

SimplicityNow
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Re: Is International Stock Index Safer?

Post by SimplicityNow » Mon Oct 30, 2017 9:18 am

Chitowncameraman wrote:
Mon Oct 30, 2017 8:44 am
We are 64 and 59, recently retired, and are getting worried about our 34% AA in Fidelity's US Total Stock Market Index, the other stock percentage of 13% is in Fidelity's International Stock Index. We look to stocks for growth, we have enough revenue streams for 80% of our recurring needs, we need the stocks to throw off revenue for the 20%.

With all the doom and gloom articles about a coming correction, is it safer to move from the US to International?

Meanwhile we are considering moving into Vanguard Intermediate Term Treasury Fund (VFITX), currently yielding 1.6 percent as recommended by Kiplinger. What do you folks suggest?

Thanks,

Nick
Nick:

I think you are all over the map. Moving US to International and then move what to VFITX?

I personally wouldn't make changes to my portfolio based on what some financial newsletter says.

Start at the beginning. Read the WIKI here. Read the getting started guide. Read a book or two on Asset Allocation. Rick Ferri's is a popular one.

Write up an Investor Policy Statement and determine your asset allocation. Base this on Larry Swedroe's idea of need, ability and willingness to take risk.

Yes this will take time instead of following a simple recommendation. Yes it is time well spent.

dbr
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Re: Is International Stock Index Safer?

Post by dbr » Mon Oct 30, 2017 9:25 am

No, international stocks are not safer than US stocks. Emerging markets specifically are more risky. Otherwise the risk is similar.

Trying to time investing in US vs OUS is itself risky.

lostdog
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Re: Is International Stock Index Safer?

Post by lostdog » Mon Oct 30, 2017 9:31 am

All those doom and gloom articles are just noise and click bait.
"Our life is frittered away by detail. Simplify, simplify." -Thoreau

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HomerJ
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Re: Is International Stock Index Safer?

Post by HomerJ » Mon Oct 30, 2017 10:18 am

Stocks are not "safe" in the short run.

We could see a crash in U.S. Markets or International Markets, or most likely, both at the same time.

47% in stocks is a fairly conservative number. That's a good number for retirement. What's the other 53% invested in?

You say 80% of your revenue needs are already met. Are those pensions and/or SS, or is that money coming from the other 53%?

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Hyperborea
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Re: Is International Stock Index Safer?

Post by Hyperborea » Mon Oct 30, 2017 10:38 am

Chitowncameraman wrote:
Mon Oct 30, 2017 8:44 am
we have enough revenue streams for 80% of our recurring needs, we need the stocks to throw off revenue for the 20%.
Are you looking to use the revenue (i.e. dividends) to generate that 80%? I would suggest switching from a dividend approach to a total return approach. Chasing dividends is only going to have you buying and selling and often at inappropriate times.

How much do you have in the portfolio to provide this 20%? What multiple of the money required is it?
Last edited by Hyperborea on Mon Oct 30, 2017 10:52 am, edited 1 time in total.

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nisiprius
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Re: Is International Stock Index Safer?

Post by nisiprius » Mon Oct 30, 2017 10:47 am

Nobody knows nuttin'. Despite all the smart-sounding talk about valuations and such, nobody knows what's going to happen or what will outperform, and fretting and fussing and reviewing and revising every six months probably won't help and there's good evidence that it hurts. If U.S. stocks are highly valued compared to international stocks, it is because there are investors willing to buy at those prices; if it were a dead sure thing that international stocks were better, everyone would be moving to them. Stocks in general are what they are. They are volatile, they are not safe, and if you are jittery enough about stocks that you feel seriously uncomfortable with what you have now, it is wiser to trim back your stock allocation, "sell to your sleeping point," rather than search for "safer stocks." Cutting back stock allocation is a powerful and effective lever for reducing risk, even though of course it reduces return. Tinkering with what's in your stock allocation is not a powerful or reliable way to reduce risk. I assume that U.S. and international stocks are not very different in either risk or return.

We'd all like to have stock market returns without stock market risk, but I think that's the investing equivalent of perpetual motion.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Ron Scott
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Re: Is International Stock Index Safer?

Post by Ron Scott » Mon Oct 30, 2017 10:49 am

FWIW Bogle's recommendation is (still) to stick with US equities, no international.

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ruralavalon
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Re: Is International Stock Index Safer?

Post by ruralavalon » Mon Oct 30, 2017 10:56 am

There is always gloom and doom talk about something in investing. I don't pay attention to that.

Chitowncameraman wrote:
Mon Oct 30, 2017 8:44 am
We are 64 and 59, recently retired, and are getting worried about our 34% AA in Fidelity's US Total Stock Market Index, the other stock percentage of 13% is in Fidelity's International Stock Index. We look to stocks for growth, we have enough revenue streams for 80% of our recurring needs, we need the stocks to throw off revenue for the 20%.

With all the doom and gloom articles about a coming correction, is it safer to move from the US to International?

Meanwhile we are considering moving into Vanguard Intermediate Term Treasury Fund (VFITX), currently yielding 1.6 percent as recommended by Kiplinger. What do you folks suggest?

Thanks,

Nick
I will just tell you what I do.

We are both 72, retired, no pension, asset allocation is 50% stocks and 50% bonds, with 25% of stocks in international stocks, and all bonds in intermediate-term bond funds.

I think your international allocation is about right, your domestic/international mix is very similar to ours.

What is your current bond fund that you are considering moving away from?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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nedsaid
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Re: Is International Stock Index Safer?

Post by nedsaid » Mon Oct 30, 2017 11:11 am

Chitowncameraman wrote:
Mon Oct 30, 2017 8:44 am
We are 64 and 59, recently retired, and are getting worried about our 34% AA in Fidelity's US Total Stock Market Index, the other stock percentage of 13% is in Fidelity's International Stock Index. We look to stocks for growth, we have enough revenue streams for 80% of our recurring needs, we need the stocks to throw off revenue for the 20%.

With all the doom and gloom articles about a coming correction, is it safer to move from the US to International?

Meanwhile we are considering moving into Vanguard Intermediate Term Treasury Fund (VFITX), currently yielding 1.6 percent as recommended by Kiplinger. What do you folks suggest?

Thanks,

Nick
The International Stock Markets are cheaper than those of the United States and much of that is because of the perception that the US is a safe haven for investors. In other words, International Stocks are cheaper than US Stocks because of greater perceived risk in International markets.

I would in your position make modest shifts from US Stocks to International Stocks. Vanguard recommends an allocation of 40% of stocks to International though I personally am closer to the 30% mark. I believe that anywhere between 20% and 50% is okay.
A fool and his money are good for business.

asif408
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Re: Is International Stock Index Safer?

Post by asif408 » Mon Oct 30, 2017 11:12 am

Nick,

You will have to define safety before we can help much. If "safe" means the value of the fund will not lose value in the next stock market downturn, no stock or mutual fund is guaranteed to be safe. Only cash, CDs, or I-bonds/TIPS would be "safe" in that situation. VFITX would be "safer" than stocks but still could fall in value if the next crisis is inflationary. Of course, in an inflationary crisis only I-bonds or TIPS would keep up, and cash and CDs would lose purchasing power.

If "safe" means best chance to have a positive real return on your money over the next 10+ years, then foreign stocks (and emerging markets in particular) are "safer" in that respect than US. Of course, no guarantees in investing as these are only probabilities, and US might do better. With almost any stock fund, a roller coaster ride is a sure bet at some point.

WhiteMaxima
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Re: Is International Stock Index Safer?

Post by WhiteMaxima » Mon Oct 30, 2017 11:22 am

Neither are safer. There are geopolitical risk, currency risk. Compare to US, Int'l is cheaper. However, it is cheaper for a reason. I would do 60/40 US/Int'l.

goingup
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Re: Is International Stock Index Safer?

Post by goingup » Mon Oct 30, 2017 12:35 pm

There's an old saying, "all correlations go to 1 in a market downturn". I view US and International as equally risky because they are both equity. For safety use bonds/cash.

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