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I would be really interested to learn what the default advice for retail investors is across countries. In Germany the consensus is MSCI World or FTSE All-Worl
by oezi 1mo ago
I would be really interested to learn what the default advice for retail investors is across countries.
In Germany the consensus is MSCI World or FTSE All-World ETFs.
I believe in the US most advice goes to VTSAX (US Total Market), VOO (S&P500) and maybe QQQ (NASDAQ100) which means only US stocks.
What gets recommended in other countries?
- rafram 1mo agoDisagree on that being the advice in the US. Most basic investment advice (and target-date funds) will use a three-fund portfolio containing US, ex-US, and bonds.
- khuey 1mo agoGenerally the default fund in a decent 401(k) (employer managed but largely employee funded retirement plan) will be a "target date retirement fund" that contains a mix of equities and bonds according to the expected risk tolerance of someone at that age, and generally the equity component is also split between US and foreign equities. e.g. Fidelity's fund for people planning to retire around 2050 https://fundresearch.fidelity.com/mutual-funds/summary/315792416 https://fundresearch.fidelity.com/mutual-funds/summary/31579...
- itake 1mo agotarget date funds always confused me, b/c they don't account for the rest of my portfolio. My IRA/401(k) actually has close to 100% cash/bonds to minimize annual taxable impact and the rest of my portfolio is equities.
- khuey 1mo agoMany people don't have a "rest of their portfolio".
- eudamoniac 1mo agoThere is no annual taxable impact in a 401k nor IRA
- itake 1mo agoexactly, which is why your 401k/IRA include your bond allocations and your taxable account house your equities. Assuming a portfolio with $100k in 401k and $100k in taxable and targeting 80/20 stock/bonds, your 401k should be 60/40k and taxable should be 100/0. Target date funds would have 80/20 in both 401k and taxable accounts. Target date funds assume your 401k is your only retirement savings vehicle.
- eudamoniac 1mo agoI understand why you'd say bonds in tax-advantaged accounts and equities outside, but I don't know why you would put cash in the former. Unless by cash you mean money market funds or similar. But even still, qualified equity dividends are yielding more these days than bond interest to the extent that the total tax is usually higher, so you might still prefer to reverse what you said.
- itake 1mo agoMy equities are highly concentrated in tech (which tends to either not pay dividends or prefers stock buy backs). The rest of my equities is VTI (~1% dividend) and VXUS (~2.3% dividends). When I say cash, I meant value stored in money market and $SGOV. I'm actually experimenting with using my 401k/ira to invest in private equity (VC) funds, so I am holding cash (money market and $SGOV) in those accounts to ensure I have the capital for capital calls.
- oezi 1mo ago3% less annual returns than the S&P500 over 10 years and the entire fund lifetime. That's a considerable difference.
- khuey 1mo agoYes, diversification results in lower returns than investing in just the best performing asset class.
- eudamoniac 1mo agoThat's what happens when you are in a 10+ year bull market. That doesn't mean 100% US equity allocation is a good idea starting now.
- amarcheschi 1mo agoItaly - vwce or any all world This of course if you're doing by yourself, banks definitely won't recommend that but some other bullshit fund with high costs and poor performances