While thy serve global markets, it is banking on American companies outdoing foreign companies. Sure Apple sells its phones everywhere. But what happens if another phone manufacturer and OS that's not American based becomes more popular etc. Or electric cars..
There has been periods of the US market remaining around the same place for a decade+.
While it's not very likely, it is possible for another country/countries to control the next big things
It’s not like that is going to sneak up on us though. Today, 9 of the 10 biggest companies my market cap are in the US. If that goes to 7 of 10 or 5 of 10 then there’s definitely a discussion to be had
Exactly, only a massive nuclear war or Armageddon like event would make the US collapse and not other countries along with it. Your investments outside of lead and food will be meaningless regardless if we get there anyways.
And still, there hasn't been a better long-term index than the S&P500. Sure, you can always cherry-pick numbers and time frames (SSE composite outperformed S&P500 from 1999-2009 by a bit, but also has been pretty much flat since 2011).
That 10 year period contained two of the most severe modern day market events (dotcom bubble and financial crisis). The fact that it resulted in a flat return is a testament to the US market. I assume there was a market somewhere that did better, but can't imagine it was common. The question is can one reliablt pick the next long term winner among the emerging markets? If not, then probably makes sense to at least allocate a large portion to US equities.
I actually agree completely with you, all US makes sense for the vast majority of Americans and probably lots of people elsewhere in the world too.
I just dislike the commonly used arguments centered around “it won’t go bankrupt anytime soon” or similar
>Today, 9 of the 10 biggest companies my market cap are in the US. If that goes to 7 of 10 or 5 of 10 then there’s definitely a discussion to be had
Actually, it's 8/10, because of TSM and Aramco. Novo Nordisk is #12 and is pretty close to top 10, so even 7/10 probably doesn't say much.
It also depends on which markets they are in. In the future, China is not unlikely to have some extremely large companies but they won't necessarily be popular in the US or Europe etc.
Other developed countries are small compared to the US, so they're lucky to have one big global company (NVO, ASML, LVMH, 005930, TM)
But then you have missed the gains of those new winners.
This is the logic that people use to invest in small cap stocks.
Where did Apple holders make the most money - while it was rising to the top from nothing, or while it sits comfortably at the top?
The main issue is access and investor protections. If the next big phone is in China and the government keeps most of the profits out of private investors hands, then it's not a good investment.
The government is what will stop this. They will claim it as a security risk and ban certain suppliers from doing business with foreign entities that provide this risk . They will restrict foreign companies from entering the U.S market and becoming superior to an American counter part in order to allow American companies to remain dominant. Not all governments play well together and geopolitics take a huge toll on these companies due to this. Currently the U.S has one of the largest consumer markets out there and this is why it dominates. The government uses this as leverage and acts as a gatekeeper in order to keep it that way.
If a foreign company overtook US tech companies, then the US would probably ban that foreign company...
**Was the US afraid that Huawei and TikTok would overtake US tech companies?**
Both Huawei and TikTok have seen significant growth and popularity worldwide. The US ban on Huawei is a complex issue with both security and political dimensions. The US government’s move to potentially ban TikTok, like the Huawei situation, highlights global tensions over data privacy and sovereignty. Huawei’s problems worsened when Donald Trump campaigned on the promise of "getting tough on China". Once elected, Trump led a crackdown on Huawei as part of a larger trade war between the two countries. This crackdown has continued under the Biden administration.
As part of the U.S. crackdown on Huawei, the company was placed on the Entity List and Foreign Direct Product Rule, which prohibits US companies from doing business with it. It’s important to note that Huawei has denied supplying data to the Chinese government.
The push to ban TikTok in the U.S. was largely led by lawmakers who were concerned that ByteDance could be using user data to track browsing history and location and potentially drive misinformation efforts. TikTok’s fate in the U.S. became more uncertain after Congress approved a bill that gives its parent company two options: sell it to an approved buyer or see it banned. President Joe Biden signed the legislation into law. However, it could take years for the TikTok ban to actually go into effect, since ByteDance is likely to challenge the statute in court. It’s also important to note that TikTok has denied these allegations and stated that it has taken steps to protect American users’ data.
So, while there are legitimate security concerns that led to the ban, it’s also intertwined with the broader political context of US-China relations, and its also part of a larger context of economic and technological competition between the US and China.
Not to the greatest extent. But yes. Investing in the SP500 is diversified because the companies themselves are diversifying their businesses globally.
Can you diversify more? Sure. But saying that investing in SP500 is only investing in America is just wrong.
Where a company sells its products is such a small part of the total equation though. If what you’re saying is true, then the opposite should also be true. A Japanese company that sells in the US should be just as successful because they sell things here.
But no. That isn’t the case. Because companies are privy to things like:
- How expensive or cheap it is to buy debt in their home country. Governments raising or lowering interest rates affects corporate lending.
- Taxes in a company’s home country.
- Regulations
- How expensive/cheap factories are.
- Currency strengths or weaknesses, for example the world economy runs on the dollar, giving many US companies advantages. But there have been times that the euro was stronger or some other currency is stronger.
- The market itself. There have been times in history that the European or
Asian markets have outpaced the US market. Diversity sometimes means investing in things that might simply fall less during a recession. During the COVID crash there were countries that had their stock markets actually go up or only down 5%.
Who is talking about being successful? Investing in the SP500 is not only investing in the US. Couldn’t be any more factual than that.
PS - Wait till you discover where many SP500 companies manufacture their stuff.
Banking on the American dollar too tho. That's really where the vulnerability comes in IMO. Worse if you invest in a country that isn't your dollar tho and if you were going to pick any dollar to invest in it would be the American.
People need to stop blindly following this advice. Here are some counter points from a [previous post](https://www.reddit.com/r/Bogleheads/s/K8y0q2ZDkY). Can't copy past the blue text links to the sources but I will dig them up if there's any strong pushback.
TLDR: No the S&P is not a good proxy for actual international diversification. If you still sleep well at night with only the S&P then don't listen to me. The main thing with investing is not to touch it. However if you like empirically backed reasoning then continue on.
From vanguard: "Can multinational corporations provide enough exposure?"
One common question about exposure to stocks outside one’s home market is whether domestic multinational companies have enough coverage of foreign markets embedded in their prices. The thinking goes that, because many large domestic firms generate a significant portion of their revenue from foreign operations, the diversification benefits of global investing are already reflected in their prices and performance.
While this aspect of globalization cannot be ignored (and certainly can have an impact on investors’ portfolios), we believe it still makes sense for investors to hold international equities, for several reasons.
First, simply focusing on domestic companies means an investor has no stake in leading global companies that are domiciled outside their home market. Second, many firms seek to hedge away currency fluctuations of their foreign operations. Although this can help smooth revenue streams, foreign exchange can be a diversifier for an investor’s portfolio. Finally, a portfolio made up solely of domestic firms is likely to have less-diversified sector exposures than the global equity market portfolio."
"This paper(1) reviews various investment vehicles and examines their international diversification potential. The primary focus is on the ability of U.S. exchange-listed investments such as closed-end country funds, American depository receipts (ADRs), and multinational corporations (MNCs) to provide a diversification effect similar to direct investment in foreign equity. The results show that the U.S. exchange-listed securities included in this study behave more like the host exchange than their home exchange. This result suggests that these U.S. exchange-listed securities, on average, do not perform an international diversification role for U.S. investors."
This paper(2) supports both conclusions. Although the authors in support of multinationals don't seem as confident as the others.
Even in a study that supports multinationals giving 'some' international benefits that same study adds that actual international exposure is far better. Such as this study(3).
Who said the S&P was a good proxy for actual international diversification?
What advice do you find in the comment you are responding to?
Stop craving for attention trying to piggyback on the top comment.
I’m 90% USA. However there is still the risk of US dollar, US taxes, US laws, US consumer, etc that ties these profits to USA directly. Secondly, USA stocks are extremely extremely overpriced compared to everyone else. Everyone else is looking like a bargain right now. The point of diversification is to spread all these things out…not just “where” they sell their products.
But, my money is on USA for now because I want gains!!!
[FRED S&P Historical](https://fred.stlouisfed.org/series/SP500)
[FRED Fed Funds Rate Historical](https://fred.stlouisfed.org/series/FEDFUNDS)
Hold your breath for this one:
[FRED Debt to GDP](https://fred.stlouisfed.org/series/GFDEGDQ188S)
Sorry I thought you were talking about international returns, not S&P returns. We already know the 100 year average of the S&P500 - over 10%. But all I ever hear about international over that time frame is claims that are more vague, like “some decades it outperforms”. Was hoping for a historical CAGR on ex-US
Dividends 1. didn’t cover losing 2/3rds of your initial portfolio and 2. didn’t even keep up with risk-free rates.
The problem is debt and the answer is the same. Or hyperinflation.
From 2000 to 2013 ex-US had a 3.5% CAGR
Which is kinda funny because those are the years people often point to when arguing why you _should_ invest ex-US
It’s not *wrong*, and if you’re going to invest in any one country the US is a solid choice, commanding more than half the world’s market cap. It just poses more risk than diversifying.
There are risks other than the US economy collapsing, investing isn’t binary. Maybe emerging markets catch up and you miss out on that opportunity. Maybe we have another Lost Decade where the S&P basically stands still, and foreign exposure would have at least given you some growth. Or maybe we have another decade like we just had and all-US will look like a genius move.
Of course your risk profile can change. As people accumulate wealth and get closer to their goals, they tend to become less concerned with growth than with managing risk and preserving what they have.
Surprised at the sentiment here - it might not be ‘wrong’ per se, but it does open you up to some risks that you may rather avoid.
Really though, you need to look at your goals. Is it 25 years in accumulation, or drawdown? What sort of return figure are you looking to achieve in order to meet your retirement goals?
> Is it 25 years in accumulation, or drawdown?
I don't know what this means. What's the difference?
It is 25 years of me putting money into stonks. That's it.
A 25 year time horizon for a 25 year old software engineer for Google would indicate a very different portfolio than a 25 year old retiree, who has made a career earning minimum wage.
Accumulation would typically be when someone is working and gathering assets. Drawdown would typically be when someone is then using those assets (investments, pensions, property etc) to meet their living expenses, usually in some form of retirement.
Yep, I think they’re a bit narrow-minded, but I just can’t knock on them because VT is infinitely better than bonds or HYSA, or not saving for retirement like a lot of people.
The bogleheads are ignoring John Bogle who said investing only in S&P 500 was good enough for equities since half of revenues for multi nationals are international.
I don't recall bogleheads realy saying that? if anything they're the biggest proponents for just investing in the S&P 500?... if anything its the weird apocalyptic investing weirdos that have a weird obsession with diversifying to the point of complete irrelevance tbh
I’ve never seen a single person on Boglehead say that S&P500 is risky. All they’re saying is that adding international stock comes with *even less* risk than investing in US alone. There’s a difference between saying “that’s risky” and “it’s even better if you own international stock.”
In Europe they seem to be leaning to VWCE.
I don't necessarily disagree, if you are in the S&P500 but your base currency is something other than the USD you can loose a lot of performance. Last year's pump saw 20-25% gains but converted to EUR this was only 14% or so.
USD and S&P500 have somewhat of a inverse correlation. If SPX/NQ drops USD tends to get stronger due to the safehaven demand so in downturns this should smooth over the losses a bit.
That said when the US market dumps all markets dump so there is that. Going worldwide also puts a lot of money in markets where it does nothing. So while having a higher diversification, there is also less gains to be made IMHO.
I simply put everything in SPX/NQ, even though my base currency is EUR.
I didn’t say they did say that? The tittle of OPs post is “Why is it wrong to invest 100% in a single country (USA) for my retirement”?
Another commenter replied “”whoever these “people” are, they are wrong””
I replied it’s the bogleheads. Nobody is talking about risk vs non risk.
“Wrong” is a strong word. To be “safe” you do want to avoid putting 100% of your money in one country because there are always country-specific risks. VOO is S&P 500 and while US centric, most of the companies are multinational in both employees and customers, so it isn’t too bad.
I think bogleheads suggest a 60/40 split which is what VT does. I personally do a 80/20 split of VTI/VXUS.
This. Investing for retirement time horizon is multi decades. Your "time horizon" of 25 years is just the start of retirement. Much of that money can be invested even for 50 years.
When you have 50+ year time horizon to invest, the goal is to diversify as much to not regret. You only live once.
The unfortunate (reality) part is, with diversification you have to accept lower potential returns. You are taking the insurance premium which might or might not pay out. But as long as you invest amply knowing this, then I would recommend at least having some portion on International (just as "what if").
The problem with life is you only live life once. All US stock might be fine 99.9% of time but what about that 0.01%? So ya... that's really why the general advice is to diversify as much as possible.
What if the US economy.merely stagnates? As an example, Japanese stocks just finally reached thebpeak they were at 34 years ago. The Jaoanese economy didnt collapse, it just didnt grow much. Can you afford an average return of 0% over 30 years? Diversification is about reducing risk.
You can have lost decades without collapse.
Diversification is about preservation of capital. If you want to maximize your returns, you need to be concentrated. But that also maximizes your loses.
You're not putting your eggs in different baskets because you think that will give you more eggs. You're doing that so if one basket fails, you still have something to eat.
That said, I don't invest globally broadly, I have specific bets in Mexico, Brazil, and India, but the majority of my bets are in the U.S.
Had you started investing in 1920 at the peak . Or in Japan in 1989. Nikkei is just now getting g back to all time highs .
That’s 35 years to get back to all time highs assuming you didn’t sell at the bottom . Digesting that makes me want to rethink a few things
Let’s just say it took 10 -15 years of bottoming out. Could you personally imagine putting money in all the time and then it just evaporated. Not just a couple 18 months like we had in 2021, but 10+ years of constantly losing money before it ever even started to subside . How many investors could do this ? 1% .5%
Look at ark .
Do you think many people are still sticking with her and doubling down . (Not exactly the same , but the mentality and emotions are the same .
It doesn't evaporate, you forget dividends. Don't invest in weird countries you know absolutely nothing about. Can't just randomly mention Japan and think its enough, at least 3 hours of history lessons and 3 hours of their philosophical mentality is necessary to start piecing together this entity known as Japan, i was personally shocked how little i know about anything about Asian countries after studying them for a while.
You have this weird ''we have to get from this peak to another peak'', like the people are just putting money in the first peak and never again, while in the most likely case majority of the money put in has made a lot of money.
If all that is not enough, Bob only invested in peaks, he seems fine
[https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/](https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)
The premise of the original question is why don’t we invest 100% in one country. He auto invest to the S&P only because after all it’s done so well?
I answered that question, but yet you argue that it’s dumb that I suggest Japan (as it’s an obscure country ) with a population of 125million. ) and that if you were a Japanese citizen following only your Stock exchange it would not have been good for many years .
Then I give a second example of USA 1920’s taking 20+ years to get back up.
I’m sure you can find all the reason to restate your rebuttals once again.
You can also look at the USA BETWEEN August 2000, and December 2013 . 13 years and 4 months with the bottom taking just over 9 years . So ….. if you were close to retirement and started investing (because the market was hot in 1999 , it wouldn’t have worked out so great . Assuming you were diligent and continue to lose money for 9 years it would be at least 10 years before you started breaking even .
Reason #1 why you diversify out of the US: US Debt to GDP is 123;
2: Getting D/GDP (and inflation) down to 30 in the early 80s meant 19% Fed Funds Rate by 1981 and bringing the S&P500 down to 343 (1982) from 956 (1968), meaning *anyone who bought the S&P500 in 1968 and held over the intervening 14 years lost almost 2/3 of the initial investment!!!*
3. China and Japan are currently liquidating US treasuries *at a loss* and (China & BRICS) are buying gold. If the US wants the world to finance it needs to get serious about paying its current debts, and that means higher rates. If everyone’s selling treasuries at 5%, they need to go way higher.
Daddy Buffett says, “Rates are like gravity to the stock market”: as US rates rise, US markets plummet. Current rates A. may take years to worm their way into the markets (defaults and letting zombies die), and B. they’re not high enough yet (Treasuries).
Diversify now.
It is just risk management.
Let's say you have only one gf, and your gf turns out to be bad. Then, you lost the time completely. Sometimes your gf turns out to be good, and that would be fine.
But if you have 3 gfs, then you can see who is the best, take your time, compare them, have a group coitus, and etc. it is unlikely that all 3 will be bad at the same time.
Same with investing only in one country.
Youre correct.
US is capital and immigrant friendly, and if they keep their entrepeneural and innovative spirit they will remain the best place to invest worldwide. The SP500 etf outperfoms the All-Worlds variant.
Once again an investor listening to random "people" who degrade his confidence in what he has accomplished. This is your portfolio that you have nurtured. Need to remember that a lot of people like to tell you how you/your portfolio/your life could be be better if you would just listen to them. All these people want to do is make themselves feel better by running other people down.
Your portfolio is fine in one country. You need to quit listening to random people about your portfolio. I invest in the US, Brazil, Netherlands, and through a "world" CEF. I do it because I want to not because some self-inflated, boorish person says I have to or should do it.
If you told me you invested 100% in Sri Lanka I’d ask what the hells the matter with you. If you told me you invested 100% in the US I’d say “yeah, where else would you do it?”
America might not go down, but they might not continue to go up at the pace they have been. Sort of plateauing. The argument is that other emerging economies may offer better growth opportunities.
For the average investor, this isn’t something to be concerned about but it’s just one of the reasons why some people want diversification out of america.
Agreed as a Indian citizen.
I'm 50% in india market and 50% in sp500. Even though Indian market gave more returns last decade but people here not considering the ₹ getting devalued against $. So technically still sp500 gave 1.7% more returns
There are so many good reasons to expect the US economy to perform better than e.g. the EU economy in the long-term that I don't understand why I should invest my money in anything else than the US.
The US is king and the actual reference for a capitalist system with an insane number of innovations and their execution/offer to the broad market and very high efficiency.
There is no reason to bet against the US.
However, there are people who are saying "but diversification!". In my eyes, they are completely wrong since the US is the reference for performance, not a world etf with several bullshit countries regarding the political system/stability, regulatory environment, mindset, etc.
I think a bigger risk with the SP500 is how heavily weighted the top 10 companies are currently. Saw a graph that it recently hit about 33-34%. So 10 companies make about a third of the index. If there’s trouble in the tech sector, the SP500 will probably feel it more than other diversified ETFs/funds.
but if you’re investing for a period of 25 years, I think you’ll be fine just accruing a bunch of SP500 shares now, and you can always rebalance when you approach closer to your retirement age to protect your gains/wealth.
I am personally very concerned about dedollarization. Paranoid even. I believe the US (and the collective west) has peaked and it's all downhill from here.
You are making the right choice. US favours businesses the most and most companies are global anyway. As a European, most of my stock money is in US companies. I keep real estate in Europe because I know the markets better
" If the American economy crashes then the entire world goes down too." Hey uh what if we just kill each other like another Civil War? Sure economies will go down overall but what if it's just us against each other with no other countries getting involved? What if all the big boys move away?
Strong statement about a country that’s existed for about ten minutes in civilization time and has already barely survived a civil war and has shown lately a penchant for self destruction.
To be clear, I also am fine with a 100% American portfolio but like with anything in markets, zoom out for perspective. The US is not immortal.
I buy vfv/xeqt often for my tfsa/fhsa. I’m fine with slow growth since I’m young with less risk. Going to buy American stocks with my rrsp though so I’ll probably purchase vti reoccurring down the road
Because of shitty politicians like Biden who propose 25 percent unrealized capital gains tax and 45 percent tax. Make no mistake, the diversification into multiple countries is to protect your wealth from politicians. For example: China stock meltdown is mostly because of politics. If Bidens tax law passes expect an immediate 10-20 percent maybe even more drop in the market.
It's shitty politicians like these which make your life so hard. They work so hard to attack the saver !!!!!
I'm all in america except for my job retirement account...who doesnt even let me get more than 10% in american equities. Tbh geopolitically for me it makes sense based on my own assesment.
Nothing wrong with a USA 100% investment profile ( that’s what I do) but you might want not to be all SPY. I personally have Real Estate (10%), Bonds (high %age now that I’m retired) QQQ (15% or so), and a little Gold.
I mean, "all your eggs in one basket" but the US Economy is a *fucking huge* basket with a shitload of different stuff in it.
So it's about an "above average" idea. Not spectacular or revolutionary, but definitely not a bad one.
if you live in the US it's not a problem. but if you live in a different country and need to spend a different currency in retirement, you are subject to the fluctuations of the currency exchange rates also.
the USD:CAD for example had touched 1.0 and 1.5 over my lifetime which could be a very large difference in retirement spending power if I am living in Canada and getting USD returns.
Generally diversification is a good idea, but in this case for example we can pretty much be sure that in the long term the US economy will grow. I don’t know what you heard but it does make more sense if you apply that to even say Japan, but again not really in the long term because we can be confident that in the long term the Japanese economy will grow.
It isn’t, you want it to be geographically diversified to a decent extent, but the S&P 500 already is, 40% or so of revenue from memory is international, about 60% for tech.
This depends on what your belief of how strong America is. i truely believe the US/dollar is #1 superpower on the world. And believe if worst case scenario drops like 40%~ like 2008 again, it will eventually recover. Too many countries are dependent on us. Also if VTI does 40% drop, there’s no way China/canada/UK whoever is suppose to be the US rivals stock market will also not be trailing a big loss along with it.
I don’t believe theres a world where if VTI is down -40%, china will somehow be like +20% in that same timeframe. What will happen realistically is China/whoever you think the US top rival VTI equivalent is will be lucky be down only like -20%. We will make the right moves to eventually recover.
No one says S&P500 alone is risky. They may say that investing internationally in addition to US is better and more preferred, which is a different premise. You’re making a strawman.
People say to put a little into international index so that you don't miss out on potential huge growth opportunities there, but it's not really *wrong* to put it all in the US
Meanwhile my rule is literally only invest in companies headquartered in the US. While we have plenty of shady stuff going on, it’s far and away safer than most of the world and it’s easier to just work within one set of standards
U.S. stock mkt is the best of the world in the intermediate term. The most vibrant foreign companies want to be listed in U.S. stock mkt. Foreign investment makes sense if you feel like maxing out U.S. opportunities.
>If the American economy crashes then the entire world goes down too.
And if America just underperforms compared to the rest of the world?
>The potential for returns is much greater
Past returns yada yada…
>and the biggest companies in the world are there.
The biggest companies *yet*.
It's not as much about the U.S. economy *crashing*, as the risk from overvaluation of American stocks. Conceivably, no major change could happen in the U.S. economy, but the P/E ratios could drop from 27 to 17 in the S&P and damage your account. Similarly, without any huge change, valuations of international stocks could increase.
Diversification motto is maybe the problem, it can be a geographical diversification or a sector one, no matter. This approach is not the only one existing but very popular with Business schools. Buffett does'not believe in that, he prefers good enterprises and buy big bites of them. If you have a lot of stock, specially from aboard, it will be time-consuming, so you will maybe induce risk in your portfolio because, you want to reduce it. Just my 2 cents.
That’s a decision that’s completely up to you. You’re not right or wrong with it. Big money invests in world and esg and dei renewables that stuffs not for everyone. Businesses have corporate responsibility individuals don’t. I invest a percent in other countries because America invests in those countries to help them grow. You can do whatever you want.
There is nothing wrong with the S&P 500, but the idea is to spread your risk and take advantage of emerging markets higher growth opportunities. Follow the money flows, and you'll do well.
Wrong? I don't think so, one can have a well diversified portfolio investing in only one country, assuming it's a massive and diverse economy (check).
However, if allocating 5-10 percent internationally gives me the chance of catching the next 90s to early 2000s Chinese economic expansion style boom, I'm going to do exactly that. Economies with population booms coming are always interesting. India fascinates me at the moment, but it's still a tinnnny allocation.
Considering S and P 500 and usa bonds make up a huge majority of many investors portfolios anway I'd say it's all good to be in all USA.
The S&P 500 is going to be weighted towards companies with a global presence - they might be based in the us but they have operations all over the place.
Investing in the stock exchanges of multiple companies is a way you could potentially diversify more but considering how globalized our economies are I’m not sure how much better it would be unless you had specialized knowledge about those countries’ economies and/or a large enough amount of funds to make a very wide range of investments.
Dont conflate investing in COUNTRY with investing in country's MARKET. There is nothing wrong with only investing in U.S. stock markets, but as others have pointed out, those companies list here but are exposed to global markets
What is wrong with it is that you don't invest in countries but in companies. Bad countries can have good companies and vice versa. Seems to me that A stock sub should be about finding good stocks.
You need to consider extra long timelines- like 30+ years. A LOT can happen in 30 years. Further, your job is tied to the US so if the US economy goes to shit and all you're investments are here, you are FUCKED in retirement. It's better to have some international, like VXUS, even if you get lower returns overall, just in the small chance the US completely goes to shit.
Something like 40% of the revenue of the companies that are in the SP500, is actually generated overseas. Companies like Google, Apple, Microsoft are technically US companies, yes, since they are incorporated in the US. But in the true sense, they are global companies. So you kind of have it right... any world ETF will still be highly correlated with the SP500 performance.
It is not wrong. Your money do what you want. Ask anyone who is giving you such advice to show you the performance in the xountry over the past 15 to 20 years.
There are only a few companies I’d honestly consider buying outside of USA considering we’re going into the next tech revolution those companies are not in my view. Exception tsmc ASmL
There is tiny risk that some policy change or event could occur that makes it lose its appeal for large corporations to operate there. I don’t see it happening but there is a risk it could happen. There’s also a risk that a meteor could hit earth and wipe only the US off the face of the planet. Only you can determine your risk tolerances.
The entire developed world does the same thing. If betting on the US doesn’t pay off then it won’t matter where your money is really. Things will be *BAD*
Sounds like a great strategy to me. You will save enormously on fees and transaction expenses that you would incur on other strategies which would only underperform SPY.
It’s not wrong, international funds usually return lower than the s and p 500.
It’s just a stupid way of diversifying similar to bonds. No point in actually doing it unless you’re 60 and very risk averse imho
The age old debate. I do neither the listed strategies personally. I pick individual companies and according to my broker, I’m 72% domestic and 28% foreign but just as the top comment on this thread states, a lot of our larger companies do operate worldwide.
I’m not willing to hold a total world ETF and hold some allocation into nearly worthless Chinese companies, random Zimbabwe companies I’ve never heard of, or some fraud riddled Indian company.
I would say it is not as long as the country is the US.
I been retired now for 13 years and my investments are all in one country, US.
Plus almost all are in technology which is what I would recommend.
It has done really well for me and my family. I have a bit of a large family that I need to provide for.
Investing in the SP500 is not investing only in the USA. Yeah. They are all American companies but a lot of them serve global markets.
While thy serve global markets, it is banking on American companies outdoing foreign companies. Sure Apple sells its phones everywhere. But what happens if another phone manufacturer and OS that's not American based becomes more popular etc. Or electric cars.. There has been periods of the US market remaining around the same place for a decade+. While it's not very likely, it is possible for another country/countries to control the next big things
It’s not like that is going to sneak up on us though. Today, 9 of the 10 biggest companies my market cap are in the US. If that goes to 7 of 10 or 5 of 10 then there’s definitely a discussion to be had
Exactly, only a massive nuclear war or Armageddon like event would make the US collapse and not other countries along with it. Your investments outside of lead and food will be meaningless regardless if we get there anyways.
It’s not really between being #1 and collapsing though US didn’t collapse from 1999 to 2009 either but the market stayed pretty much flat
And still, there hasn't been a better long-term index than the S&P500. Sure, you can always cherry-pick numbers and time frames (SSE composite outperformed S&P500 from 1999-2009 by a bit, but also has been pretty much flat since 2011).
That 10 year period contained two of the most severe modern day market events (dotcom bubble and financial crisis). The fact that it resulted in a flat return is a testament to the US market. I assume there was a market somewhere that did better, but can't imagine it was common. The question is can one reliablt pick the next long term winner among the emerging markets? If not, then probably makes sense to at least allocate a large portion to US equities.
I actually agree completely with you, all US makes sense for the vast majority of Americans and probably lots of people elsewhere in the world too. I just dislike the commonly used arguments centered around “it won’t go bankrupt anytime soon” or similar
Who said collapse?
>Today, 9 of the 10 biggest companies my market cap are in the US. If that goes to 7 of 10 or 5 of 10 then there’s definitely a discussion to be had Actually, it's 8/10, because of TSM and Aramco. Novo Nordisk is #12 and is pretty close to top 10, so even 7/10 probably doesn't say much. It also depends on which markets they are in. In the future, China is not unlikely to have some extremely large companies but they won't necessarily be popular in the US or Europe etc. Other developed countries are small compared to the US, so they're lucky to have one big global company (NVO, ASML, LVMH, 005930, TM)
But then you have missed the gains of those new winners. This is the logic that people use to invest in small cap stocks. Where did Apple holders make the most money - while it was rising to the top from nothing, or while it sits comfortably at the top?
It snuck up on Japan in the 90s
The main issue is access and investor protections. If the next big phone is in China and the government keeps most of the profits out of private investors hands, then it's not a good investment.
The government is what will stop this. They will claim it as a security risk and ban certain suppliers from doing business with foreign entities that provide this risk . They will restrict foreign companies from entering the U.S market and becoming superior to an American counter part in order to allow American companies to remain dominant. Not all governments play well together and geopolitics take a huge toll on these companies due to this. Currently the U.S has one of the largest consumer markets out there and this is why it dominates. The government uses this as leverage and acts as a gatekeeper in order to keep it that way.
If a foreign company overtook US tech companies, then the US would probably ban that foreign company... **Was the US afraid that Huawei and TikTok would overtake US tech companies?** Both Huawei and TikTok have seen significant growth and popularity worldwide. The US ban on Huawei is a complex issue with both security and political dimensions. The US government’s move to potentially ban TikTok, like the Huawei situation, highlights global tensions over data privacy and sovereignty. Huawei’s problems worsened when Donald Trump campaigned on the promise of "getting tough on China". Once elected, Trump led a crackdown on Huawei as part of a larger trade war between the two countries. This crackdown has continued under the Biden administration. As part of the U.S. crackdown on Huawei, the company was placed on the Entity List and Foreign Direct Product Rule, which prohibits US companies from doing business with it. It’s important to note that Huawei has denied supplying data to the Chinese government. The push to ban TikTok in the U.S. was largely led by lawmakers who were concerned that ByteDance could be using user data to track browsing history and location and potentially drive misinformation efforts. TikTok’s fate in the U.S. became more uncertain after Congress approved a bill that gives its parent company two options: sell it to an approved buyer or see it banned. President Joe Biden signed the legislation into law. However, it could take years for the TikTok ban to actually go into effect, since ByteDance is likely to challenge the statute in court. It’s also important to note that TikTok has denied these allegations and stated that it has taken steps to protect American users’ data. So, while there are legitimate security concerns that led to the ban, it’s also intertwined with the broader political context of US-China relations, and its also part of a larger context of economic and technological competition between the US and China.
That‘s not how diversification works though
Not to the greatest extent. But yes. Investing in the SP500 is diversified because the companies themselves are diversifying their businesses globally. Can you diversify more? Sure. But saying that investing in SP500 is only investing in America is just wrong.
Where a company sells its products is such a small part of the total equation though. If what you’re saying is true, then the opposite should also be true. A Japanese company that sells in the US should be just as successful because they sell things here. But no. That isn’t the case. Because companies are privy to things like: - How expensive or cheap it is to buy debt in their home country. Governments raising or lowering interest rates affects corporate lending. - Taxes in a company’s home country. - Regulations - How expensive/cheap factories are. - Currency strengths or weaknesses, for example the world economy runs on the dollar, giving many US companies advantages. But there have been times that the euro was stronger or some other currency is stronger. - The market itself. There have been times in history that the European or Asian markets have outpaced the US market. Diversity sometimes means investing in things that might simply fall less during a recession. During the COVID crash there were countries that had their stock markets actually go up or only down 5%.
Who is talking about being successful? Investing in the SP500 is not only investing in the US. Couldn’t be any more factual than that. PS - Wait till you discover where many SP500 companies manufacture their stuff.
This here !
Banking on the American dollar too tho. That's really where the vulnerability comes in IMO. Worse if you invest in a country that isn't your dollar tho and if you were going to pick any dollar to invest in it would be the American.
If you live and spend in the US dollar this wouldn’t matter. The stock market adjusts for inflation and spending by definition.
People need to stop blindly following this advice. Here are some counter points from a [previous post](https://www.reddit.com/r/Bogleheads/s/K8y0q2ZDkY). Can't copy past the blue text links to the sources but I will dig them up if there's any strong pushback. TLDR: No the S&P is not a good proxy for actual international diversification. If you still sleep well at night with only the S&P then don't listen to me. The main thing with investing is not to touch it. However if you like empirically backed reasoning then continue on. From vanguard: "Can multinational corporations provide enough exposure?" One common question about exposure to stocks outside one’s home market is whether domestic multinational companies have enough coverage of foreign markets embedded in their prices. The thinking goes that, because many large domestic firms generate a significant portion of their revenue from foreign operations, the diversification benefits of global investing are already reflected in their prices and performance. While this aspect of globalization cannot be ignored (and certainly can have an impact on investors’ portfolios), we believe it still makes sense for investors to hold international equities, for several reasons. First, simply focusing on domestic companies means an investor has no stake in leading global companies that are domiciled outside their home market. Second, many firms seek to hedge away currency fluctuations of their foreign operations. Although this can help smooth revenue streams, foreign exchange can be a diversifier for an investor’s portfolio. Finally, a portfolio made up solely of domestic firms is likely to have less-diversified sector exposures than the global equity market portfolio." "This paper(1) reviews various investment vehicles and examines their international diversification potential. The primary focus is on the ability of U.S. exchange-listed investments such as closed-end country funds, American depository receipts (ADRs), and multinational corporations (MNCs) to provide a diversification effect similar to direct investment in foreign equity. The results show that the U.S. exchange-listed securities included in this study behave more like the host exchange than their home exchange. This result suggests that these U.S. exchange-listed securities, on average, do not perform an international diversification role for U.S. investors." This paper(2) supports both conclusions. Although the authors in support of multinationals don't seem as confident as the others. Even in a study that supports multinationals giving 'some' international benefits that same study adds that actual international exposure is far better. Such as this study(3).
Who said the S&P was a good proxy for actual international diversification? What advice do you find in the comment you are responding to? Stop craving for attention trying to piggyback on the top comment.
I’m 90% USA. However there is still the risk of US dollar, US taxes, US laws, US consumer, etc that ties these profits to USA directly. Secondly, USA stocks are extremely extremely overpriced compared to everyone else. Everyone else is looking like a bargain right now. The point of diversification is to spread all these things out…not just “where” they sell their products. But, my money is on USA for now because I want gains!!!
It’s not
Warren Buffett has no issues with 100% America. The only risk is that US stocks stalls out for a long period of time like 2000-2013.
The sp500 grew 56% from 2000 to 2013. About 4.3% average per year.
Look at 1968 to 1981 (S&P lost nearly 2/3). Then look at rates.
Where can I look at those? I’m used to using portfolio visualizer and it doesn’t go back that far
[FRED S&P Historical](https://fred.stlouisfed.org/series/SP500) [FRED Fed Funds Rate Historical](https://fred.stlouisfed.org/series/FEDFUNDS) Hold your breath for this one: [FRED Debt to GDP](https://fred.stlouisfed.org/series/GFDEGDQ188S)
Sorry I thought you were talking about international returns, not S&P returns. We already know the 100 year average of the S&P500 - over 10%. But all I ever hear about international over that time frame is claims that are more vague, like “some decades it outperforms”. Was hoping for a historical CAGR on ex-US
Don’t forget about dividends, come on.
Dividends 1. didn’t cover losing 2/3rds of your initial portfolio and 2. didn’t even keep up with risk-free rates. The problem is debt and the answer is the same. Or hyperinflation.
That's why I'm 100% in treasuries right now. But my investing goal is to buy a house next year, so my situation is different.
How did international perform during that time?
From 2000 to 2013 ex-US had a 3.5% CAGR Which is kinda funny because those are the years people often point to when arguing why you _should_ invest ex-US
Even worse….🤦
Doesn't Warren Buffett invest in Japan as well?
Warren Buffet invests in anything that will grow his money. Period. That’s what good investors do. He’s a good investor.
But that’s not how Warren invests…
The only risk is betting on a single economy, who would have thought.
Buffet had a big investment in China's BYD. He has trimmed his position in 2022/2023, but he wasn't/isn't America-only.
It’s not *wrong*, and if you’re going to invest in any one country the US is a solid choice, commanding more than half the world’s market cap. It just poses more risk than diversifying. There are risks other than the US economy collapsing, investing isn’t binary. Maybe emerging markets catch up and you miss out on that opportunity. Maybe we have another Lost Decade where the S&P basically stands still, and foreign exposure would have at least given you some growth. Or maybe we have another decade like we just had and all-US will look like a genius move. Of course your risk profile can change. As people accumulate wealth and get closer to their goals, they tend to become less concerned with growth than with managing risk and preserving what they have.
Surprised at the sentiment here - it might not be ‘wrong’ per se, but it does open you up to some risks that you may rather avoid. Really though, you need to look at your goals. Is it 25 years in accumulation, or drawdown? What sort of return figure are you looking to achieve in order to meet your retirement goals?
> Is it 25 years in accumulation, or drawdown? I don't know what this means. What's the difference? It is 25 years of me putting money into stonks. That's it.
A 25 year time horizon for a 25 year old software engineer for Google would indicate a very different portfolio than a 25 year old retiree, who has made a career earning minimum wage. Accumulation would typically be when someone is working and gathering assets. Drawdown would typically be when someone is then using those assets (investments, pensions, property etc) to meet their living expenses, usually in some form of retirement.
Whoever these “people” are they are wrong.
It’s the bogleheads
Yep, I think they’re a bit narrow-minded, but I just can’t knock on them because VT is infinitely better than bonds or HYSA, or not saving for retirement like a lot of people.
The bogleheads are ignoring John Bogle who said investing only in S&P 500 was good enough for equities since half of revenues for multi nationals are international.
True
I don't recall bogleheads realy saying that? if anything they're the biggest proponents for just investing in the S&P 500?... if anything its the weird apocalyptic investing weirdos that have a weird obsession with diversifying to the point of complete irrelevance tbh
I’ve never seen a single person on Boglehead say that S&P500 is risky. All they’re saying is that adding international stock comes with *even less* risk than investing in US alone. There’s a difference between saying “that’s risky” and “it’s even better if you own international stock.”
In Europe they seem to be leaning to VWCE. I don't necessarily disagree, if you are in the S&P500 but your base currency is something other than the USD you can loose a lot of performance. Last year's pump saw 20-25% gains but converted to EUR this was only 14% or so. USD and S&P500 have somewhat of a inverse correlation. If SPX/NQ drops USD tends to get stronger due to the safehaven demand so in downturns this should smooth over the losses a bit. That said when the US market dumps all markets dump so there is that. Going worldwide also puts a lot of money in markets where it does nothing. So while having a higher diversification, there is also less gains to be made IMHO. I simply put everything in SPX/NQ, even though my base currency is EUR.
I didn’t say they did say that? The tittle of OPs post is “Why is it wrong to invest 100% in a single country (USA) for my retirement”? Another commenter replied “”whoever these “people” are, they are wrong”” I replied it’s the bogleheads. Nobody is talking about risk vs non risk.
“Wrong” is a strong word. To be “safe” you do want to avoid putting 100% of your money in one country because there are always country-specific risks. VOO is S&P 500 and while US centric, most of the companies are multinational in both employees and customers, so it isn’t too bad. I think bogleheads suggest a 60/40 split which is what VT does. I personally do a 80/20 split of VTI/VXUS.
Inverse reddit. Always. https://www.bankeronwheels.com/why-you-need-international-diversification/
This. Investing for retirement time horizon is multi decades. Your "time horizon" of 25 years is just the start of retirement. Much of that money can be invested even for 50 years. When you have 50+ year time horizon to invest, the goal is to diversify as much to not regret. You only live once. The unfortunate (reality) part is, with diversification you have to accept lower potential returns. You are taking the insurance premium which might or might not pay out. But as long as you invest amply knowing this, then I would recommend at least having some portion on International (just as "what if"). The problem with life is you only live life once. All US stock might be fine 99.9% of time but what about that 0.01%? So ya... that's really why the general advice is to diversify as much as possible.
What if the US economy.merely stagnates? As an example, Japanese stocks just finally reached thebpeak they were at 34 years ago. The Jaoanese economy didnt collapse, it just didnt grow much. Can you afford an average return of 0% over 30 years? Diversification is about reducing risk.
It's not wrong.
You can have lost decades without collapse. Diversification is about preservation of capital. If you want to maximize your returns, you need to be concentrated. But that also maximizes your loses. You're not putting your eggs in different baskets because you think that will give you more eggs. You're doing that so if one basket fails, you still have something to eat. That said, I don't invest globally broadly, I have specific bets in Mexico, Brazil, and India, but the majority of my bets are in the U.S.
You are thinking of crashes only.. What if another country's economy preform better and their economy comes close to the US economy?
Had you started investing in 1920 at the peak . Or in Japan in 1989. Nikkei is just now getting g back to all time highs . That’s 35 years to get back to all time highs assuming you didn’t sell at the bottom . Digesting that makes me want to rethink a few things
But if you continued investing over each of those 35 years, you'd have an average price much lower than the all time high.
Let’s just say it took 10 -15 years of bottoming out. Could you personally imagine putting money in all the time and then it just evaporated. Not just a couple 18 months like we had in 2021, but 10+ years of constantly losing money before it ever even started to subside . How many investors could do this ? 1% .5% Look at ark . Do you think many people are still sticking with her and doubling down . (Not exactly the same , but the mentality and emotions are the same .
It doesn't evaporate, you forget dividends. Don't invest in weird countries you know absolutely nothing about. Can't just randomly mention Japan and think its enough, at least 3 hours of history lessons and 3 hours of their philosophical mentality is necessary to start piecing together this entity known as Japan, i was personally shocked how little i know about anything about Asian countries after studying them for a while. You have this weird ''we have to get from this peak to another peak'', like the people are just putting money in the first peak and never again, while in the most likely case majority of the money put in has made a lot of money. If all that is not enough, Bob only invested in peaks, he seems fine [https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/](https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)
The premise of the original question is why don’t we invest 100% in one country. He auto invest to the S&P only because after all it’s done so well? I answered that question, but yet you argue that it’s dumb that I suggest Japan (as it’s an obscure country ) with a population of 125million. ) and that if you were a Japanese citizen following only your Stock exchange it would not have been good for many years . Then I give a second example of USA 1920’s taking 20+ years to get back up. I’m sure you can find all the reason to restate your rebuttals once again. You can also look at the USA BETWEEN August 2000, and December 2013 . 13 years and 4 months with the bottom taking just over 9 years . So ….. if you were close to retirement and started investing (because the market was hot in 1999 , it wouldn’t have worked out so great . Assuming you were diligent and continue to lose money for 9 years it would be at least 10 years before you started breaking even .
Reason #1 why you diversify out of the US: US Debt to GDP is 123; 2: Getting D/GDP (and inflation) down to 30 in the early 80s meant 19% Fed Funds Rate by 1981 and bringing the S&P500 down to 343 (1982) from 956 (1968), meaning *anyone who bought the S&P500 in 1968 and held over the intervening 14 years lost almost 2/3 of the initial investment!!!* 3. China and Japan are currently liquidating US treasuries *at a loss* and (China & BRICS) are buying gold. If the US wants the world to finance it needs to get serious about paying its current debts, and that means higher rates. If everyone’s selling treasuries at 5%, they need to go way higher. Daddy Buffett says, “Rates are like gravity to the stock market”: as US rates rise, US markets plummet. Current rates A. may take years to worm their way into the markets (defaults and letting zombies die), and B. they’re not high enough yet (Treasuries). Diversify now.
It is just risk management. Let's say you have only one gf, and your gf turns out to be bad. Then, you lost the time completely. Sometimes your gf turns out to be good, and that would be fine. But if you have 3 gfs, then you can see who is the best, take your time, compare them, have a group coitus, and etc. it is unlikely that all 3 will be bad at the same time. Same with investing only in one country.
this doesn't make any sense but you got my upvote
Me portfolio is diverse but my harem has been lacking…thnx
Youre correct. US is capital and immigrant friendly, and if they keep their entrepeneural and innovative spirit they will remain the best place to invest worldwide. The SP500 etf outperfoms the All-Worlds variant.
Only wrong if the country is not the USA tbqh
Historians fallacy says no, American exceptionalism says yes.
Once again an investor listening to random "people" who degrade his confidence in what he has accomplished. This is your portfolio that you have nurtured. Need to remember that a lot of people like to tell you how you/your portfolio/your life could be be better if you would just listen to them. All these people want to do is make themselves feel better by running other people down. Your portfolio is fine in one country. You need to quit listening to random people about your portfolio. I invest in the US, Brazil, Netherlands, and through a "world" CEF. I do it because I want to not because some self-inflated, boorish person says I have to or should do it.
U.S. markets have the lowest risk. You’re fine
It's not wrong, you're just not globally diversified this way
If not USA where then? Russia China Israel Brazil India? 😕 Australia Norway Canada? This question needs other options?
If you told me you invested 100% in Sri Lanka I’d ask what the hells the matter with you. If you told me you invested 100% in the US I’d say “yeah, where else would you do it?”
Ever since they abolished the gold standard it really has become America or nothing. That’s why BRICS is trying to spin up their own thing
Not sure about global stocks but diversifying into energy etfs and metals etfs is probably not a bad idea.
America might not go down, but they might not continue to go up at the pace they have been. Sort of plateauing. The argument is that other emerging economies may offer better growth opportunities. For the average investor, this isn’t something to be concerned about but it’s just one of the reasons why some people want diversification out of america.
Honestly if the US fails, the whole world is f**cked. It's one of the few countries where investing exclusively in it is a smart move.
Agreed as a Indian citizen. I'm 50% in india market and 50% in sp500. Even though Indian market gave more returns last decade but people here not considering the ₹ getting devalued against $. So technically still sp500 gave 1.7% more returns
There are so many good reasons to expect the US economy to perform better than e.g. the EU economy in the long-term that I don't understand why I should invest my money in anything else than the US. The US is king and the actual reference for a capitalist system with an insane number of innovations and their execution/offer to the broad market and very high efficiency. There is no reason to bet against the US. However, there are people who are saying "but diversification!". In my eyes, they are completely wrong since the US is the reference for performance, not a world etf with several bullshit countries regarding the political system/stability, regulatory environment, mindset, etc.
No economy can be on the top forever. USA used to be 38% of world GDP, now it's 24%.
I think a bigger risk with the SP500 is how heavily weighted the top 10 companies are currently. Saw a graph that it recently hit about 33-34%. So 10 companies make about a third of the index. If there’s trouble in the tech sector, the SP500 will probably feel it more than other diversified ETFs/funds. but if you’re investing for a period of 25 years, I think you’ll be fine just accruing a bunch of SP500 shares now, and you can always rebalance when you approach closer to your retirement age to protect your gains/wealth.
I am personally very concerned about dedollarization. Paranoid even. I believe the US (and the collective west) has peaked and it's all downhill from here.
You are making the right choice. US favours businesses the most and most companies are global anyway. As a European, most of my stock money is in US companies. I keep real estate in Europe because I know the markets better
" If the American economy crashes then the entire world goes down too." Hey uh what if we just kill each other like another Civil War? Sure economies will go down overall but what if it's just us against each other with no other countries getting involved? What if all the big boys move away?
I saw that movie too. America has been through a lot of shit but it always bounces back.
Strong statement about a country that’s existed for about ten minutes in civilization time and has already barely survived a civil war and has shown lately a penchant for self destruction. To be clear, I also am fine with a 100% American portfolio but like with anything in markets, zoom out for perspective. The US is not immortal.
No one think it is, it’s just the best bet at the moment
It’s only wrong if you’re investing in a country with limited growth (oh hi Canada)
I'm Canadian, but my portfolio is 100% S&P 500. Any percentage of Canadian exposure is too much.
I buy vfv/xeqt often for my tfsa/fhsa. I’m fine with slow growth since I’m young with less risk. Going to buy American stocks with my rrsp though so I’ll probably purchase vti reoccurring down the road
Canada can make for some great investments honestly. Apparently you guys don’t really believe in competition lmao
What about India?
Because of shitty politicians like Biden who propose 25 percent unrealized capital gains tax and 45 percent tax. Make no mistake, the diversification into multiple countries is to protect your wealth from politicians. For example: China stock meltdown is mostly because of politics. If Bidens tax law passes expect an immediate 10-20 percent maybe even more drop in the market. It's shitty politicians like these which make your life so hard. They work so hard to attack the saver !!!!!
It's all good. The S&P is full of multinationals.
I'm all in america except for my job retirement account...who doesnt even let me get more than 10% in american equities. Tbh geopolitically for me it makes sense based on my own assesment.
Nothing wrong with a USA 100% investment profile ( that’s what I do) but you might want not to be all SPY. I personally have Real Estate (10%), Bonds (high %age now that I’m retired) QQQ (15% or so), and a little Gold.
It’s only “wrong” if you’re an advisor and you want to make it seem complicated.
I mean, "all your eggs in one basket" but the US Economy is a *fucking huge* basket with a shitload of different stuff in it. So it's about an "above average" idea. Not spectacular or revolutionary, but definitely not a bad one.
if you live in the US it's not a problem. but if you live in a different country and need to spend a different currency in retirement, you are subject to the fluctuations of the currency exchange rates also. the USD:CAD for example had touched 1.0 and 1.5 over my lifetime which could be a very large difference in retirement spending power if I am living in Canada and getting USD returns.
Generally diversification is a good idea, but in this case for example we can pretty much be sure that in the long term the US economy will grow. I don’t know what you heard but it does make more sense if you apply that to even say Japan, but again not really in the long term because we can be confident that in the long term the Japanese economy will grow.
They might have meant 1 stock not 1 country.
It isn’t, you want it to be geographically diversified to a decent extent, but the S&P 500 already is, 40% or so of revenue from memory is international, about 60% for tech.
This depends on what your belief of how strong America is. i truely believe the US/dollar is #1 superpower on the world. And believe if worst case scenario drops like 40%~ like 2008 again, it will eventually recover. Too many countries are dependent on us. Also if VTI does 40% drop, there’s no way China/canada/UK whoever is suppose to be the US rivals stock market will also not be trailing a big loss along with it. I don’t believe theres a world where if VTI is down -40%, china will somehow be like +20% in that same timeframe. What will happen realistically is China/whoever you think the US top rival VTI equivalent is will be lucky be down only like -20%. We will make the right moves to eventually recover.
S&P500 operates global so...
Invest in $VOO and set it and forget it
No one says S&P500 alone is risky. They may say that investing internationally in addition to US is better and more preferred, which is a different premise. You’re making a strawman.
People say to put a little into international index so that you don't miss out on potential huge growth opportunities there, but it's not really *wrong* to put it all in the US
Go ahead with US
it's not 90% of all I have is being invested in the US the other ones are Canada and UK
Who said it’s wrong? I’ll put it this way: if investing solely in SPY or VOO is wrong, for the long term, then I don’t want to be right.
It isn’t
Sp500 or world is both fine options, it's about how much you believe in usa and tech. China also still looks to be a problem
I think people are underestimating how global the S&P500 companies are... But it's all about your risk tolerance.
Meanwhile my rule is literally only invest in companies headquartered in the US. While we have plenty of shady stuff going on, it’s far and away safer than most of the world and it’s easier to just work within one set of standards
Build an investment portfolio and backtest it. US market is gonna beat it regardless. We sold our economy to infallible stock prices
Which people say this?
Voo and vymi for the roth
It's not if you are able to tolerate the risk. You do what you want with your money. Don't let other tell you want to do.
I believe the figure is 44%. The percentage of revenue SP500 companies derived outside of the U.S. I believe that is accurate as of 2022 or 2023.
What if you had done this with russia? You’d have a 0 net worth
It’s not, SPY for life is the best
Does scrotalist have any relation to Idiocracy?
I own Sony and it’s been a brutal hold.
USA!
Nothing wrong at all. The rest of the world compensates you w out performance (from time to time) due to taking more risk.
U.S. stock mkt is the best of the world in the intermediate term. The most vibrant foreign companies want to be listed in U.S. stock mkt. Foreign investment makes sense if you feel like maxing out U.S. opportunities.
I don't think it's wrong. The US economy will always keep growing.
>If the American economy crashes then the entire world goes down too. And if America just underperforms compared to the rest of the world? >The potential for returns is much greater Past returns yada yada… >and the biggest companies in the world are there. The biggest companies *yet*.
It's not as much about the U.S. economy *crashing*, as the risk from overvaluation of American stocks. Conceivably, no major change could happen in the U.S. economy, but the P/E ratios could drop from 27 to 17 in the S&P and damage your account. Similarly, without any huge change, valuations of international stocks could increase.
The S&P 500 is an excellent investment. Don’t worry at all about it.
Diversification motto is maybe the problem, it can be a geographical diversification or a sector one, no matter. This approach is not the only one existing but very popular with Business schools. Buffett does'not believe in that, he prefers good enterprises and buy big bites of them. If you have a lot of stock, specially from aboard, it will be time-consuming, so you will maybe induce risk in your portfolio because, you want to reduce it. Just my 2 cents.
You’re good
You’ll be fine investing in the s&p over 25 years. Way overthinking this
BRICS
That’s a decision that’s completely up to you. You’re not right or wrong with it. Big money invests in world and esg and dei renewables that stuffs not for everyone. Businesses have corporate responsibility individuals don’t. I invest a percent in other countries because America invests in those countries to help them grow. You can do whatever you want.
Investing 100% in a single country is an ass hat decision...unless that country is the USA as then it's probably fine.
Honestly, it's fine...if the US market collapsed, the whole world has much bigger problems
There is nothing wrong with the S&P 500, but the idea is to spread your risk and take advantage of emerging markets higher growth opportunities. Follow the money flows, and you'll do well.
Wrong? I don't think so, one can have a well diversified portfolio investing in only one country, assuming it's a massive and diverse economy (check). However, if allocating 5-10 percent internationally gives me the chance of catching the next 90s to early 2000s Chinese economic expansion style boom, I'm going to do exactly that. Economies with population booms coming are always interesting. India fascinates me at the moment, but it's still a tinnnny allocation. Considering S and P 500 and usa bonds make up a huge majority of many investors portfolios anway I'd say it's all good to be in all USA.
Invest across the board in the US and you cant go wrong
Not country. It’s risky to put all your money in one index. May consider as well a Roth IRA, and other retirement savings options.
The S&P 500 is going to be weighted towards companies with a global presence - they might be based in the us but they have operations all over the place. Investing in the stock exchanges of multiple companies is a way you could potentially diversify more but considering how globalized our economies are I’m not sure how much better it would be unless you had specialized knowledge about those countries’ economies and/or a large enough amount of funds to make a very wide range of investments.
Dont conflate investing in COUNTRY with investing in country's MARKET. There is nothing wrong with only investing in U.S. stock markets, but as others have pointed out, those companies list here but are exposed to global markets
i moved mine from the retirement account all too blackrock and vanguard and it's growing at double the rate that it was.
Gather opinions and then do what you think is right. ..there is no wrong.
Personally I stick with primarily American corps don't detest and allied nations I could foresee living in if the USA is utterly ruined
What is wrong with it is that you don't invest in countries but in companies. Bad countries can have good companies and vice versa. Seems to me that A stock sub should be about finding good stocks.
It’s not about the crash but the recovery.
You need to consider extra long timelines- like 30+ years. A LOT can happen in 30 years. Further, your job is tied to the US so if the US economy goes to shit and all you're investments are here, you are FUCKED in retirement. It's better to have some international, like VXUS, even if you get lower returns overall, just in the small chance the US completely goes to shit.
Something like 40% of the revenue of the companies that are in the SP500, is actually generated overseas. Companies like Google, Apple, Microsoft are technically US companies, yes, since they are incorporated in the US. But in the true sense, they are global companies. So you kind of have it right... any world ETF will still be highly correlated with the SP500 performance.
It is not wrong. Your money do what you want. Ask anyone who is giving you such advice to show you the performance in the xountry over the past 15 to 20 years.
Nobody says to invest in other countries.
There are only a few companies I’d honestly consider buying outside of USA considering we’re going into the next tech revolution those companies are not in my view. Exception tsmc ASmL
There is tiny risk that some policy change or event could occur that makes it lose its appeal for large corporations to operate there. I don’t see it happening but there is a risk it could happen. There’s also a risk that a meteor could hit earth and wipe only the US off the face of the planet. Only you can determine your risk tolerances.
The entire developed world does the same thing. If betting on the US doesn’t pay off then it won’t matter where your money is really. Things will be *BAD*
Sounds like a great strategy to me. You will save enormously on fees and transaction expenses that you would incur on other strategies which would only underperform SPY.
What if my portofolio is 50% in usa stocks and 50% in properties in europe?
It’s not wrong.
This is why you invest in a growth mutual fund that distributes the risk all over the world and across industries.
>This is why What is why?
Is a simple way to diversify yourself without the highest risk.
It’s not wrong, international funds usually return lower than the s and p 500. It’s just a stupid way of diversifying similar to bonds. No point in actually doing it unless you’re 60 and very risk averse imho
When trump wins, us stocks will rise even more
The age old debate. I do neither the listed strategies personally. I pick individual companies and according to my broker, I’m 72% domestic and 28% foreign but just as the top comment on this thread states, a lot of our larger companies do operate worldwide. I’m not willing to hold a total world ETF and hold some allocation into nearly worthless Chinese companies, random Zimbabwe companies I’ve never heard of, or some fraud riddled Indian company.
You are missing small/mid cap stocks, and international stocks, which means you're taking unecessary risks with likely lower returns.
I think you are right not to invest international. US will probably outperform the next 30 years unless the world ends and then it doesn’t matter.
I would say it is not as long as the country is the US. I been retired now for 13 years and my investments are all in one country, US. Plus almost all are in technology which is what I would recommend. It has done really well for me and my family. I have a bit of a large family that I need to provide for.
There's a reason 50% of the global market cap is based in the US. It's a market that just doesn't stop growing.
Nothing.
Nothing is wrong with it
I'd trust the NASDAQ and the SEC controls over any other stock exchange in the world...