Vanguard ETF's: VWO: Put more of my money into emerging markets?

[mtgordon]

Read the Sticky + Random Speculation FTW?

[gull]

Your allocation looks great (except that it only adds up 90%). I'd stick with it. Don't worry about the weak dollar.

[ckboddic]

[ QUOTE ]
Your allocation looks great (except that it only adds up 90%). I'd stick with it. Don't worry about the weak dollar.

[/ QUOTE ]

Thanks gull. It does add up to 100%, though : )

Question: why not put more money overseas? Here is how I think of it and feel free to tell me if I'm wrong: when you are investing in overseas funds you are pretty much investing every else but the US...the world. Since the world is such a big place I think it makes more sense to have more money invested overseas than in the US. It seems more diversified. I don't know what the point of having 70% of my eggs in one basket (the US) is. I would also be more protected if more bad things were to happen to the US economy if I had most of my funds invested overseas. Also, generally, if the US is doing well, isn't the rest of the world doing well also?

[ckboddic]

bump

[gull]

High international allocations help diversify a portfolio. A 50/50 split is usually a good starting point for splitting domestic and foreign equity. The market cap of the US is now like 40% or something, so if you want to own the market, a 40/60 split may be better. Also, know that with foreign funds you take on additional currency risk and slightly higher costs. In addition, small foreign funds diversify more than large growth/blend alone. In recent years, large foreign has had a high correlation with domestic equity.