# Why invest internationally?



## jbonne84 (Aug 8, 2016)

I know I should for diversification but there has never been a time as far as I can tell where in a fiscal year when the US got hit that international didn't get hit harder. So this leaves just the upside as a reason. Less than 10% of the time does international outperform the US in the last 10 years.

On top of all that europe is still highly unstable, asia is mostly-ok and south america is also unstable. What's the reason for investing international today?


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## My Own Advisor (Sep 24, 2012)

I have often though about this as well. They (experts) always say to invest in international markets but I'm not convinced long-term this is smart. 
https://www.blackrock.com/investing...ation/asset-class-returns-one-pager-va-us.pdf


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## james4beach (Nov 15, 2012)

I share this concern. I suspect that one Canadian and one US index, say XIC & ZSP, may be all you really need. At the risk of speaking on his behalf, I think Argonaut does as well.

Currently I'm only in Canada & US, but I keep changing my mind on this.


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## jbonne84 (Aug 8, 2016)

Yea.. one thing what I was thinking is only buying emerging post a large correction


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## mordko (Jan 23, 2016)

This is a typical example of "recency". 

In reality international shares outperformed N America, for example, in the 70s. In fact, holding international stock was the only way to get any growth. 

And in any case past isn't the same as the future.


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## AltaRed (Jun 8, 2009)

jbonne84 said:


> Yea.. one thing what I was thinking is only buying emerging post a large correction


Why? It is the most volatile of all equity markets in which EM is only 10.5% of global market capitalization and much of that is taken up by the casinos of Russia and China where economic numbers are likely made up in the back room of the respective President's offices and/or the result of pumps by the oligarchs.


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## tygrus (Mar 13, 2012)

Investing in canada is the same as investing internationally except safer and without the corruption. We are mostly export based so if other countries are doing good so are we. I wouldnt have a dime outside Canada or US.


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## mordko (Jan 23, 2016)

AltaRed said:


> Why? It is the most volatile of all equity markets in which EM is only 10.5% of global market capitalization


I seem to recall it's 15%.


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## AltaRed (Jun 8, 2009)

mordko said:


> I seem to recall it's 15%.


I used http://www.agf.com/institutional/global-resources/files/quarterly-report/inst270-msci-acwi-cad.pdf for my source.


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## GreatLaker (Mar 23, 2014)

From 2003 to 2006 EAFE significantly outperformed S&P500. Emerging and TSX also did well. Yes I cherry picked the time period, but to prove a point. 
See this link for the periodic table in CAD: http://www.stingyinvestor.com/cgi-b...gi?&type=Nominal&StartYear=2003&StopYear=2007

Over that time period the CAGR in CAD according to Stingy Investor Asset Mixture was:
S&P500: 6.4%
EAFE: 15.7
TSX: 20.5
Emerging: 26.9

With international diversification so easy and cheap these days, my preference is greater diversification when it is available at a reasonable cost. Also I always am wary of recency effect.

[sarcasm]Although with Trump/Pence running the US, and Trudeau/"More Dough" Morneau running Canada it's easy to believe the recent out-performance of US markets will continue forever.[/sarcasm]


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## humble_pie (Jun 7, 2009)

GreatLaker said:


> From 2003 to 2006 EAFE significantly outperformed S&P500. Emerging and TSX also did well. Yes I cherry picked the time period, but to prove a point.
> 
> See this link for the periodic table in CAD: http://www.stingyinvestor.com/cgi-b...gi?&type=Nominal&StartYear=2003&StopYear=2007




alas this is cherry picking that is so far out of any reasonable time frame that i don't see how investors can accept it.

2003 was 14 very long years ago. Dubya was in power. It was a whole generation ago.

moreover a cherry selection of only 3 years out of the entire past 72 - since the end of WW II - could not be reliable. If one were to go back to the introduction of the original "country funds" to the NY stock exchange - it's my understanding they were pubic spinoffs from world bank private investment funds - one might have some comparative figures for emerging market exposure.

.


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## mordko (Jan 23, 2016)

AltaRed said:


> I used http://www.agf.com/institutional/global-resources/files/quarterly-report/inst270-msci-acwi-cad.pdf for my source.


Yes, but that's just an active decision by the company which runs the index.

A couple of years ago EM made up 17% and I doubt they make up a smaller fraction today: https://blog.wealthfront.com/emerging-markets/

EM would be worth 25% if you were to count "Control holdings" (mostly Chinese state holdings). 

Too large to be ignored. Yes, they are risky but risk = higher expected return.


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## james4beach (Nov 15, 2012)

Is there any decade in which international stocks outperformed both Canadian and US stocks?

(For example, there are decades during which bonds and gold outperformed -- which is why they are justifiable investments IMO. But I'm not sure that international stocks ever have).


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## GreatLaker (Mar 23, 2014)

humble_pie said:


> alas this is cherry picking that is so far out of any reasonable time frame that i don't see how investors can accept it.
> 
> 2003 was 14 very long years ago. Dubya was in power. It was a whole generation ago.
> 
> ...


A typical investor's lifecycle is from age 25 to 85 - 60 years. In that context, 14 years is a sliver. Investment trends move in long term cycles. Regions, countries, growth, value, tech, commodities. Gold hit a peak in 1980, investors that bought then had to wait until 2006 for it to go back up to 1980 levels, then hit another peak in 2011 and is now 1/3 below 2011 levels. In 1979, Business Week magazine had a cover story "The Death of Equities", since they had been in a bear market since the mid-1960s. Not too long after that cover story, the equity market went on about a 17 year bull market. Jim Rogers, in his book Adventure Capitalist, talked about how people in the oil industry told him not to invest in it because it had been in the doldrums for so long it was impossible to make money, at a time that just preceded the commodity super-cycle in which he made a lot of money.

So when people ask "why invest in {whatever} because it has not performed well for at least {however long}" my spidey sense tells me to watch out for common investor errors like recency bias, new paradigms, and the four most dangerous words in investing: "it's different this time".


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## james4beach (Nov 15, 2012)

GreatLaker said:


> So when people ask "why invest in {whatever} because it has not performed well for at least {however long}" my spidey sense tells me to watch out for common investor errors like recency bias, new paradigms, and the four most dangerous words in investing: "it's different this time".


OK, fair enough. But in history, when DID international actually outperform US/Canada for a prolonged period? When I use
https://www.portfoliovisualizer.com/backtest-asset-class-allocation

And plug in US vs International, the most I see - historically - is about a 5 year stretch where international outperforms.

Are you saying that even though International has never outperformed for a prolonged period, it might start doing so _now_? Almost sounds like you're saying "it's different this time".


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## new dog (Jun 21, 2016)

tygrus said:


> Investing in canada is the same as investing internationally except safer and without the corruption. We are mostly export based so if other countries are doing good so are we. I wouldnt have a dime outside Canada or US.


I agree with this. Not saying you can't invest internationally and if the opportunity is there and you know what you want and what you are doing then that is also fine.


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## My Own Advisor (Sep 24, 2012)

mordko said:


> This is a typical example of "recency".
> 
> In reality international shares outperformed N America, for example, in the 70s. In fact, holding international stock was the only way to get any growth.
> 
> And in any case past isn't the same as the future.


Fair Mordko but that only matters if I was an investor in the 70s.


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## new dog (Jun 21, 2016)

Almost everything worked and didn't work in the 70's.


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## doctrine (Sep 30, 2011)

Some reasons to use international markets: EAFE and emerging markets are not 100% correlated with the S&P 500. Diversification will provide lower volatility, and rebalancing can make up for some of the lower long term returns (S&P 500 is hard to beat in the long run). You can also reduce currency fluctuations. All together, lower risk adjusted returns with less volatility can keep people more invested, especially at market lows. Selling low is one of the biggest long term destroyers of wealth and long term gains out there and international strategies can help. 

All that being said, I use EAFE/EE in my registered portfolios, but at lower weightings. It gives me something with equity characteristics to rebalance into. They are also weighted to the biggest international companies, which tend not to be sketchy local outfits, but fairly major players with plenty of first world market connections. S&P 500 and TSX are at all time highs, which is great, but doesn't suggest value. Neither EAFE nor EE are at all time highs. It's easy to be wary, especially with S&P 500 / TSX at all time highs. Recency bias has been mentioned here, do not forget it applies to North American markets too.


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## My Own Advisor (Sep 24, 2012)

The thing is you can get international exposure via owning VTI; indirect exposure to 100s of huge U.S. multinationals that derive lots of their revenue (in some cases up to half of it) from around the world. 

I'm not saying you should avoid international stocks or ETFs; just that I question the value when the returns over the last 20 years have barely beaten fixed income.

Every investment and every asset in a particular allocation has pros and cons.


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## mordko (Jan 23, 2016)

My Own Advisor said:


> Fair Mordko but that only matters if I was an investor in the 70s.


As a rule, you are not going to be obtaining future returns in the past. Last decade is no more indicative of future returns than 1970s. In fact, there is a negative correlation. Markets that had great performance over the last 10 years tend to underperform.


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## humble_pie (Jun 7, 2009)

GreatLaker said:


> A typical investor's lifecycle is from age 25 to 85 - 60 years. In that context, 14 years is a sliver.



the thing is laker, you didn't cite 14 years. You cited only 3 years, from 2003-2006. That's not enough time to form even a sample.

my experience mirrors those who say they weren't investing in the 1970s & their international investing experience has been flat to negative. Right now i have a few pesky offshores plus a dutch bank. The bank has been OK strictly because i've been able to sell puts & calls against the bank position, which i've held for nearly a decade.

i've had more luck with canadian multinationals that are active mostly or entirely outside our borders. There are plenty of these. Easy access to local news since they're HQ'd in canada. Familiar & reliable accounting standards. Even tax-favoured canadian dividends. What's not to like.

.


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## AltaRed (Jun 8, 2009)

I wouldn't put a lot into EAFE but want to be part of at least the European multi-nationals. Hence I've skewed my 12-15% International to VGK (Europe FTSE) with the remainder in EAFE.


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## mordko (Jan 23, 2016)

Canadian securities regulations are known to be dodgy, particularly so for Canadian companies with oversees operations. Surely anyone concerned about these kinds of issues should stay well clear of Canadian stocks. Which, incidentally, underperformed over the last few decades.


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## humble_pie (Jun 7, 2009)

mordko said:


> Canadian securities regulations are known to be dodgy, particularly so for Canadian companies with oversees operations. Surely anyone concerned about these kinds of issues should stay well clear of Canadian stocks. Which, incidentally, underperformed over the last few decades.




over*seas* operations


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## GreatLaker (Mar 23, 2014)

james4beach said:


> OK, fair enough. But in history, when DID international actually outperform US/Canada for a prolonged period? When I use
> https://www.portfoliovisualizer.com/backtest-asset-class-allocation
> 
> And plug in US vs International, the most I see - historically - is about a 5 year stretch where international outperforms.
> ...


No, I am saying that there are lessons learned by looking back further than 10 years when studying investing, that I prefer broad diversification when it is available at a reasonable cost, and when people say why invest in an asset class that has under-performed recently they may be projecting recent past performance into the future when it is not warranted.

I found The Four Pillars of Investing by Dr. William J. Bernstein to be a very interesting book on a lot of aspects of investing.


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## GreatLaker (Mar 23, 2014)

jbonne84 said:


> I know I should for diversification but there has never been a time as far as I can tell where in a fiscal year when the US got hit that international didn't get hit harder. So this leaves just the upside as a reason. Less than 10% of the time does international outperform the US in the last 10 years.
> 
> ...





humble_pie said:


> 2003 was 14 very long years ago.
> .





humble_pie said:


> the thing is laker, you didn't cite 14 years. You cited only 3 years, from 2003-2006. That's not enough time to form even a sample.
> 
> .


@ h_p, The OP stated that there has never been a time in a year when US had bad investment returns when international did not do even worse. I pointed out 4 years where that was not true... 4 years in a row. OP also stated that less than 10% of the time does international outperform the US in the last 10 years. Actually in CAD, according to Stingy Investor, EAFE outperformed S&P500 in 2012, 2009, and 2007, or 30% of the last 10 years.

I was responding to your comment that 2003 was 14 years ago.

2003-2006 is 4 years, not 3.

Anyway, I prefer broad diversification and recognizing that investing cycles can run more than a decade rather than just picking recent winners. Others don't and I'm OK with that.


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## My Own Advisor (Sep 24, 2012)

mordko said:


> As a rule, you are not going to be obtaining future returns in the past. Last decade is no more indicative of future returns than 1970s. In fact, there is a negative correlation. Markets that had great performance over the last 10 years tend to underperform.


I would say there are many predictions about what will happen ahead, i.e., lower total equity returns, but there is no rule. 

Rules are good for science and math. They are not so good when it comes predicting the future with any accuracy. This is why you index invest and hold international equities right? You believe, for your portfolio and likely endorse for others, this is the best formula for investing success. Nothing wrong with that. This does not however mean you will be correct. Only in hindsight can any of us say "I told you so" and even then, that isn't overly polite. 

In the end, indexers prefer broad diversification which equates to not overthinking your portfolio; and because of it, market-like returns. Those could be good for international investments or horrible or anywhere in between. 

I'm personally taking my chances with US multinationals directly or with VTI over other international assets.


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## mordko (Jan 23, 2016)

MOA - all of that is true. It's just that the reasons for not investing internationally that were given by the OP are not valid. He specifically referred to:

- market performance in the last 10 years and 
- international "instability". 

Well, market performance in the last 10 years can only be used to support the opposite argument because of "reversion to the mean". And international instability is already priced in. 

Diversification does mean you won't win big by correctly guessing that, say, Canadian market is going to double in the next 3 years. If that's what one is after then concentrating on a single market is the right choice.


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## My Own Advisor (Sep 24, 2012)

Yes, true, there will always be 'international "instability"'!


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## jargey3000 (Jan 25, 2011)

AltaRed said:


> Why? It is the most volatile of all equity markets in which EM is only 10.5% of global market capitalization and much of that is taken up by the casinos of Russia and China where economic numbers are likely made up in the back room of the respective President's offices and/or the result of pumps by the oligarchs.


the U.S. is headed towards inclusion in that group in the next 4 years or so.... (don't be a chump...)


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## AltaRed (Jun 8, 2009)

jargey3000 said:


> the U.S. is headed towards inclusion in that group in the next 4 years or so.... (don't be a chump...)


At least the US has the 'semblance' of independent regulatory oversight even if it has been somewhat neutered. :wink-new:


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## CalgaryPotato (Mar 7, 2015)

I've considered this myself at times.

Problem is what do I do with the money.

1/3 Canadian 2/3 US. I feel like I have too much in US dollars, considering I don't live there and probably never will. Currency fluctuation is always a risk, but it just feels exacerbated in this situation.

50/50 split. Then I just feel like I have two much money in the undersized Canadian market.

It's probably a good strategy, i just haven't been willing to pull the trigger on it.


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## cashinstinct (Apr 4, 2009)

I do indexing this way:
1/3 Canada
1/3 US
1/3 International (around 26% EAFE and 7% Emerging).

Why? Well... No favorites, so each same 1/3 allocation.

Maybe 1/3 Canada is too little / too much, who knows?

Us and International market cap were around the same when I chose this allocation, so 1/3 each.

I did good in EM market considering I bought first in 2008-2009...

My US did good, but I would need to split how much is thanks to falling Canadian dollar (compared to parity couple of years ago).


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## Nerd Investor (Nov 3, 2015)

There's no rule that says investing internationally means you have to buy an index for the entire world outside of North America. You can buy a basket of individual country indexes you feel are undervalued (Meb Faber has written extensively on this) you can buy individual stocks of quality international companies, either directly or through an ETF/mutual fund. My international exposure is relatively low; I'm gradually targeting a higher percentage (but I don't think it will be more than 20%).


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## Argonaut (Dec 7, 2010)

My personal feeling is that Canada and the USA is just fine for equity allocation. SPY or VTI offers a perfect complement to quality TSX stocks by being highly weighted in sectors that Canadian names are weak in: Technology, Health Care, and Consumer. Canadian and US companies also have plenty of international business. The rest of the world has problems like anemic growth (Europe, Japan) crooked markets (emerging) or being too similar to Canada (Australia). 

If the goal is to lower volatility and diversify, one can do that with an asset class that has lower correlation and thus provides a better complement like Gold, Cash, or god forbid, Bonds. Bottom line is I can't be arsed with the rest of the world. Only thing I'm worried about in this scenario is a comet hitting North America.


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## james4beach (Nov 15, 2012)

^ I tend to agree with Argonaut here (though as I mentioned earlier, I can see both sides of the argument).



Argonaut said:


> If the goal is to lower volatility and diversify, one can do that with an asset class that has lower correlation and thus provides a better complement like Gold, Cash, or god forbid, Bonds.


Yes - this is important. If you really want diversification, other asset classes offer actual diversification vs stocks. Gold is a separate asset class. And the much-hated bonds (who needs bonds right?). I think the following permanent portfolio-style allocation is a very strong composition; this is my current benchmark along with some ETFs that are good choices for each

Gold bullion - MNT, CEF.A, GLD
Bonds - VAB, XBB
Canada - XIU, XIC
USA - ZSP, SPY, VTI
Cash - HISA, VSB, VSC

Argo is that still similar to your approach?


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## Argonaut (Dec 7, 2010)

My personal situation and market forecast dictates that I'm 100% Stocks right now. I think Bonds will enter a bear market, and Gold is in a bear market that started in 2012 and may not let up for another 10 years. You may call this market timing and that's true, but it works for me and it's my own money I'm betting.

I think by the time I'm 40 years old I will settle into the modified permanent portfolio I've talked about before:

25% Canada Stocks (12-Pack)
25% USA Stocks (SPY or VTI)
25% Gold (Coins and GLD)
25% Cash & Bonds (HISA and Bond ETF)

By that time gold may be legging up for another bull run, and interest rates may be more suitable for fixed income. I'll gradually settle into this allocation over the next 10 years, and then I'll have the second half of my life to stick to the plan. Always up for adapting though. Who knows if capital markets as we know them will even exist 50 years from now?


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## james4beach (Nov 15, 2012)

This is probably obvious to you but if you're 100% in stocks, you're not going to get the beautifully dampened volatility of asset class diversification 

But I can see that the PP (and low volatility) is much more valuable to someone who is retired. Retired people who are living off capital really need a nice balance between performance and low volatility because of sequence of return risk. Argo can whether a 2008-like storm because he's not drawing money out of his portfolio (assuming he doesn't get laid off during the depression).

A retiree can't really tolerate a prolonged bear market unless they are willing to make huge cuts to their annual spending.

Personally, I am the kind of person who is willing to sacrifice some performance for more stability in my portfolio value which is why I really like the idea of asset class diversification, including holding fixed income. It also means that if I ever decide to buy a home or start a business, that I'm less vulnerable to wild swings in my capital.

I completely agree with Argonaut's overall allocation, but personally I am not overweighting stocks.


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## Argonaut (Dec 7, 2010)

I consider it a temporary allocation based on circumstances. Every dollar goes to repaying MBA debt which will be finished soon. Current portfolio is a holdover from the stuff I've held for years, so I won't mess around with it. I'll just work towards desired allocations over time with new cash.

Anyway I'm just saying this to be overly honest for some reason. I could just as easily say I'm sticking to the above target allocation and have been for several years and no one could prove me otherwise.

There was a brief period where I met my modified permanent portfolio allocation back in 2012 or thereabouts. I had a stable relatively low paying job and maintaining that was easy. A few years of turmoil and now I'm in a stable relatively high paying job with a couple promotions already. So it'll all pay off in the end.

If I get back on topic, I would say that most Canadian investors can safely ignore International. The more important decision is how much equity you have, not necessary where it is. Canada and US split is OK.


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## My Own Advisor (Sep 24, 2012)

Our approach is similar Argo.

My plan calls for the following...with some adjustments along the way:

1. 100% stocks in personal portfolio. 
2. Zero bonds and no reason to own them at this time given where interest rates are and I'm in my asset accumulation years.
3. As part of the stocks, I'm striving for this: 30 CDN stocks, all dividend payers, my own XIU ETF if you will + VTI (30-40%) + VXUS (up to 15%).
4. As I approach retirement I figure a cash wedge of at least >1 year in cash for expenses and more ($50k?)

No coin, no silver, nothing exotic.

I'm up for change, hard to say what the future holds...but I'm betting equities will return more than bonds and cash is good for a major market disaster.


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## mordko (Jan 23, 2016)

Worth noting that all of us have fixed income allocation, whether it's deliberate or not. If nothing else, that's what CPP is all about. Say it's 12K annual pension for life after 65. Present day value would depend on your age but its not insignificant.


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## james4beach (Nov 15, 2012)

Funny how during strong phases in stocks, everyone says they don't need fixed income (or much cash).


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## mordko (Jan 23, 2016)

Don't get me wrong, I am not saying one doesn't need fixed income. I do.


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## twowheeled (Jan 15, 2011)

Nerd Investor said:


> There's no rule that says investing internationally means you have to buy an index for the entire world outside of North America. You can buy a basket of individual country indexes you feel are undervalued (Meb Faber has written extensively on this) you can buy individual stocks of quality international companies, either directly or through an ETF/mutual fund. My international exposure is relatively low; I'm gradually targeting a higher percentage (but I don't think it will be more than 20%).


Agreed, personally I'm curious, patriotism and convenience aside, why invest in Canada at all. 

Just for fun


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## My Own Advisor (Sep 24, 2012)

I have some cash and a small pension at work, the latter is my bond. Otherwise, I'd probably have some bonds.

CPP is fixed income. OAS is fixed income. That must be taken into consideration.


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## james4beach (Nov 15, 2012)

For me, no work pension of any kind, and minimal CPP since working in the US qualifies me for neither CPP nor US SS. Therefore... lots of fixed income for me.


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## Nerd Investor (Nov 3, 2015)

I am essentially 100% equities as well. I can stomach the volatility and I'm also paying down a mortgage and likely will be for a while. I consider this a form of fixed income allocation (everyone always talks about how paying down debt is the equivalent of a guaranteed rate of return).


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## Retired Peasant (Apr 22, 2013)

james4beach said:


> Bonds - VAB, XBB
> Cash - HISA, VSB, VSC


VSB and VSC are bond ETFs - short-term, yes, but that doesn't make them equivalent to cash, right?


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## agent99 (Sep 11, 2013)

james4beach said:


> For me, no work pension of any kind, and minimal CPP since working in the US qualifies me for neither CPP nor US SS. Therefore... lots of fixed income for me.


This does make a difference. Forum like this has many young people as those nearing retirement and old fogeys like me well into retirement. The same rules do not apply to all. They used to say that FI percentage in retirement should be approx your age. So say 75% for a 75 yr old. That might have been fine when GICs paid 5+%, but I don't hear anyone suggesting that now. We have about 40% in our RRIFs, and zero in our unregistered accounts.

If I was young, I might just invest in a couple of balanced funds (TD/RBC Monthly, MAW104, etc) and let them look after growing a nest egg. Then spend my time working (and playing) hard instead of poring over investment "stuff" on computer screens.


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## fplan (Feb 20, 2014)

james4beach said:


> For me, no work pension of any kind, and minimal CPP since working in the US qualifies me for neither CPP nor US SS. Therefore... lots of fixed income for me.


Between canada and US , If you work for 10yrs , you are eligible to collect CPP/SS from respective countries based contribution percentage. only issue is, will there be any money left in CPP/SS to pay after 30-40 years. I am not counting on CPP , I think boomers will wipe out the whole money


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## Spudd (Oct 11, 2011)

fplan said:


> Between canada and US , If you work for 10yrs , you are eligible to collect CPP/SS from respective countries based contribution percentage. only issue is, will there be any money left in CPP/SS to pay after 30-40 years. I am not counting on CPP , I think boomers will wipe out the whole money


I would trust CPP a lot more than SS. CPP is separated from general revenue and actuaries expect it to be good for at least 70 years.


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## Eder (Feb 16, 2011)

Bleh, deleted...


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## james4beach (Nov 15, 2012)

fplan said:


> Between canada and US , If you work for 10yrs , you are eligible to collect CPP/SS from respective countries based contribution percentage. only issue is, will there be any money left in CPP/SS to pay after 30-40 years. I am not counting on CPP , I think boomers will wipe out the whole money


I won't be working in the US for 10 years, so unfortunately my US work years are kind of being thrown away as far as CPP eligibility or equivalence. Unless you actually exceed 10 years working in the US, there is no SS granted.

CPP is fine. It's a pension that has actual assets, unlike SS.


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## fplan (Feb 20, 2014)

james4beach said:


> I won't be working in the US for 10 years, so unfortunately my US work years are kind of being thrown away as far as CPP eligibility or equivalence. Unless you actually exceed 10 years working in the US, there is no SS granted.
> 
> CPP is fine. It's a pension that has actual assets, unlike SS.



you dont have to work 10yrs in US. 

*Am I eligible to receive a benefit?*
*Canadian benefits*

The Canadian pension programs included in the Agreement are the Canada Pension Plan (CPP) and the Old Age Security (OAS) program.

*If you do not qualify for a Canada Pension Plan benefit, Canada will consider your periods of contribution to the pension program of the United States as periods of contribution to the Canada Pension Plan.*

If you do not qualify for an Old Age Security pension based on your years of residence in Canada, Canada will consider your periods of contributions to the pension program of the United States after the age of 18 and after January 1, 1952 as periods of residence in Canada.


*United States benefits*

The pension program of the United States is similar to the Canada Pension Plan and covers most persons who work in the United States.

To qualify for a benefit under the pension program of the United States, you normally must have contributed to the program for a minimum period.

*If you have not contributed to the pension program of the United States for the minimum period, under the Agreement, the United States will consider periods of contribution to the Canada Pension Plan as periods of contribution under the pension program of the United States.*

link: https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-international/united-states.html


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## mordko (Jan 23, 2016)

5 good reasons to invest internationally:

http://www.moneysense.ca/save/investing/canadian-investors-duped/


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## Argonaut (Dec 7, 2010)

Don't see what your point is, mordko. International companies have a history of being as bad or worse than Canadian companies in this respect. See the institutions that have been destroyed by trading or accounting anomalies such as Barings Bank and Metallgesellschaft. Deutsche Bank right now is a pile of derivatives waiting to blow.


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## humble_pie (Jun 7, 2009)

Argonaut said:


> International companies have a history of being as bad or worse than Canadian companies in this respect. See the institutions that have been destroyed by trading or accounting anomalies such as Barings Bank and Metallgesellschaft. Deutsche Bank right now is a pile of derivatives waiting to blow.




Deutsche Bank cannot be allowed to fail. If DB fails, all those tens of thousands of ETFs running on custom-built DB indexes would fail. It would be worse than 08/09, when folks only lost their homes & some lost their jobs. 

.


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## james4beach (Nov 15, 2012)

Don't forget the FX and interest rate derivative contracts that DB is counterparty to.


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## humble_pie (Jun 7, 2009)

james4beach said:


> Don't forget the FX and interest rate derivative contracts that DB is counterparty to.




jas4 aren't you in a cycle right now where you're not supposed to talk like that?

remember that, in this cycle, you are believing that ETFs are holding all of their sweet little individual stocks in outright ownership, just like their simulation lists suggest ...


.


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## Shaun80 (Oct 22, 2016)

Yes 50 percent Xic (TSX) and 50 percent vfv (S and p ) leave for thirty years you will be fine. Lowest mer . No need for international or bonds m


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## james4beach (Nov 15, 2012)

humble_pie said:


> jas4 aren't you in a cycle right now where you're not supposed to talk like that?
> 
> remember that, in this cycle, you are believing that ETFs are holding all of their sweet little individual stocks in outright ownership, just like their simulation lists suggest ....


I still like ETFs, but I'm selective with them.

I like XIU because it has the longest track record (first ETF in the world), minimal securities lending, and 18 years worth of audited financial statements ... all of which I've looked at that convince me it doesn't play derivative games.


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## james4beach (Nov 15, 2012)

Argonaut said:


> I think Bonds will enter a bear market, and Gold is in a bear market that started in 2012 and may not let up for another 10 years.


Can't be much of a bear market considering that gold (valued in CAD) is actually positive since the start of 2012. Here's the chart of gold since 2012.

Even if you shift the start date to the peak price, we're still only 7% below that peak as shown in this chart. I agree we might be in a bear market for gold, but not a particularly severe one by the CAD reference point.

As gold is a currency, it must be looked at in context of your base currency, not USD.


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## james4beach (Nov 15, 2012)

Shaun80 said:


> Yes 50 percent Xic (TSX) and 50 percent vfv (S and p ) leave for thirty years you will be fine.


If you really can leave it alone for 30 years, yes you will be fine. I would make the argument that few people can actually leave the bulk of their capital alone for thirty years. Maybe those with ultra-steady jobs and benefits. As time goes on, I'm seeing the appeal of government and academic jobs. Even if they pay less than corporate, the stability is worth so much!

Many people will have to dig into their savings at some point. It could be job loss, recession, divorce, home purchase, health issues, needs of the family, one partner stops working, etc. Going 100% stocks assumes that you won't encounter one of these situations.


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## My Own Advisor (Sep 24, 2012)

I think a two-fund portfolio like that could work out rather well for many investors....left for 30 years...

1. XIC + VFV
2. XIU + VTI

Since I've largely unbundled my Canadian ETF (own 20-30 XIU stocks directly focusing on telcos, utilities, pipelines and financials) I figure that + _lots of VYM _inside RRSP might eventually be all I need. And a cash wedge of course, I figure we need $50k at time of retirement. 

Like mordko and others have written government pensions and my small workplace pension will be my fixed income.

John Bogle on international investing:
http://www.morningstar.com/cover/videocenter.aspx?id=718644


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## Eclectic12 (Oct 20, 2010)

Shaun80 said:


> Yes 50 percent Xic (TSX) and 50 percent vfv (S and p ) leave for thirty years you will be fine. Lowest mer . No need for international or bonds m


Do fine ... maybe ... not sure I'd skip international exposure.

The small LIRA that I bought then forgot for sixteen years plus is showing +48% for the Canada/US exposure while the international exposure is +278%.

Current market and political issues will affect the going forward possibilities but I'm not sure I'd want to ignore it completely.


Cheers


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## zylon (Oct 27, 2010)

*only in Canada, eh?*

*Pity!*

I took a random sampling from 65 country specific iShares ETFs.
There's always a bull market somewhere - also a bear somewhere.
Who wants to do all that work? Not I, said I.
I just went with MAW130 - Mawer Global Balanced Fund (mer 1.15%)

These are neither the best nor the worst *5-year* returns from the list.


http://stockcharts.com/freecharts/perf.php?tur,ewo,ewy,eden,indy,mchi,ewq,ewg,ewc,erus


```
Fee %
TUR    Turkey   0.64
EWO    Austria  0.48
EWY    S. Korea 0.64
EDEN   Denmark  0.53
INDY   India 50 0.94
MCHI   China    0.64
EWQ    France   0.48
EWG    Germany  0.48
EWC    [B]CANADA[/B]   0.48
ERUS   Russia   0.64
```
No real point to this post except for entertainment.


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## james4beach (Nov 15, 2012)

It can also be fun to look at the Credit Suisse Global Investment Returns Yearbook
http://publications.credit-suisse.c...e-global-investment-returns-yearbook-2017-en/

It profiles different countries and their historical returns. Countries do not all have similar returns through history... there are some that are notably better performers than others. For example many European countries have awful performance histories. We're not just talking about the last few years, but over a century+. Some profiles of a few of the top performers



> Whether it is down to economic management, a resource advantage or a generous spirit, Australia has in real terms been the second-best performing equity market over the past 117 years. Since 1900, the Australian stock market has achieved an annualized real return of 6.8% per year.





> Canadian equities have performed well over the long run, with a real return of 5.7% per year. The real return on bonds has been 2.2% per year. These figures are close to those we report for the USA.





> Over the years since 1900, the South African equity market has been one of the world’s most successful, generating a real equity return of 7.2% per year, which is the highest return among the Yearbook countries.





> Over the long haul, Swedish equity returns were supported by a policy of neutrality through two world wars, the benefits of resource wealth, and the development of industrial holding companies in the 1980s. Overall, equities returned 5.9% per year in real terms.





> Since 1900, equities and government bonds in the USA have given annualized real returns of 6.4% and 2.0%, respectively.


Those appear to be some of the best performers,

South Africa 7.2% real
Australia 6.8% real
USA 6.4% real
Sweden 5.9% real
Canada 5.7% real

Notably, Canadian real returns are not very far behind the US's.


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