I am looking at opening a Stocks & Shares ISA (effectively a tax shelter account whose gains are exempt from both capital gains and dividends taxes, and which operates similarly to the Roth IRA) with Vanguard, and am not sure whether to invest in an ETF that attempts to mirror something like the S&P 500, where I’m effectively betting that the US economy will perform well in the long run, or a cheap global tracker fund, which should include plenty of US equities, so assuming that I cannot accurately predict long term trends in the global markets, should I opt for one of these instead to spread my bets more effectively? Or should I go for a 50 50 split or some other ratio?
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Thank you for your question @plaguedbyfoibles! I’m familiar with Stocks & Shares ISA!
I’m a fan of a globally diversified index fund. In recent times, the US market has outperformed the rest of the world. But over longer periods of time it goes back and forth on if the US outperforms or if the rest of the world outperforms. Since we have no idea what the future holds, you might as well have exposure to both!
This post is from a couple years ago, but it provides a great visual of the long term view of how the US and International stock markets have taken turns outperforming over the last 50 years.
I hope this helps! Keep us posted with any other questions!