Non-US person investing

Hello,
I am from a small country in Europe. We do not have a lot of options here, definitely no target date index funds. But I can open an account on InteractiveBrokers and buy seperately ETFs like VTI (Vanguard Total Stock Market), VXUS (Vanguard International Stock Market) and BND (Vanguard Bond Market), for which Jeremy has made posts on instagram so I’m clear regarding that. But my questions are :

  1. A few month ago I sold a business that I had for many years and now have a pretty big amount of money (equivalent to about 950k in US dollars) and am 23 years old, so with that in mind how would you split that amount between the 3 ETFs (or between the 2, if you think that I can just ignore Bonds for now since I’m pretty young)?Also I am working still and doing just fine financially so I don’t need that money to live etc I just want to invest it and leave it there for decades hopefully and have it grow as something that I can always fall back on if (hopefully not) things ever get rough.

  2. Would I need to re-balance it myself since obviously it wont do it itself like a target date index fund would? If yes, how often? And would that make a mess on the taxes (buying/selling ETFs to rebalance).

Thanks in advance.

Hey Johny!

Wow, congrats! That is a ton of money… if you invest it and leave it for a while it could last you a lifetime!

  1. I would dump it in those 3 ETFs you mentioned. You could dump it all in right now, or you could “dollar cost average” it over the next year or so. I’m generally the fan of the “lump sum” method because you get today’s price in the market. If you DCA it over the next 12 months, all that does is give you the average price over the next year… and historically speaking, that has about a 75% chance of being higher than it is today. I would keep it simple. Dump it in, plan to leave it there for decades. Ignore the market.
  2. Rebalancing has a very marginal benefit. Many smart, educated, experienced, altruistic people say to skip it. I do think the (less than 1%) benefit is at least worth considering. Although, in your case I don’t think I would ever actually sell anything. I’d probably keep a simple spreadsheet with your target asset allocations. Then when you put new money in, just buy the ETF that’s the furthest below it’s target. i.e. if you plan to have 50% VTI, 40% VXUS, and 10% BND and when you check the values, VTI is only 46% (with the other two being above their target), just buy VTI with your new money. If you ever sell to use the money, sell the one that is too high. That’s kind of built in rebalancing without actually having to sell and buy just to rebalance.

Congrats on the great windfall and finding the simple, low cost way to build wealth! :slight_smile:

Thank you very much ! That’s exactly what I’ll do.
And one final thing : So that’s what you recommend? 50/40/10? I was thinking 70/30 or 60/40 skipping Bonds completely. Or is this still as you say fine-tuning and won’t matter that much in the long term?

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Congrats Johny! That’s an amazing achievement!!

I am also from a small country in Europe (Croatia) and have been having trouble finding a good way to invest. I would be very grateful if you can share your experience investing with Interactive Brokers + other relevant details such as investing in USD or EUR etc.

I’m also looking into Fidelity, they have target date index funds in EUR…

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Regarding asset allocation, yes. I would say it’s definitely fine tuning. If you look backwards over the last 10 years, the 70/30 portfolio slightly outperformed… but that’s just because the US market had a great 10 years in comparison to bonds and international. Going forward, we don’t know whether that will be the case. Here is a look at how those three asset allocations compared.

So basically, they’re all good, they’re all close, and it’s impossible to know which will be best going forward. So just pick one and stick with it. (Monkeying with it over time is more likely to hurt than help).

Thank you, Jeremy :pray: Noted.

Thanks Zee. I haven’t started investing, I just will. I just got done funding my account. But I’ve done thorough research about IB and everything is great to me, fees and everything else. I funded it in USD. Exchanged my money with market value at the bank from local currency account to USD bank account, and then from there deposited to IB. ETFs I’m buying are in USD also so I didn’t want to have to do anything with currency exchange. Plus I’m planning to hold for decades so USD sounds much better than EUR in the long run in my opinion (maybe a few decades from now EUR doesn’t even exist with how political situation is looking for EU), but what do I know, that’s just what I personally did, these details shouldn’t really make a difference anyway. :man_shrugging::slightly_smiling_face: