Should I have a split of Domestic and International in Roth IRA?

Investing
#1

Hey everyone,
I am re-balancing my portfolio and have a question.
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Here is a quick overview:
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30yrs old
152k in Trad IRA
31k Roth IRA
3k in play money (indv. stock etc.)
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In my retirement accounts
Fund breakdown: 93/7 stocks to bond
VTI
VXUS
BND
BNDX
.
Stocks:
61 % Domestic (VTI)
39 % International (VSUX)
.
My question is that since Roth grows tax free
and Domestic (VTI) has outperformed international (VXUS) over the past 10 years (12% vs 6%)
would you suggest having a 80/20 split in Roth IRA of domestic and international and rebalancing my Trad IRA to contain more International, or go 100% domestic in Roth and rebalancing my traditional IRA.
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The only reason I ask is because although I will still be balanced in International and domestic, I would rather have the greater gains be tax free. I know you are not supposed to chase previous returns, but since I will still be balanced , Im just thinking it may be better to have greater tax free gains vs taxed when I decide to retire.
.
Thanks in advance !

  • Chad
#2

Hi Chad,

Given your age and risk tolerance, I would agree with your strategy to overweight domestic stocks in your Roth IRA (go 100%) if you believe domestic will continue to outperform foreign.

However, some would argue that foreign will outperform domestic in the long-run moving forward. But that is for another discussion haha.

Good luck and keep up the good work saving!

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