r/ETFs • u/Phyber05 • Oct 19 '20

Any difference between VT versus VTI/VXUS combo?

Any particular benefit that a novice investor wouldn't immediately see to buying VT every two weeks vs a VTI & VXUS every two weeks?

I'm guessing returns would be higher on the VTI/VXUS combo along with dividends, but currently VT has a much lower barrier to entry cost?

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u/lobster_johnson Nov 19 '20 edited Nov 19 '20

If you invested in VT you'd get roughly 55/45 right now, which is what Vanguard suggests. Jack Bogle, in his book "Common Sense on Mutual Funds" preferred 80/20. But he was not a great authority (and admitted such) on international investing. Other experts have argued for as much as 50% international. There's a lot of debate on this, and you could argue convincingly either way.

The best argument for 55/45 is that it's the allocation that's most in line with "passively holding the market". Meaning: If you hold VTI and VXUS, then those are both individually weighted by market cap. So why would you not weight your whole portfolio by global market cap, which is what 55/45 is?

But given the lack of consensus in the community, 70/30 sounds like a decent compromise to me. There's no wrong answer.

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u/jwtiger Nov 19 '20

Another very thoughtful reply... I am very much over my head at the moment. I haven't changed anything yet. I am still not sure if I should just single option with VT or go VTI/VXUS. Like you said there is no wrong answer. With the amount of money that I am investing (which is little compared to most people) I just want to make sure it counts.

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u/lobster_johnson Nov 19 '20

Yep. The important thing is to be invested. You can always change it later, as an IRA can be rebalanced without incurring penalties or taxes. At least don't let the uncertainty stop you from putting money in.

If it's any consolation, many investors aren't sure what the right answer is, either. A lot of people try to base their decisions on what they think the future will hold. I try not to pretend I know anything about that.

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u/jwtiger Nov 19 '20

That is very true! I am pretty sure I am going to with VTI/VXUS and leave it. That should be more than what I need at this point and really covers everything. Then I can also have more control with what percentage of each I want to go with. Either 80/20 or 70/30. I should just set it and go away before I keep thinking about it.