A recent comment in another thread piqued my curiosity about why exactly some people have a home bias in their investment portfolios.
My investment strategy is quite simple:
VT and Chill
VT is my opinion the most logical long-term investment. It has rock bottom fees (0.06%) and is extremely diverse because it consists of shares in over 10,000 companies in dozens of countries and tracks the FTSE Global All Cap Index. As it is global it does not rely on the economic performance of one nation or region.
Currently VT is quite US dominant (62%) but it is likely that percentage will decrease over time as the equity markets in other countries improve. That is the beauty of an index fund: it is self-cleansing and adjusts over time to current market allocations.
JL Collins is known for advising US investors to invest in VTSAX (US only index fund). Yet even JL Collins changed his mind this year and now advises that everyone invest in VT or a similar global index fund.
I happen to be a US citizen so technically I have a strong home bias with VT. However, I view nationality as an accident of birth or heritage. I don't mind if the percentage of US stocks in VT decreases.
Do some people maintain a home bias because they feel obligated to invest in their home country due to patriotism? I don't really understand this but I also view nations as arbitrary and artificial entities created by drawing invisible lines on a map.
I do not think people need to maintain a home bias because most people live in their home countries and are already supporting their local economies in multiple ways:
1. Taxes
2. Pension contributions (which are often invested locally)
2. Patronizing local businesses
3. Contributing efforts and energy via employment at local businesses
Aren't these involuntary and voluntary contributions sufficient? How much obligation does a person really have to further support their nation?
Do you have a home bias in your portfolio? If so, why do you maintain the home bias?
My investment strategy is quite simple:
VT and Chill
VT is my opinion the most logical long-term investment. It has rock bottom fees (0.06%) and is extremely diverse because it consists of shares in over 10,000 companies in dozens of countries and tracks the FTSE Global All Cap Index. As it is global it does not rely on the economic performance of one nation or region.
Currently VT is quite US dominant (62%) but it is likely that percentage will decrease over time as the equity markets in other countries improve. That is the beauty of an index fund: it is self-cleansing and adjusts over time to current market allocations.
JL Collins is known for advising US investors to invest in VTSAX (US only index fund). Yet even JL Collins changed his mind this year and now advises that everyone invest in VT or a similar global index fund.
I happen to be a US citizen so technically I have a strong home bias with VT. However, I view nationality as an accident of birth or heritage. I don't mind if the percentage of US stocks in VT decreases.
Do some people maintain a home bias because they feel obligated to invest in their home country due to patriotism? I don't really understand this but I also view nations as arbitrary and artificial entities created by drawing invisible lines on a map.
I do not think people need to maintain a home bias because most people live in their home countries and are already supporting their local economies in multiple ways:
1. Taxes
2. Pension contributions (which are often invested locally)
2. Patronizing local businesses
3. Contributing efforts and energy via employment at local businesses
Aren't these involuntary and voluntary contributions sufficient? How much obligation does a person really have to further support their nation?
Do you have a home bias in your portfolio? If so, why do you maintain the home bias?
