2Wk·

Newbie ETF allocation - Europe yes/no?

I am (unfortunately) a newbie at over 40 and now have $IWDA (-0.26%) and $EIMI (-0.16%) in a 70/30 ratio as a savings plan with 700Euro. I would reserve 10% for some BTC, individual shares ($PYPL (+2.64%) ) and cash. However, ETFs should remain 90% of my portfolio for the next 20 years.

Would it make sense to add the EuroStoxx600 to the ETFs and if so in what ratio?

Thanks in advance for your opinions

9 Comments

GHF@GHF

2Wk

Europe is weighted accordingly in your $IWDA. If you also want to save in a Euro STOXX ETF, you are significantly overweighting Europe.
If you expect more growth in Europe over the next 20 years, that's fine.
Even if the stock markets in Europe are currently performing above average, they have statistically underperformed the USA in the past.
Personally, I have significantly overweighted the USA in my portfolio and have only picked out individual stocks from Europe.

But it's a decision you have to make for yourself. If in doubt, I would leave it at the World ETF without overweighting a region

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Stefan@ladspell

2Wk

Thank you very much - I'll think about it. Unfortunately, I'm not competent enough for educated guessing.

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GHF@GHF

2Wk

This is also nothing to start with... No master has yet fallen from the sky... And that's exactly why there is a World ETF 😉.

Google home bias, a common beginner's mistake

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TomTurboInvest@TomTurboInvest

2Wk

At 40, you still have a very long investment phase ahead of you, it's never too late to start. When you retire, you won't liquidate your portfolio in one go, it will continue to run even if you make regular withdrawals.

In the current phase, it may well make sense to overweight Europe. Even large investment houses no longer expect the USA to outperform in the near future, which is not surprising after the run of recent years. They don't have a crystal ball either, but their view is still interesting and has often been very accurate.
If you are interested, you can find the JP Morgan longterm Capital market Assumptions for the next 10-15 years at the following link. The US large caps are only in 6th place when it comes to performance...

https://am.jpmorgan.com/at/de/asset-management/adv/insights/portfolio-insights/ltcma/

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Stefan@ladspell

2Wk

@TomTurboInvest Many thanks for the link - great info

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Stefan@ladspell

2Wk

Many thanks for your detailed comments. I will add the EU Stoxx600 to the portfolio with the next increase in the savings rate and then leave it at that and only rebalance or increase the total savings rate. Thank you in particular for the words of warning about home bias (already considered in advance).

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Julian@MoneyISnotREAL

2Wk

@ladspell Why not take S&P500, EM and Stox600? Then you can weight the regions in relation to each other as you wish.

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Mark777@Mark777

2Wk

With the world ETF you are well off for now, but things are not going so well in the USA at the moment.
I think you have 71% America in your ETF, which is currently not so favorable because of T and all the other specialists.
I would also recommend an EM Markets ETF and an EU Stoxx 600.
You can now distribute the weighting among each other with different savings rates, for example, or you can determine it with a one-off payment of a certain amount, depending on where things are going better.
If you balance it out once or twice a year, that's enough.
All in all...with the 3 ETFs you are more flexible in an emergency than with just one world ETF.

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Stefan@ladspell

2Wk

I have an EM ETF. EU Stoxx seems to divide opinion somewhat.... But what is easy in life. Thanks for your comment

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