Ok, I see. In general, I think you'd generally want your spending currency to be 50% of your assets (or income). I haven't really looked into having two spending currencies, so my naive ballpark estimate is 25% of each. Many probably don't need to think about currency movement much, but if you have ever held a significant amount in something that has seen a dramatic and prolonged movement due to currency then it may be more of a concern.US/Intl is set to global market cap, around 65/35 these days IIRC.
In any case, the Cederburg reference earlier is to hold 50% US 50% Intl stocks and no bonds. The testing says that you end up richer that way particularly during periods of inflation when bond are not good. That might be good if you can withstand potential volatility, but your EUR exposure would be around 8% (assuming total market is about 30% EUR). And your USD exposure would be 50% plus the social security you are getting.
And in your case if you are 70/30 stocks/US bonds and 65% of stocks is US, then your USD exposure is about 76% and EUR is about 7%. Maybe you would be ok with that. I don't have any research saying what an ideal allocation is but EUR seems low in my personal opinion.
If you were to be 70/30 stocks/US bonds and 50/50 US Intl stock, you'd be 65% USD exposure and 11% EUR exposure and again your social security is in USD. That's with half your spending in EUR.
I don't know the scenario where EUR appreciates significantly but times are a changing I think and I can't say I have any idea what will happen in the global economy if globalization is rolled back and tariffs wars are the rage. If it worries you, perhaps you can find a way to get EUR exposure in your fixed income allocation or use something like iShares MSCI Eurozone ETF EZU for some of the international stock allocation. Vanguard's has 25% UK which doesn't help.
Again, international companies will have revenue and currency exposure all over the world, so country isn't an exact measure of currency exposure, but they very well may hedge their exposure to foreign currencies back to their home currency for the benefit of their local shareholders.
I'd feel more comfortable with something like 10% in EZU and 5% less in bonds and 5% less of international stocks. That'd be 60% USD exposure and 19% EUR exposure (with the rest being other currencies). That'd leave you overall at 35% US stock, 30% International stocks, 25% US bonds and 10% Eurozone stocks.
I don't know of a good EUR (or Eurozone) bond fund that you can get in a US domiciled fund to replace USD bonds. That's why I did it that way. Perhaps you can find one.
What do you think?
Statistics: Posted by typical.investor — Thu Feb 20, 2025 9:33 pm