I’m investing in QQQ and VTI currently and seems like it’s not diversified internationally. Is it wise to add in IWDA so I’m diversified to all countries instead of concentrating in US alone? - Seedly
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Anonymous

Asked on 10 Jun 2020

I’m investing in QQQ and VTI currently and seems like it’s not diversified internationally. Is it wise to add in IWDA so I’m diversified to all countries instead of concentrating in US alone?

Thank you!

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Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Jul)

Level 9. God of Wisdom
Answered on 11 Jun 2020

Diversification into appropriate products, in this case a more global approach is always a good idea, for risk reduction.

what can be said is, that for at least 20 years (maybe many more) the U.S. stock exchanges had the lead performance wise, due to the strong prospects (and performance) of the technology sector, but not only technology, the dot-com bubble excluded. there have also been intervals where f ex Europe indices fared better. Potential gains come with higher risk/volatility. My private thinking is that I would omit f.ex. 'Emerging Markets', there are so many risks (political, currencies) but only diversify into the 'strong' (still strong?) western style economies: U.S., Scandinavia, Switzerland, ?Germany (? technology index TecDAX?), Singapore (REITs), and progressively upcoming China.

make also sure for cost reduction:

-to have low online broker fees

-to let not your bank or broker convert SGD into USD for buying USD denominated ETFs (they often don't state on the trade confirmation sheet what were the fees for currency conversion as % of the trade, often VERY high up to 1% and much more...), better use services like TransferWise or CurrencyFair to send/convert your SGD from bank as USD into your brokerage account

-to consider buying Ireland domiciled ETF equivalents to Your U.S. choices when they distribute relatively high dividends, because for U.S. domiciled ones there is higher (30%) withholding tax on dividends and even if the Ireland ones have a bit higher annual fees ("TER") it can be worthwile

some more ideas and ETF options here:

https://seedly.sg/questions/what-is-your-general-investing-philosophy-strategy

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