The Best Bargain Index Funds That Everyone Should Own



My wife and I are homeless.

For the past 18 months we’ve wandered from Singapore to Mexico, Malaysia, Vietnam, Thailand, Bali, back to Singapore. We’ll likely leave for Costa Rica in a couple of months. In late spring, we’ll pack our tandem onto an airplane and ride our bike around Europe.

My wife is American. But she hasn’t lived in the United States for more than 25 years. I left Canada (where I grew up) in 2003. Sometimes, our friends ask where we plan to retire. We don’t know. And for that reason, our investment portfolios don’t reflect a home country bias. We’re global, so our money is global too. It’s divided based on global capitalization. The U.S. represents about 48 percent of the world’s stock market value, so roughly half of our equity exposure is in a U.S. stock ETF. The remaining stock component is with international index funds.

Researchers Kalok Chan, Vicentiu Covrig and Lillian Ng say most investors–no matter where they’re from– usually tilt their portfolios towards home country stocks. They published their findings in the Journal of FinanceThat makes sense. After all, U.S. retirees won’t get phone bills in Euros or Yen. But if you don’t own an international stock market index, it’s best to add one now.


You can read the rest of the article for free, at AssetBuilder

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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19 Responses

  1. Susan says:

    Hi Andrew
    My husband and I are similar to you in that we are international school teachers who are New Zealanders who are not sure where we’ll retire. We are in our mid-40s and after reading your book we opened an account with Saxo and have been investing in ETFs.
    We have a query regarding currency conversions. We are paid in British pounds which are transferred to our NZ account and we have our Singapore Saxo account in NZD. We have bought ETFs in GBP, EUR and AUD. Our account is now showing a loss of over $4000NZD but this is primarily due to currency conversion and the NZ dollar taking a hit, compared to the pound and Euro.
    Please can you tell us – how does this work long-term? When we retire we will need to sell but will be at the mercy of currency vagaries? Would we be better to have an account in GBP instead of NZD?
    Also, how does this work for re-balancing? Do we look at the NZD profit/loss or the GBP/EURO profit/loss?
    We are about to invest another $150,000NZD but we’re quite worried that we’re not doing this right.
    Also, with this next investment do we purchase more of the same ETFs or should we buy different ones?
    Finally, do you recommend we use an advisor? We’ve looked at the ones you profiled but they seem to be focused on the US expatriate market and/or large accounts.
    Thanks for your help with our queries.
    Happy New Year and safe travels!
    Best regards

    • Hi Susan,

      As I mentioned in my book, when you invest in an ETF, you are really invested only in the currencies of the holdings. For example, if you buy a U.S. stock ETF that’s priced in Euros, you aren’t really investing in Euros. You are investing in USD, even though it’s priced in Euros. If you bought an international ETF priced in UK pounds, the pound would not affect the true value of the ETF, despite the fact that it may be priced in pounds. The true value reflects international currencies.

      In your case, assume you bought a U.S. stock ETF priced in New Zealand dollars. Assume the U.S. market went sideways for the year, but the New Zealand dollar dropped 20%. Priced in New Zealand dollars, your U.S. stock market ETF would show a gain of about 20%. But that gain, in USD, would be zilch. Likewise, if the U.S. market gained 20% and the New Zealand dollar gained 20%, you would not show a gain if the ETF were priced in New Zealand dollars.

      The denominated currency of the ETF’s price means nothing. But for rebalancing purposes, set a single currency to measure everything. Then you can rebalance with apples and apples. For each ETF, each year, look at how the priced currencies moved against a single currency. Then work out how much they gained or fell, based on that single currency.

      Most importantly, remember that you should hope to see your investments fall in value, if you are many years from retirement. I celebrate, when markets fall, because I have an income to keep buying. That’s the most important thing to remember.



  2. Lisa says:

    Dear Andrew

    Your book was given to me as a gift and after reading it with zeal it turned to be surprisingly inspiring for me. Thank you!

    Let’s say I do not really fit in the classic market investor’s profile. My background is in international development and the unjust distribution of wealth which characterises our capitalist society has always saddened me deeply. Although money has never been the drive of my life, well, growing up I realised it does help and that is why I decided to try making my little saving going a little further. I am writing because I would like to do it in the best possible way and I wondered whether you could be so kind to help me with a couple of queries.

    My major concern is regarding the ethical aspects of investing in index funds. If my understanding is correct by investing in an index I will spread my money to invest in the large number of different businesses which are represented in that index. Am I right in thinking that it is then possible that I could end up investing in companies which I wouldn’t chose to support if picked individually as for example arms’ manufacturers or oil multinationals. Is there a way to invest in an index fund which is openly ethically sound?

    Also, I am Italian but have been living in England for the past 10 years, I do work as a midwife within a London public hospital and my income is rather modest. Would you be able to recommend any financial companies based in the UK that I could refer to in order to start building my small portfolio.

    I wish you a wonderful new year and safe travel to you and your wife!

    Thank you so much in advance

    Warmest regards


  3. Adam says:

    Hi Andrew

    In your interview titled “the couch potato goes abroad” on the Canadian Couch Potato website, you mentioned that you allocated your portfolio with 40% bonds, 20% Canadian, 20% US, and 20% international using Horizons’ total return swap ETFs for some. From this article, I take it that you’re now basing your allocations on market capitalization after having decided not to retire in Canada. For others in similar situations, would you recommend that they reflect on their equity allocations to base it more on capitalization, too? Would this automatically be done in an ETF like VXC that trades on the TSX? Or, would one have to research it a bit and see that they have their allocations roughly in line with global capitalization?

    I really appreciate your books and find myself going back and reading them again and again.

    Thanks for your help.

  4. Thomas says:

    Dear Andrew,

    I am 29 years old, French and my, soon to be wife is Singaporean. We are most likely going to relocate because of my work in few years and we are not sure where we will retire. It will be most likely in Europe or in Singapore.

    In your books you mentioned many times, that it is extremely important to have a good portfolio from the start and stick to it. Unfortunately, despite also reading your blog, I have difficulties to determine which allocation will be best for me.

    Should I choose the below allocation to have exposure in both countries?
    40% Global stock index (VWRD).
    20% Euro Stock Index (VEUR).
    20% SG Stock Index (SGS:ES3)
    15% Global Government bond (SAAA)
    5% SG Government bond (SGX:A35)

    Or choose a globetrotter allocation like yours?
    40% Global stock index (VWRD).
    40% US stock index (VUN)
    10% SG Government bond (SGX:A35)
    10% Global Government bond (SAAA)

    I wish you a good weekend and safe travel to you and your wife!

    Thank you so much in advance

    Best regards,

  5. Donna says:

    Dear Andrew,

    I recently finished reading your book-it was excellent and quite informative!
    My only question was in regard to what type of index stocks I should invest in.
    I am a 32 year old teacher here in the U.S. and would like to make a transition into index funds.

    While reading your books I was interesting in allocating into :
    35% Vanguard U.S Bond Index
    35% Vanguard Total U.S. Stock Market Index
    30% Vanguard Total Stock Market Index

    However, after reading further there was also mention of investing in a Vanguard Life Strategy Growth Fund which would lower my percentage fees instead of keeping separate index funds.

    Which one would you recommend? Is it better to take a “couch potato approach” where I have control over balancing my allocation or going with a Life Strategy Growth Fund where the allocations will be fixed?

    Thanks so much,

  6. Albert Thacker says:

    Dear Andrew
    I have half read your expat investing book ……… then lost it on a plane ……… just when I was getting to the good stuff ……… I really really enjoyed what I have read so far ……………….. You are very genuine and down to earth …………. I am a Canadian, living in the Cayman Islands, with Cayman Citizenship , but travel with my Canadian Passport. I am still unclear with which company that I should open a trading account with in order to keep the fees low?? Considering “One Trade” in Cayman ……… or should I go to Singapore and open with DBS Vickers as you suggest on line??

  7. Kim Brown says:

    Hello Andrew,
    If you do end up coming to Costa Rica, and are interested in doing an exchange -your financial wizardry for a room and breakfast in our rental home here in Monteverde (husband, son and I)- please contact me. We are also full of local info:) I read your Millionaire Teacher book, and I am just not able to understand where to begin. When it comes to financial jargon I just shut down. I need someone to hold my hand through the process.

    Enjoy your travels!

  8. Matt Prebble says:

    Hi Andrew,

    So I’ve read a lot on your site in and in your books about how to invest if you have no idea where you’ll end up, with the world effectively being your oyster. For my wife and I (she’s a US citizen and I’m from the UK) it’s either going to be the US (where we are now) or the UK but we’re just still not sure. All the while, we’re watching our colleagues investing in 401(k)’s or 403(b)’s, or going down the index fund route – like watching a train getting ready to leave the station and unsure whether or not to board!

    My question then might be a good one for many expat teachers like me who actually have a more narrow choice of final retirement places: if you have the potential of retiring in one of two countries, how should you invest sensibly to cover the potential retirement and maximise the tax benefits in both countries?!

    You’re a busy man I’m sure, but a tip or two would be appreciated, and probably not just by me!

    Kind regards,


  9. Peter says:

    Hi Andrew
    Firstly, I attended your recent talk in Dubai and learnt a great deal. Thank you.
    I have about 85000USD invested through AES in the Blackrock Managed Index Portfolio moderate fund. I also have a further 25000USD ready to invest and about 50000USD in an Ashburton fund which I would like to move.
    What I would like to know is whether the Blackrock fund is my best option or whether there is another single fund that will give me a balanced portfolio at lower cost.

  10. Peter says:

    Hi Andrew

    I am South African but own a property in Cyprus where I plan to retire in a few years time.I have been out of SA for about 22 years now. I have ordered the book through Amazon and it should be arriving in the next couple of days so I look forward to reading it.


  11. ron says:

    Andrew, I am pondering the following. Typically you recommend a simple eg 60/40 portfolio or variations thereof like the permanent portfolio. However, nothing of this takes size of the portfolio into account and for bigger portfolio’s one may end up being invested too conservative.
    What is your view on this portfolio: 1 year spending in cash; 1 year spending in gold, 3 year spending in bonds, anything else in stock? Rebalance annually if needed, but mostly cash will anyway be replenished by dividends. To me this seems the best of both worlds: safe for short and medium term, combined with maximum growth potential longer term.

    • Hi Ron,

      I don’t recommend this. Consider what would happen if you had a $2 million portfolio. If your living expenses were $40,000 a year, a portfolio such as this would have a full 80% invested in the stock market. If I followed this portfolio rule, I would have more than 90% of my money in the stock market. I recommend you stick to something like the 60/40 principle.


  12. ron says:

    It would be even 90%. So a 90/10 portfolio is obviously more volatile than a 60/40 portfolio. However in this example one just consumes 2% a year with 5 years stashed away in a safe fashion.
    The dividends of such portfolio already exceed annual spending, adding another safety buffer in cash.
    Which means that one should assess the volatility risk versus upside of the stock portion separately from the portion that is safe (incl dividends).

    My main issue with a fixed 60/40 or 70/30 is that it does not take size into account. For smaller portfolios I totally agree with your recommended 60/40, however I would argue that when the portfolio grows the buffer to handle the risk also gets stronger and that fact itself reduces risk.

    I am not a big spender and precisely because of that the portfolio has been growing nicely. However if I were to stick to my 75/25 I have used so far I am ending up with about 15 years spending in bonds. This looks awfully conservative to me and the longer term opportunity loss is starting to bother me a bit.

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