Hi all,
I’ve been a long-time bogleheader and and a firm believer in the three-fund portfolio. However, as our national debt crosses the $38 trillion mark with no signs of slowing down, I’m finding it harder to "stay the course" without questioning if this portfolio truly hedges against a potential domestic fiscal crisis.
I’m curious to get the community's take on the "hedge" aspect of the 3-fund setup specifically regarding:
\- Currency Devaluation: With debt-to-GDP levels at historic highs, many are worried about the long-term strength of the USD. Does the standard 20-40% international allocation (VXUS) provide enough of a "safety valve" if the dollar's dominance slips?
\- Bond Risk:If the government is forced to keep rates higher to attract buyers for all this new debt, or if inflation remains sticky due to deficit spending, is BND (Total Bond Market) actually a safe haven? Or does it just tether me to the very debt I'm worried about?
\- The "Japan Scenario": We often hear that the U.S. might follow Japan's path of high debt and decades of flat growth. For those of you sticking to the 3-fund, do you view international diversification as a sufficient hedge for this, or have you considered "tilting" further away from U.S. large caps?
I’m not trying to time the market or get political, but I want to make sure the "set it and forget it" mentality isn't blinding me to a fundamental shift in U.S. fiscal reality.
Does the 3-fund portfolio still offer the best protection against these "uncompensated risks," or is it time to look at additions like TIPS, Gold, or a heavier International tilt?
Looking forward to your insights.
Thanks