| Take the Vanguard Target Retirement 2045 Fund as an example. As I write, it has approximately 50% invested in the U.S. stock market, 33% in foreign stock markets, 12% in the U.S. bond market, and 5% in international bond markets. It also keeps a fraction of 1% of the assets in a cash reserve to meet redemptions. Some investors will insist they don't want or need global diversification. They say that because international stock and bond funds have underperformed U.S. financial markets in recent years. But the case for global diversification over the long term is solid. Investing internationally helps reduce overall portfolio risk by spreading investments across different economies and markets. When one region faces economic challenges, others may thrive, balancing out potential downturns. For example, during a U.S. economic slowdown, a portfolio with exposure to European and Asian markets could offset losses from American equities. There are unique sectors and innovative companies that are not available in our domestic market, such as wind energy in Scandinavia or rare earth minerals in Brazil. Emerging markets in Latin America, Eastern Europe, and the Pacific Rim have high economic growth rates, potentially leading to better stock market returns. Holding assets in multiple currencies can protect against fluctuations in an investor's home currency. This adds an extra layer of stability to the portfolio, especially during periods of domestic currency weakness or high inflation. While international diversification doesn't always increase short-term returns, it has been shown to reduce "deep risk" - the risk of severe, long-lasting losses - over the long haul. This can lead to a more stable portfolio performance and better risk-adjusted returns over time. For example, most international markets have handily outperformed the U.S. market in 2025. A globally diversified portfolio offers the benefits of reduced risk, increased growth opportunities, and improved long-term stability. That's why Vanguard constructs all its Target Date Retirement funds this way. Investors can make an initial investment and then have Vanguard debit their bank account for a certain amount each month, a widely used technique called dollar-cost averaging. (By investing a fixed amount at regular intervals, investors end up buying more shares when they are low and less when they are high, improving their cost basis.) I suggest these Vanguard Target Date Funds because - after 40 years as an investment advisor - I know no other way that smart investing could be made simpler. The funds are diversified, convenient, cost effective, and offer an easy glide path from higher risk to lower risk as investors grow closer to retirement. Is it the best portfolio that any investor could have? No, it's not. The funds offer limited control, are not personally tailored to the individual, and are less tax efficient in taxable accounts. But they are still a heck of a lot better than what most investors do on their own - or through a high-paid investment "professional." This strategy's greatest strength is its simplicity. Complexity and confusion are big stumbling blocks for young, new or unsophisticated investors. If I had a friend or relative who wanted to invest but didn't have the time or inclination to become an expert on the subject, I would strongly encourage an investment in one of these funds, which currently go out as far as 2070. There is no muss... and no fuss. All the investor needs to do is make an initial investment and then add to it or over time. (Or not.) I realize that many Liberty Through Wealth readers are doing something more sophisticated with their money than this. But how about your siblings, kids, and grandkids? I have family members who don't know a stock from a bond. They wouldn't know the first thing about asset allocation, diversification, security analysis, position sizing, or trailing stops. And they're not going to learn about them either. But can they plunk some money in a Vanguard Target Date Retirement Fund and just forget about it? Absolutely. These funds are a real-world solution to Americans' widespread lack of financial literacy. And a great way to give - or bequeath - money to financially unsophisticated loved ones. I have much more to say on this important topic in The American Dream: Why It's Still Alive… and How to Achieve It. To learn more - or order your copies - click here. Good investing, Alex | 
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