Q&A: Should You Keep Part of Your Money Outside the U.S.?

What It Covers

Paula and Joe address portfolio efficiency questions, health insurance options for graduating students, and whether investors should diversify assets internationally amid concerns about institutional trust and geopolitical risk in The United States.

Key Questions Answered

• •Portfolio Allocation Strategy: A 100% equity portfolio historically maximizes returns, but requires exceptional risk tolerance. Most investors should work backward from 100% stocks, reducing allocation only enough to prevent panic-selling during downturns. Rental properties can serve as bond allocation substitutes, providing income stability while maintaining growth potential.
• •Efficient Frontier Application: Portfolio efficiency requires defining specific goals first, not optimizing in a vacuum. Calculate required return by determining goal cost divided by years until needed, then select asset allocation on efficient frontier that achieves that return with minimum volatility. Without clear goals, efficiency optimization becomes meaningless mathematical exercise.
• •Tax-Advantaged Rebalancing: Rebalance portfolios primarily through new purchases rather than selling appreciated assets. Stop reinvesting dividends in taxable accounts, redirect dividend cash to underweighted positions, and execute sales in tax-advantaged accounts where possible. Prioritize selling long-term capital gains over short-term, checking whether accounts use FIFO or LIFO methodology.
• •Health Insurance Under Age 26: Children remain eligible for parents' health insurance until age 26 regardless of dependency status, employment, marital status, or student enrollment. This federal ACA requirement supersedes tax dependency rules. Partial-year dependency requires living with parents over 183 days annually, but full-time student school time counts toward residency requirement.
• •International Asset Protection: The United States attracts massive global capital inflows because strong property rights and rule of law protect assets better than most alternatives. Transferring assets offshore creates double taxation, foreign compliance complexity, currency exchange risk, and potential US government repatriation actions. Probability of US asset seizure remains extremely low compared to operational risks.