Looking to buy first ETFs.
Just curious what does the portfolio of ETFs look like as there are quite a few options.
From my understanding, VDGR (balanced growth) replicates super funds balanced growth products.
Also curious on what app do people use nowadays to track different different stocks and ETFs?
This is really good advice.
Conservative indexed funds are fairly rare (non-existent?) during accumulation phase. At least for me.
What do you think of a 59yo with 1/3 of their Super in term deposit (5%) and 2/3 in a high indexed fund (all within Super)…… until they get to pension phase where they switch to a more conservative indexed fund (which does exist)?
(Soz OP for being a little off topic)
I had just switched my super investments to high growth before reading this Bec Wilson piece … see Myth 2
For me it is about the level of risk tolerance that I am comfortable.
In Australia, in Super, ‘balanced’ is typically 75/25 which in the US would still be considered growth. The point I’m making is that the conservative indexed fund I mentioned is 60/40; which still allows for meaningful growth.
@Eeples: Your fund will assess risk appetite at the fee-free advice level, so you can check if you're on the right track for your personal needs
Many people fail to realise that historically the Australian stock market has lower returns and higher risk compared to the US stock market. This is because Australia's economy is mainly driven by Banking/Finance & Commodity and commodity is driven by supply and demand, whereas the US economy is more broad-base with Health, Banking/Finance, Technology, Communication, Consumers, Resources etc.
In theory, you can be 100% invested in the S&P500 equivalent up the age of 50 and call it a day and you will have lower volatility and higher returns over the next few decades.
Google "bogleheads" and there are lots of lectures on YouTube sharing the foundation of what John Bogle was trying to achieve when he created Vanguard.
As a short-term plan, given the run up in equities in the last year, recession risks (here and in the USA) and the USA election in November, that's an OK plan to protect capital, but you probably need to think about what your "investment strategy" is going to be for your pension phase, in the context of your overall financial position.
Personally, I would want to continue to hold a portion of my portfolio (super and non-super) in growth assets for use later in retirement.
no point in having cash below the age of 50, you need all your invested money to compound.
You already have cash in your offset, bank account and wallet. Ideally 3-6m of emergency fund.
You don't need emergency fund in your super or in your investment.
remember money is fungible.
you can slowly ramp up your portfolio with cash/bond by 2-3% each year from age 50 to 60 so you end up with a 20-30% cash/bond and 70-80% invested. when you turn 60.
keep it simple
don't pay the high fees.
Agree. Lots of good points. Just to clarify though, "lowest fee" is only the prime consideration if you are investing in an index tracker (as you have suggested). There are several comments on this forum about ETF's which are not index trackers, so long term performance / total return trumps fees for those sorts of ETF's.
Have a look at
VHY, ETHI, NDQ, MOAT
Franking credit is done differently for non Australian shares, do your own research.
Nasdaq has strong effect on NDQ and ETHI which have done great up to now.
Recently purchased DHHF via CMC Invest (chose this platform for $0 brokerage fees, once per day)
Was tossing up between VDHG (a popular option) and DHHF, decided to go with DHHF as the tax side seemed a bit simpler. I was wanting a relatively top up and forget ETF.
I bought equal cost amounts of 3 ETFs - IVV, FANG, and MOAT about 4 years ago.
Since then the big difference I haven't fully studied due to complexity is cashflow dividends vs capital gains tax (and did I mention AMIT cost base adjustments I have to record for each year for eventual sale 'cost base'?)
lemme try a quick one - I get emails from Simply Wall St - recently saying things like FANG was up 47% in the last year, or a month ago - IVV^18%pa, MOAT^4%pa;
my spreadsheet shows the current value of my FANG to be up 75% in 4 years, not counting cash dividends or tax - this year's tax statements showed I was paid about 5% return in cash, but a big lump of net capital gains (about 8% of current value) will cost me a BIG lump of CGT in my income tax return, so urgh … but there's a slightly larger AMIT amount to gross up the cost base so that looks like pay more tax now, less tax on eventual sale … if 5+8=13% total x 30% tax, I may be paying 4%, reducing the net growth for me, which makes the next one look better …
IVV (S&P 500) current value has grown 74% in 4 years, and this year's tax statement showed only about 1% cash dividend and almost no capital gains so maybe I can consider that as about 18% net growth this year with minimal extra tax for me …
MOAT current value has grown only 15% in 4 years, and this year's tax statement showed only about 1% cash dividend, and about 7% net capital gains, so looks like this baby is trailing this pack … I might want to swapsies this one over to IVV maybe
but then on 24/9/24 I read that IVV (iShares S&P 500 ETF) were beaten by iShares Global 100 ETF in International Broad Based ETFs - https://www.canstar.com.au/etfs/etfs-highest-return
in short, my four-year experience with ETFs would be - look out for capital gains bumping up your marginal tax bracket, and use a spreadsheet to record annual tax statement AMIT cost base adjustments, e.g. in this year's FANG tax statement 'AMIT cost base net amount – shortfall (increase cost base)' as that could make a big difference to capital gains tax you might have to pay on eventual sale.
OK folks - if anyone is interested, having just spent two hours creating and filling in this kind of spreadsheet for my ETFs - out of interest for one, and to record AMIT cost base adjustments for two, here's a copy I assume you can download for free to use if it might be of any interest to you -
colour ideas being enter stuff into the green cells to suit your own data, and not the pink cells which have some simple formulae to add and calculate the cost base adjustments. Probably assumes basic knowledge of spreadsheets, so sorry if you don't - I retired from teaching some years ago … ;-)
link - https://docs.google.com/spreadsheets/d/18pV89xndSbycjZAn7nzW…
That sheet isn't publically viewable.
sorry - I thought it was - I've now changed access rights to 'anyone with the link' - try again ?
HI yjun355
My portfolio has a core of NDQ/U100, VESG, QUAL. (usually a core is just a basic Australian ASX200/300 ETF, and S&P500 ETF and maybe a world ETF.
Then you can hold individual shares or thematic ETFS outside of this core group in much smaller percentages. For example ATEC (Australian technology), ASIA (Asian technology less Japan), HACK (cyber security), SEMI (semiconductors) etc…
I run some ETF courses too, these courses will go remote starting this weekend. Check out at https://www.wea-sa.com.au search for "understanding ETFs".
Cheers
Shane
Hello there
I'm also just starting out this year. My ETF mix is NDQ, IOZ & BGBL, through CMC markets platform due to the 0 brokerage fee allowing me to DCA at small amounts at a time.
I think you would want to have greater return than super. If you just want a balanced super return then you might as well invest in super, and take advantage of the tax benefits
Thats good but the website's info itself - for investors is so much better.
I often wonder how many investors who buy ETFs are properly keeping track of their cost base adjustments etc from their annual AMIT statements. Good record keeping makes things a lot easier down the track.
Mytax etc will not keep track of that for you - so is essential if you're serious about investing in ETFs.
Cost base adjustments? Anywhere I can read more about this? I haven't been keeping track :(
Well thats exactly my point - people are super keen to buy them , what to buy etc but do not understand the very basics of record keeping with them - which can be a major pita for you & cost significant $$$ if you don't do the proper return calculations.
https://help.sharesight.com/au/au-amit-tax-components/
Humble opinion, bite the bullet, sign up for one the portfolio tracking services, their cost is deductable expense - go back and do from the start of you buying - is worthwhile & helps you understand what you're buying a lot better.
@Daniel Plainview: So confused. So what happens if you don't keep these records? You can end up paying more CGT than you were supposed to? Is it only an issue when you sell?
I thought accountant figured it all out based on the statements.
100% VDHG, and will be buying gradually and holding until about 2038.
Thanks.