Recommended ETF's - medium to long term hold investment

Daniel Plainview on 07/03/2018 - 13:48

Hi Folks,

I'm seeking feedback from learned folks on which ASX traded ETF's to consider as part of a medium to long term investment strategy. We've already got a significant part of our net worth tied up in our home (which is paid off) and had parked funds in cash for the past few yrs. But even with that in the best online accounts etc it's basically done nothing at 3% etc - so thinking to bite the bullet and place a portion in ETF's instead with a view to diversification.

Thanks in advance for any feedback & suggestions - please let me know if more info needed.

Financial

Comments

  • dcep on 07/03/2018 - 14:25
    +1

    max your super yet ?

    • Daniel Plainview on 07/03/2018 - 15:56
      +1

      Yes, this is taken care of - but good suggestion. :-)

  • evol on 07/03/2018 - 14:38
    +4

    100% VDHG

    • dcep on 07/03/2018 - 15:02

      how to start buying ?

      • CyberMurning on 07/03/2018 - 15:04
        +1

        its ETF so listed stock on ASX just go through your brokers and buy yourself.

        • dcep on 07/03/2018 - 15:12
          +1

          is there online alt without going through broker ?

          something equiv. to crypto exchange like btc market / coinspot … , etc.

        • [Deactivated] on 07/03/2018 - 15:26
          +2

          @phunkydude: If you have more than ~$100k to invest you can go through their wholesale department. The advantage being you can do regular bPay payments and avoid brokerage. The disadvantage being that it's a little more involved to get money out.

          Going through a broker is by far easier, faster and safer than trading crypto though. Think Commsec etc, you can have an account up and running in minutes and trade right away, they're traded like any other share so buying/selling is trivial, brokerage of $10-$20 isn't that much if you're buying $5-10k+ amounts and not touching it for > 12 months.

        • fenric on 08/03/2018 - 01:08
          +1

          @phunkydude: Have a look at CMC Markets. Some of the lowest trading rates around. Pretty easy to use also.
          I bought my first EFTs through them a couple of months ago (VAS), though i'm a newbie to this stuff also.

    • [Deactivated] on 07/03/2018 - 15:41
      +1

      +1 for VDHG if it's long term.

    • Daniel Plainview on 07/03/2018 - 15:58

      Ok - had a quick look - it appears a very new derivative. So just wondering if you or any others could give a rationale or link explaining why specifically this ETF is suggested?

      • mskeggs on 07/03/2018 - 19:45
        +1

        Its Vanguard, so it is reputable and low fee. It is diversified high growth, so it will aim to maximise returns, but will have years where it goes backwards badly.
        The overall return over the long term will exceed a more conservative investment, should future returns be similar to history.

        • Edsanwong on 08/03/2018 - 16:31

          What do you think about the fee for this product? It says 0.27%, which is higher than normal broad based index like VTS or VAS.
          Do you it would be better if we mix our own ETF, like 10% VTS, 10% VAS, and a bit of VGE etc, the fees would be lower than 0.27%?

        • mskeggs on 08/03/2018 - 18:17

          @Edsanwong:
          Still very low, but I take your point. I haven't spent more than a minute looking at VDHG, it is more an example of a low fee, high growth, global fund. Just don't cost yourself more in brokerage than you save in fees!

      • Oofy Doofy on 08/03/2018 - 11:43
        +3

        the real reason for these new products from Vanguard is to simplify things. The best thing is no rebalancing required on an annual or bi-annual basis. You get on with life with minimal input, other than doing your taxes.

        and yeah, the expense ratio is cheap as chips for what you get.

        the way to use VDHG is to buy-in throughout your life until you need to get a little more conservative. The way to do this is to buy VDCO as you look to reduce your volatility as you get older (post 40 or so)

  • hoey888 on 07/03/2018 - 16:17

    ETF's and shares are great for lump sum investments.

    If you are regularly looking to add more (fortnightly/monthly) you might want to consider managed funds. Yes they are more expensive in terms of management fees, but it will give you the ability to add small infrequent amounts as you wish. Personally I'm happy to pay to have that extra flexibility.

    My rule to investing, 'If you can't live without it or lose it, you are probably over leveraging; its time to consider something else.'

    Some thoughts for you to consider

    • consider an financial adviser driven investment account. there are some very competitive offers that you might want to consider for managed funds
    • consider a strategy that has a mix of Australian and International equities
    • indexed funds/ETF have cheap management fees, however you might want to consider more actively managed strategies instead.
    • Daniel Plainview on 07/03/2018 - 16:43

      I'd likely invest the lump sum all at once - dollar cost averaging might be the only proviso to this but hardly something I'd do for sure.

      RE: Financial advisors - had a bad experience in the past with one, I know it's not really indicative of much BUT honestly I tend to think they're really not a huge advantage IF you have the willingness to look for good info etc. Big generalisation but in short they're incentivised to look after their best interests rather than mine and tend to offer only a portion of true options as no comm/trail on them.Essentially for me I don't think they're worth their %. End of story.

      No, don't really want to actively manage something - would only take that path if I was going to consider individual equities etc and I've been there before and it's not suitable for me/us.

      • mskeggs on 07/03/2018 - 19:49

        You almost certainly do want to do some dollar cost averaging.
        Otherwise, if the market drops 40% tomorrow, you will have no firepower to buy cheap shares, and all your investment will have dropped.
        I suggest investing one year's savings now, another year's worth in 9 months or so, and keep going until you are naturally adding a year's worth of savings every year.
        It ensures you buy fewer shares when the market is high, and more when the market is low - just what you should do.

        • Oofy Doofy on 08/03/2018 - 11:55

          Bogle would say to do that over ten years, but then he could risk losing out on mega returns in that time.

          There will almost certainly be a reversion to the mean, regardless of a potential market bust.

          best way to deal with that scenario is to have a few years of living expenses to deal with sequencing risk. And don't pull anything out of the market.

  • iforgotmysocks on 07/03/2018 - 18:04

    Bitcoin

  • Thenarrator on 07/03/2018 - 19:42

    VHY, high yield, get dividend

    • Oofy Doofy on 08/03/2018 - 11:51

      best for retirees looking to live off div income.

      there are no free lunches with these higher yield funds. It's better to just buy into whole markets and get the growth + dividends total return.

      • Thenarrator on 08/03/2018 - 20:08

        the high yields also got growth? its equally diversified too

        • Oofy Doofy on 08/03/2018 - 20:42

          It's not equal. There are a lot of companies inside the broad (read: whole market) indexes that might not pay as big dividends, but they are more likely to grow exponentially versus the blue chips. This is why they (high yield funds) are geared towards people looking for income, instead of growth+income. It's just the way the high yield funds are designed.

  • Daniel Plainview on 09/03/2018 - 14:13

    Any other than VDHG to shortlist?

    Also any of the brokers got a free brokerage deal going? I know Commsec used to and also NAB - unsure if they still do.

    RE: Dollar cost averaging - ummm its a reasonable idea but only benefits you if the market trends down over the investment placement period - if it trends up you're down $$$. Essentially it's a simple hedging technique but as with all of those can help or hurt just as easily.

    • Oofy Doofy on 10/03/2018 - 20:45

      Best to just keep things simple really. Jump on the Bogleheads forum and look around.

      Put your SelfWealth referral code into the Ozbargain system.

  • Daniel Plainview on 29/03/2018 - 14:27

    Have setup a NABtrade account - started moving some funds over and have watchlisted a number of ETF's - I don't know if it's just me but the following occurred to me pertaining to the oft recommended VDHG.

    100% of it's holdings are comprised of other Vanguard funds e.g currently top 5 are:

    Vanguard Australian Shares Index 36.12%
    Vanguard International Shares Index 26.63%
    Vanguard International Shrs Idx Hdg AUD 15.68%
    Vanguard Global Agg Bd Indx Fd (Hdg) 7.14%
    Vanguard International Small Companies 6.38%

    So it seems like on any returns the investor will ACTUALLY be double paying Vanguard fees i.e the % of your funds that are in the Vanguard Australian Shares Index will pay their fees and then you also pay the VDHG fees on top of that. So seems like Vanguard have been very smart and double dipped on the fees that EFFECTIVELY go to them.

    Seems like as with a lot of modern products you pay extra for the convenience - and really might be better off individually crafting a DIY VDHG holding by simply buying the approx. holdings of the ETF versions of the funds that comprise VDHG.

    I might be completely wrong but seems that way and in which case it'd undermine VDHG being so low for fees as actually EFFECTIVELY it'd be significantly higher - its just that the holdings fees are hidden as they're deducted from the gross returns.

    Might be completely wrong - welcome feedback.

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