I am new to ETFs and looking to invest $5k to start off and then put in $5k bi-annually going forward.
Based on my search and get better exposure, I am thinking to do 50% split between VDHG and VTS. I plan to buy via Superhero as they appear to have zero brokerage fee on ETFs.
I plan to invest for 5 to 10 years.
What are thoughts of people who invest in ETFs? Any other ETFs to consider?
Any help and guide will be much appreciated!
A minimum 5 year invest horizon is recommended for shares. On average, Australian shares return 6.5%p.a in the long term. Just be prepared for negative returns in the short-term and during market shocks.
Source: https://moneysmart.gov.au/how-to-invest/choose-your-investme…
I wouldn't regard 5 years as "pretty short term" at all in this context.
For the ETF's he's investing in it's on the short side.
A consideration is to have high capital+dividend return while minimise tax you pay on those return.
What's your exit strategy? When you sell your EFT, are you likely to be in high income tax bracket? If so, high dividend yield EFT with low capital gain EFT may suit you, and you pay tax on those dividend along the way. If you are likely in low income tax bracket, then those two EFT you listed may be suitable.
If you're only buying Vanguard ETF's, use their own personal investor portal (www.vanguard.com.au). There's no brokerage to buy into their funds (minimum deposit $500) and you have full control, unlike Superhero.
Fees are higher than ETFs
Further clarity here - Superhero doesn't allocate shares against your own HIN as it is not CHESS sponsored. Instead Superhero holds them in its own custodian account and has you as a beneficiary. For most people it doesn't matter other than if Superhero goes under you'll have to transfer them out to your own broker.
Vanguard does it the same way. No HIN, custodian account. If you want them in your own name Vanguard personal investor is not the answer.
https://www.vanguard.com.au/personal/en/faq-details/do-i-rec…
If you buy the ETF through an exchange the individual company shares in the fund are still held by Vanguard.
Buy them with self wealth and then forget about them for 5 years done.
I plan to invest for 5 to 10 years.
What is your expected RoR in 5Y and 10Y?
Do you mean ETF (Exchange Traded Funds) rather than EFT (Electronic Fund Transfer)?
You should consider salary sacrificing additional contributions to your superannuation which has tax benefits if your goal is to build your nest egg.
Have you checked out Spaceship? Zero/low fees, similar concept to ETFs except they are not publicly listed, and may be more suitable if you want to make regular investments for dollar cost averaging.
You should check out spaceship:
https://www.ozbargain.com.au/node/635278
Agreed. I use spaceship to roll up my spare change and build to 5k chunks. In hindsight I should have just been chucking it into ADA at the lows
It will dip again, don't you worry.
chucking it into ADA at the lows
Hindsight.
What if I want to learn how to invest in EFT machines? I could skim 0.000000001c off every transaction in the machines I own. If I place them all over the country I could earn thousands a day doing nothing.
I need to learn how to invest in EFTPOS.
VDHG has 10% bond allocation. Depending on your risk tolerance you may or may not like it.
One alternate is DHHF. Its newer kid but has 100% allocation to equities and holds almost similar companies. It also has more exposure to Emerging Markets which means higher risk. Google VDHG vs DHHF and you would find plenty of information.
If you think technology will keep booming in next 5/10 years and would like to have a higher exposure to tech, then you might want to look at NDQ - NASDAQ 100 ETF and FANG. Be-aware that these are sector based ETFs that come with the risk of downfall of IT. Also VDHG/DHHF will already have weighted exposure to these companies.
Barefoot s advice: VTS, VAS, VEU. Although the time frame is probably longer than 10 years.
His portfolio with VTS, VAS, VEU is for buy once and forget for decades. OP is looking for regular investment.
Interesting. So VTS, VAS, VEU pretty much cover the whole world?
VTS + VEU will cover the whole world.
@Autonomic: ^ that. Barefoot just adds VAS to have more exposure to the local market.
And yes, it's for "buy and forget", i.e. definitely more than "5-10 years"
Self Wealth cheap brokerage & importantly chess sponsored unlike Vanguard or Superhero who both use a custodian model. Means that Self Wealth is safer no advantage in going with Vanguard or Superhero.
Does self wealth provide easy to read tax statement where we can just plug in the number when doing tax return?
You will get annual statement from share registries like Computershare, not from brokers.
So we need to calculate capital gain, foreign offset, etc ourself?
@CyberMurning: It all will be in annual statement. You just copy those values into your tax return.
The same data will be passed to ATO, so in most cases your tax return will be prefilled by about mid August.
@CyberMurning: when you eventually sell, then you will need to use a different tool/spreadsheet to calculate capital gains.
But for the purpose of the annual tax return, the share registry will provide an AMMA statement. This has nothing to do with the broker either way.
@FirstWizard: Actually, in case of sale it is something to do with the broker. If you sell, you will need the details of the purchase and sale, like date, price, fees paid when you do your tax return. You get that from the broker. Tip here: when you buy or sell you'll receive a contract note with that info - make sure you save it.
@andrek: Well yes and no. At the time of buying and selling any broker would issue you a contract note, which you would keep for the purposes listed above.
However, I'm not sure if there're any brokers that would directly help you with consolidation of buy and sell record and do the tax calculations etc. I mean like the AMMA which exactly gives you the amount you have to put in each box of your tax return.
Things get further complicated when you participate in say DRP as those shares are bought at multiple intervals and the broker does not have anything to do with those sales, although they get loaded on to your HIN sponsored by them.
I use sharesight to put everything together and do the final calcs.
I know you can pay some registries(computershare) to get a tax report, I've never gotten one so dunno what it contains.
Also, now having thought about it, I wonder how things work if you go with a non CHESS sponsored broker. The shares are under their name and technically you wouldn't get a HIN to sign up for an account at the registry to get annual statements. So do the broker provide them to you?
@FirstWizard: correct. things get complicated with those corporate events. like changing cost bases thus affecting your CGT, also some tax reliefs on certain products, etc
@FirstWizard: Good points, especially about DRP, I haven't considered that… Which reminds me, I probably should get those confirmations and save for future!
Superhero is NOT zero brokerage on ETFs!
Its free to buy but $5 to sell.
$5 to sell if you haven't held the etf for longer than a year.
5 years is pretty short term. Hope you’re not expecting 1000% returns…