VDHG vs VHY for a +30y plan with $40k investment

ratoloko on 11/07/2025 - 19:56

Me:

  • Middle 30s
  • $40k (ING Maximizer Saving)
  • +30y long term plan

I have been saving some money with ING Maximizer ( it has decreased to 5.00% p.a and only up to $100k before decreasing to breadcrumbs interest )
I believe I could make better use of that money, I am not getting into a 30 years home loan and even if I was, it is far from 20% of the cheapest house.

  • VHY: Australia market with high yield. The next distribution is $2 per unit
  • VDHG: Australia and international market with a humble yield. The next distribution is $1.12 per unit.

I have a bit of both already and set to Dividend Reinvestment Plan (DRIP) with Computershare., so I am not touching their returns and neither dealing with tax dramas during the tax return. Buy ETFs monthly and forget attitude.

No panic-selling either, monthly buying disregarding the market since I am aiming 30-40 years.
I do have an emergency savings that will keep me going for a few months if life goes sideways.

Also, you shouldn't leave all eggs in one basket so after some readings, it is recommended to invest into bonds too.
VAF (Vanguard Australian Fixed Interest) seems to be a bonds option, so invest into VHY and VAF???? VDHG and VAF???

50-50%???
80-20%???

It feels too perfect of a plan meaning I am missing something important.
I appreciate the opinion from those who have been doing this for a long time.

Thank you very much.

Financial

Comments

          • RocketSwitch on 13/07/2025 - 11:34

            @SBOB: I was comparing the 5Y view. And didn't see the timeline.

            • SBOB on 13/07/2025 - 11:47

              @RocketSwitch: what 'view'?
              any price graph (eg google stock trends) likely doesn't include the combination dividend/yield along with growth

              for the last FY, GHHF has beat VGS (will likely be a very different story in a non upward trending market times though, but thats what gearing gets you)

              • skid on 14/07/2025 - 09:25

                @SBOB: Gearing seems to be a multiplier. It doubles the wins and doubles the losses. ps Past performance is not an indicator of future performance.

  • liongalahad on 12/07/2025 - 15:48
    +1

    Why I keep seeing people caring much about distributions. Receiving distributions is no different than selling a portion of your shares (the share loses value the same day the distribution is paid and by the same amount of the distribution).
    If you're in for the long term and aiming at growth, receiving distributions is actually not good as you need to pay CGT on them.

    • mskeggs on 12/07/2025 - 18:13
      +3

      You get 50% CGT discount for sales after 12 months, and if you hold until you retire you might pay no tax at all.
      Dividends get taxed when they are paid out, likely when you are in a high tax bracket
      If you want to have dividends, better in super where tax is only 15%.

      • liongalahad on 12/07/2025 - 22:53
        +1

        Yeah, that's exactly my point. I actually try to avoid as much as possible anything that pays dividends as they are an annoyance and are very much tax inefficient

  • cmafra on 12/07/2025 - 18:54

    Congrats on saving and investing and not panic selling.

    On your age bracket and looking to the 30-40 years horizon , I would not use VAF - for now, maybe slowly building and transitioning into that later when you are closer to retirement age, and dont have income need to protect the assets.

    You are on the building phase.

    So go for australian and international shares. If using ETFs a good way to start is 50-50% and review the allocation every 2 years.

    Regards

  • RocketSwitch on 12/07/2025 - 21:41

    I invested in VAS and VGS back in Sept 22, it has been amazing for me.

    • Thanos from Titan on 12/07/2025 - 23:59

      just a bad question, but how do we buy vas or vgs or vdhg and vhy.

      • Bidet Mate on 13/07/2025 - 07:53

        you can buy them from vanguard themselves but most of us just buy them on the ASX, that way they can be easily tracked and managed like a stock.

        There's really comprehensive guides online but basically just set up an account on something like Selfwealth, deposit cash, search VDHG or whatever ticker you want, and buy it.

        • Thanos from Titan on 13/07/2025 - 10:19

          Thanks for replying mate, i have got commsec account, can it be purchased through their platform, are they like anyother shares, search them up and buy?

          • dtc on 13/07/2025 - 11:25

            @Thanos from Titan: Yep, exactly like other shares

          • choumada on 13/07/2025 - 13:30

            @Thanos from Titan: Basically make a vanguard account. Bank transfer the money into the account and then once its in a vanguard account (works exactly like a bank) you can use the $$$ to buy vanguard ETF's. Wheh you want to sell its the same process in reverse.

          • bbinc on 24/07/2025 - 09:29

            @Thanos from Titan: You might save quite a lot by comparing brokerage fees on buying AND selling. Compare Commsec and NABtrade with Selfwealth for example. And Selfwealth isn’t the cheapest anymore.
            You can have more than one broker, eg, if you already have shares in an expensive broker, you can just leave those parcels there, and start building another portfolio elsewhere. I do that with a small parcel with an expensive broker, because I still get access to their research platform at no cost.

      • RocketSwitch on 13/07/2025 - 11:31
        +1

        I do it via Vanguard. No fees to buy.

        • [Deactivated] on 14/07/2025 - 21:20

          Or betashares- most of the newer platforms let you with minimal to no costs to purchase.
          They charge you a brokerage fee to sell your assets (shares)

    • choumada on 13/07/2025 - 13:27

      Yep same here, around 33:66 split favouring VGS since at my current age (30) and investment goals i prefer a higher risk profile.

      • RocketSwitch on 13/07/2025 - 21:45

        Well done. I did the same. 30/70, with more VGS.

  • watwatwat on 13/07/2025 - 01:14
    -4

    100% in IVV.

    Also, you shouldn't leave all eggs in one basket so after some readings, it is recommended to invest into bonds too.

    I think whatever you have read has steered you down the wrong path, for your particular scenario. It will almost certainly reduce your returns, but that's OK, it's a free world and you can buy whatever your heart desires.

    Let's ask AI:

    40-Year Projections:
    VDHG at 8% annual return:

    Starting: $40,000
    After 40 years: $869,358
    Total growth: $829,358

    IVV at 9% annual return:

    Starting: $40,000
    After 40 years: $1,278,334
    Total growth: $1,238,334

    Difference: $408,976 more with IVV

    • dtc on 13/07/2025 - 11:30
      +3

      So you are telling me that if you assume one share will have higher future returns than another I should invest in that share?

      VDHG total return since inception is 9.44%. IVV since inception is 7.24%. Yes those are over different time periods and IVV has done better in the last 10 years (by quite a bit), but if you want to extrapolate out to 40 years then you can’t just use random figures

      • watwatwat on 13/07/2025 - 19:09
        +1

        Yes those are over different time periods

        It's a bit of a nonsensical thing to compare (two funds with inception dates 17 years apart). But it is interesting. Actually, based on these dates (IVV being May 2000), it seems IVV on asx was created almost at the absolute height of the dotcom bubble. It's a notable moment in history that could explain this performance since inception.

        then you can’t just use random figures

        "The S&P 500 specifically (since 1957) has delivered an average annual return of approximately 10.47% including dividends, or about 6.60% after adjusting for inflation.R"

        random figures

        Maybe you are smarter than AI. Or maybe your assumption that something with a 10% bond exposure will outperform IVV. Technically anything is possible. Maybe universe will explode tomorrow.

    • Bidet Mate on 13/07/2025 - 07:58

      whats the goss?

  • Munners1989 on 13/07/2025 - 11:51
    +4

    This is painful to read. Go and see a financial advisor.

    • dtc on 13/07/2025 - 13:13
      +1

      Yes, I see articles about how people have insufficient financial literacy and I think it’s a bit hyperbolic since this stuff is pretty basic and you can learn about it by spending an hour or less reading some relevant blogs and articles. But this thread shows that not only OP but an awful lot of people have NFI and, worse, actually confidentially believe they do understand.

    • watwatwat on 13/07/2025 - 22:17
      +1

      Go and see a financial advisor.

      It's absolutely wrong to pay for financial advice on a straightforward $40,000 investment. The data shows that the S&P 500 has averaged 10.47% annual returns since 1957 S&P 500 Average Returns and Historical Performance, and you can capture nearly identical performance by simply buying a low-cost S&P 500 ETF like SPY or VOO with expense ratios under 0.1%. A financial advisor typically charges 1-2% annually, which would cost you $400-800 per year on your $40,000 - money that compounds against you over decades. The research is straightforward: countless studies show that low-cost index funds outperform actively managed portfolios over the long term, and the S&P 500's historical performance speaks for itself. Why pay someone hundreds of dollars annually to recommend what you can research and execute yourself in 20 minutes? Your $40,000 invested in a simple S&P 500 ETF, held for 20+ years, will likely outperform whatever complex strategy an advisor suggests after fees.

      • bbinc on 24/07/2025 - 09:39

        Sort of agree with you. I would/have never seen a financial adviser for advice on actual investments or ongoing management, but the $500 spent in 2000 on how to benefit from tax planning, distribution/savings with partner, incorporating super etc etc has been invaluable, and provided a structure fro additional learning about how it all works.

  • sm3llycat on 13/07/2025 - 13:05

    VDHG

  • blehgg on 13/07/2025 - 18:01

    DHHF all in

    • ratoloko on 16/07/2025 - 12:43
      -1

      DHHF appears to go more deep into the US market, based on Trumps game, it is the more unstable market right with company after company moving elsewhere to survive the tariffs war.
      Add to that EU abandoning the US coz it is no longer a reliable partner, even Canada jumped ship.
      Both CH and Japan sold a ton of US bonds to the US dollar has a hard time ahead.

      A single Elon or Trump tweet wipes out millions from US companies, I wouldn't trust that much.

      • SBOB on 16/07/2025 - 12:50

        DHHF appears to go more deep into the US market

        its a high-growth diversified EFT that provides
        - AU market allocation
        - Blend of world markets based on relatively market spread global weightings

        it's literally the "don't leave all the eggs in one bucket approach." you just posted just rolled into a single ETF for set-and-forget exposure
        https://www.ozbargain.com.au/comment/16733756/redir

        Asset classes within DHHF
        AU Equities - 37%
        World Equities - 63% (US, Developed world Ex-US, Emerging markets)

        Detailed breakdown
        Australian Equities 37.2%
        US Equities 40.5%
        Developed Markets - ex US 16.3%
        Emerging Markets 6.0%

        • ratoloko on 16/07/2025 - 12:58
          -2

          its a high-growth diversified EFT that provides

          That invest heavily into the US market which is falling apart under Trump administration.
          Your comment and others, is the first time ever that I heard from DHHF

          I don't expect you to agree with my POV towards it, the whole US market is a carnage right now.

          That comment is investing into multiple well known ETFs instead of a single unstable ETF, 40% of it will drag everything to sh1t by the end of Trump term.

          • SBOB on 16/07/2025 - 13:07
            +1

            @ratoloko:

            That comment is investing into multiple well known ETFs

            That comment had
            25% VAS
            25% VDHG
            25% IVV
            25% VGS

            Which if you work out the weightings isn't far off dhhf

            Vdhg is essentially dhhf with some bonds
            Vas is au market
            IVV is us market
            VGS is world market ex au

            It amazes me people have money to invest but can't spend the few hours if would take to be educated on where they invest.

          • V2L on 17/07/2025 - 10:07
            +2

            @ratoloko: all broad market global ETFs will be US skewed as they are weighted by market cap. there are ex-US ETFs but DHHF is already a mix of all those
            if you want to roll your own mix, go for it but reading your comments I'd have strong doubts on whether you know what are doing

  • DingoBilly on 14/07/2025 - 03:43
    +2

    Neither.

    I'd go vas/vgs or a200/bgbl with a 20-30/80-70 split.

    Much better returns over the time frame and lower fees. You lose out on some stability but it should be irrelevant over a 30 year time frame.

    Avoid any crypto or individual stocks. Things like 100% IVV is ok, but risky to focus purely on international market. Modelling suggests that above split of domestic/international is a good risk/reward balance based on Sharpe ratios.

  • BobCobb on 14/07/2025 - 08:22

    Buddy… sit tight for the big one. You are too late into the cycle to make any gains now.

    All hell is about to break loose!

    https://finance.yahoo.com/news/buffett-indicator-highest-lev…

    • tenpercent on 14/07/2025 - 09:41

      There's more fools in the market than at Motley.

      • BobCobb on 14/07/2025 - 10:43

        100%.

  • Merish4U on 14/07/2025 - 08:24
    +1

    KISS rule
    DHHF - as better than either of those for the timeframe stated (no need for 10% fixed interest in VDHG)

    If you want to DRP, make sure you have very good record keeping as will be major PITA when you eventually sell. I personally prefer to manually reinvest in whatever is underweighted in my portfolio, but if you've got a single holding, DRP is reasonable though it's really more helpful as a behavioural workaround than saving brokerage.

    • ratoloko on 16/07/2025 - 12:33

      If you want to DRP, make sure you have very good record keeping as will be major PITA when you eventually sell

      How come??

      • Merish4U on 16/07/2025 - 13:07

        Not sure who negged you on your post below - wasn't me.

        How come records are a PITA when you sell? Well with an ETF that you DRS with - you will be buying more small parcels perhaps several times a year. You also need to do your AMIT statement adjustments. Something that many investors new to ETFs overlook.

        Having your taxes done well and correctly is a big part of good investing results.

        IMHO DRS complicates this and for the brokerage cost saving, which is the lauded benefit - I strongly prefer to manually reinvest myself. If a company has a DRS discount - as a tiny number do - perhaps thats worth reconsidering but generally you're always paying market price so the negatives outweight the upside , IMHO anyway.

    • ratoloko on 16/07/2025 - 12:41
      -1

      Also, DHHF appears to go more deep into the US market, based on Trumps game, it is the more unstable market right with company after company moving elsewhere to survive the tariffs war.
      Add to that EU abandoning the US coz it is no longer a reliable partner, even Canada jumped ship.
      Both CH and Japan sold a ton of US bonds to the US dollar has a hard time ahead.

      A single Elon or Trump tweet wipes out millions from US companies, I wouldn't trust that much.

      • V2L on 17/07/2025 - 10:09

        so what would you buy instead? any economic shock coming out of US would cause AU/EU/emerging markets swing wildly as well, possibly more so than US equities. perhaps you should buy German Govt bonds and call it a day

  • atwilliams on 14/07/2025 - 11:08

    Of those 2 over that timeframe, VDHG, although it's not a favourite of mine.

    You could also look at VGS (sticking within the Vanguard options), which is a higher growth option (than VDHG).

    Whilst VHY has higher dividends and franking credits, depending on your tax rate, they might not be worth much to you (after tax). It also doesn't contain many growth companies, which means you are relying more on dividend income that growth.

  • Maxxjet on 14/07/2025 - 12:43

    DHHF instead of VDHG

    • ratoloko on 16/07/2025 - 12:43
      -1

      DHHF appears to go more deep into the US market, based on Trumps game, it is the more unstable market right with company after company moving elsewhere to survive the tariffs war.
      Add to that EU abandoning the US coz it is no longer a reliable partner, even Canada jumped ship.
      Both CH and Japan sold a ton of US bonds to the US dollar has a hard time ahead.

      A single Elon or Trump tweet wipes out millions from US companies, I wouldn't trust that much.

  • [Deactivated] on 14/07/2025 - 13:59
    +1

    Assuming you aren’t a div293 tax payer… why aren’t you putting into your super (can backdate 5 years) and get the difference back off tax..?
    Albo might steal it from you later… but not right now.
    That way your $40K investment becomes probably around $45K instantly when you claim your tax back.
    Then get your super into a SMSF and then do this investment… $5k free…

    • Merish4U on 16/07/2025 - 13:18

      100%
      OP has stated a 30-40 yr investment time frame. Super should be the only option for most folks in that case.

  • Drakesy on 14/07/2025 - 18:33
    +1

    I'm
    25% VAS
    25% VDHG
    25% IVV
    25% VGS

    Fairly well rounded risk profile for my liking.

    • ratoloko on 16/07/2025 - 12:42

      That is fair, don't leave all the eggs in one bucket approach.

    • Merish4U on 16/07/2025 - 13:16
      +1

      Hmmmm hey look not telling you anythng you do not know but thats a lot of crossover between each holding - which honestly I don't think is a bad thing, as long as it's a good crossover. i.e underlying holdings that are in multiple of those listings.

      Just comes down to whats more efficient - but thats getting picky. If you came to me with that portfolio though I would say, what is the benefit of having 4 instead of just 100% in VDHG or even better DHHF?

      • Drakesy on 16/07/2025 - 13:55

        I tend to err on the more conservative approach and honestly am not really placing a lot of confidence in America atm.

        • Merish4U on 16/07/2025 - 14:00
          +2

          Understood - but you are aware that the VDHG is a 'fund of funds' so it's made of of VAS, VGS, VISM etc - so I reckon if you ran the numbers on your exposures for your 4 x 25 vs 1 x 100 - it would be near identical. i.e near identical exposure to US and no more conservative.

          But I suspect you're paying a higher MER and have overlap plus 4 times the holdings. Complexity is a good thing, only if it has a tangible benefit.

        • SBOB on 16/07/2025 - 14:02
          +2

          25% VAS (all au)
          25% VDHG ( about 33% vas, 25% vgs, 15% hedged vgs, some small cap and other emerging markets and 10% bonds)
          25% IVV (s&p 500 tracking)
          25% VGS (MSCI Index International Shares ex au)

          For someone on the conservative approach that's not exactly conservative :)
          It's also no less weighted on the US market than buying vdhg directly.

          • Merish4U on 16/07/2025 - 14:12
            +1

            @SBOB: @SBOB
            is completely bang on. Hence - and I say this to help not to be a 'know it all' portfolio commentator - but I do not udnerstand the upside of that portfolio design. 100% VDHG or 100% DHHF (of GHHF if you're holding long term and can stomach volatility) would fill your brief better, have a lower effective MER, be simpler and likvely have a better overall diversification i.e compare the number of underlying exposures in DHHF to your - I think the former would be well ahead - as you have very little emerging markets exposure at present which doesn't align with your aim to move away from the US.

            One of the other aspects thats very overlooked is how tax efficient the vehicle is with the underlying assets and DHHF is also incredibly good at this - some financial geniuses over at Reddit analysed it vs its peers and found it to be astonishly effective at maximising returns. Which is one of the thnigs that puts it ahead of VDHG for many folks, as the Vanguard product is somewhat poor in this regard. The saving grace that they have is they use security lending to scrape back a few points on many of their products. But DHHF would still be my pick by far - and I say this as someone who does NOT hold it, though often rues it and is happy to concede this.

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