Boglehead/Vanguard way to retire.

No because with ETFs, unlike other publicly traded shares, the company itself acts as a market maker, buying your shares off you and selling you shares at moving prices throughout the day.

In other words - when you want to buy, you buy from the market maker. When you want to sell, you sell to the market maker. Thus they are "making a market" at a price that is close to the value of the underlying holdings, at that point in time. There is a slight gap between the buying and selling price, which is referred to as the spread. The spread is larger with smaller or newer ETFs

If there are only a few buyers and sellers, I would say it's because each "buyer" or "seller" order is very, very large. Look at the total amount of shares being sold in dollar terms, instead of the number of buyers/sellers. With VGS and VHY I'm sure its quite a large amount. They need to be able to service large buyers / sellers at any one time.

 

Hi All

just did some quick calculations on the Vanguard ETF returns.
I excluded the latest VHY dividend as it may have been an unusual blip.
VAF 3.8%
VGB 2.72%
VAS 4.5%
VHY (excluding latest hi dividend) 5.5%
VGS 2.8%

Inflation eats away the return and so does the MER.

The Aussie shares are by far and away the winners as far as dividends go.

There is some argument for going overweight in Aust when assessing the boglehead ideal of 'your age in bonds' esp when franking is added to the return.

What would Mr Bogle do? This is the question a boglehead must ask. He does not like beta funds like VHY see youtube link for a speach he gave this year
but he is looking at it from a US perspective.

The search continues..

 

Hi All,
Very interesting thread. I have many questions similar to others:
I want to simply my strategy and go for VAS, VTS, VEU and VAF. I would prefer to invest periodically. However I don't know if I should go ETF or fund. I will need to sell my holding in a managed fund to get the $100k required for the wholesale fund. If I don't then when I reach $100k in ETFs there is a CGT issue if I sell and buy into the fund.

Additionally the lump sum vs DCA vs value averaging comes into the equation, particularly with the state of the world economy. Do I sit it out and wait for the moment that may never come? Do I buy regularly at each drop? Do I just drop it all and hope it isn't sep 2007 repeated?

Cheers

 

Sounds like doing it manually via ETFs would be the go. As for timing, can't help you there. You'll need to come to your own conclusions on that.

 

Thanks Falcon. You are a wealth of knowledge. It makes sense as long as my parcels make the brokerage fee small enough.

On VGS vs VTS and VEU what are your thoughts? I can save on brokerage with VGS and receive some tax benefits but lose control of where i allocate US vs non US and decrease diversification. Is this a case of 6 vs half a dozen?

 

Long great thread, just got through it.
Thanks, now back to homework

MTR

 

I'm trying to get into a buy-hold-sleep-repeat phase instead of actively trading and I'm outta my depth.

Having read this and many other threads - I'm wanting to invest a solid portion of cash plus a monthly top up with a dividend roll-over scheme on top of all of that.

In other words, set and forget to a certain extent.

Can anyone provide reasons why I would pick one over the other? I'm new to this type of holding so all help is appreciated.

Cheers

 

Trading vs Investing?

Unless your very good at trading then your commissions will eat up your margins. Also the drawdowns can hurt every day since your actively monitoring your portfolio.

I try an maintain the following portfolio split and top up every few months (limit order not market order)
Long term (>10 year) out look. Quite high risk so no bonds.
50% VAS - ASX 300 (.15%)
40% VGS-- MSC Word Developed (.18%)
10% VGE - emerging markets (.48%)

 

I have a long and very successful history with trading. Currently up well over 2000% (that's two thousand percent) on my initial capital. My trading income is quarantined in the USA so I can't use it here (or there....long story....don't ask).

But it's time consuming and I would like to be able to utilise my trading to top up a longer term strategy.

I assume the percentage in brackets if you annual divvy?

 

Wow, thats fantastic. I suck at trading and im always underwater.

% in brackets is the management fees.

I use DRD if its available.

 

I've done the same. I don't see the point going so heavy VTS when there's alot more economies out there to diversify to.

Have gone VAF, VAS, VEU, VTS.

I did not go VAP since VAS contains property (and we are already property investors).

I reduced VAS percentage as VEU also contains some ASX shares.

My VAS further reduced to account for some investment in MLT (Milton) since the LICs tend to perform well if not bought above NTA.

Im not going to do DRP as I want to make further investments manually for rebalance purposes. Also this is borrowed money so I want to have income separate to capital.

 

Would be keen to know if anyone else investing in VEU?

Any reason it's not so favoured?

 

let me just get this straight - you are talking about dividend reductions, no....? that's what I know DRD to mean.

 

Dividend Reinvestment

 

same/same - sorry. that's what i know DRD to mean.

many new acronyms popping up in here for me.

do most Vanguard funds allow DRD?

 

Dividend investment plans don't make sense to me.

They add extra paperwork calcualtions for your CGT.
They can distort your asset allocation percentage unintentionally.
You have to declare the income from the dividends even if it's going into more shares.

Why not just get the cash, then when you do your portfolio rebalance, invest the cash into the portion of the portfolio that is below it's percentage? Makes rebalancing easier?

Maybe I'm missing something, but the only benefit I see is they are a method of forced savings?

 

Drp is the more correct term

Forced savings and no brokerage

 

From memory all Vanguard Funds allow DRP

@DanW, DRP is usually at a discount to current price.

 

Thanks Turk, that is interesting especially for an index fund. Would be nice to get below market for index.

 

see - all this stuff I didn't know.

I'm not anal about being a percent or four over allocation here or there. It is what it is.

if you have to declare the divvy then you could always ask for a percentage roll over, then a percentage cash (to put into a HIS account) for your tax bill, surely?