Boglehead/Vanguard way to retire.

Discussion in 'Share Investing Strategies, Theories & Education' started by 2935, 7th Sep, 2015.

Join Australia's most dynamic and respected property investment community
  1. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,379
    Location:
    Buderim
    I have looked at this a few times and asked @The Falcon about it awhile back given I vaguely thought he had invested in it at some stage.

    No doubt it is about as good as one can get here if wanting "indirect" dedicated exposure to this fantastic sector.

    But note the fund is domiciled in the US. Also I imagine the major stocks in IXI are also in VGS hence you are going overweight many of these rather than adding them! IXI also has small exposure to Aussie consumer stocks so a little doubling up with the likes of VAS etc.

    As @The Falcon mentioned in our correspondence this being a cap weighted fund the turnover will be low which is good.

    Given I want International for exposure to stuff we have little of here ( Eg IT, Healthcare) in addition to consumer staples I have at this stage just decided to keep it simple by not bothering with IXI and sticking with VGS.

    @The Falcon may wish to comment further as to whether my view is sensible or not. Always keen to learn.
     
  2. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    I'm asking because I don't understand which way to go myself and I am about to allocate my entire superannuation. I do not actually want to learn too much about investing in the stock market - the more I learn the more I realise I do not understand. I believe that the very simple Bogle type strategy is perfect - not too much to learn and minimal worry about in terms of checking the status of investments.

    I'm at the point where I think I have a fairly concrete strategy largwly thanks to the posters on this forum. For anyone interested, it is very similar to @Hodor:

    Around 50/50 australia / rest of the world.
    ING limits direct share investing to 80% in total and 20% in a single share.
    Australia to be VAS, IOZ, STW, BKI and other major LICs.
    Global to be VGS, VTS, VEU and one of MFF, MGF (not sure which one: MFF @ premium to NTA).
    By having no share at 20% I can have flexibility with my yearly purchases / rebalancing whilst minimizing brokerage, which should be at least $15k per single purchase.
    Last 19% is in balanced fund which has no fees apart from buy/sell spread. It is 50/50 cash / asx shares.

    Any suggestions appreciated.
     
    Ynot likes this.
  3. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,379
    Location:
    Buderim
    :eek:

    Why VAS & IOZ & STW? They're all basically the same thing. Why not choose the cheapest? VAS is popular.

    Same goes for VGS & VTS + VEU. Choose one or the other.

    Not advice.
     
    Ynot, Redwing, Anne11 and 1 other person like this.
  4. Hodor

    Hodor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,238
    Location:
    Homeless
    I thought it was trading at a discount (as per asx below) which kind of makes sense given the outstanding options. Where do you get at a premium?
    http://search.asx.com.au/s/search.html?query=mff&collection=asx-meta&profile=web

    Can't comment on the whole Aus/rest of world splits and what will be best going forwards, I don't think it is a right way or wrong way kind of thing. What I will say is you should have a reason you feel comfortable with.

    I didn't consider the 20% max per stock in ING super @austing as to why you were getting VTS, VEU, VGS etc. Makes perfect sense.
     
    Observer, Anne11 and Zenith Chaos like this.
  5. Hodor

    Hodor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,238
    Location:
    Homeless
    Thanks for a summary. I noted the US domiciled thing but need to do some reading to understand what effects it has.

    Nice to know it attracted your attention enough to have a look as well, even if you didn't bite.

    One comment on weightings. I was viewing it as skewing my sector weightings towards certain industries using a combination of VGS and IXI rather than been overweight as a whole. I looked at the IT and healthcare ones briefly as well, however for some reason I didn't feel as comfortable with them.

    I might just be over complicating things for where I am at, I'll continue reading on these subjects before doing anything too rash. My purchases will continue down my current path for the moment.
     
    Anne11 and Zenith Chaos like this.
  6. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    ING constraints of 20% per share plus flexibility and some unintended diversification. Thanks for reading @austing .
     
  7. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,379
    Location:
    Buderim
    Yes what you are doing is exactly what I was going to do. That is, VGS + IXI. IXI is the only sector tilt I'm interested in, not interested in IT and Healthcare specific funds. Unlike @The Falcon I have no interest in purchasing overseas stocks directly. Hence IXI.

    It should be noted I said "at this stage" ... . It is highly likely I will add IXI down the track BUT my greatest reason for avoiding it at this stage is value. For better or worse I'm somewhat a contrarian investor. And at the moment International Consumer Staples I consider to be expensive Defensives! I was reluctant to mention this in my last post as I didn't want to bring up the market timing issue especially in a Boglehead thread. But what the hell.

    May be wrong, usually am. But I'm prepared to hold off in the meantime. @The Falcon might give me the Ben Carlson (Wealth of Common Sense) market timing spanking if I'm not careful:eek:.
     
    Last edited: 13th Jun, 2016
    Ynot, Anne11 and Zenith Chaos like this.
  8. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,379
    Location:
    Buderim
    Oops, sorry. Teach me to skim read posts:oops:.
     
    Redwing and Zenith Chaos like this.
  9. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    Current price is 1.86 and website says NTA is 2.074:
    ASX Releases « Magellan Flagship Fund

    .....and I just realised the mistake I made. Thanks for pointing that out @Hodor
     
  10. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    Sorry @austing.
    I am very thankful for all your input and asking the question as it shows that you were reading the posts.
     
  11. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,379
    Location:
    Buderim
    In regard to Magellan @The Falcon is the man. But from memory MFF and MGE are quite different. So if you have no choice but to spread your funds it might be worthwhile considering both. Compare their portfolios. Maybe better than loading up too much on the Vanguard ETFs mentioned earlier.

    Ignoring my value comment is IXI offered as a choice? Some of the best companies in the world in that one. As for my timing comment note it's not really an issue for younger accumulators. We are retired with a sizeable portfolio so can be choosy if we desire.

    Not liscenced to give advice.
     
    Last edited: 13th Jun, 2016
    Ynot and Anne11 like this.
  12. Hodor

    Hodor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,238
    Location:
    Homeless
    Yes, IXI is offered in ING super.
     
  13. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,379
    Location:
    Buderim
    There you go.

    An International portfolio example:
    VGS
    IXI
    MFF
    PMC

    With PMC others might disagree but I still have faith in them longer term. Have held PMC for a long time. Kerr Neilson is no dill. And I personally would rather add PMC than VTS + VEU assuming VGS is in.

    Not liscenced to give advice, general info only.
     
    Last edited: 13th Jun, 2016
    Ynot and Anne11 like this.
  14. Hodor

    Hodor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,238
    Location:
    Homeless
    @ErYan - If you can send ING an Email asking for them to add QVE and FGG, apparently they actually listen if they get enough requests and I think they would be worthwhile additions and aren't offered currently.

    Anyway, in the name of this been a Boglehead thread.

    "Assuming ASX index-tracking funds, such as Vanguard Australian Shares Index (VAS) etc., anywhere up to about 50% of your total portfolio in Australian equities should be fine; more than this and you may wish to consider a larger holding in international equity as the risks of portfolio concentration start to outweigh the benefits from franking." - Liberated from the Boglehead Wiki.

    So using the ETFs you mentioned ErYan to build a 50/50 portfolio sounds like a winner if you want to Bogle your way to Super fund success and you can credit Wiki for it.
     
    Ynot, Realist35 and Anne11 like this.
  15. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,379
    Location:
    Buderim
    Oops again, sorry. Gotta keep reminding myself this is a Boglehead thread so ignore my previous posts.

    Better be careful or @Redwing will be sending in the Bouncers to throw me out of here especially if I've sneaked in some home brew:D.

    Off back to the LIC thread where I belong:cool:.
     
    Ynot and Anne11 like this.
  16. Redwing

    Redwing Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    7,438
    Location:
    WA
    There's an old saying, "Don't let the perfect be the enemy of the good"

    Achieving a perfect portfolio is impossible and increasing efforts and holdings may result in lesser returns. I like to keep it simple

    [​IMG]
     
    Observer, Nodrog and 158 like this.
  17. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,379
    Location:
    Buderim
    @Redwing,

    Is that really you:D? Nice suit!
     
    Ynot likes this.
  18. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,379
    Location:
    Buderim
    Another advantage of index funds / ETFs.

    I see in the AFR this morning an article "Blue Chip Stocks of the Future".

    Here are some extracts from the article designed to scare investors:
    Well guess what, owning an Index Fund does all the work for you. So called disrupted stocks, failures, the challenged, those taken over and the like either drop down / out of the index whilst the disrupters, strong growers, high quality stocks and those with brighter prospects etc work their way into / up the index.

    Or to put simply, OUT WITH THE BAD IN WITH GOOD:).

    Which is why, albeit a little reluctantly at times, I hold VAS in our portfolio sitting along side our older LICs.

    But for LIC investors, don't panic. Those LICs that have survived decades have done so because they understand all this. Look carefully and you will see small but gradual changes occuring in their portfolios reflecting the above changes. But by the same token they are wise enough to know that you don't rush into so called paradime shifts. Thus avoiding the Tech Wrecks etc in the past. Plus one would hope these wise heads would be avoiding some / most of the BAD in the first place!

    Bugger I can see @Redwing with his Meerkat bouncers heading my way to throw me out of the Boglehead Thread. He knew I wouldn't be able to resist giving LICs a plug:p. Quickly, quickly I say to myself whilst rushing out of here on my wheely walker:eek:...:eek:........:eek:.................:eek:... . Phew, made it out just in time :p:p:p.

    Not advice.
     
    Last edited: 17th Jun, 2016
    Ynot and Jack Chen like this.
  19. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    I sent the email to ING. Standard response:

    As per feedback we received, we recently increased the shares you are able to purchase through your Living Super account this was an increase of shares that you can purchase from the SP/ASX 200 increased to SP/ASX 300. If the shares you are looking to invest in are not in SP/ASX 300 at present you would not be able to trade.

    I have passed on your feedback about the product for future changes and upgrades.

    --------------------
    I will let you know if I hear anything.
     
    Hodor likes this.
  20. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,379
    Location:
    Buderim
    INDEX VS ACTIVE FUNDS

    Not exactly new, but a reminder of some facts in the Active vs Passive debate that has Bogleheads popping Champayne corks when the SPIVA reports are released each year:

    Fund managers get a poor report - Money magazine (7/10/2015)

    And SPIVA- Cross Country Comparison:
    https://au.spindices.com/documents/research/research-spiva-a-cross-country-comparison.pdf

    As a generalisation based on this it would appear that the odds strongly favour:

    INDEX FUNDS for
    1. International (extremely strong)
    2. Fixed Interest
    3. A-REITs

    ACTIVE FUNDS for
    1. Small Caps

    INDEX and ACTIVE FUNDS for
    1. Large Caps
    ... Note that with Large Caps Indexing is the strong winner but there is a somewhat increased chance of finding a consistently outperforming Active manager.

    It is also important to note that market conditions during a given time period may favour one over the other when it comes to active vs passive. However the odds over long time periods do support index investing in certain asset classes.

    It does at least convince me that a Core (passive) and Satellite (active) approach is worth considering in some asset classes such as International. As for Small Caps and Emerging Markets for me personally it's 100% Active Management only.

    NOT ADVICE.
     
    Last edited: 23rd Jun, 2016
    Ynot likes this.