ETF How to build ETF/Index funds portfolio for long term

Discussion in 'Shares & Funds' started by mkbonline, 17th Oct, 2019.

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  1. mkbonline

    mkbonline Well-Known Member

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    I have been doing desk research on building ETF/Index funds portfolio for long term. I am almost 40 now and both myself and my spouse are in highest tax bracket but not much to speak about in terms of investment and wealth creation.

    I came across this article and plan to invest in ET/Index funds for long term - 10 to 20 years (for retirement kitty and kids education etc)

    What are the best Global share ETFs?

    My questions

    1. Given AUD is at all-time low and US market is all time high, it is good time to start investing or hold on till next the market correction? My current thinking is to invest a regular amount - like 20% of monthly savings in S&P 500 tracker and 10% in Tech specific index fund and remaining in PPOR and investment properties loan.

    2. iShares S&P Global 100 ETF (IOO) and Vanguard US Total Market Shares Index ETF (VTS) seems to have solid performance record - 15% p.a. in last 3 years. Any thoughts on which ETF/Index funds for long term?

    3. Which platform would you recommend for buying ETFs and holding for long term (want to avoid holding cost as I plan to hold for 10-20 years). Stake has only shares. CommSec has higher fees and does not have US IPO.

    4. Can i invest on above mentioned ETF from super as well? I am with MLC at the moment but plan to switch to Hostplus (as recommended by Scott page)

    5. On separate note, Scott Page (Barefoot Invester) talks about Australian Foundation Investment(AFI) as an alternative route to invest in AU companies - but looking at 5 year chart - it hasn't moved much !

    Thanks for your help and guidance.

    Cheers,
    MKB.
     
  2. willair

    willair Well-Known Member Premium Member

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    There is a post about the barefoot investor and his grandson within this site ,maybe read that post for some guidance ..With the platform i use comm-sec but i stay well away from eft's ,i just invest within the asx in banks and asx listed within the top 20 and start-ups from 20 cents up to $2-50..When you look at some of the charts that are out there within the 5-10 years range the story writes itself..imho..
     
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  3. Froxy

    Froxy Well-Known Member

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    Different viewpoint. ETFs are great, but dont extrapolate previous short term performance into future indefinitely.

    VTS has had extended periods of poor returns also. And after a market has outperformed its long term average it will normally revert to the mean over the longterm.

    Buy a diversified portfolio and average in through thick and thin over long term and dont try and time the market. Through market downturns comfort yourself knowing you are buying more at a better price.

    Easiest way to do this in my opinion is VDHG.

    Also with super most industry funds they have an index option at around the same fee as the etf equivalent.
     
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  4. geoffw

    geoffw Moderator Staff Member

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    Just on the platform. Stake is US shares. CommSec is domestic plus OS, but for OS transactions it's comparatively more expensive.

    For domestic, if you plan to buy and hold, look at SelfWealth for the cheapest transactions with Chess sponsorship. The downside is that you need cash in your account to purchase - CommSec allow you three days to settle. SelfWealth is $9.50 per trade regardless of size, CommSec is a minimum amount but with a percentage. A $50,000 trade might cost you $50 with CommSec - both buying and selling. I use both, but I haven't used my CommSec for a while.

    If you want take a poverseas transactions, Stake takes a (small) percentage of your FX purchase. Charles Schwab is a cheap alternative, but they're not quite as user friendly for setting up. For the ETFs you're looking at, you may prefer to stick with Australia for the time being.
     
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  5. mkbonline

    mkbonline Well-Known Member

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    Thanks for your response and inputs. VDHG seems to have grown just 12% net since last 5 years. or I am missing something?

    upload_2019-10-17_8-55-35.png
     
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  6. Froxy

    Froxy Well-Known Member

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    Yep you are missing dividends and it hasnt been around for 5 years. Go to vanguard website.
     
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  7. Trainee

    Trainee Well-Known Member

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    Your reading the scale wrong. The fund only started in nov17.
     
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  8. Redwing

    Redwing Well-Known Member

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    Chasing past performance can sometimes be like trying to catch multiple chickens at once, hard work and not much fun for you or the chickens
     
  9. Froxy

    Froxy Well-Known Member

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    Hahaha will steal that one
     
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  10. mkbonline

    mkbonline Well-Known Member

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    You mean stick to ETFs listed in ASX which are investing in US companies or ETFs listed in ASX which are investing in AU companies?
     
  11. mkbonline

    mkbonline Well-Known Member

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  12. Froxy

    Froxy Well-Known Member

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    IVV and VTS are US market. VDHG is a sort of one stop shop. Anyone who chooses between IVV and VTS is unlikely to notice much difference considering they are almost identical.
     
  13. mkbonline

    mkbonline Well-Known Member

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    Yes. I understand that. But from that article it seems -- "IVV is perhaps the easier product to use. It spares the annoyance of W8 BEN forms and allows dividend reinvestment. "
     
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  14. Trainee

    Trainee Well-Known Member

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    Vdhg seems to be a etf of etfs? So there is a second layer of fees (very low).
     
  15. geoffw

    geoffw Moderator Staff Member

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    All I meant was that you had only referred to ETFs which were available on the ASX. If that is what you want, you won't need a broker in the US like Stake.

    If you're new to this, keep it simple and buy securities which are listed on the ASX. Investing directly overseas is an extra layer of complexity which you may be better to postpone until you've had a little more experience.

    ETFs like IOO and VTS give you overseas exposure without having to go through an overseas exchange.
     
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  16. investoradam

    investoradam Well-Known Member

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    You’ll find companies that offer the etf offer similar products as each other. Once you 100k plus some like vanguard where you can buy wholesale directly them after you have set up an account and there is no brokerage fees
     
  17. Never giveup

    Never giveup Well-Known Member

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    Do you have seprate Chess accounts for Selfwealth and Commsec?
     
  18. Renee17

    Renee17 Member

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    Does this mean with a CommSec account you can have your savings sitting in an offset account for an IP? For e.g. NAB? Whereas Selfwealth you need the funds in the associated account? Probably a stupid question!
     
    Last edited by a moderator: 24th Apr, 2020
  19. Trainee

    Trainee Well-Known Member

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    Asx settlement is 2 days.
     
  20. geoffw

    geoffw Moderator Staff Member

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    What happens is something like this:

    Buying shares. I buy some shares in Company A.
    Commsec - I need to have cash in my account in two days time to pay for the shares.

    Selfwealth - I need to have cash in my account immediately to pay for the shares.

    This mightn't sound like much- except when I'm selling and buying.

    So if I'm selling some shares in Company A, and I need the proceeds to buy some shares in company B. The proceeds will take two days to land in your account.

    Commsec - I can buy the shares in Company B immediately. I don't need the cash in my account for another two days, so I can trust that the money will land in my account when I need that money to pay for the shares in Company B.

    Selfwealth - I have to wait for two days for the money to arrive in my account to buy the shares in Company B.
     
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