ETF Investment Allocation ETF or Individual Stocks?

Hi,

I am new to the stock market although I have a great deal of experience with technical and fundamental analysis in regards to financial markets such as foreign exchange as I have active trading accounts. I am considering investing $30,000 into the stock market into blue chip stocks but my question is am I better off buying an ETF such as VAS for the top Aussie stocks or will buying the individual stocks provide a greater return? I also want international exposure so I know I am intending to buy an ETF owned in Australia for that as I do not want to deal with the foreign tax implications. Therefore my options are

1. Buy individual aussie stocks but international ETFS for foreign market exposure.
2. Buy aussie ETFS for aussie stocks and aussie ETFS for international stocks.
3. Buy individual aussie stocks, but buy aussie bond, property ETFS. Also buy international ETFS for both blue chips and emerging markets.

I am leaning more towards buying individual stocks since I do have the technical and fundamental analysis skills to analyse stocks at optimal buying times although I am wondering if just buying ETFS would provide greater yield per say?

Would anyone suggest which would give me the greatest return over a long term period of 30+ years considering I am going to keep reinvesting the dividends for compound growth no withdrawals, as well as regular lump sum deposits into either of the 3 options of whichever I choose unless someone can suggest a totally different path?

Thank you for your time and suggestions

 

The easiest and surest option will be investing via ETFs for both Aussie and International shares.

Although if you’re super interested you could try picking your own stocks too. But higher returns are far from guaranteed!

A higher dividend yield will be easier to achieve with picking stocks, because obviously you can leave out the low yielders. But that doesn’t mean higher overall return.

It depends how simple you want the approach to be.

You could do both. Invest mostly in ETFs or LICs for the core of your portfolio to ensure an excellent long term result and protect against yourself, while picking a couple of stocks here and there to satisfy your interest.

 

Oh I see. So a higher dividend yield wont actually contribute to the overall return? I was liking the idea of individual stocks due to the franking credits attached too. But I do see your point of aquiring ETFs and LICs for the ease and piece of mind.

 

I think of it this way

Speedboat vs Tanker

The big tanker is designed for the longer voyage, moves very slowly, take a long time to get up to speed or to change direction, but is generally unfazed by the ocean currents and waves, and has a large crew on board.

The speed boat is designed for shorter voyages is swift and agile and a lot more fun, has a smaller crew on board but can be thrown about more in rough weather, the risk of capsizing is greater



Though most Tankers have a tender or two to get into shallower waters



Picture above used as it looked better than this ..

 

Haha a good analogy to use towards this post. Thanks for the feedback

 

Higher dividend yield will contribute but it doesn’t mean the total return will necessarily be higher. Basically high yield doesn’t equal high returns. Otherwise we’d all just buy high yield stocks.

I like dividends myself and tend to lean towards higher income paying stocks and LICs.

But lower yielding stocks are good to hold too because they often have high dividend growth which can result in much higher income over the longer term.

Think about a low starting pay in your job, but you get a 10% payrise compounded each year. Soon enough you’ll be earning way more than if you went for the higher paying job with 2% wage rises.

Luckily for lazy investors like myself, most LICs and ETFs will hold a balance of high yield, low growth stocks and low yield, high growth stocks - meaning we don’t have to do anything

Picking a couple of companies here and there can add to the entertainment and satisfies the interest some of us have, but it also adds to the administration and portfolio management too - meaning more time consuming and more to think about.

 

Thanks for that feedback definitely something to think about in relation to my next purchase. I guess the only question remains is upon how to diversify myself amongst LICs and ETFs such as which ones offer the best return in regards to Aussie exposure like VAS/STW or foreign shares like VGS. Are there any LIC's on the asx which currently offer international exposure?

 

Check out DUI - About us

Their latest NTA (Net Tangible Asset) report - here

Cheers,
Oracle.

 

Why not put 1/3 in LIC, 1/3 in blue chip with good yield and 1/3 in great potentials (trading ones). All Australian.
See what works for you. Learn about your own attitude when the market plays up. Learn about your habits.

 

Or if one prefers a more active approach PIC can hold up to 25% International. Fee noticeably higher than DUI though. More mid cap focused for ASX.

PIC (run by Perpetual) is a high conviction, value Mgr which is probably what one wants if adding an active Mgr as opposed to an index hugger charging high fees.

https://www.asx.com.au/asxpdf/20180214/pdf/43rl0bvvv2blsz.pdf



Rather than Index vs active I quite like the idea of Core / Satellite as a strategy. Index / index proxy product as a major Core with non-index aware active Mgrs / individual stocks as Satellites.

Not advice.

 

I would put PMC up as an option.

Rather than fluff around at the edges, they’re essentially an all International LIC - and a good one to compliment VGS.

Have a poke around their website and read a few reports to get a feel for how they operate.

Platinum Capital Limited - Platinum Asset Management

 

$2.07 for shares worth $1.75, not at the moment thanks.

 

They also offer actively managed EFTs which trade at NAV.

ASX Quoted Managed Funds - Platinum Asset Management

 

Personally if one feels the need for something active to complement an International Index ETF I personally like FGG. Cheaper than most other active product and covers all bases. The list of Funds (all quality Mgrs) in the LIC:



https://www.asx.com.au/asxpdf/20180214/pdf/43rl5n9cmhzrws.pdf

Not advice.