Optimum Vanguard Allocation

Discussion in 'Shares & Funds' started by Kelly88, 9th Dec, 2019.

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  1. Kelly88

    Kelly88 Well-Known Member

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    Hi all

    Just a question for a friend. He has $100K to invest now and he is quite inexperience with shares. He is thinking about putting it in Vanguard wholesale. What is his best allocation now for: fixed interest, Bond, Aus shares and international ? He is thinking about having a starting point and then move all 100K to shares after a few months.

    Thank you so much in advance
     
  2. geoffw

    geoffw Moderator Staff Member

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    This is individual advice, and it wouldn't be good for unlicenced advisors such as ourselves to answer.

    The "best" allocation depends on a number of factors, like risk tolerance, age, financial situation and so on.

    A financial advisor though may charge a lot more than your friend's investment is worth.

    Perhaps an advisor can give just a too level advice?
     
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  3. mtat

    mtat Well-Known Member

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    We can't decide on an asset allocation for them because:
    1. You haven't told us anything about them
    2. They need to decide for themselves based on their risk tolerance

    This is a good starting point.

    We don't know anything about them but more than likely this product will be suitable for them.
     
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  4. Gen-Y

    Gen-Y Well-Known Member

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    Isn't wholesale needs to buy in $500k trench?

    Investment Products
     
  5. LeeM

    LeeM Well-Known Member

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    You can start with $100k for wholesale. I called them this morning.
     
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  6. Absent

    Absent Well-Known Member

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    When I called them I was told that you need $100K per ETF; so 50/50, VAS/VGS, for example, would require $200K.

    I still have my doubts about this so would like confirmation and intend to call them back at some stage.
     
  7. Kelly88

    Kelly88 Well-Known Member

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    Yes, I called them yesterday and you need 100K per fund, not 100K for the whole portfolio, so @Absent: you are correct.

    @LeeM: according to them you can start with 100K, but only for one fund.
     
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  8. DoggaPP

    DoggaPP Well-Known Member

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    There is a little loophole to this (a friend has done this so I know it works) - you can apply for one of the funds and deposit your 100K then start BPAYing in as you would normally, then, down the track when there is $105K in the fund you can apply to have $5K siphoned off to one of the other available accounts then continue to just BPAY into that fund (each will have its own BPAY code). $5K is the minimum that V allow in a wholesale account.

    This method probably does not align with the spirit of the rules Vanguard have laid down (!) but I have it on good authority that it is possible.
     
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  9. Redwing

    Redwing Well-Known Member

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    upload_2019-12-10_12-59-33.png
     
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  10. Froxy

    Froxy Well-Known Member

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    Juat put 100k in the wholesale cash fund and then after account opened follow @DoggaPP lead and split between aus/global or just go as above high growth
     
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  11. Kelly88

    Kelly88 Well-Known Member

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    I look at Vanguard LifeStrategy® High Growth Fund and after 100K, the fee is the same as the wholesale fund, 0.29%. So there is no need to change to the wholesale fund. Do I miss out on anything here ?

    Investment Products

    Thanks.
     
  12. Froxy

    Froxy Well-Known Member

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    100k gets you into the wholesale version.

    The retail is a tiered. First 50 at 0.9 next 0.6 then 0.29 so your first 100 is 0.75
     
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  13. Kelly88

    Kelly88 Well-Known Member

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    Yes, but if you don't have 100K to start with, or don't want to start 100K at once, then you can just slowly build up to 100K and then stay there as the fee is the same at the wholesale one (and only 0.02 more than the equivalent ETF). Is it correct ??
     
  14. Nodrog

    Nodrog Well-Known Member

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    The tiered fee with retail funds applies to “each” separate fund. Ok if you’re only intending to own a “single” diversified fund but if owing multiple funds it is costly. Trouble is with owning just one diversified fund is that with age you may want a more conservative asset allocation but can’t change to a different diversified fund without being hit with CGT. So you may want to add say a bond fund but the tiered fee will apply all over again.

    Rumour has it Vanguard is lowering the fee on their unlisted Funds soon. Ring them and ask. They generally won’t talk about upcoming changes but really pressure the operator saying how important this information is for you in making a decision.
     
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  15. DoggaPP

    DoggaPP Well-Known Member

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    The whole fund does not drop to 0.29%, only the amount invested above the $ figure - so it is not the same unfortunately
     
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  16. Kelly88

    Kelly88 Well-Known Member

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    @Froxy and @DoggaPP: thanks, now I get it. It seems that the wholesale version is a better option :). Honestly, I like the idea of BPAY, set & forget, and the simplicity of tax return.

    @DoggaPP: can you explain again how you calculate capital gain tax later ? Do you need to keep the record of each BPAY ? Thanks.

    @Nodrog: thanks. I suppose if you move funds around the wholesale, you need to pay CGT also ?
     
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  17. DoggaPP

    DoggaPP Well-Known Member

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    You do not need to keep a record of each BPAY for tax purposes (the Vanguard site has a transaction history section anyway) as Vanguard works out the realised Capital Gain amount for you and states it on the yearly statement. In the simplest terms, CGT is calculated using any capital gain realised within a given financial year e.g. you buy X asset for $100 and sell it later for $150 then the capital gain will be the $50 increase on the price you originally paid for X asset. That $50 will be a taxable capital gain in the financial year that you sold it AND will be taxed at your marginal personal taxation rate of that particular financial year. So if you were in a high tax bracket for that financial year, it would be taxed at that level and conversely if you were earning very little and were in a lower tax bracket, then it would be taxed at the lower level. There are lots of other considerations with CGT, but that is the basic nuts and bolts of it.
     
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  18. Nodrog

    Nodrog Well-Known Member

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    No need to. Just add new cash to underweight / new funds. Unlike retail funds with tiered fee per fund same fee applies regardless of number of wholesale funds.

    If rumours are true not only will there be a fee reduction but the process of investing in Vanguard unlisted Funds could be vastly improved in the not too distant future.
    Vanguard plans to tackle locals in super
     
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  19. LeeM

    LeeM Well-Known Member

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    @DoggaPP do you mean once the account is $105K, you can siphoned off the $5K to another different Wholesale account? so, you'll ending up with 2 wholesale accounts, one with $100K and the other only $5K (2 different products)??
     
  20. DoggaPP

    DoggaPP Well-Known Member

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    Yep - then you can start feeding the smaller one
     
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