Putting all my eggs in the VDHG basket?

I'll be throwing some money into shares on a regular basis moving forward and will likely have $100k in there within 6-12 months and grow it by around $5k per month.

My strategy is just to buy 100% VDHG monthly and keep them long term. I like the fact that it's a simple to manage solution where I don't have to rebalance my holdings etc etc.

Am I throwing too many eggs in one basket by only owning VDHG? I like the weighting that VDHG provides so there doesn't seem to be any reason to buy anything else, as that would just throw the weighting out.

Thoughts?

 

It's pretty diversified.
Suggestion is to keep everything they send you as some of it might be needed in the future for capital gains calcs. If you are keeping these long term, having a system is important as you might be keeping these for 50 years.

Scan everything and name the files so that your accountant or executor knows whats in there. A simple naming system might be:

VDHG 2020-07 Buy contract note

Have you decided what entity you are buying in? 60k a year adds up.

 

Open a wholesale index fund and avoid brokerage. You can do that with 100k. I do that with the VDGR version.

 

Sorry to hijack your thread @Jmillar.
@CSDS I have registered on the Vanguard website and put in a request to buy some VDHG ETF for a far far smaller amount than 100k
It says there is no brokerage for Vanguard ETFs. Am I missing something?

 

• What is VDHG and why should I invest in it?

VDHG is Vanguard's Diversified High Growth ETF. It's an ETF consisting of other Vanguard ETF's, giving you an incredible diversified portfolio with only one fund. It's perfectly fine to go all in on VHDG and is the generally recommended approach for beginner investors. It's management fee (MER) of 0.27% is higher than some individual funds, but the simplicity and lack of rebalancing makes it very worthwhile. It removes the emotional side of investing which is something that shouldn't be underestimated.

Read these articles in full to understand VDHG and what it consists of:

VDHG or roll your own - Passive Investing Australia

Should I diversify out of VDHG? - Passive Investing Australia

• But what about a portfolio of some combination of any these funds: VAS/VGS/VGAD/IWLD/A200/VAE/VGE/other commonly referenced funds?

These funds can be used to essentially build a DIY version of VDHG for a lower MER, but come with the additional effort and emotional difficulties of rebalancing manually. If you go for a 3-4 ETF approach, make sure you're the sort of person who's okay buying the worst performing fund over and over - don't underestimate how difficult it can be to stick to your strategy during a market crash.

The % allocations in your portfolio are up to you. It depends on what you are comfortable with. The smart people at Vanguard have done the maths for VDHG so their allocations are a good guide, but if you prefer more international exposure over Australian, bump that up by 10%! There's no "right" answer and no one knows what the markets will do. Just make sure your strategy makes sense. 100% in Australian equities means you're only invested in ~2.5% of the entire world economy, which isn't very diversified.

If you want to put 10% of your money into a NASDAQ tech ETF because you think it's a strong market, go for it! People on Reddit don't know your situation, do your research and pick what you're comfortable with that makes sense. But remember that the safest strategy that will make you the most money in the long run is generally the most boring one.


More info here.
New to FIRE and Investing? Start here! [FAQ CONTRIBUTION THREAD] : fiaustralia

 

Thanks. I've read that. I've done plenty of reading on VDHG and pretty happy with it - just doing a reality check.

 

I know of a few people who just have VDHG and top up regularly

 

Yeah, seems like this is the go for a nice diversified portfolio that doesn't involve thinking.

Doesn't seem to be any good reason to try and outperform this ETF so I think I'll keep things simple and just go with VDHG.

 

Apparently you do now need $500K for the wholesale funds, this changed a few months ago - although I haven't tried asking. And I'm not sure what happens to those that were already in with just the $100K.

 

You are using Vanguard Personal Investor. Different platform to buy same product. You will be charged I think 0.2% for assets under management up to $600yr. Still a reasonable option

 

I see.

I got in in May 2019 with $100k. Have $330k and nothing has changed.

 

One great thing about VDHG is that in the future if you decide to lean your investment in a particular direction then the VDHG element becomes a great anchor for the rest.

EG if you want more AU exposure maybe 70%VDHG + 30%VAS. Or if you want some play money in individual stocks and some in NDQ then maybe 80% VDHG, 10% NDQ and 10% asst etc

I feel that VDHG and similar funds are really good as a stable long term core for a portfolio. But thats just my thoughts

 

1. CGT realised inside the EFT as it rebalances and passed on to holders @ tax time
2. The 0.25% (?) annual fee (capped at $600) to use the Vanguard personal platform

 

Is average volume a concern with vdhg? Seems to be about $1 million a day?

 

No concern at all. VDHG is as liquid as its underlying exposures.

Meet the market makers spread and vast liquidity (100,s of millions under normal market conditions) can be accommodated by the market makers buying/selling the underlying basket of assets and swapping with Vangaurd for creation units.

Abnormal market conditions, ETF liquidity will dry up in alignment with the underlying markets. Just like everything else.

VDHG has good growing FUM and reasonable spread. Longevity of the fund doesn't look to be at risk.

 

So, in essence, you mean it is better to use Vanguard individual investor platform?

 

I recently did something similar and consolidated almost all my various funds into one core holding of the wholesale fund version of VDHG. The temptation to fiddle was too high with the different funds. I still have a couple of satellite active plays with Hyperion, and a bond/cash component which I plan to use to rebalance or reinvest (into VDHG), but overall the simplicity of VDHG has won me over.

 

I will be investing $50k shortly. I was going to go 100% VDHG.. vanilla choice I know but the convenience of instantly diversifying & rebalancing is a major draw card for a novice.

This is a long term play with an indefinite timeline, I want it to be as hands off as possible with DRP switched on. For that reason, I am also looking at potentially adding an allocation to NDQ (purely for growth potential)... was thinking of doing 90/10 split between VDHG/NDQ... so end up invested in $45k VDHG + $5k NDQ?

I understand that VGS has a lot of the NDQ holdings already, so not sure if I also need to add NDQ (as I’d be doubling up?) or should I just KISS and stick with my original plan?

 

I would personally keep it simple. Even if NDQ does outperform is that 10% allocation going to result in a significant outperformance in your total portfolio.

 

What does everyone think about the 'new & improved' DHHF fund? Which is 100% growth... What's the chances Vanguard eventually adjust their strategy of VDHG and remove it's allocation to Bonds?