ETF Recommended index funds ?

That's where I'm at too. And even then my cash is in offsets against deductible debt.

 

Found an old article with performance table on Microcap

Which microcap funds outperformed in FY18?

 

if bond is a must, i would keep it as ultra short 1-2y duration. even if one wish to hold "long term" for next 30yrs, there are no yield along the curve to make it attractive. this irrespective whether you invest in a constant maturity Bond eTF buy actual bond and hold.

also depends on your inflation view. Inflation is bond nemesis. right now what works best is long tem asset inflation financed by low cost of carry... which is exactly why property is so hot, it ticks all boxes. i think REITs for this reason is better than bond, both suffers when interest rate rise but risk premium availablr for REITs make it more bearable coupon.

 

Same. I wonder if Australian investors love for leveraged property is why bonds are less popular here.

I expect quite a few people hold bonds in default balanced super funds without even realizing while also holding debt outside super. I guess that’s ok if it reduces the risk of them switching to cash in a downturn.

 

I have balance index fund for super with ICR is 0.04% which is significantly better performing then other super which was high growth but with higher fees ..!

Fees in superannuation kills investment returns if they are high end of market.

 

Bonds are the opposite side of that trade. Security vs Risk. Bonds for most people should play a minor role, if any, during the accumulation phase.

Most people hold the default “balanced” option in super. I’d suspect very many property investors would too.

 

Relevant to the above discussion a really interesting summary and analysis of the proposal in the 2010 book “Lifecycle Investing” by Ian Ayres and Barry Nalebuff. They argue that a large subset of investors should adopt a (currently) unconventional strategy: One’s future retirement contributions should effectively be treated as bonds in one’s retirement portfolio that cannot be efficiently sold; therefore, early in life one should balance these low-volatility assets by gaining exposure to volatile high-return equities that will generically exceed 100% of one’s liquid retirement assets, necessitating some form of borrowing.
...
The authors conclude that when many people are young they should buy equities on margin (i.e., with borrowed money) up to 2:1 leverage, at least if they have access to low enough interests rates to make it worthwhile.

Review of "Lifecycle Investing" - LessWrong

Lifecycle Investing

 

equity on margin its an interesting thought but the rates you pay may be prohibitive. i just done random search tellling me its 4-5pct range

Westpac Online Investment Loan

so dividend income is largely used to pay cost of carry whilst running risk of margin call. one must habe strong confidence in price upswing

i think to get same effect, would use equity release from real estate to finance equity. the interest is lower and avoid margin call. despite best of plans black swans do occur with 50pct+ drawdown that usually recovers quickly, but with margin you are stopped out at the low

 

But where does this concept of investing fit in?

 

For sure, it's down the list of the most important things.

 

Good point.

It must be the nature of us. We seem to need to somehow find a method of making a simple thing complex. Pretty big challenge to go the opposite way.

As long as it all works out fine it doesn't matter really.

 

did author defined at what age one should stop taking margin loans?

I am new to investing and like many in australia I jumped to ASX in March 2020 and my portfolio runs 60% to 80% above my original investment as i entered at lowest point. Which made me think that I am good at picking stock so I invested in two companies after oct 2020 thinking i am now good at picking stock but both those companies running 50% loss to original investment amount .

with my own investment lesson, I am now disposing my stocks slowly to avoid too much of capital gain tax and hopefully by june 2022 or august 2022 i will fully transition into ETF (mostly VGS/QUAL, VDHG, VDGR) and remaining cash in high interest OZ bank.

Similarly, margin loans are risky and no one except those professional in investing should think of it and particularly young people should be staying away from it in my opinion.

 

Agree, use of leverage with stocks in practice introduces a range of complexities and risk factors that make it entirely unsuitable for most people. Although there's evidence that sensible leverage at a reasonable cost in the right hands of a broad based cap weight index is less risky than a highly concentrated portfolio in the wrong hands.

 

I think most people could deal with a product like NAB EB in a sensible fashion. Problem is by the time most people are ready for such a product, they've already maxed out their serviceability on their PPOR and by the time it's paid off (probably after moving 1-2 times and extending that loan out), they're near retirement and can't take on the same risk.

 

Thank you so much for the suggestion.... it is the best tool i have seen so far for ETF portfolio checks.... I used combination of ETF and checked portfolio performance over last 5 or 10 years and i am leaning more and more towards VDHG ad VDGR. I wanted to have VGS in the mix but $100 is way too much to invest ( can't buy frequently due to high per unit cost).... so looking for something similar to VGS... but lower entry point... !

By the way any suggestion to replace sharesight? similar but more reasonable to manage portfolio plus tax reporting.. thanks in advance.

 

WXOZ is equivalent to VGS but a higher MER (0.3% vs 0.18%) and a $40 unit price.

I hope you are using Superhero with zero cost brokerage if you are investing such small amounts otherwise the brokerage will drag significantly on your returns.

Another option is the managed fund version of VGS via Vanguard Personal Investor. A little tax efficient being a managed fund, but no minimum purchase after an initial $500

ShareSight is free for up to 10 holdings.

 

I use selfwealth as it is Chess while superhero is not so don't want to take a risk.

When I started investing last year, i had around 19 company stocks in my portfolio. however over the last 1 year, I realised that it is not worth reading every company report and forum and spend time when i can get at least 7% to 8% in ETF per year without doing all those hard work... so i am now selling my stock as i get better price and some even without better price with all those fund going into VDHG and VDGR.

i tried link you provided and nothing beats VGS, VDHG combination in last 5 years at-least but high entry price of VGS is something i want to avoid otherwise i would have added more VAS.

Sharesight was good and i had 10 shares into it at first then i sold some stock so i thought i can add new company in to that portfolio but i realise they only allows 10 stock max. unless you buy subscription. so basically you can't simply sell investment and then add more later on... if the subscription was $10 for unlimited shares then i would have used them but $20 only allows for 20 shares basically... which is not worth it..it is shame that there isn't any affordable or even equally competitive service such as sharesight ... ! hope @SelfWealth do something similar as it will add significant value to their services... !

 

I’m not following the issue with the $100 unit price on VGS. Are you investing less that $100 at a time?

Use this calculator to work out the optimal investment frequency based on savings rate and brokerage cost,
Investment Frequency Calculator

VGS is a great option. When building a portfolio though, I’d be wary basing decisions on 5 year past performance. VDHG contains VAS, VGS, VGE, VISM as well as 10% bonds so is more diversified depending what you are looking for.

Keep currency risk in mind as well depending what other AUD assets you have.

 

Two reason @ why I don't like $100 entry point. 1. psychological (i love quantity with quality) and 2. I believe the correction to market is inevitable so I might jump if and when that happens and until then i will use VDHG & VDGR on 50% basis. Combination of these two over last 5 year has provided roughly 9% which includes dividend of 5% and with my current investment appetite i prefer constant performer with dividend then something that goes down -40% and jump back to +180%.

thank you again for very good calculator... never thought such thing exist... !

 

This makes no sense and you should work on changing your thinking instead of indulging it.

This is like saying buying lots of cheap properties is inherently better than buying fewer more expensive properties.