Join Australia's most dynamic and respected property investment community

The Perfect Portfolio

Discussion in 'Other Asset Classes' started by Blacky, 27th Feb, 2016.

  1. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    1,104
    Location:
    Bali
    Peter Pippers Perfect Portfolio (that just sounds cool - but is complete irrelevant to the post).

    I a pretty basic understanding of the share market - Im trying to learn more (I think I would like to trade) but right now I dont have the time to focus on such ventures.

    So - Im time poor. I currently have a small holding of VTI denominated in USD.

    Im looking to grow my portfolio. The plan is a long term hold which I will add to over time, and will utilise some leverage to help. Where possible I will re-invest dividends, where I cant - dividends will be used to fund interest and/or debt reduction.
    I like ETF's as they give good diversity, are simple and cheap. Im not keen on creating a portfolio of individual stocks, purely because of the work involved in picking them, and with the limited funds available my divestment wouldnt give me a lot of cover.
    Right now Im seeking long term growth.

    The portfolio I have 'designed' is
    VHY - 20% of portfolio
    VGS - 40% of portfolio
    VTS - 40% of portfolio

    I will continue to hold my current VTI - but wont add to it.
    The intent is to leverage 50% of purchases initially, but not add to this if there is an underlying increase is value. I will cover interest and margin calls from personnal cash. The remaining 50% will be from cash (not a LOC secured against property for example). But actual cash.
    I have been looking at the Commsec margin loan - which seems about as good as any. Though a 7%+ interest rate isnt appealing.

    Any issues/improvements I should consider to the above?
    Is there any concentration risk with all ETF's being Vanguard?

    Blacky
     
  2. Bran

    Bran Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    3,220
    Location:
    At work
    For less of a novice than you, might I ask why you chose VHY/VGS/VTS and in those proportions?
     
  3. Hodor

    Hodor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    742
    Location:
    Homeless
    Interesting. Why VHY? I would have thought VAS would be more suitable for a growth strategy.

    VGS is 60% US from memory, with VTS as well you are very bullish on the US market with a poor AUD. Is this deliberate?

    I'm currently designing a similar portfolio with a similar level of current knowledge (im guessing). I picked VAS and VGS for ETFs along with two LICs. So my comments may be bias towards those.

    Good luck
     
  4. Redwing

    Redwing Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    838
    Location:
    WA
    Have you checked Westpacs rates?

    My Super has been running for a while on a simple 4 fund
    STW
    VAF
    VTS
    VEU
     
  5. oracle

    oracle Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    142
    Location:
    Canberra
    How much are they?

    Cheers
    Oracle
     
  6. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    1,104
    Location:
    Bali
    If investing in personal names they are currently a smidge above 5%. However, only available to a limited number of shares/stocks, and only available in individual names. Not company/trusts.

    After that they push you to a BT product. I dont like BT having dealt with them in the past. Their customer service leaves a lot to be desired, as does the fee structure.

    Blacky
     
    oracle likes this.
  7. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    1,104
    Location:
    Bali
    You will notice it is reasonably 'heavy' on the US/international market vs the AU market. Yes - this is stategic as I think, esspecially in the near term, the US market has greater potential.
    Also 2 of the 3 provide a DRP. Also strategic.

    I would invest direct into VTI (the US version of VTS) however, it doesnt offer DRP, and ultimately VTS does not hedge the currency so is open to the same volitility.

    These picks were based on my research, prior performance and my own understanding of market conditions.

    Blacky
     
    Bran likes this.
  8. xactly

    xactly Member

    Joined:
    21st Jun, 2015
    Posts:
    23
    Location:
    QLD
    My perfect portfolio I'm still building but the basics are there. It's based on
    "A random walk down wall street. 10th Ed"
    Chapter 14 and 15 is interesting in terms of asset allocation to investment lifecycle.

    It was after reading that book I realised the perfect portfolio is fluid depending on where your life stage is.

    RAndom walk is about the US centric investor and outlines the specific index fund portfolio of the ageing US baby Boomer:

    index funds roughly in the following areas and proportions using ETF/Mfs
    -Cash 5%
    Bonds 27.5%
    RE Equities 12.5
    Stocks 55%
    - US total stock 27%
    - developed markets 14%
    - emerging markets 14%

    If he is talking about exposure to other areas in the above ratio when the US makes 40% of the world markets it is interesting to speculate what he would make of the Oz investors who are playing in a 2% of the world market pond.


    if you exclude bond/ RE and cash then of the 100% he sinks into the markets (as opposed to 55% of the whole portfolio) the breakdown is:

    US 50%
    developed 25% (insert ASX here)
    emerging 25
    I don't think this will work in Oz we have too many banks and miners in the mix for broad diversification with indexes


    As I head towards retirement in 15 or so years I'm going to be loving franking credits and Aus stocks but for now my mix is

    Oz 40%
    WHF AFIC ARG VAS QVE A couple of direct holdings RHC etc
    Global inc US 40%
    IXI IXJ VOO VTS and some direct holdings on S&P inc BRK
    5% emerging markets and 5% flutter on stocks.

    I'm happy buying lics and indexes. Im not a trader. I can't keep the cool head needed and I don't have the time. I have all my major purchases now. So I just save up a set amount then top up whichever is lowest.
     
    austing likes this.