ETF Vanguard VDHG or VEU, A200 and VTS

Discussion in 'Shares & Funds' started by LeeM, 17th Dec, 2019.

Join Australia's most dynamic and respected property investment community
  1. LeeM

    LeeM Well-Known Member

    Joined:
    4th Sep, 2018
    Posts:
    111
    Location:
    Gold Coast
    After a long day of researches online, I'm about to buy the VDHG in a big lump sum. However, I saw this threat from Reddit Rookie Q- Why is VDHG so popular? : fiaustralia and it comparing this with the other 3 ETFs: VEU, A200 and VTS. Do you think VDHG will do a better job instead of buying those 3? For diversification argument sakes? how about costs? Which way would you go?

    Also, is it better to buy EFT for VDHG or retail fund direct with Vanguard?
    thanks
     
  2. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    10,502
    Location:
    .
    Retail direct fee with Vanguard way too expensive. $100k minimum needed for wholesale option but much cheaper fee. Best option if prone to fiddling and trying to time buying etc which is a much greater problem when buying ETFs through a broker. Simply open an account for wholesale fund with Vanguard, setup auto Bpay then forget about it.

    VEU, A200 and VTS very cheap fee wise. But the onus is on the investor to rebalance and maintain regular buying discipline etc. Don’t under-estimate how difficult it is to maintain discipline and avoiding stuffing around with the portfolio. International ETFs not locally domiciled, just creates further complication although some don’t consider it a big deal.

    If one doesn’t have $100k to get started with wholesale unlisted fund option then VDHG is the simplest listed option. Fee might be a bit more expensive but rebalancing is done for you. Importantly by using a diversified fund there’s potentially less likelihood of the temptation to fiddle and favour one ETF after another.

    Essentially even the most experienced investors have issues with messing with their portfolios often to their detriment. The best option is likely one that removes the investor from the process as much as possible. Hence the low fee widely diversified Vanguard wholesale fund equivalent to VDHG with auto BPay meets that criterea. Once setup leave well alone. The biggest enemy to investing success is the investor themselves. Hence bear that in mind when comparing funds and FEEs.

    Not advice.
     
  3. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    10,502
    Location:
    .
    Anne11 and LeeM like this.
  4. LeeM

    LeeM Well-Known Member

    Joined:
    4th Sep, 2018
    Posts:
    111
    Location:
    Gold Coast
    Thanks so much @Nodrog. You summed it all up really really well all the information I read for the past many days about this matter. Why didn't I asked you earlier....could have saved me hours of my life! I really appreciate it.
    In regard to diversification, that Reddit threat also discussed about 'what happened if Vanguard goes under'...It made me a bit worry, because I'm about to invest in Vanguard's products in 3 different accounts (myself- with over $100k; my teenager daughter- with $35k and an 11 years old son- with $25k). Either direct through Vanguard or EFTs through Selfwealth, but different products like VDHG, VAS, VGS, VAE. I'm not sure how to go about doing this for all three of us.

    If it's you, how do you go about doing this?

    Note that I'm also considering LICs, and yesterday I bought some MLT.

    Thanks for fore-warning me about fiddling with the portfolio and messing it up.
     
  5. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    10,502
    Location:
    .
    Get the structuring / tax side of things sorted before even thinking about buying anything.

    @Terry_w might be kind enough to give some direction in regard to investing for your children. I’m somewhat rusty on this area.
     
    LeeM likes this.
  6. Synergy

    Synergy Well-Known Member

    Joined:
    6th Jun, 2019
    Posts:
    164
    Location:
    Brisbane
    I do a200/vgs and on the fence about vge (emerging markets). I buy and forget, dont bother watching it. At the time I bought a200 there mer was half of vas but since then vas has come down to 0.10% vgs is aussie domiciled and no tax form to fill out. Mer is up there but when betashares releases there vgs copy then im hoping vanguard will lower it from 0.18

    Most people on reddit are vdhg biased. But you pay a convenience mer for all in one 0.27. It depends on what type of investor you want to be.

    Barefoot recommends 75% Vas,15% Vts and 10 Veu
     
    LeeM and Silverson like this.
  7. Kelly88

    Kelly88 Well-Known Member

    Joined:
    27th Jul, 2015
    Posts:
    75
    Location:
    Sydney
    @Nodrog sums up perfectly. I started with buying ETF but for me, it was too hard to set the price each time I want to buy and watch the market. It's also a very difficult decision about which one to buy. So for now, I'm thinking about starting with the retail or wholesale funds that I can just BPAY in and forget all about this.

    @LeeM: tax will be high if you invest $25K for your son. Dividend will be ~1K and anything over $400, it is taxed at very high rate.
     
    LeeM likes this.
  8. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    10,502
    Location:
    .
    Yes a sharemarket broker account where it has all the elements of an auction process but one can buy instantly at the touch of a button has a tendency to bring out all sorts of demons. Many underestimate the problems this can cause.

    I shudder to think how much wealthier we’d be if I had enough sense to do what I suggested above early on. Unfortunately I seemed to have had every bad behavioural trait possible. It’s taken a long time to overcome the worst of these and I’m still far from perfect. As I said earlier the worst enemy of investing success in oneself.

    Get a plan in place then automate it (eg periodic BPay) as much as possible to protect one from oneself. Then let it do it’s thing whilst you get on with the rest of your life. The more you leave it alone the wealthier you’re likely to end up.
     
    codeninja, Gypsyblood and LeeM like this.
  9. Kelly88

    Kelly88 Well-Known Member

    Joined:
    27th Jul, 2015
    Posts:
    75
    Location:
    Sydney
    @Nodrog: what do you think about VAS/VGS ?
     
    LeeM likes this.
  10. pippen

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,297
    Location:
    australia
    Just buy vanguard wholesale equivalents of vas and vgs as individual funds, bpay every month or pay! Done and dusted
     
    Sticky and LeeM like this.
  11. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    10,502
    Location:
    .
    I’m a great fan of VAS / VGS, they’re my only two index holdings. The rest is a small number of LICs. Overtime VAS / VGS will become a larger and larger part of the portfolio. If I was younger I’d likely hold VAE or VGE as well.
     
    LeeM, number 5 and Burgs like this.
  12. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    10,502
    Location:
    .
    +1 if you want to avoid the listed path and potentially avoid the issues mentioned in previous posts.
     
    LeeM, number 5 and pippen like this.
  13. pippen

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,297
    Location:
    australia
    Yep, you will get close of business price of course when you buy so u cant jump in and out but do you really want to be on commsec all day looking at prices! Get that long term wealth building plan underway ASAP!
     
    LeeM likes this.
  14. DoggaPP

    DoggaPP Well-Known Member

    Joined:
    23rd Jul, 2018
    Posts:
    319
    Location:
    Lake Macquarie NSW Australia
    Oh, how utterly true. Yet some people seem so 'together'. e.g. I look at my 5 daughters with amazement how they approach their investing - they all set their phone alarms for 2pm Friday afternoon and invest whatever they have on hand (usually $1K or more). Some use Commsec pocket (using IOZ only) others of them use Stockspot and another uses Australian Unity 10Invest (VAS wholesale under the hood). It takes them 30 seconds a week and they get on with their life. I so wish I was like that - they clearly inherited their mother's good sense.
     
    codeninja, pippen, Gypsyblood and 6 others like this.
  15. Snowball

    Snowball Well-Known Member

    Joined:
    28th Dec, 2016
    Posts:
    843
    Location:
    Perth
    I can only assume a hefty portion of credit goes to you as parents for steering them in the right direction! Fantastic habit (regular investing) to pass on. Priceless really.
     
    Gypsyblood, LeeM, DoggaPP and 4 others like this.
  16. Synergy

    Synergy Well-Known Member

    Joined:
    6th Jun, 2019
    Posts:
    164
    Location:
    Brisbane
    I wish i knew about 10invest before i started genlife for my 2 kiddos (3 mths + 5 year old) only found out when barefoot did a review on them. But he said if youve started a investment bond then dont change. 0.69% mer with VDHG. I put in 5k a year each for them and will til they 25.

    My 5 year old boy tells my wifey "be frugal" whenever she says she going to the shops.
     
  17. DoggaPP

    DoggaPP Well-Known Member

    Joined:
    23rd Jul, 2018
    Posts:
    319
    Location:
    Lake Macquarie NSW Australia
    Actually 10Invest is a pretty good product. It allows you to access Vanguard wholesale products at fees well below retail fund prices (0.46% total fee structure for wholesale VAS equivalent) for as little as $1000 initial deposit. Depending on your circumstances, you can strategically break the 125% rule to ensure that all draw downs have 30% tax credit applied (e.g. if you are retired this works great). Investment bonds are not just for kids IMO - they are very misunderstood (just read the woefully inaccurate ravings on Reddit and Whirlpool!). IMHO, as long as the fee structure is under 0.70% then it is probably one of the best out-of-the-box products after Super. It is also a good way to hold wealth if owned inside a trust as Investment Bonds are not deemed as an income producing asset and thus are very helpful for older people needing to reduce their assessable income for centrelink. The thing that makes most Investment bonds a bad choice is the wrap fees by the provider, but Australian Unity has busted that threshold now with the 10Invest product. Also, most people do not understand how unrealised capital gains are treated inside investment bonds - there are some very wild theories out there that are simply incorrect.

    Not advice etc
     
    Gypsyblood, number 5, LeeM and 3 others like this.

PFA Property Expo is designed in a way that visitors can gather maximum real estate knowledge with added benefits. Different speakers will be presenting on different topics as where to buy, when to buy in this market...