Think I’ve read every previous vanguard ETF post on this forum, spent countless hours researching via different platforms end result still cannot decide! Any feedback on my personal situation would be greatly appreciated! We are in our early 30s want to invest $25,000 per year in ETFs moving forward growth is obviously nice but we are more focused on dividends we can enjoy later on in life… 2 options 1) all in VDHG 2) 50% VAS 50% VGS I know this has been spoken about a million times on this forum and every other forum but I still cannot decide and I think I’ve reached the point of information overload… Just looking for some opinions from the more experienced investors in this great forum, THANKS!
The reason I would go into ETFs is to get a diversified return. In which case VAS/VGS split mix is good. Not a fan of high growth etfs. Who knows what kind of stuff they will add or exit in
VAS/VGS but only because I already do that. Honestly there is no wrong answer, toss a coin if you like. The key is to actually just get started and not get bogged down splitting hairs over the pros/cons. Besides, you can always buy/sell/change things up later if you become convinced you've done something sub optimaly.
Because both options in terms of risk are dominated by equity exposure, the only real difference between the two is the likely distribution of outcomes due to the diversification. VDHG is the more diversified. If you imagine the Y axis is number of occurrences and the X axis is return. If you are continually accumulating over the long term both options will have very similar expected average return (same mean) but VDHG is more diversified so its distribution is likely to be tighter around the expectation (represented by blue line) It is likely to have a tighter range of actual outcomes. VAS/VGS has more potential for broader outcomes (represented by the redline). Technically you could get really technical and argue about the Skewness & Kurtosis of each choices distribution but in reality to make a decision in this case you can think in terms of a normal distribution. Really the key point to differentiate between the two boils down to, do you want to get as tight to the return expectation as you can (VDHG) or do you want the broader return distribution potential (VAS/VGS) with as much chance of getting a poorer result than VDHG as getting a better result than VDHG.
you are trying to apply past decade of common sense into new era of macro economy which has exact opposite of what worked in last decade. Low vs high inflation, CB liquidify, and Interest rate. low tides will sink all boats and vice versa. your dilenma is like arguing between setting sail on dingy or kayak or floating boat into ocean that was rising for all the time you can recall and tide is finally receding. either would be fine as long as you spread your investment by dollar cost average. If you try to nail the low and highs you would end up doing the opposite
Thank you for your reply and sorry for my confusion, but are you saying because things moving forward the economies local and abroad is so different than the past decade due to inflation and expected interest rates and what not that it is not a good choice to put our hard money into 1 of these 2 options in the long term? I think I may of miss understood your point…. we we’re also planning for monthly or quarterly deposits with a very long time frame ahead of us. thanks!
Thanks for all the above feedback I appreciate it, I started my property investment journey largely with all the information available from the old somersoft property forum and was rather successful (who wasnt in Melbourne past decade )… but we are new to shares and finding it very challenging being noobs, if property has taught me anything having a solid foundation structured correctly can lead you on the right path to success!! I guess I was hunting responses with members who may of had a similar dilemma when creating their ETF portfolios with a long time frame ahead or potentially members with one of the above ETF vanguard portfolios my main concerns are… -is VDHG too diversified compared to the VAS/VGH potentially leading in less capital gains long term -is the increased 0.13 management fee worth just avoiding (aiming for a 1 million portfolio) -the lack of flexibility of VDHG if you want to change directions at a later date Or am I just being silly, over thinking things… so many people seem to say VDHG set and forget move on with your life!
There really isn't a thing as being too diversified. The opposite of diversification is concentration. That said, VGS is already well diversified. It lacks small caps and emerging markets although they are optional and can potentially be omitted. Passive Investing Australia might help your decision process if you haven't already read it. eg VDHG or roll your own — Passive Investing Australia DHHF is another good all in one fund that overcomes some of the issues in VDHG DHHF and other VDHG alternatives — Passive Investing Australia
all i meant to say is dont decide your allocation using past performance as macro- economic landscape is very very different. for example, idea that bond protect equity is fallacy - right now yield spike so bond falls, and equity matket hate that so shares fall. either allocation is fine. i have both vdhg and VAS and going to buy VVLU. its a nice level to be adding.
