Advice for investing $70,000 AUD in Vanguard Managed Funds

[bestyinvesty]

Hi everyone, as the title states, I'm looking for advice on how best to divvy my dollars between Vanguard managed funds. I've just sold my CBA shares for about 90,000. Haven't paid capital gains tax yet but whatever's left over I intend to invest in Vanguard. I currently have about 10 grand in the Vanguard Life Strategy Growth Fund, now my only investment.

First a bit about my goals. I'm 40 and intend to leave this money in these investments until I retire. So it's a 20+ year investment. Given the 20+ year horizon, I'm willing to accept a higher risk fund for a higher return.

What I'm currently thinking is this:

Leave the 10 grand in the retail fund (life strategy growth) - for ongoing small fortnightly instalments (to avoid the brokerage fees of the ETFs); and
Split evenly the approx. 70K between the following ETFs: VEU, VTS, VGS, VHY

My questions are as follows:
1. Thoughts about my split - would you agree or suggest a different split across the ETFs or allocate more to retail funds for better diversification/growth?
2. I note that the management fees are reduced after $50,000. Do you think it would be better to choose only two funds with investments over 50k rather than a number of managed funds under 50K? Would lower management fees or greater diversification be best?
3. Thoughts on my current retail fund (life strategy growth). Should I stick with this or would a different retail fund be better (perhaps high growth)? Why?
4. Which online broker would you recommend for a largish one of ETF trade like this?

I would really appreciate any advice you can offer. I know that this is not the advice of a professional planner and shouldn't be taken as such. I respect the knowledge and intelligence of the forum members and any advice will only be used to assist me in making an informed decision but will not form the sole basis of that decision.

 

[Habakkuk]

I would really appreciate any advice you can offer. I know that this is not the advice of a professional planner and shouldn't be taken as such.

Just a few comments.

ETFs seem to have much lower MER than retail funds. Are there any disadvantages to compensate for that? Why is anybody investing in retail funds otherwise?
The reduced management fees for retail funds apply only to the investment above $50,000. Below that it is all 0.9% as I understand it.
It would make sense to keep the Life Strategy fund so that you can add ongoing instalments without brokerage.
As for a broker for ETFs I would just open an online account. If you go and use a broker for a one-off transaction, the brokerage charged is excessive.
If you are with any of the 4 big banks, look at their offerings (Commsec, Etrade, Nabtrade, Westpac Broking). Make sure that there are no ongoing fees if you don't trade. I remember something about Commsec charging 0.5% if you don't make at least one transaction per year. They (Commsec) are the most expensive anyway.

Finally, why not invest directly in local shares? Too adventurous, perhaps? Index funds seem so uninspiring. It's like saying I have no idea whatsoever, so let's just diversify over the whole world.

 

[sydboy007]

cmcmarkets has pretty low brokerage rates. 10K trade costs $11 from memory or 0.1% once you're over 11K.

as for the ETFS you're interested in - VEU, VTS, VGS, VHY

VEU is world ex US. Do you have a perference of Europe over USA in your investment strategy? VGS may be the better option?? Do you see the ASX or International shares being the out performer over the next few years?

Other options could be IXI and IOO via ishares. Not so index hugging but they do invest in some of the top global companies so would hopefully be able to trade through any economic fallout from greece or china hard landing

 

[minwa]

Finally, why not invest directly in local shares? Too adventurous, perhaps? Index funds seem so uninspiring. It's like saying I have no idea whatsoever, so let's just diversify over the whole world.

It's rather smart, in reconizing their chance of beating the market averages is unlikely especially as a inexperienced investor, considering most managed funds & self investors don't.

If you have a good track record of outperforming the market every year by being more active/selective then go for it.

 

[christianrenel]

cmcmarkets has pretty low brokerage rates. 10K trade costs $11 from memory or 0.1% once you're over 11K.

as for the ETFS you're interested in - VEU, VTS, VGS, VHY

VEU is world ex US. Do you have a perference of Europe over USA in your investment strategy? VGS may be the better option?? Do you see the ASX or International shares being the out performer over the next few years?

Other options could be IXI and IOO via ishares. Not so index hugging but they do invest in some of the top global companies so would hopefully be able to trade through any economic fallout from greece or china hard landing

Have a look at ILC _ISHARES ASX20 (ETF) pays dividends quarterly and matches the aus index


Kind Regards

Christian Renel

 

[skc]

First a bit about my goals. I'm 40 and intend to leave this money in these investments until I retire. So it's a 20+ year investment. Given the 20+ year horizon, I'm willing to accept a higher risk fund for a higher return.

Why not stick it in Super? Talk to your tax accountant on tax implications.

P.S. Please don't ask for advice here. You can ask for opinions and thoughts... but not advice.