My Passive Portfolio - Best options?

[shezz150]

So, my first post on here. It's a bit of a ramble. But all thoughts welcome. And yes, I know its not professional advice.
I've got another tax return coming up as a sole trader which is when I look at pumping up my super and buying into more shares. I'm looking for some overall thoughts this time round. I've been doing some long term thinking on where the best place is to store my savings.
I just finished reading The Little Book of Common Sense Investing by John Bogle, recommended by Scott Pape in one of this emails back in the day. Bogle educated me on the fact that there is actually a difference between Index funds and ETF Indexed funds. I had no idea they were 2 separate entities. I haven't quite been able to distinguish the difference outside of a couple of things: ETF's can be traded like shares on the ASX, and non ETF indexes have lower management fees. As far as I can tell, I'm pretty safe with my current Vanguard selection below for long term? The ASX tradable ones presumably have a little more risk?
I trade on CMC with this current ASX portfolio:
VAS - VANGUARD AUSTRALIAN SHARES INDEX ETF - $16k
VTS - VANGUARD US TOTAL MARKET SHARES INDEX ETF - $4.5k
VEU - VANGUARD ALL-WORLD EX-US SHARES INDEX ETF - $4.5k
LTR - LIONTOWN RESOURCES LIMITED - $4k (A recent addition outside my usual. Bit of an experiment that I'll hold onto for a couple of years. Happy to take on the risk)

In my Hostplus Super account, I've got my investment split 50/50 between IFM Australian Shares and Hostplus International Shares - Indexed (Barefoot Blueprint recommendation). Those seemed to have gone gangbusters the first half of this year: it went up around 10% just in 6 months! According to an article of averages from the statistics bureau on super amount by age, my Super is behind by $12k. But I figure it's kind of offset by my CMC Vanguard shares? Obviously super will get taxed less than when (if) I sell the Vanguards. I can only get the VAS to compound dividends. VTS and VEU don't allow it for some reason and instead deposit them in my bank. As opposed to my Super, my VAS portion didn't earn anywhere near as good. I'm sure I've missed something along the way. I struggle getting my head around this stuff.

I've gone with the choice of having indexes outside super as an option to invest savings that I can still have access to.

I turned 31 two weeks ago. I am 100% a passive trader and can't be bothered active trading. I'm good at buying and forgetting, bugger the FOMO, I'm too busy. I would just like to get the best bang for my buck long term. I share an off-set account on a house mortgage with my sister with both of our savings (and my sole traders potential owed tax) in there saving us around an average of $140-160 of interest each month. I thought I might figure out if I can potentially earn more in dividends than savings on mortgage interest.

Bogle mentioned having bonds in a diversified portfolio. I thought the Vanguard ETFs I have might have some bonds in there, but I don't think they do. If I really wanted to diversify, then would digging into some bond indexes be an option?

 

[Dona Ferentes]

Posters on this site don't give advice. But I will say a couple of things

1. Rule of 72. Look it up; you are young, you want things to compound, to deliver more down the track. No point in chasing things that pay a few % pa.
2. If you are dealing with super, there is far more to be made through strategy, utilising the existing structures and limits to optimise the (hopefully growing) balance, than agonising over this or that fund, or what Scott said or what Felicity thinks.
3.

 

[Sir Burr]

My thoughts are VEU and VTS are domiciled in the US so death tax for non-Americans.

You might be happy with that (a bit cheaper to hold?) but there are similar like VGS that are domiciled here.

Also, not sure Bogle would have a high percentage in VAS compared to the others while ASX is >2% of world.

About bonds, there are a few Vanguard:

VAF
VGB
VACF
VBND
VIF
VCF

 

[So_Cynical]

Not sure what you are looking for shezz, you have a low risk low reward portfolio even with LTR its still pretty low risk.

Personally i have just completed stage one of my de risking process, selling out of foreign and local shares in my super, less than 1 year to semi retirement. You are young and have plenty of time.

 

[shezz150]

Not sure what you are looking for shezz, you have a low risk low reward portfolio even with LTR its still pretty low risk.

Personally i have just completed stage one of my de risking process, selling out of foreign and local shares in my super, less than 1 year to semi retirement. You are young and have plenty of time.

I guess all of the research and experiences I've been learning about thus far have been largely based on long term growth and looking after yourself when you're old.

How many options are there to increase the risk on investment without having to actually active trade and not paying some manager to do it for me? Or am I asking for a perfect world here? What do people generally look at? Different ETF's then? I know there's quite a lot of them around. I feel like one could research one's eyes off.
I've got a bunch of crypto as well. It jumps around like a kangaroo, but considering when I bought them, I've quadrupled my initial investment into them. I guess that's where I channeled the risk haha.

 

[divs4ever]

while you desire to not trade ( swap out of investments , often )

i do suggest you continue to WATCH and THINK ,

in the coming years there will be times to add more to an investment you have , and times to park that spare cash somewhere better ( maybe your mortgage , maybe pay down education debt or something else )

PS learn to look after yourself now , when you are old you might have more choices and years to enjoy them it in ( several of my school-mates were dead before 25 and the Vietnam War only got some of them )

 

[Gunnerguy]

So, my first post on here. It's a bit of a ramble. But all thoughts welcome. And yes, I know its not professional advice.
I've got another tax return coming up as a sole trader which is when I look at pumping up my super and buying into more shares. I'm looking for some overall thoughts this time round. I've been doing some long term thinking on where the best place is to store my savings.
I just finished reading The Little Book of Common Sense Investing by John Bogle, recommended by Scott Pape in one of this emails back in the day. Bogle educated me on the fact that there is actually a difference between Index funds and ETF Indexed funds. I had no idea they were 2 separate entities. I haven't quite been able to distinguish the difference outside of a couple of things: ETF's can be traded like shares on the ASX, and non ETF indexes have lower management fees. As far as I can tell, I'm pretty safe with my current Vanguard selection below for long term? The ASX tradable ones presumably have a little more risk?
I trade on CMC with this current ASX portfolio:
VAS - VANGUARD AUSTRALIAN SHARES INDEX ETF - $16k
VTS - VANGUARD US TOTAL MARKET SHARES INDEX ETF - $4.5k
VEU - VANGUARD ALL-WORLD EX-US SHARES INDEX ETF - $4.5k
LTR - LIONTOWN RESOURCES LIMITED - $4k (A recent addition outside my usual. Bit of an experiment that I'll hold onto for a couple of years. Happy to take on the risk)

In my Hostplus Super account, I've got my investment split 50/50 between IFM Australian Shares and Hostplus International Shares - Indexed (Barefoot Blueprint recommendation). Those seemed to have gone gangbusters the first half of this year: it went up around 10% just in 6 months! According to an article of averages from the statistics bureau on super amount by age, my Super is behind by $12k. But I figure it's kind of offset by my CMC Vanguard shares? Obviously super will get taxed less than when (if) I sell the Vanguards. I can only get the VAS to compound dividends. VTS and VEU don't allow it for some reason and instead deposit them in my bank. As opposed to my Super, my VAS portion didn't earn anywhere near as good. I'm sure I've missed something along the way. I struggle getting my head around this stuff.

I've gone with the choice of having indexes outside super as an option to invest savings that I can still have access to.

I turned 31 two weeks ago. I am 100% a passive trader and can't be bothered active trading. I'm good at buying and forgetting, bugger the FOMO, I'm too busy. I would just like to get the best bang for my buck long term. I share an off-set account on a house mortgage with my sister with both of our savings (and my sole traders potential owed tax) in there saving us around an average of $140-160 of interest each month. I thought I might figure out if I can potentially earn more in dividends than savings on mortgage interest.

Bogle mentioned having bonds in a diversified portfolio. I thought the Vanguard ETFs I have might have some bonds in there, but I don't think they do. If I really wanted to diversify, then would digging into some bond indexes be an option?

@shezz150
Welcome to ASF.
Sorry for the dumb reply, however I’m always from the concept of ... protect what you have before you drive fir growth.
Not knowing your background, whatbinsurabces do you have in lance to protect what you have, before you invest in risky assets ?
Just a question.
Gunnerguy
(Masters in Financial Planning, Independent, retired)

 

[divs4ever]

@shezz150

also please understand since September 2019 , these have been extraordinary times , remember these ,times , take notes, even

even some of the global wisest heads admit we are in uncharted territory the lessons being taught now , might last you and yourfamily for generations ( but SOME old pearls of wisdom will still apply .. but which ones )

to get a further feel of what is happening in the markets read the shareholder newsletters from various LICs ( the ASX releases them ) and get various professional insights into things , they all have a different angle and style , so you get a better idea by reading several each year

good luck

 

[monkton]

Am a fan of John Bogle, ie. long term passive investing & wish I'd accepted his style of investing years ago. His idea of including bonds seems more appropriate for the U.S. market where dividends are usually a lot lower than in Aus. & no franking either, thus their favouring bonds ( to smooth the ride). Yes, franking could/will be played around with in future but at least with VAS all income including franking is returned to the investor. As for bonds my reading suggests that with current low interest rates will not be great going forward for bonds. Others will no doubt think differently & that's okay.
Good to think about VGS for o/s exposure as mentioned by @Sir Burr as is domiciled here so favourable tax wise.
Just an opinion & not advice as we all need to find what suits us, oh & well done for your achievements so far.
The FIRE community ( Financially Independent Retire Early) mostly favour a simple index approach not that you are looking to necessarily retire early, not all are either, but the no nonsense simple approach can make a lot of sense while you just get on with working & saving/accumulating.
Just my 2 bob's worth.

 

[frugal.rock]

If I really wanted to diversify, then would digging into some bond indexes be an option?

Yes.
In the current climate and the current outlook, does anyone think 10 year bonds would not be an option for a diversified portfolio?
Im noticing they are starting to climb...

 

[divs4ever]

so what is climbing ... the retail buying price , or the interest they are paying

now if you are talking floating rate ( which move up or down as the official rate moves ) the floating rate ( called TIPS in the US ) just remember they are always behind the curve in keeping up with interest rate increases

but ( any type of ) sovereign/treasury bond nope not for me , if you are ultra careful with the research MAYBE a corporate offering

one thing to watch is the price you are paying for the board ( compared to the face value ) when is was buying the now redeemed MBLHB i was paying $62.xx for a $100 face value note so in that hybrid the return was comparatively low but the eventual capital gain was very nice

 

[Value Collector]

So, my first post on here. It's a bit of a ramble. But all thoughts welcome. And yes, I know its not professional advice.
I've got another tax return coming up as a sole trader which is when I look at pumping up my super and buying into more shares. I'm looking for some overall thoughts this time round. I've been doing some long term thinking on where the best place is to store my savings.
I just finished reading The Little Book of Common Sense Investing by John Bogle, recommended by Scott Pape in one of this emails back in the day. Bogle educated me on the fact that there is actually a difference between Index funds and ETF Indexed funds. I had no idea they were 2 separate entities. I haven't quite been able to distinguish the difference outside of a couple of things: ETF's can be traded like shares on the ASX, and non ETF indexes have lower management fees. As far as I can tell, I'm pretty safe with my current Vanguard selection below for long term? The ASX tradable ones presumably have a little more risk?
I trade on CMC with this current ASX portfolio:
VAS - VANGUARD AUSTRALIAN SHARES INDEX ETF - $16k
VTS - VANGUARD US TOTAL MARKET SHARES INDEX ETF - $4.5k
VEU - VANGUARD ALL-WORLD EX-US SHARES INDEX ETF - $4.5k
LTR - LIONTOWN RESOURCES LIMITED - $4k (A recent addition outside my usual. Bit of an experiment that I'll hold onto for a couple of years. Happy to take on the risk)

In my Hostplus Super account, I've got my investment split 50/50 between IFM Australian Shares and Hostplus International Shares - Indexed (Barefoot Blueprint recommendation). Those seemed to have gone gangbusters the first half of this year: it went up around 10% just in 6 months! According to an article of averages from the statistics bureau on super amount by age, my Super is behind by $12k. But I figure it's kind of offset by my CMC Vanguard shares? Obviously super will get taxed less than when (if) I sell the Vanguards. I can only get the VAS to compound dividends. VTS and VEU don't allow it for some reason and instead deposit them in my bank. As opposed to my Super, my VAS portion didn't earn anywhere near as good. I'm sure I've missed something along the way. I struggle getting my head around this stuff.

I've gone with the choice of having indexes outside super as an option to invest savings that I can still have access to.

I turned 31 two weeks ago. I am 100% a passive trader and can't be bothered active trading. I'm good at buying and forgetting, bugger the FOMO, I'm too busy. I would just like to get the best bang for my buck long term. I share an off-set account on a house mortgage with my sister with both of our savings (and my sole traders potential owed tax) in there saving us around an average of $140-160 of interest each month. I thought I might figure out if I can potentially earn more in dividends than savings on mortgage interest.

Bogle mentioned having bonds in a diversified portfolio. I thought the Vanguard ETFs I have might have some bonds in there, but I don't think they do. If I really wanted to diversify, then would digging into some bond indexes be an option?

For a Passive Investor, I think you have selected well. You should do well over the years provided you take a long term few and dollar cost average in, and don't attempt to time the market etc.

You mentioned passive "Trading" though, rather than passive "investing", I am not sure what that means.

I think the way to few an investment such as the one you have outlined above, is that you are buying a cross section of global business, where you aren't trying to make a value decision on which companies are better than others, you are just basically saying you own a piece of everything, because you believe on average over the years the global economy will be productive, I think thats a good strategy for anyone that wants to be passive, and that can ignore the market and business cycles and just continue buying in regularly.

 

[shezz150]

For a Passive Investor, I think you have selected well. You should do well over the years provided you take a long term few and dollar cost average in, and don't attempt to time the market etc.

You mentioned passive "Trading" though, rather than passive "investing", I am not sure what that means.

I think the way to few an investment such as the one you have outlined above, is that you are buying a cross section of global business, where you aren't trying to make a value decision on which companies are better than others, you are just basically saying you own a piece of everything, because you believe on average over the years the global economy will be productive, I think thats a good strategy for anyone that wants to be passive, and that can ignore the market and business cycles and just continue buying in regularly.

I guess I did mean Passive Investing. I'm just getting familiar with all of the terms.

As far as I can tell, I think I'm pretty satisfied with my approach so far. I guess it would be worth waiting a bit and seeing what on earth is happening in the world once most of the planet is vaccinated and starting to trend back to 'normalcy' post pandemic.
Thanks for your input, everyone!

 

[Value Collector]

I guess I did mean Passive Investing. I'm just getting familiar with all of the terms.

As far as I can tell, I think I'm pretty satisfied with my approach so far. I guess it would be worth waiting a bit and seeing what on earth is happening in the world once most of the planet is vaccinated and starting to trend back to 'normalcy' post pandemic.
Thanks for your input, everyone!

I think with your strategy you don't really have to think much about what happens with vaccinations and such, Because you are invested in basically everything you will do well either way what ever happens.

For example as lockdowns end, maybe the growth of the Netflix shares you own in the index will slow, but the airlines you own will pick up more passengers Etc, it all balances out really, business will be happening, and you are exposed to it, thats all that really matters.

 

[Value Collector]

If I really wanted to diversify, then would digging into some bond indexes be an option?

You could also look at some property Unlisted or listed property trusts, I think I would rather that than bonds.

Here is one that I personally invest in, its an unlisted trust, its designed to be a 5 year minimum investment, but there is options to withdraw funds once every 6 months. It owns industrial property around Australia, it has a better income return than bonds, and should rise with inflation over time rather than be eaten by inflation like bonds will.

Something to think about, anyway. It's good to learn about these things so you have more tools in your investor tool belt.

 

[divs4ever]

I guess I did mean Passive Investing. I'm just getting familiar with all of the terms.

As far as I can tell, I think I'm pretty satisfied with my approach so far. I guess it would be worth waiting a bit and seeing what on earth is happening in the world once most of the planet is vaccinated and starting to trend back to 'normalcy' post pandemic.
Thanks for your input, everyone!

you have many years to change it , or refine it if you need to

so don't panic excessively but do watch and learn

good luck