Newbie here. Glad to see some fellow Aussies :)
I've read through all 36 pages!! I know this one has been covered before, but I had a bit of trouble keeping it all straight. I hope you don't mind if I bring it up again?? Trying to get my head around VGS vs VTS/VEU.
VGS: Oz-domiciled, simplifies taxes, do we pay less foreign taxes overall on dividends vs VTS/VEU because we get a credit for those?
VTS/VEU: splits up the US and rest of world, US-domiciled, do we lose taxes e.g. if a non-US country has a tax and then the dividends get siphoned through the extra US withholding tax?
I'm also confused about currencies. All else being equal: is it advantageous to buy when the Aussie dollar is high so we get more parcels for our buck, and sell when it is low? Is there a difference here between VGS vs VTS/VEU? Is there even a way to figure it out or is this too complex?
Why would you go for one over the other? Thanks.
Well done on the reading....
When you earn dividends, each year, if its complicated, companies/index funds will annually send out a tax guide, which essentially tells you what number to put in each spot of your tax return.
One of the things they can give you to record - is that you have effectively paid tax in a foreign country - if that happens, the ATO uses a formula that takes into account that tax.
I assume this would happen with VGS, VTS/VEU, i.e. I don't think there's a difference between them.
I've also thought that having sub-indexes that essentially subdivide an overall index, is only there for people to make (informed?) bets.
So if you think US will do better than the rest of the world, but VTS, if you think it'll do worse, buy VEU. If you don't think you can tell (which is my position) buy VGS.
Although I've just noticed that VGS has a higher management fee than VTS and VEU. So if you were really squeezing out return, if you wanted VGS, you'd probably be better just splitting your money evenly between VEU and VTS.
As to currency, who knows what it'll be in the future - personally, I think its now about in its historically typical range, so I think it'll drift around here, and who knows if next time it moves, it'll go up or down. If you think you know which direction will move - better than what the average person in the currency market does - maybe you should do currency trading - although, most people who try to do that, end up doing badly.
I currently have VHY and VAS. Over the next few years, I was planning to add VGS and VGE (to get the whole world), but after thinking about it, rather than VGS, I might do the 50/50 VEU/VTS