Ok, I've registered for Vanguard's retail funds and will have about $20k to start investing next week. My plan is to focus on the VAS version first, get that to $100k first (yr 1) and then focus on the VGS version second (yr 2) and get that to $100k. It should take me a year to fill up each.
My question: does this strategy make sense or should I do a 50/50 split each year for the next 2 years?
So you're not talking about the ETFs, but the retail managed funds?
International (ex Aus) https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/fundDetail/retail/portId=8145/?overview
Some things to consider if you haven't already.
Given you are going the fund route, buying both at the same time doesn't incur any additional transactions costs like brokerage, and it has the advantage of diversifying your investment across Australia and the World. What if you your plough all your savings into Australia over the next year and International goes gangbusters?
Then again, as you can see, the fees for each decrease progressively at $50k invested, and then again at $100k. So if you have two funds sitting at about $60k each, you're paying marginally more fees than if you had them in one fund sitting at $120k. I emphasise 'marginally' more. But every little bit counts of course.
Over the long term, my gut feeling would be to start the two funds as the return from diversifying across Australia and international is probably going to be better than the savings from marginally lower fees over a small proportion of your overall.
But this then begs the question, why not go straight into one of Diversified funds?
The fees for the 'VAS' and 'VGS' equivalent funds are quite a bit higher than the ETFs. And the only real benefit of investing in these via the separate funds vs the ETFs is the lack of brokerage costs (which you pay for anyway via the fund fees) when buying small regular amounts.
But if you are happy with the fund route, and attracted by the fact that you make regular small investments, then the Diversified fund gives you automatic rebalancing and a blend of asset classes other than Australia and International shares (like property) to smooth over both bad times and good times. If you're going to pay those fees you may as well get something in return.