G'day,
It's great to see a bunch of like-minded Aussies in these discussions, so I thought I'd introduce myself here. I'm a newly-minted mustachian from Sydney who is quite happy to saving. I prefer doing stuff rather than having stuff!
I'm 32, and having made some spreadsheets, I predict I'll need around 8-10 years to FIRE. I have $50k to invest now (should have started this earlier), and being youngish, I'm thinking of broadly splitting my investments between 30% higher risk to 70% growth/balanced risk. I'm certain that I would like to invest indirectly, as I don't have the nous nor time to be an direct trader.
My question is about active verses passive options for small-to-mid cap investments? I've read in various places that for most types of investments, passive funds like ETFs are often quite competitive with active funds because the higher fees of active funds often balance out with index performance... except in the small cap bracket, where active funds often outperform indexes.
An example of this suggestion:
http://moneymag.com.au/fund-managers-get-poor-report/My plan is to allocate the 70% towards a range of Australian and International ETFs.
I'm trying to decide between allocating my 30% to either:
A - An active and more expensive managed fund
B - A passive and cheap small cap ETF.
I don't yet know much about LICs, and if or where these might fit into this picture.
Has anyone else considered mixing (or not mixing) active and passive investments? If so, what did you decide to do, and why?
Thanks!
Dropbear