Australian Mustachian Shares Investing Strategy

[EliseHearts]

Ahoy Fellow Mustachians!

As a newbie Mustachian, I'm about to take the plunge into investing in shares, and I wanted to hear how people choose to invest in the Aussie market - so what's your strategy and why?

I was planning to go with Vanguard (obviously) but read a few things that suggested dividend yielding shares are a better option in the Australian market. Do you think this is true - that dividend shares are better value than Vanguard?

Looking forward to your replies!
Elise :D

[MsRichLife]

Have you read through this thread?

http://forum.mrmoneymustache.com/investor-alley/australian-investing-thread/

[Rustycage]

1) Vanguard ETFs (and possibly LICs at a later date)

Why?
Because a) I don't think I know more about how stock prices work that anybody else and b) laziness/convenience

My currently allocation is roughly 50% VAS, 25% VTS, 25% VGE. I expect people will say "you're far too exposed to emerging markets!" ..... and to counter that I can tell them that my next purchases will focus on holdings such as VTS or possibly VGS instead (VGS for even more laziness). By doing that I will reduce my % held in emerging markets.

2) Will leave that question for someone more qualified to answer :)

[deborah]

If I were starting out now, I would go with ETFs because it allows you to invest with less risk. The risk is the entire market, rather than that you choose a dud company - and there is one major dud each year.

One problem with the Australian share market is that there is a lot of money in Superannuation. Much of the superannuation money is in Australian shares. Retired people all want dividends. So the entire market is being distorted by people wanting dividends. This is encouraging companies to give dividends when they might otherwise reinvest the money for future growth. As a result, deciding to buy dividend shares is possibly the wrong thing to do. And anyway, different market sectors tend to have different levels of dividends - mining companies need to use their profits for growth, and give small dividends, whereas banks can give a lot of their profit as dividends.

Once you have learnt a bit about the different companies, you can decide for yourself which individual shares you may want to invest in. Otherwise you are just speculating.

[FFA]

1. I'm roughly half in index etfs and half in direct blue chips (about 12 asx50 companies). Strategy is buy and hold forever for both. Too early to say which approach is winning.

2. Yield chasing is popular nowadays due to low rates. But personally I'm not keen to seek out dividends specifically. Overall asx dividend is high anyway, I basically consider vas itself as a dividend share! I don't use dividend etfs such as vhy.

[Dodge]

There's some good dividend analysis in this thread too:

http://forum.mrmoneymustache.com/investor-alley/australiausa-mustachian-philosophy-differences/

In short, stick with the ETFs.

[Murdoch]

EliseHearts,
I also advocate a lazy well diversified approach.
Vanguard Lifestyle fund outside of Super. Chose the one that suits your risk appetite, and don't sell.
Cheap international index fund in Super. Mine doesn't offer Vanguard, but there should be something with good exposure there.

Personality, behaviour, savings rate, and cost of living, will likely impact the final outcome the most.

Good luck, and know that it may take some time and self reflection to find the approach that works best for you.

Murdoch