Author Topic: Australia - suggestions for a fire-and-forget strategy?  (Read 1792 times)

daneeka

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Australia - suggestions for a fire-and-forget strategy?
« on: September 30, 2017, 10:09:26 PM »
I've read around here and Bogleheads for a while, and I'm attracted to the idea of putting money I won't miss into the market, and pulling it out on my terms a decade later. I'm not interested in an early retirement; I like my work and I want to keep doing it for as long as it stays interesting. Was wondering if anyone had ideas on a fire-and-forget strategy to investing cash that's currently sitting in a bank account gathering dust.

My situation:
I am late 20s, single.

Income:
$100,000 pre-tax; able to save $1500 per month without changing my (very lax) budget.
Average income for my field is $400,000 once training is finished; will reach this stage within 5 years

Debt:
HECS ~$50,000

Assets:
$95,000 in a bank account
$3000 car

Essentially, I have more money than I need right now. I feel that if I didn't see my savings for 10 years, it wouldn't impact on my day-to-day life, so long as my income is maintained.

I figure Vanguard ETFs are an easy way to get exposure to the market.

Could I just open a CommSec account, and buy Vanguard ETFs according to their "high growth" suggested portfolio strategy i.e.
VAF 4%; VIF 4%; VCF 2%; VAS 40%; VTS 24%; VEU 21%; VAP 5%
http://www.moneymanagement.com.au/sites/moneymanagement.com.au/files/Vanguard%20Portfolio%20Strategies.pdf

Say I put in $60,000, divide it up as suggested and just let it sit there for a decade or so? Do I really need to talk to some financial advisor whose interests may lie god-knows-where?

steveo

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Re: Australia - suggestions for a fire-and-forget strategy?
« Reply #1 on: September 30, 2017, 10:32:13 PM »
I view your asset allocation as being overly complex. I'd go 100% stocks and I'd probably just go 100% VGS. If you want to have an Australian focus as well I'd go 50/50 into VAS and VGS. Simple and easy and you will do well.

There is no need to talk to a financial adviser.

mjr

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Re: Australia - suggestions for a fire-and-forget strategy?
« Reply #2 on: September 30, 2017, 10:47:32 PM »
To be fair to OP, that asset allocation has come from the linked Vanguard document.  I agree that it is too complicated.

I'd be going with 50% VAS and 50% VGS.   I like having a good chunk in home currency dollars and VGS gives you some effective currency hedging and better capital growth. 

That said, personally, I use VTS instead of VGS - can use the withholding tax as a foreign tax offset and I think that Europe is a basket case, but that's just me.

itchyfeet

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Re: Australia - suggestions for a fire-and-forget strategy?
« Reply #3 on: September 30, 2017, 10:47:46 PM »
I agree with Steveo.

At this time your assets are pretty small relative to your future income and future assets. I wouldn't give allocation mix too much consideration.

There is absolutely no need to get overly complicated.

I do agree to have an exposure international markets. The split between ASX holdings and international is a personal choice. As an Australian wanting an AUD return I personally favour having the majority Of my shareholdings in the ASX and a smaller portion international. FX movements can cause a lot of volatility.

I also have a reasonable sized allocation to emerging markets, and as is often typical for Australians I am over exposed to Australian residential property. I hold nothing in fixed interest or bonds at this time.





marty998

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Re: Australia - suggestions for a fire-and-forget strategy?
« Reply #4 on: September 30, 2017, 10:59:46 PM »
Curious to know what profession goes from 100 to 400k in 5 years... medicine?

50/50 into VAS / VGS sounds good.

Note also at your income your HECS debt will be gone in 5-6 years too, probably sooner so that'll free up another $10k+ per year

daneeka

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Re: Australia - suggestions for a fire-and-forget strategy?
« Reply #5 on: September 30, 2017, 11:15:29 PM »
Curious to know what profession goes from 100 to 400k in 5 years... medicine?

Yep. I'm hoping to avoid the traps that my colleagues are notorious for falling into.

I view your asset allocation as being overly complex.

That's good to hear - I'm a fan of the KISS principle.

Thanks - appreciate the advice folks.

misterhorsey

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Re: Australia - suggestions for a fire-and-forget strategy?
« Reply #6 on: October 01, 2017, 06:45:16 AM »
Another suggestion would be Vanguard's Diversified funds.  The published initial minimum investment is $500k but they accept lower amounts. 

For a slightly higher fee than buying ETFs you get automatic rebalancing, and you can regularly BPAY smallish amounts into the fund.  This may not sound like that much difference, and you sound pretty disciplined already, but rebalancing you allocation (even if it is just 50/50 between Australia and OS) and regular investments may well justify the fee difference between just buying individual ETFs by delivery better returns.

I'm in the High Growth one, but I also have a mess of ETFs as well:

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/fundDetail/wholesale/portId=8134/?overview

Eucalyptus

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Re: Australia - suggestions for a fire-and-forget strategy?
« Reply #7 on: October 01, 2017, 05:58:11 PM »
Another suggestion to think about again, at that kind of pay and saving rates, you could also maximize your super contributions up to the limit with pre-tax contributions.

Essentially getting 37 to 45% bonus on investment.

Of course you won't be able to see that money again until age 60. But at your savings rate you'll still have plenty left over to invest outside of super to FIRE very early.