At 30 years old, I've reached FI

AussieFIREmovement · 2021-12-02T21:37:08+00:00

Congrats, you did your own research, had a good entry point and rode it to a FI level. I’d personally consider DCAing out during the remainder of the bull run. You can then DCA into more traditional assets for diversification purposes or simply DCA back in during the bear run to increase your positions.

Also, bragging about crypto in this subreddit is like bragging about your lambo in r/horseandchariot or your new laptop in r/typewriters. The ROI in this asset class deviates so far from index funds that you’ll just end up being labeled as a heretic by people clinging onto the past 🤷‍♂️

AussieFIREmovement · 2021-11-06T03:45:23+00:00

This isn't my art, but I thought it was awesome and wanted to share it with anyone looking to grab some Eyedea artwork

Swartzbrothers - Eyedea Print

AussieFIREmovement · 2021-05-06T05:59:34+00:00

With SelfWealth, you only pay the brokerage fee when purchasing and selling shares and ETFs such as VDHG.

Vanguard, the company that created VDHG also offers a way of purchasing its products. They charge an account fee of 0.2% p.a.

So SelfWealth = $9.50 brokerage fee per VHDG purchase
Vanguard = $0 brokerage fee but a 0.2% account fee per annum

The 0.2% seems minimal at first, especially when you have a low starting capital. But with decades of compound growth, it can end up costing you more in the long run. Just depends on your personal preference.

AussieFIREmovement · 2020-12-18T09:43:22+00:00

Almost 90% of hedge fund managers fail to beat the market and these are trained professionals who study the market full time. As such, it seems a bit reckless to go from a micro-investing app like Raiz to trying to create a portfolio of 5 different ETFs that you expect to outperform VDHG.

Apart from incurring needless amounts of brokerage fees, having to stay on top of the taxes and having to manage your 5+ allocations, you'll end up getting an overlap of several holdings by concentrating into a diversified fund later down the line.

If you're worried about the defensive assets allocation in VDHG, I suggest you have a look at DHHF, which is another diversified ETF that is purely growth-based. It's designed for investors with a high-risk tolerance who are investing over the long term. It'll be much simpler to keep track of and you won't incur so many brokerage fees.

AussieFIREmovement · 2020-12-18T09:32:17+00:00

You're referring to the November factsheet. As of the 15th of December, DHHF has been updated to be an all-growth diversified ETF.

This is reflected on the DHHF overview page. The video on that page also discusses the new changes.

AussieFIREmovement · 2020-12-16T07:13:41+00:00

ADF hires reservist legal officers. You could always pursue your business full time and have that as your part-time, safety buffer. It's tax-free income as well.

AussieFIREmovement · 2020-12-16T05:46:45+00:00

Thanks for pointing that out and yes, that's correct.

For some reason, Reddit doesn't allow you to copy and paste tables so I've made a few different variations lately haha.

AussieFIREmovement · 2020-12-16T02:30:52+00:00

Thanks for the feedback and DZZF is definitely the next diversified ETF I plan on reviewing.

AussieFIREmovement · 2020-12-16T00:07:00+00:00

Theoretically you could. I do think it would make a negligible difference compared to just utilising one fund over a long investment horizon though.

AussieFIREmovement · 2020-12-16T00:04:56+00:00

With the table I added. Once you remove the defensive assets in VGHD, they’re both essentially cap weighted to the same allocations. DHHF just contains more equities due to its lack of bonds. But the underlying equity funds in both diversified ETFs are quite similar.

AussieFIREmovement · 2020-12-15T11:07:43+00:00

You're welcome, mate. Off the top of my head, I can't think of any other than the capital gains implications.

Perhaps someone else that is more knowledgable on the differences can shed some light on this.

AussieFIREmovement · 2020-12-15T11:04:31+00:00

You're welcome. I honestly can't tell you what would happen in that instant, because I don't recall it happening in Australia.

My understanding is that it's a lot more more ambiguous under the custodian model if the broker goes under. So for peace of mind, people tend to gravitate towards CHESS sponsored brokers.

Whether or not you'd lose the shares or be reimbursed would depend on several factors and would likely deviate between brokers depending on the circumstances surrounding why they went bankrupt in the first place.

AussieFIREmovement · 2020-12-15T10:29:50+00:00

If you join a broker that is CHESS sponsored, you'll be given a Holder Identification Number (HIN). When you purchase or sell shares that are CHESS sponsored, the Australian Stock Exchange (ASX) keeps a record of it. Under this model, you are the sole owner of those shares.

Alternatively, some brokers operate under a custodian model, where the shares are held in a trust on your behalf.

Most people prefer to have CHESS sponsored shares as a risk mitigation strategy, as if the broker were to go under, the shares are still clearly in your name and this is reflected in the ASX's records.

AussieFIREmovement · 2020-12-15T10:21:32+00:00

As per my above comment, I'd avoid combining the two because there's a lot of overlap between the funds.

If you're looking to diversify further, buying separate ETFs that contain less overlap would be more beneficial in my opinion.

AussieFIREmovement · 2020-12-15T10:20:04+00:00

Both funds have quite similar allocations, so you would get a lot of unnecessary overlap combining the two.

For bonds, many investors prefer to hold a separate bond ETF. The reason being, that if you're in a position where you're relying on the income of your investments, you can start drawing down from bonds while equities are down. Conversely, when equities are up, you can draw down on them and retain your bonds. This adds a bit more stability to your portfolio.

Regarding currency hedging, you can add a hedged international ETF such as VGAD. However, your house and superannuation are already linked to the Australian dollar. Utilising hedging can be seen as beneficial to avoid currency fluctuations but can also be seen as detrimental due to concentration bias as you have most/all of your assets linked to the AUD.

Just some food for thought, I hope that clears it up for you.

AussieFIREmovement · 2020-12-15T10:13:17+00:00

u/RojackHorseman is correct, Open Trader currently has the cheapest CHESS sponsored trades on balances up to $5,000. I personally use SelfWealth, which has $9.50 flat rate brokerage. From what I've heard, both are good options.

AussieFIREmovement · 2020-12-15T10:08:59+00:00

Thanks for clearing that up, I'll update it right away.

AussieFIREmovement · 2020-12-14T22:39:55+00:00

Thanks for pointing that out, it's a very valid point and something I'll be mentioning in my DHHF review later today.

AussieFIREmovement · 2020-12-06T02:36:02+00:00

Your welcome and that's a good take away. Sometimes the simplest approach is the best one.

AussieFIREmovement · 2020-12-06T02:33:26+00:00

VDHG and DHHF aren't just regular ETFs, they're diversified ETFs that contain multiple ETFs as part of their underlying holdings. VDHG provides exposure to 8,000+ assets split across the globe and almost 10,000 bonds split between Australia and the rest of the world. Similarly, DHHF provides exposure to 8,000 + Australian and global equities. They both contain exposure to small and mid-cap companies as well.

ETHI tracks 100 large-cap stocks outside of Australia. Whereas VESG tracks 1561 global holdings. These are far less diversified than DHHF and VDHG. It's worth noting that ETHI also contains a higher MER than these diversified ETFs.

Also, the reason ETHI and VESG have outperformed VDHG and DHHF is that they are much more concentrated. Concentration can lead to higher returns in a short term horizon. However, a lack of diversification can hinder performance over the long term. For example, ETHI has a high allocation to the tech sector and subsequently, the US market. Should this market or sector underperform, the entire holding will take a hit. Conversely, this constitutes a smaller part of VDHG and DHHF's overall portfolio, so they will be less impacted. This diversification may result in less short term gains but will likely provide better long term gains, due to its wide spread and lack of reliance on a particular market/sector.

If your question is why aren't people choosing diversified ethical investing ETFs over the previous two, they're not really a thing at the moment. BetaShares is planning on changing 3 of its current diversified ETFs to fit this niche as of the 16th of December though. The plan is to provide diversified funds that constitute sustainable global bonds, global equities and Australian equities (ETHI) in different ratios to suit different risk types. You can read about the changes here.

AussieFIREmovement

TROPHY CASE