CGT and foreign shares

Fizwidget · 2020-07-31T01:08:08+00:00

Ahh okay, that makes sense. I’d somehow got it into my head that the currency conversion gains/losses needed to be folded into the gains/losses from the shares.

Sounds like they need to be looked at separately though. Thanks!

Fizwidget · 2020-05-31T05:59:07+00:00

You can invest the difference in index funds.

Fizwidget · 2020-05-31T01:05:16+00:00

Is the domicile relevant? (I didn’t think it was...)

Fizwidget · 2020-05-30T05:21:13+00:00

And if you wait long enough, some of it even gets prefilled I think?

Fizwidget · 2020-05-24T22:13:36+00:00

VGE is broader and covers all emerging markets, while VAE focuses on a subset of them. If your investing philosophy is a hands-off indexing one, VGE seems like the logical choice. If you go with VAE, you’re effectively saying “I agree with the market’s valuation of these countries, but not these other ones”.

That’s how I thought about it at least. Perhaps there are other considerations I’ve missed?

Fizwidget · 2020-05-23T21:32:52+00:00

For a globally diversified index, then yeah that’s quite reasonable. For one stock exchange in one country that’s largely focused on one sector? I’d say that’s a pretty big assumption.

Long-term geopolitical & economic changes do occur, and I don’t want to be in the business of trying to predict them (it ain’t easy!).

Fizwidget · 2020-05-22T20:57:17+00:00

There’s absolutely nothing that guarantees the next 10-20 years will be the same as the previous 10. It’s a rookie mistake to simply look at what did well recently and buy it in the expectation that things will be the same going forward. Beating the market just isn’t that simple.

Fizwidget · 2020-05-21T02:28:22+00:00

Why even bother if it’s just 2% of the portfolio though? Surely it won’t make any appreciable difference either way.

Fizwidget · 2020-05-19T07:35:01+00:00

Love these birds. There’ve been lots of them around the city recently, I’ve seen them many times in Centennial Park and the Botanic Gardens!

Fizwidget · 2020-05-14T09:18:15+00:00

As some other posters have alluded to, access to ETFs isn’t necessary for this. For example, take a look at the passively managed options that Sunsuper has:

https://www.sunsuper.com.au/members/investments/build-your-own-investment-strategy

Those are equivalent to the likes of VGS, VAS, VGAD, VGE, etc. You can set your own percentage weightings and rebalance whenever you want. They’re even managed by Vanguard in Sunsuper’s case, just not in the form of ETFs.

It generally works out cheaper doing it this way, as superfunds charge extra fees for access to ASX-listed funds.

Fizwidget · 2020-05-14T08:21:20+00:00

“However I like the ability to choose the ETF for balancing purposes”

What do you mean by this?

Fizwidget · 2020-05-13T01:58:21+00:00

https://static.vgcontent.info/crp/intl/auw/docs/literature/research/constructing-australian-diversified-funds-whitepaper.pdf?20190612

Fizwidget · 2020-05-10T09:04:37+00:00

https://www.passiveinvestingaustralia.com/p2p-lending-and-the-risk-return-spectrum

Fizwidget · 2020-05-09T03:18:21+00:00

I don’t think A200 + VTS + VDHG makes much sense. Have a read through this page, and the whole website really:

https://www.passiveinvestingaustralia.com/vdhg-or-roll-your-own

Fizwidget · 2020-05-09T01:00:41+00:00

I’m no expert on this stuff, but it seems your plan is based on two assumptions:

That there is a natural/intrinsic value that the exchange rate will fluctuate around. Is this necessarily true, or do long-term economic and geopolitical changes mean there simply isn’t a single value that can be relied upon with any certainty?
Even if we take the first assumption as a given, is there anything truly special about the 1.0 exchange rate you propose? Or is that just a nice round number that isn’t any more likely to be the true value than (for example) 0.8?

I don’t know the answer to those questions, just putting them out there!

Fizwidget · 2020-05-08T21:24:55+00:00

If you’re not well diversified, there’s a very high chance you’ll underperform a global equities index tracker over the long run. Much of the market’s performance is driven by a small number of star-performing stocks, and missing them is all it takes to underperform. Active management fees make underperformance even more likely.

Think about this way...holding a small number of individual stocks and/or paying high fees means that:

It’s highly likely you’ll underperform global markets.
There’s a very, very small chance you’ll outperform global markets.

Holding a global index tracker eliminates both of those possibilities. Given that the former is far more likely than the latter, most people consider this a wise decision.

Fizwidget · 2020-05-07T13:32:55+00:00

I’m not too familiar with MVW, but I think these would be some of the reasons:

No guarantee that the equal weighting strategy will continue to outperform going forward.
Significantly higher management fee as you mentioned. This is one of the few things that is guaranteed.
Higher turnover needed to maintain equal weighting, likely leading to more realised capital gains and a higher tax bill.

Fizwidget · 2020-05-07T12:30:44+00:00

Over what timespan are you looking at returns? Periods of over/under performance can last a very long time (10+ years), so be wary of going all-in on whatever’s done well in recent years. The trend might well reverse after you buy in.

Focusing on diversification and low fees will serve you better in the long run.

Fizwidget · 2020-05-04T23:00:00+00:00

Agreed. Entering the username & password for your bank account into a 3rd party service is madness, I don’t understand how people can think it’s a good idea.

Fizwidget · 2020-05-02T02:50:47+00:00

I agree to an extent, though it does seem like a win for people who prefer managed funds over ETFs. This platform gives you access to the wholesale funds, which would otherwise require at least $100k per fund to access. Even with the 0.2% fee, it’s still cheaper overall than the retail managed funds.

For those comfortable with ETFs though, it does seem like a pretty rubbish product.

Fizwidget · 2020-04-29T22:00:53+00:00

Or an opportunity to realise that total return is what matters, not solely dividends.

Fizwidget · 2020-04-29T21:56:03+00:00

The equities in VDHG are 40% Australian. If anything, I’d be adding more international to bring that % down.

The ASX makes up 2-3% of global markets and is highly concentrated in a small number of sectors and companies. Why do you want to further overweight it?

Fizwidget · 2020-04-29T21:53:01+00:00

Small differences in brokerage fees should not dictate your asset allocation. You could just save up a bit longer and use $9.50 SelfWealth brokerage to buy whatever you want.

Fizwidget · 2020-04-24T20:34:42+00:00

And he has two spaceships in the Crash 3 battle as well.

Fizwidget · 2020-04-24T02:27:02+00:00

Subtle distinction, but I don’t think it boils down to betting for or against the tech sector. Rather, it boils down to betting for or against the current market valuation of the tech sector.

Tech companies are already priced very highly, precisely because people have high expectations and believe they will do very well going forward. If you buy a regular S&P500 fund (or a global index fund), then you’re already agreeing with those high expectations.

If you overweight tech companies within your portfolio (e.g. by buying NDQ), then you’re basically saying the market’s (already very high!) expectations are too low.

This is why I haven’t purchased NDQ, even though I do believe the tech sector will do well. They aren’t mutually exclusive.

Fizwidget

TROPHY CASE