Two Fund Vanguard Australia Portfolio - VAS & VGS ETFs (+ Alternatives)
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- Опубликовано: 5 сен 2024
- Vanguard’s VAS ETF and VGS ETF are two of the most popular Index Funds in Australia for Passive Investors. This 2 fund portfolio tailored for Vanguard provides long term growth with minimal fees.
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So in this video we're actually going to talk about what the two fund portfolio is at a conceptual level, the benefits of a two fund portfolio, how to actually build the Vanguard version, some alternative two fund portfolios to consider (which are actually really quite good) and then finally be sure to stick to the end where I’ll share a really easy way to actually stick to your target allocation percentages for the portfolio.
So very simply, the original three fund portfolio comprises of three different asset classes, you have US stocks, US bonds and international stocks, and the Australian version of this is Australian stocks and bonds, plus international stocks. The concept of the three fund portfolio was popularised by “Bogleheads”, a group of investors named after the original founder of Vanguard and the grandfather of passive investing, Jack Bogle. Now this doesn’t mean you can go out and buy any Australian stock, Australian bond, and international stock, and say that you have a 3 fund portfolio.
The point is to achieve a highly diversified portfolio using low cost index funds or ETFs. If you’re not sure what an index fund is, it’s a way to by a whole basket of stocks through a single transaction, imagine if you wanted to buy the largest 500 companies in the world, it would be pretty cool if you could do that by just buying a single stock, rather than all 500 individually, well that’s what an index fund or ETF allows you to do.
So back to the two fund portfolio, well this is just a version of the three fund portfolio but without the bond allocation. And the Australian version would comprise of an Australian Shares index fund and an International Shares Index Fund.
What is a 2 fund portfolio
The benefits of a 2 fund portfolio
- Performance
- Simple and easy, More likely to keep balanced
- Low cost
The Vanguard version of the Australian two fund portfolio and the shares that are actually inside of it
I’ll provide some alternatives options to the Vanguard 2 fund portfolio
- Swap VAS for A200
- Swap VGS for IVV
Automate your target portfolio allocation balancing
All opinions expressed in the video and this description are for entertainment only. You should consult a licensed professional before buying any securities, stocks, cryptocurrency or digital assets. Everything in this RUclips channel is for entertainment only.
Been watching, listening, and paying attention to all of predictions and forecasts since early Covid. He hasn't disappointed yet 👌
Well said! I am also here to learn how to invest after listening to a lady on tv talk about the importance of investing and how she made 7 figures in 3 months, somehow the video taught me nothing and left me even more confused, I'm a newbie and I'm open to ideas on how to invest for retirement
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@@user-wx7qe4ch9f Thank you, Going through her profile on her webpage out of curiosity, and surprisingly she seems proficient. I appreciate this.
VAS/VGS are my two highest holdings. Interesting to hear your take on the 75/25 split as I lean slightly higher in VAS than 25%. This is definitely some food for thought and awesome information for investors. Keep it up, mate!
Literally the only 2 ETFs I own
Is it a good idea to have a stock broker in Uk?
Yes, Mate. It is.
@@saanvi848 Please why do you say so? I wanna know. I have lost a lot. Trying to manage my stocks myself.
I’m too tied up with work. I have no time to analyze which stock to buy.
Getting these people will ease a lot. And at last, you’ll realise you have safe your funds. The money we throw into stock without even taking consideration to whether it’s good for holding or not is our hard earn money. So we should accept someone professional to make good management of it for proper growth.
@@steffan683 Talking about my analyst I met her sometime last year in Manchester. Her name is Loretta Wilkinson. She has helped me grow my money from £60,000 to £400,000. I can afford a house now, is her help.
This video was uploaded at the perfect time! Looking to buy my first ETFs buy the end of the month. Great content btw, get the info across in an entertaining way without the fuss 👍
Glad it was helpful!
Have you looked at VTS? Seems to be a direct competitor for IVV, with 0.03% management fee, 99.18% in US shares, and similar returns, and half the price of IVV per ETF. Excellent video by the way!
Thanks for sharing this.
You are my favourite youtuber and very clearly explain. BTW, your videos qualities improve so much and background is super. You look super smart with white colour.
Thanks Cynthia, appreciate the feedback!
Thanks for the informative video. I agree with having a simple structure for your investments and holding for the long term. If however, you wanted to add a little more control and also lower your fees, I would suggest considering splitting the 75% for international stocks between VTS (US total stock market) and VEU (non US international stocks). Both have extremely low management fees around 0.04%. The downside is that you need to make the decision of how much to allocate to both ETF’s. In other words, how much exposure you want to the US market. But your approach is fine and certainly keeps things simple.
You are a total legend thank you for making these vids! I hope that RUclips algorithm starts snowballing for you
Thanks means a lot
Good content and video. Only comment I have. I wouldn’t be investing such a big share in Australia. It’s not reflecting the size Australia plays in the economy.
Due to home bias that’s what people will do. Because we like to invest in what we know and not what’s best. I’d recommend Small caps and emerging markets considering the role they play in the economy.
Great video Michael, I would like to add maybe ASIA on top of VGS and VAS
Thank you 🙏
Great Video, thanks Michael!
Thanks Max
VAS will keep coming down in price as it already has since I began in 2016. Vanguard is a NFP organisation so lower fees are a given. Therefore I wouldn't waste my time with A200.
I like A200 and IVV. They have the lowest fee and I plan to hold them for a long time.
Can't go wrong with those in the long term
Thanks for sharing your knowledge! Seriously listening to you.
Thank you for sharing your knowledge. I am starting to invest and you gave me a lot of material to evaluate which indices I should choose.
Cheers mate.
Love to hear it Gian!
What about IEM?
As a alternative to ASIA
I sold my afterpay
Im 39% A200 and 61% IVV
the way i see it with bonds (might be something i havent thought of) i am already putting money into paying off my mortgage thus saving a small amount in interest i would have to pay to the bank if i didn't. so why would i buy bonds to get an interest payment similar to or lower than the amount i'd save paying down my mortgage...and also having to pay tax on each payment too.
Would A200 + BGBL be the ideal pick for a 2 fund portfolio? What are your thoughts on hedging for international shares? (HGBL)? Fees for the Betashares ETFs are 0.04% and 0.08% which is substantially lower than VAS and VGS
Ive been looking at VGS, IVV and ETHI and ive really been looking at ethi because everything seems to be going renewable and to me it just seems smart to focus on investing in the future
Yeah Ethi seems good, .59% management costs which are relatively high
Hi mate great videos! Question VGS - IVV at 0.04% versus VGS - VTS at 0.03% I know it’s nothing - but still what’s your thoughts?
Great video as always!!!
thanks 🙏
What is your opinion about holding VAS, VGS and VHY as 3 fund portfolio?
I'm putting $500 each/mo into both VAS and VGS, however due to newly introduced $9 per trade brokerage it's no longer making sense for smaller amount regular contribution.
I have swapped into their "corresponding" manged funds instead to oviod the brokerages. Do you think this is a good strategy Michael?
I think I read somewhere that your gains will be the same but expenses will be higher once your holdings go quite large and I think tax is higher on a managed fund due to the gains being more focussed towards dividends. Might be wrong though but that’s what I recall.
You cann try Stake with their low brokerage fee for Aussie ETFs and is Chess sponsered.
@@GaganShrma I don’t see why everybody isn’t on stake? $3 trades plus Chess for ASX. Isn’t this the best app right now?
Unbelievable you do these videos for free. So good. Whats the benefit of a 2 fund portfolio (VAS & VGS) compared to just going straight VDHG?
Thanks so much! Main benefits of VDHG, is that its more diversified (includes everything VAS/VGS has + small caps/emerging), and it also has bonds (could be a pro or con depending on what you want). VAS/VGS combination will be quite a bit cheaper in management fees over the long term though, and should have better performance (due to no bonds).
@@michael_ko Thanks Michael! You've got a real talent for clearly explaining stuff that can be complex. Really appreciate it :)
Hi @mrtrza I’d also add that a difference to VGS+VAS over VDHG is the dividends and therefore tax implications of holding these options. VDHG seems to have a higher dividend, meaning higher tax implications if you’re a higher income earner.
@@Nick-yp8eo thanks mate!
Hi huge fan here, Why'd you change your Core + Satellite approach and drop your satellites (espo, etc).
Any plans on dropping Asia off the list as well due to CCP regulatory risk? Thanks!
Hey Nigel hope you are doing well, appreciate the comment :) I'm still holding all the same ETFs I have been (incl. ASIA), holding for the long term so I don't plan on selling anything.
Hi if i have $1000 to invest in Vanguard EFT’s , any suggestion how much percentage can I allocate each with VAS, VSG and VDHG . I am 45 yrs old now and just looking to auto invest for my retirement by 55 or 65 at maximum. Thanks for answering 😊
Good video Michael 👍🏽, I just have one confusion. In Vanguard Personal Investor now they are charging 9$ flat brokerage fees for VGS and VAS etfs for every transaction so if anyone invests monthly he/she might loose a lot of money in fees over long-term. Is it better to invest in Vanguard Australian Shares Index (Managed) Fund and Vanguard International Shares (Managed) Fund to save on fees? Is that the same thing as investing in VAS and VGS?
Have the same query now that they have pushed this fee to 15 dollars
I use cmc invest. It's free if you invest under $1000 everyday
Isn’t this portfolio missing out on Australian high dividend and fracking credit benefits given only 25% allocation. The 75% international part will not give those tax benefits to Aussies. So the Australian portion could be much higher than suggested?
Pretty much the this but I’ve added a 10% allocation to emerging markets.
Likewise. I think emerging markets is a great diversifier
Excellent content - look forward to your vedios👍👍👍
Thanks for a wonderful video ... I was just wondering .. Is there any etf to get exposure to bonds, developed countries and emerging markets ?
Great vid new to all of this so can I ask that if you invest a sum each month do you have to pay brokerage each month.
Thanks.
Been a fan of you since I’ve started my investing journey.. I’m a passive investor & more into ETFs than individual stocks currently. But at this time of all high, is it still worth to invest more ? On the other hand, I’m not happy to see my dead money in savings account ..
What’s and where to buy them ? With auto reinvest dividends
Great content
Hi Michael. Would it be true to say that with the EFS such as VGS, it doesn't matter how many people buy and sell share in this fund, that the share price is determined by the value of all the stocks in the fund divided by the amount of shares?
I have been a little confused as to why the VGS share price would fluctuate during the trading day in Australia, when the US exchanges are closed and not trading. Although - VGS includes shares from other exchanges that aren't open, and they could also being taking into account the exchange rate between the AUD and USD.
However the same fluctuations during the ASX trading day still happens with HNDQ shares which are a hedged NASDAQ ETF
Hey man thanks so much for the video! I currently have been holding vdhg for about 2 years. If I was going to move this into vas+vgs, what would be the best way to this? Cheers!
@@bhadhuri 400
Hey Michael, do you think it's wiser to diversify my ETF's or put a majority of my money within maybe 3-5 which have a history of sustained growth? Thanks
I think I would try stick to 3 or less if possible, you often won't get much additional diversification with more than this. And it actually becomes quite a pain during tax time the more holdings you have.
@@michael_ko Which ETF's have you invested in? I have A200, IVV and VDHG
You have amazing content. Thank you so much! I am binging all your videos before I make my first ever investment!
Thanks for a great video! Could anyone please let me know the best way to purchase Vanguard ETFs from New Zealand. There seem to be few options from this country.
Just want yo know that if we buy vanguard us share etf and got dividends as well on company so the dividend money go to etf compnay so that they reinvest or its come to my account need to fill any form for reinvest divident in case of etf
Hi Michael, I am just starting to invest in ETFs lately. Given their P/B ratio, P/E ratio and current ratios, Is VGS a good investment? What is your opnion on this?
Hi Mate love the vids, I’m doing my own super within my super fund. Is it better to say leave my super for them to work and stay in aus and int shares or do you think if Im doing My own super etc Then I should just stay with VAS and VGS?? Any help would be great cheers
what about a gold ETF
Hi Michael, do these two etf's issue dividends?
What are your thoughts on VDHG?
Is it possible for a family trust to buy Vanguard ETFs
Hey Lothar, yeah definitely. When registering for a brokerage, you'll just need to sign up via the trust, rather than an individual account.
Thanks mate for the very informative vids you are making, which I have now subscribed. I'm thinking A200/VGS as optimum combo, thereby diversifying the ETF companies as well. What do you think?
im new to investing, are franking credits really worth it if you can get better returns from Us stock and is the main benefit just investing in our country
NO NO WORTH IT. Focus on Total Returns plus the franking credits are priced in by the market, that is, the market increases the share price a little more than it would if there were no franking credits. So it’s a wash in the end
@@bornfree8487 so dont worry about franking credits?
@@travismayne8830
Your main objective is total returns. If you hold , say, VGS in Super it’s a low tax environment. Even outside Super if most of your return comes from capital gains ( great) you can decide when to sell down and incur a CGT event. And if you hold for more than a year you get the 50% CGT discount, therefore half of the marginal rate. Or you can minimise the gain further by making a concessional contribution to Super toward your 27.5k cap
Would you prefer to have invested in Tesla or Oz Banks?
Moreover according to some clever folk in Reddit, the advantage of franking credits is partially ‘priced in’ to the share price mitigating the benefit!
So aim for shares which will give you the highest return because if you are rewarded with outsized capital gains you can defer the tax event (if you don’t need all the dividends) and allow the magic of compounding to occur unabated rather than being ‘forced’ to take a dividend
@@bornfree8487 thanks for the help dude 😎
I assume ETFs do not qualify for Chess? What happens to our investments in ETFs if Pealer folds?
pretty sure pearler is chess sponsered
@@jimmygee5 I know it is, but how does that apply to etfs?
ETFs do qualify for CHESS
pearler still not having the instant payment yet, SO pissed of at them
They released this recently! It should be available for you to use
Hello haven't seen you in a while,
I've made myself a list of ETFs (20 of them) what are your thoughts about over diversification
I was the same when I first started looking at ETF's. Advice from differnent people & websites. Stop over thinking it & keep it simply. I settled on 80-90% VAS/VGS (30/70) & 10-20% whatever I like to try. This could be NDQ, ASIA, TECH, VISM, PMGOLD. ROBO etc whatever you like. I invest in VAS/VGS every month & the other every 2-3 months
@@paulsteven4551 don't get me wrong vas and vgs are on my list they are very highly valued ETFs
@@bhadhuri 30/70 ratio out of the approx 80-90%
Have you used a tool to check the overlap between them? There’s a few around and they opened my eyes on how much they crossed over so it put me off. Also a lot of ETFs have quite high fees. Finally, managing that many would be very high brokerage costs which is just going to drag your margins?
@@paulsteven4551 this is actually a pretty good strategy! Thanks mate!
im 50 40 atm,
Are VAS, VGS & IVV included in pearlers brokerage free etf's?
Not yet unfortunately - currently its just ETFs from eInvest, ETF Securities and VanEck
Just pick one of VGS or IVV as they overlap a lot
none of them portfolios are good if you have marority in aus