Hi guys. Just thought I’d do an update regarding my ETF investments. Things haven’t gone 100% to plan, but then again, this is my first time investing so I shouldn’t be too hard on myself.
Back in early January, I had planned to stick to four ETFs. 25% in the Aussie VAS which covers the 300 largest Australian companies listed on the ASX; 25% in VGS which includes the biggest companies from around the world, mainly ones from the United States, Japan, and Europe; 25% in VGAD which is the same as VGS except that it’s hedged into Australian dollars; and 25% in VAE which gives me a low-cost exposure to big companies in Asia, not including Japan.
However, after having invested over the last seven or eight months, my current allocation is as follows: 31% in VAS – I think this occurred because I was reacting to the market a little. I saw there was quite a big dip in price in February and April, so decided to buy while the market was low. I know I promised myself that I wouldn’t “play” the market, but I saw an opportunity, and I took it. Furthermore, as commenters have mentioned before, there are tax incentives for Aussie shares in the form of franking credits. So when it came to tax time recently, I didn’t have to pay as much income tax on my dividends for VAS.
VGS and VGAD have pretty much gone as planned. 27% and 25% respectively. There have been a number of dips in the market, but I have held my cool and continued buying into them.
VAE, which was always my riskier option, started off really well. Because it went up quite high in the first half of the year, I didn’t put so much into it. I tried to stick to the buy low strategy. But then recently, it had a fairly big drop, I guess thanks to President Trump and his trade tariffs on China. So, I’m probably not going to buy anymore of these unless I have some extra money coming my way. Anyway, I’m fairly happy with my current allocation.
Now let’s get into the raw figures. I’ve bought a total of $15035 of VAE. It’s currently worth $14956. So, that’s a loss – well, not really a loss – but a reduction of 0.83% p.a. equivalent. But I always knew that was my riskier ETF. Quite frankly, the fact that there has been so much drama regarding the US and China with trade tariffs and so on, I think the result isn’t actually too bad.
VAS has done quite well. Over the last seven months or so, I’ve invested about $24877 into it and have had a respectable per annum gain of 12.62%
VGAD has done fairly well too with a gain of 11.14%.
VGS has been my top-performer with a massive 18.07% p.a. gain. This fund is heavily affected by the US market, and recently the S&P 500 has hit record highs, so I guess that would explain the good performance of VGS.
All in all, it’s been a good year so far. I’ve had a total gain of $5739.95 or 7.11% as of 28 August 2018, which equates to 11.18% p.a. Not too bad for my first crack at investing. But I’m also a realist and I realise that the markets do fluctuate. In another eight months time, I might be tearing my hair out!
Actually, just a month after I bought my first round of ETFs on January 9th, there was a large market correction as you can see in this chart. There was also a dip in April. But I decided that I’m not going to be influenced by short-term volatility. To be a good investor, one has to be disciplined. I still check my ETFs everyday, but I’ve steeled myself so that I’m never tempted to sell – especially when markets are low.
Anyway, I hope you’ve enjoyed this little update video. It’s good to keep track of how our plans are panning out and adjusting ourselves accordingly. Until next time, talk to you then.
S&P 500 closes at record, briefly hits 2,900 for the first time as trade fears ease
US and China step up trade war with second round of tariffs
VAE - Vanguard FTSE Asia ex Japan Shares Index ETF
VAS - Vanguard Australian Shares Index
VGAD - Vanguard MSCI Index International Series (Hedged)
VGS - Vanguard MSCI Index International Series
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