INVESTING STRATEGY
Please criticise my portfolio 40% UMAX, 40% VAS, 5% NDIA, 5% VEQ, 5% VAE, 5% IJP
Hi! I'm 19 years old. My investment horizon is extremely long term (30-40 years). I am looking for a globally diverse portfolio with a focus on sustainable increasing dividend yield as I plan on reinvesting all dividends. I don't want any defensive assets such as cash or bonds as I plan on holding these equities for a long time and volatility is not a worry for me. Any suggestions about how to improve this portfolio? It would be greatly appreciated. Cheers :)
4 Comments
almost 2 years ago
Hey Jacob. Nice work having such a focused plan at such a young age!
Obviously anything I say here should only be considered as rambling thoughts for general discussion :) Here’s a couple of observations…
Having 5% of a fund in an investment portfolio is almost (mathematically) a waste of time. It has such little impact that it’s worth you considering should it really be there. If it’s important, should it be bigger, and if it’s only important enough to be 5%, then is it that important to you? So I would be wary having multiple slices of 5% here and there, since even though it feels more thorough it could make things more complicated without any real benefit (to my mind).
It would be good to also question UMAX versus using a traditional index fund. I get the attractiveness of yield, but remember some growth can be harvested for income too (something I used to not feel comfortable with either). I actually wrote an article about how I changed my mind about this here if you’re interested: https://strongmoneyaustralia.com/my-latest-th...
The UMAX option strategy for income vs a normal US index has been costly to returns since inception nearly 10 years ago, so is it really worth it?
Consider the pros and cons of having US, india, japan, asia and europe all separate… where you could just have VGS (developed markets) and VGE (emerging markets), which covers US, Europe and emerging markets with fewer holdings and lower fees. Sure, the percentages might not be exactly what you want, but it’ll be pretty close and remember (mathematically) those small % exposure differences aren’t really a big deal.
Anyway, just some things to think about. Either way, you’re setting yourself up for success with a well planned portfolio at 19, so kudos to you!
Dave
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Replyalmost 2 years ago
Hey sorry I missed this reply.
The simplified portfolio makes more sense while still giving a lot of diversification.
If UMAX underperforms VTS then even by saving money on brokerage it’s simply not going to make up for the total return underperformance, especially over time. UMAX is also higher fee and follows an option strategy, which if you look at this and Betashares other funds, doesn’t seem to be delivering much value overall (they have a few funds like this, pretty much all of them underperform).
Also worth considering that VTS is the entire US market which comprises 4,000 stocks. UMAX tracks the top 500. May not be a big deal, but worth noting.
And thanks for following my story! I didn’t actually do that well in property believe it or not (half our properties were in Perth which did poorly lol). The magic was saving a crapload of money every single year and reducing our expenses so we could retire on less :)
It’s personal choice at the end of the day between property and shares. Starting again I would likely just buy a home to live in and invest in shares and not worry about investing in property. That said, leverage can help create more long term wealth more easily in real estate. But shares are better for passive income which helps create cashflow to live on and reduce work sooner. So it depends what someone’s goals are.
Hope that helps mate.
Dave
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ReplyJames P
INVESTOR
almost 2 years ago
I don’t have any advice but I wish I had your mindset 10 years ago! Awesome to see. Good luck with your investing journey!
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