4 Comments
nick nicolaides
PEARLER
over 1 year ago
Hi Larissa
Great to hear you and your Son are getting started! This topic is something that really depends on your personal situation and we can only discuss general topics here. I have outlined some things to think through or get advice on.
What index do you want to invest in? VOO tracks the S&P500 and VGS tracks a global index, they include many of the same companies due to the size of the US market. There are US, ASX and managed fund options that track both, so you can really invest in either, multuple ways.
Do you want US shares, ASX shares or a manage fund? VOO is listed in the US, but there are ASX listed ETFs that track the same index. IVV is just one example (the most invested example) of an ASX listed ETF that tracks the S&P 500 although there are several. You may want to consider investing in an ASX ETF that tracks the same index, because this will mean you avoid FX fees and could be located locally for tax purposes.
Do you want shares vs a fund? You should consider what parcel size and how regular your Son is likely to invest. For Shares, with a transaction at $5.50 prepaid, you should consider what parcel size is worthwhile so that the fee isn’t too high as a proportion of the investment. The ASX minimum is $500, but the median Pearler investment is closer to $800. This is just data as an example, this decision is really up to you. If the amounts are going to be smaller and the time taken to get past the ASX minimums is too long, then consider the managed fund route. Head to https://pearler.com/pricing to consider more on this.
Hopefully this gives you some ideas for how to go about making your decision! I appreciate this is quite general information, so please take your tiem to research. Regardless of which way you choose, it sounds like you’re both thinking long term!
Nick
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Replyover 1 year ago
Just to piggy back on what Nick has said here…
VOO has a lower management fee than VGS. But VGS comes with greater diversification (more countries and companies) than VOO.
Also, while VOO invests in US companies, the fund is also operated from America (VGS is operated from Australia). This can create some tax complications for Aussie investors in VOO, which can get a bit complex, and are discussed in detail in this post: https://passiveinvestingaustralia.com/fund-do...
For what it’s worth, many more people in the Pearler community tend to invest in VGS over VOO, because of the reasons mentioned above. You can tell this from the Invest page, as the funds are ranked in order of popularity. Here: https://pearler.com/explore/invest/au-shares
That doesn’t mean it’s always the right option, as in some cases perhaps a US only fund is what the investor wants. Though in that case, IVV is also a very similar fund that is operated from Australia and doesn’t come with the possible tax issues that VOO does, and the fee is about the same.
I hope this simplifies it a little bit, as I know this stuff can be a bit confusing at first.
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