Building Porfolio and splitting money to buy ETFs

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Topic Author
Moneyseeker
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Joined: Tue Sep 14, 2021 1:37 pm

Building Porfolio and splitting money to buy ETFs

Post by Moneyseeker »

Hello everyone. I am very new here. First of all I’m NRA , non resident alien. My native language is not English so please excuse me for my spelling and other mistakes. Another thing that i have no tax obligations for my foreign income according to my tax resident country. I am 40 now and i plan to retire in 1 year. I read lots of page in forum and also in web. I have more than 3M USD investment now. Because of home bias , i kept 1M usd in cash and 2m usd in my home country’s high yield usd bonds until now and luckily nothing happened wrong so far. However they are all junk grade as you expect and i dont want to take any unnecessary risk anymore.I sold 1 M usd of bonds already, now i have 2 M usd cash. I will still keep 1m usd in my home country’s bonds because of high yield income. I want to make safer investments with 2M usd rather than investing just junk bonds. I have two questions about my portfolio and buying etfs.

First question is about picking stocks ETFS. I decided to build my portfolio as 60 / 40. My bond etf will be VDTY Vanguard USD Treasury Bond UCITS ETF. My question is about stock etfs. I have 2 options here. Only VWRD FTSE All-World UCITS ETF or I may use 4 different ETFS as US Stock ETF + Developed Europe ETF+ Developed Asia ETF+ Emerging Markets ETF instead of VWRD FTSE All-World UCITS ETF. All ETFs will be UCITS version. There is no ucits version of VXUS or VEU therefore i have to build it myself with 3 separate ETFs or i can just buy VWRD FTSE All-World UCITS ETF. My question is , Which one is better ? j. Bogle says always choose simpler one if there are more than one solution. So, is it better to go with only one stock ETF , VWRD FTSE All-World UCITS ETF instead of 4 separate ETFs ?

Second question is about timing. I know, it is impossible to make market timing and i know what J.Bogle said about it :
I don’t know anyone who can do it successfully, nor anyone who has done so in the past. Heck, I don’t even know anyone who knows anyone who has timed the market with consistent, successful, replicable results.”
But i have more than 2M usd cash to invest. I wont invest all money at once. I mean i wont make purchases with all my cash in one day. I plan to split it smaller amounts like 50K and make purchases for 60 / 40 portfolio periodically. Is it make sense ? For example making purchasing every months 50K is good idea? How can i split my money and how often i buy stock \ bond ETFs ? Splitting it to small amounts and buying ETFs every week or every month is good idea ? I couldn’t find any information about this. Thank you for all comments.
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LadyGeek
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Re: Building Porfolio and splitting money to buy ETFs

Post by LadyGeek »

Welcome! I moved your thread to the Non-US Investing forum. This forum has the experience to answer your questions.

What is your home country?

May I suggest you post your portfolio information in this thread using the My portfolio: seeking advice format? It will help us understand your situation.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Topic Author
Moneyseeker
Posts: 4
Joined: Tue Sep 14, 2021 1:37 pm

Re: Building Porfolio and splitting money to buy ETFs

Post by Moneyseeker »

Hello. I live in Philippines and there is no foreign income tax here for foreigners.
I am planning to retire after 1 year and I will start withdrawing from my investment after 1 year. I have interest income from my bond investment and also have some rent income form my real estates.
I am in a private business and I will close my business with my own decision.therefore I will have no salary or pension when I retire. Thats why I will need to use my investment for my life expenses from next year.
TedSwippet
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Re: Building Porfolio and splitting money to buy ETFs

Post by TedSwippet »

Welcome.
Moneyseeker wrote: Tue Sep 14, 2021 2:45 pm Which one is better ? j. Bogle says always choose simpler one if there are more than one solution. So, is it better to go with only one stock ETF , VWRD FTSE All-World UCITS ETF instead of 4 separate ETFs ?
It depends on what you mean by "better".

The simplest choice is usually the better option, but ... oddly, if you buy the four ETFs you mention in ratios that more or less match VWRL itself, there can be a cost saving. For some reason, Vanguard has priced VWRL more highly than the blended cost of the individual ETFs that make it up.

For smaller portfolios, this cost different will not amount to much. Perhaps the cost of a meal out annually. For larger ones, though, it can mount up, to perhaps a nice annual vacation. In the second case then, it can be well worthwhile accepting the inconvenience of a slightly more complicated portfolio for the cost saving. You need to decide for yourself if this is worth your time, and if you are (or are not) the type of person who is prepared to handle the slight added work of running such a portfolio.
Moneyseeker wrote: Tue Sep 14, 2021 2:45 pm Second question is about timing. ... Splitting it to small amounts and buying ETFs every week or every month is good idea ? I couldn’t find any information about this.
This is commonly known as 'dollar cost averaging'. We have a wiki page on it, and also on its more complicated cousin, 'value averaging':

Dollar cost averaging - Bogleheads
Value averaging - Bogleheads

These pages are written for US investors, so you need to read past references to things like '401k plan', but the general concepts should be relevant.
Topic Author
Moneyseeker
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Joined: Tue Sep 14, 2021 1:37 pm

Re: Building Porfolio and splitting money to buy ETFs

Post by Moneyseeker »

Thank you so much for these two topics. They have information exactly what i look for.
Dollar cost averaging - Bogleheads
Value averaging - Bogleheads
I am reading everything carefully. I have a question about my ETFs.Are My ETF decisions correct for diversion and 3 fund boglehead portfolio ? US stocks ,foreign stocks and VDTY Vanguard USD Treasury Bond UCITS ETF, that is US treasuries bond ladder ETF. which is UCITS version of GOVT. I didn’t choose bnd or bndx because i already have junk grade sovereign USD bonds.
TedSwippet
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Re: Building Porfolio and splitting money to buy ETFs

Post by TedSwippet »

Moneyseeker wrote: Wed Sep 15, 2021 2:20 am Are My ETF decisions correct for diversion and 3 fund boglehead portfolio ? US stocks ,foreign stocks and VDTY Vanguard USD Treasury Bond UCITS ETF, that is US treasuries bond ladder ETF. which is UCITS version of GOVT. I didn’t choose bnd or bndx because i already have junk grade sovereign USD bonds.
Your four stock ETFs look fine, in terms of closely replicating the VWRD FTSE All-World ETF. I do something similar, though for me it requires six funds: UK, US, Europe ex-UK, Japan, Pacific ex-Japan, and Emerging Markets. I do this to balance across multiple different portfolios (tax-deferred UK pension, tax-free UK investing, taxable UK investing). It sounds like things for you will be a bit simpler.

Worth noting that the rebalancing work on this type of portfolio is not as much as you might expect. If a region out-performs, so that one of your funds grows more than the others, then that part of VWRD will also have grown, so that overall if you set up your separate ETFs initially to approximate VWRD then they will continue to do that even as some markets out-perform or under-perform others.

As for bonds, you can find more suggestions in the wiki:

Building a non-US Boglehead portfolio - Bogleheads

In general, you might want to consider holding global bonds rather than only US bonds. Better diversification, assuming the Philippine peso is not pegged to USD. Perhaps AGGG, iShares Core Global Aggregate Bond?
michoco911
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Joined: Sun Jul 14, 2019 4:13 am

Re: Building Porfolio and splitting money to buy ETFs

Post by michoco911 »

Since you will be retiring and hopefully would want to enjoy your time rather than looking at portfolios and percentages, i would say go with VWRD to avoid the hassle of rebalancing and managing multiple funds even if the expense is a bit higher.
As for the bonds, a global bond such as AGGG would be OK.

For the frequency of the purchases, you can use dollar cost averaging. It helps you mentally to accept whatever happens to the markets and get used to the process.

I see it very difficult mentally to switch from 2M$ of guaranteed cash in the bank to 2M$ Invested and then find out that we have a market crash or recession directly after that.

Good Luck and Enjoy your retirement
60% VWRD 40% AGGG until further notice
helloyou
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Joined: Sun Apr 26, 2020 6:09 am

Re: Building Porfolio and splitting money to buy ETFs

Post by helloyou »

I would recommend keeping it simple with VWRD or other globally diversified stocks ETF that are made available to you through your onshore/offshore bank/broker. It will be definitely easier to manage than saving 0.02% managing 4 different ETFs. Moreover, depending on your broker/bank there might be transaction costs added to this voiding completely the theoretical raw savings in expense ratio.

Given your move to retirement soon, I would also suggest distributing versions of both vehicles (stocks and bonds) which should provide you approx $30k/year considering your 2M. This alongside your rental properties should be giving you enough cash to live a very comfortable life in the Philippines considering you already own your place of residence in full.

On a side note, what will you do with your business which I assumed was very successful? Do you plan to sell it? I live in Asia and I am always open to acquire business ventures :)
Topic Author
Moneyseeker
Posts: 4
Joined: Tue Sep 14, 2021 1:37 pm

Re: Building Porfolio and splitting money to buy ETFs

Post by Moneyseeker »

Thank you for all answers. Very appreciated.
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