Talk:Investing from Australia

Statements likely to become outdated
There are a couple of places where the article uses "currently" to reference data that is time/date sensitive and likely to change. According to the Wikipedia:Manual of Style it is suggested that use of language such as currently should be avoided, rather use language such as "as of". Since I don't know the specifics of the Australian market, I'm not sure the best course of action to update. --Peculiar Investor 12:33, 20 March 2016 (EDT)
 * See also Wikipedia:As of for more guidance. I'll investigate the effort to port Wikipedia's Template:As of to the BH wiki. --Peculiar Investor 12:40, 20 March 2016 (EDT)

Thanks
Just wanted to say a big thanks to the editors who have fixed things so far.

As if you couldn't tell, this is my first time ever updating a wiki. I'm reading all your comments, trying to incorporate them into my writing as I go. I've got a lot of information to combine and write up so while I'm trying to keep things organised I apologise in advance for the writing tone and clutter. ^^^ added by Startingagain 01:27, 21 March 2016‎ (EDT)
 * There is no need to apologize, you're doing fine. We use the same software, and follow the same guidelines, as Wikipedia. The difficulty is understanding the wikitext language combined with following Wikipedia conventions.


 * Content is much more important than formatting. The technicalities of creating links, headings, tables (especially tables!), and organizing the page information can be overwhelming. Don't let this stop you.


 * Use the Discussion page (this one) to ask for help. If you want to insert content from a post, create a table, add a figure, or anything else; just provide the link and let us know what needs to be done.


 * By convention, an editor "signs" their name in a Discussion page. Use the "pencil" icon (3rd from the left) in the editing toolbar. You'll see --~ which will get converted to a signature upon "Show preview" or "Save page".
 * --LadyGeek 21:25, 21 March 2016 (EDT)


 * Got it, thanks!! --Startingagain 21:49, 21 March 2016 (EDT)
 * As LadyGeek points out, content is the most important part of wiki article. Please carry on and develop the article. Another part is the collaborative effort to develop and improve articles, where anyone can bring their particular skillset to help improve the article. Wiki editing generally tends to flurry of activity from a number of editors over a short period of time, then the article remains stable for a while. Editing an article tends to lead to others reading the article again and apply further edits, rinse, lather and repeat.
 * As a Canadian, I cannot much help in the way of Australian content. However I've got extensive experience in "The technicalities of creating links, headings, tables (especially tables!), and organizing the page information", so collaborate on those aspects. The challenge is not discouraging the content editors from continuing to improve the article's content when they see others "fixing/updating" the article. Please be encouraged to carry on and be bold. Improve the content even if it doesn't necessarily format correctly. Someone will generally pitch in and help there. The best way to learn the "technicalities" is review the change history to understand what got changed. For the most part, that's how I've learned many of the "technicalities". --Peculiar Investor 08:58, 22 March 2016 (EDT)

Suggested edits
The following suggested edits are courtesy of forum member andrew99999, an Australian citiaen.

​​Under existing heading International equity:

International equity
There are a couple of options for international exposure.

VTS/VEU:  VGS: IWLD:
 * Global cap weights are roughly 50/50 VTS/VEU.
 * VTS = Total US market (large/mid/small caps).
 * VEU = Total Ex-US market (large/mid/small caps, including both developed and emerging markets).
 * Covers the entire investable world (large/mid/small caps, both developed/emerging markets).
 * US domiciled, so you are subject to US estate tax.
 * Much lower cost than all other other options.
 * VEU contains about 5% Australian stock and you don't get franking credits.
 * Covers about 75% of the investable world - large/mid caps, developed markets, so missing small caps and emerging markets.
 * Is Australian domiciled so no US estate tax issues.
 * Cost is about 2.5 times VTS/VEU, but still reasonably priced.
 * Australian index & fixed income, you have an easy manageable 3 fund portfolio.
 * Can add in VISM/VGE, with global cap weights are roughly 75/15/10 VGS/VISM/VGE, to cover the entire world's investable markets, and you are able to overweight small caps and/or emerging markets if you would like to.
 * Covers almost the entire investable world (large/mid/small caps, developed, but misses emerging markets).
 * Is Australian domiciled so no US estate tax issues.
 * With Australian index & fixed income, you have an easy manageable 3 fund portfolio.
 * Can add in emerging markets and have an all world diversified equities (market cap is IWLD/EM 90/10).
 * Cost is about 2.5 times VTS/VEU, but still reasonably priced.

Currency hedging
Currency hedging should be done on a portfolio-wide level. For instance, if you decide on a 50-70% AUD based portfolio and have an asset allocation of 75/25, then you already have 25% of your portfolio in AUD currency since fixed income assets should be in your home currency, so that leaves 25-45% to be AUD based equities and the remaining 30-50% global unhedged equities.

AUD based assets: Non AUD based assets:
 * 25% Fixed income (AUD based).
 * 25%-45% Australian equities or Global AUD-hedged equities.
 * 30%-50% Global (unhedged).

Global AUD-hedged equity index funds on the market include:
 * VGAD (AUD hedged version of VGS).
 * VHWL (AUD hedged version of IWLD).

Australian equities vs Global AUD-hedged equities
Which one to choose is a trade off between concentration risk and cost of hedging. The Australian index is highly concentrated, so having half your equities there is taking on a lot of single market and single sector risk. Hedging on the other hand has costs. The costs of hedging go beyond the MER. On top of this, you lose franking credits. Vanguard's Diversified funds tackle this problem by splitting it up between the two, to reduce cost of hedging and to reduce concentration risk. A simple version of this might be (for someone with a 75/25 asset allocation).

AUD based assets: Non AUD based assets:
 * 25% Fixed income (AUD based).
 * 25% Australian equities.
 * 15% Global AUD-hedged equities.
 * 35% Global (unhedged).

Non-liquid investments should also be considered. For instance, if half of your income producing assets are in Australian property, then you already have half of your assets AUD based, so if you wanted 50-70% AUD based assets, you already have 50%, and with the fixed income part of your liquid assets AUD based, it makes more sense to have all of your equities as global unhedged equities. --Blbarnitz 18:43, 5 January 2019 (UTC)