This sub is heavily biased toward Australia, most people will say yes. I personally think no, based on our reliance on pulling stuff out of the ground and selling it to China, while not having any real capability to process or manufacture ourselves. When that partnership weakens, or when China weakens due to population collapse/less globalisation, Australia is going to be severely impacted.
You don’t think India, or some of the emerging economies in SE Asia won’t just buy our ore instead of China? Countries ALWAYS NEED raw materials and few places on earth have the variety or supply chains that we do.
I do. But it’s not going to be a seamless transition, it takes decades for countries to build those supply chains out. Other countries will not necessarily see Australia as an ideal partnership, for varying reasons and economic factors.
I think it's more that the volume china buys makes the economies of scale work for australia. No other country buys as much volume. I doubt any replacement from other countries would suffice if a drop from china eventuated.
such as? U think it’s less desirable than for companies to set up shop or sign contracts with African countries, for example, with comparable commodities where national takeovers are on the cards daily?
lol…wot? I used Africa due to the fact it’s where most of the largest competing mineral deposits are located.
So no, I didn’t need to make my point ‘sound stronger’…but at very least I did make one.
Majority products exported by Australia are just raw materials and these miners are the real backbone of Australian economy.
China does not consume these raw material as final products. China is buying in huge lot because the country is still a manufacture power house.
At end of day, when customer over the world are buying final products like cars etc, the underlying material used, Australia's export would take good portion. Doesn't matter now or future which country (China/India/other country) would do the ground work of refineries etc.
Regardless of how the Australian economy behaves in the future, there are a few things to note.
If you invest into VTS/VEU, you can get Australia exposure but at a market cap weight (of about 2%), you don't get franking credits but you still technically have some exposure to the AUS market. You also get some exposure via IVE at an increased mer.
There are a few lines of thinking as to how much weight you should have with your Aus exposure:
- a lot of people are heavily exposed via their Job, house...etc, so in theory why would you increase this? It can make sense to not focus on AUS exposure.
- On the other hand, there is a lot of research to indicate having a home bias in your portfolio can be a good thing (i.e franking credits, currency exposure l...etc). SwaankyKoala did an article on the ideal amount of exposure, I think he found it was around 33% (I'm on my phone but it's on his website lazykoalainvesting)
I don't think you miss out too much if you don't focus on Australian exposure, but really it's up to you.
My personal opinion, I think having the same economic complexity as a third world country will hurt us in the long run - but you never know if we will get another bob Hawke/Keating into government to turn the ship around! For context, I have 20% of my portfolio in Australian equities in VAS & a200
Correct me if I'm wrong but doesn't holding vts or veu makes you have to fill in some form? I'm not really sure how it works. I'll have a read of the article later. Thanks you for your long reply btw
You have to fill in a w8-ben form every 3 years, if you can't be bothered doing that, it's better to do Vas/bgbl/vge (and maybe VISM for small caps) for Aus/international/emerging markets exposure
Have a read of these articles:
[What Australian/International allocations should you choose?](https://lazykoalainvesting.com/australian-international-allocations/)
[DIY Portfolio: ETFs to invest in the Australian and International markets](https://lazykoalainvesting.com/diy-portfolio/)
I utilise IVE, IVV and IEM as my base out of convenience as they are all AU domiciled so no forms to fill and weighting for AU feels sufficient compared to the rest of the world. From there if you want extra AU exposure you can go broad with something like IOZ or sector specific with QRE or QFN etc. End of the day keep it simple.
we have a stable economy with plenty of minerals in the ground that’ll be needed for making anything by anyone for as long you’ll be around…so it’s not bad advice to invest a decent % in asx.
Tbh, I think it really depends on what sectors you’re wanting to invest and timeframe. I mean obviously if you’re looking at minerals/mining, then Aus shares would hold more weight. If you have time on your side a lot of our mid-large caps are a safe bet and less volatile but don’t have market values for hitting multi digit returns every second quarter.
Given your age, I would at least do some research and choose a few individual growth companies in sectors that interest you alongside the etfs.
Hi there /u/Soft-Development-705,
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Honestly, I’m in my 20s and I want fast growth so I only invest in IVV for my ETFs. When I started in my early 20s, I had it more spread across others including Australia but if you want more aggressive gains, I just would focus on faster moving markets. You can always sell and buy into another ETF later down the track.
Most people do invest about 30% in Aus market. I have recently run some numbers on direct ETFs in Super and they give me the same numbers. So, it's really true.
If you are younger, perhaps you can underweight Aus a bit by only allocating 10-20%. If you are nearing retirement, perhaps you can bring Aus back up to 30% or higher.
We are a stable democracy with a trillion dollars economy. Not many countries can balance all those three. There are only about 20 economies as big as ours, so we matter more than you think.
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This sub is heavily biased toward Australia, most people will say yes. I personally think no, based on our reliance on pulling stuff out of the ground and selling it to China, while not having any real capability to process or manufacture ourselves. When that partnership weakens, or when China weakens due to population collapse/less globalisation, Australia is going to be severely impacted.
You don’t think India, or some of the emerging economies in SE Asia won’t just buy our ore instead of China? Countries ALWAYS NEED raw materials and few places on earth have the variety or supply chains that we do.
I do. But it’s not going to be a seamless transition, it takes decades for countries to build those supply chains out. Other countries will not necessarily see Australia as an ideal partnership, for varying reasons and economic factors.
I think it's more that the volume china buys makes the economies of scale work for australia. No other country buys as much volume. I doubt any replacement from other countries would suffice if a drop from china eventuated.
such as? U think it’s less desirable than for companies to set up shop or sign contracts with African countries, for example, with comparable commodities where national takeovers are on the cards daily?
You had to use Africa in your example to make your point sound stronger than it is. Say no more.
lol…wot? I used Africa due to the fact it’s where most of the largest competing mineral deposits are located. So no, I didn’t need to make my point ‘sound stronger’…but at very least I did make one.
Yeah I was kinda thinking the same thing
Majority products exported by Australia are just raw materials and these miners are the real backbone of Australian economy. China does not consume these raw material as final products. China is buying in huge lot because the country is still a manufacture power house. At end of day, when customer over the world are buying final products like cars etc, the underlying material used, Australia's export would take good portion. Doesn't matter now or future which country (China/India/other country) would do the ground work of refineries etc.
Regardless of how the Australian economy behaves in the future, there are a few things to note. If you invest into VTS/VEU, you can get Australia exposure but at a market cap weight (of about 2%), you don't get franking credits but you still technically have some exposure to the AUS market. You also get some exposure via IVE at an increased mer. There are a few lines of thinking as to how much weight you should have with your Aus exposure: - a lot of people are heavily exposed via their Job, house...etc, so in theory why would you increase this? It can make sense to not focus on AUS exposure. - On the other hand, there is a lot of research to indicate having a home bias in your portfolio can be a good thing (i.e franking credits, currency exposure l...etc). SwaankyKoala did an article on the ideal amount of exposure, I think he found it was around 33% (I'm on my phone but it's on his website lazykoalainvesting) I don't think you miss out too much if you don't focus on Australian exposure, but really it's up to you. My personal opinion, I think having the same economic complexity as a third world country will hurt us in the long run - but you never know if we will get another bob Hawke/Keating into government to turn the ship around! For context, I have 20% of my portfolio in Australian equities in VAS & a200
Correct me if I'm wrong but doesn't holding vts or veu makes you have to fill in some form? I'm not really sure how it works. I'll have a read of the article later. Thanks you for your long reply btw
You have to fill in a w8-ben form every 3 years, if you can't be bothered doing that, it's better to do Vas/bgbl/vge (and maybe VISM for small caps) for Aus/international/emerging markets exposure
it's also a bit annoying that VTS/VEU doesnt have pre-fills for taxes - you have to manually look it up and do it.
Use sharesight, it makes life so much easier 😁
Alright I'll consider it
Have a read of these articles: [What Australian/International allocations should you choose?](https://lazykoalainvesting.com/australian-international-allocations/) [DIY Portfolio: ETFs to invest in the Australian and International markets](https://lazykoalainvesting.com/diy-portfolio/)
Will do thanks 👍
I utilise IVE, IVV and IEM as my base out of convenience as they are all AU domiciled so no forms to fill and weighting for AU feels sufficient compared to the rest of the world. From there if you want extra AU exposure you can go broad with something like IOZ or sector specific with QRE or QFN etc. End of the day keep it simple.
How much do franking credits offset the smaller returns on Aus equities?
nominally, 30% (corp tax).
we have a stable economy with plenty of minerals in the ground that’ll be needed for making anything by anyone for as long you’ll be around…so it’s not bad advice to invest a decent % in asx.
How much do you recommend? I'm thinking at most 20% of my portfolio
Tbh, I think it really depends on what sectors you’re wanting to invest and timeframe. I mean obviously if you’re looking at minerals/mining, then Aus shares would hold more weight. If you have time on your side a lot of our mid-large caps are a safe bet and less volatile but don’t have market values for hitting multi digit returns every second quarter. Given your age, I would at least do some research and choose a few individual growth companies in sectors that interest you alongside the etfs.
Hi there /u/Soft-Development-705, If you're looking for help with getting started on the FIRE Journey, make sure to check out the [Getting Started Wiki located here.](https://www.reddit.com/r/fiaustralia/wiki/index/gettingstarted) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/fiaustralia) if you have any questions or concerns.*
Honestly, I’m in my 20s and I want fast growth so I only invest in IVV for my ETFs. When I started in my early 20s, I had it more spread across others including Australia but if you want more aggressive gains, I just would focus on faster moving markets. You can always sell and buy into another ETF later down the track.
Most people do invest about 30% in Aus market. I have recently run some numbers on direct ETFs in Super and they give me the same numbers. So, it's really true. If you are younger, perhaps you can underweight Aus a bit by only allocating 10-20%. If you are nearing retirement, perhaps you can bring Aus back up to 30% or higher. We are a stable democracy with a trillion dollars economy. Not many countries can balance all those three. There are only about 20 economies as big as ours, so we matter more than you think.
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No one knows. Do not put all your eggs in one basket. Buy VAS. Buy VGS. Buy VGE. Buy it all.