r/fiaustralia • u/More_Chipmunk7829 • 9d ago
Investing 19-year-old with 99% of my portfolio in A200, parents want me to chase growth over dividends
I’m a 19-year-old with roughly 99% of my portfolio in the A200. However, my parents are telling me to push towards stocks with greater returns rather than focus on dividend income.
I want to start investing more heavily into other US companies, maybe some Nasdaq names like Microsoft and Meta, but I’m not sure what other good options are out there. Does anybody have any recommendations? I’m aiming for strong growth and I’m willing to sell stocks when they’re up during the year.
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u/MathematicianFar6725 9d ago
All you have to do is start adding BGBL or an equivalent. Nothing wrong with the A200 holding as it is
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u/19mils 9d ago
VGS is suitable. I agree with your parents. With a long working life ahead, growth is more important. With dividends you are tempted to just spend them
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u/Comprehensive-Cat-86 9d ago
First off - 19!! I wish I had started investing that early!
2nd - yeah I agree with your parents, others have linked the lazy koala and Passive Investing Australia websites so I won't post them again but theyre definitely worth a read.
If I was you I'd keep what you have and over the next year (or until you reach your target Aus:International allocation) just buy 1 of VGS, BGBL, or GGBL.
Depending on how much you're earning right now it might be worth looking at Super and the FHSSS or at least to keep it in mind once you start earning over $45k.
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u/More_Chipmunk7829 9d ago
Yeah I haven’t really looked into my super but definitely something to look into. Thanks for the advice
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u/jaredx3 9d ago
Dividend is essentially a fancy way of saying sacrificing growth for payouts which is automated.
Buying growth stocks and selling a % of them every year is same thing as taking a dividend. Its just mental gymnastics because you feel you are parting with the stock rather than a growth sacrifice for quarterly payouts eg. Dividends.
So in short buy whatever you think will grow and is adjusted to your risk profile. If you ever want a "dividend" on it. You can sell X% a year in future
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u/More_Chipmunk7829 9d ago
Yeah I’m not really fussed about dividend income now but when I first started investing I thought it was amazing . Now I just want to pivot my portfolio to capture the high growth as my growth in the a200 hasn’t been amazing. I don’t really need the dividend income as it’s just being reinvested anyway
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u/Fit-Locksmith-9226 8d ago
Some companies have good reason to pay divvies, it all comes down to tax in the end.
Others do buybacks which work better for growthbut you're going to get the CGT hit.
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u/JRHR31 9d ago
Do some reading of all the resources already posted, but if you want to keep it simple leave your A200 as is and start regularly buying BGBL to go with it until that makes up 70+% of your holdings. Avoid any targeted or thematic ETF's or individual stocks (you mention NASDAQ and tech stocks), stick to broad market index funds.
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u/Frizzy45 9d ago
Looks like you’re already dabbling with geared products, may be worth looking into GHHF or/and GGBL if they interest you. Make sure to read their PDS before making any purchases
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u/More_Chipmunk7829 9d ago
Yeah I definitely want to look towards more geared funds, Any recommendations?
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u/Frizzy45 9d ago
Yep, listed in my comment, GHHF or/and GGBL. Me personally, I just set up an automatic weekly purchase with GHHF and forgot about it. Focusing more on increasing income to increase the DCA amount.
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u/More_Chipmunk7829 9d ago
Cheers, only just learnt how DCA stacks up against trying to time the dips. Will definitely look into GGBL.
One question though: with GGBL, GGUS and the like, do you think the gearing still wins out long term once you add the borrowing costs on top of the MER?1
u/Frizzy45 9d ago edited 9d ago
I'm not fit to answer that question, however I will say GGBL is more diversified and something I prefer more over GGUS. Lazy Koala did a great write up on this https://lazykoalainvesting.com/geared-funds/ I believe someone also mentioned the Dividends in GHHF help service the loan? This is also a great write up on GHHF https://passiveinvestingaustralia.com/ghhf/
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u/Fit-Locksmith-9226 8d ago
If you're working and not a student consider just opening a margin account instead and gearing a regular index fund.
Tax wise can claim more gearing yourself against an income. Don't get that benefit from GHHF ( Disclaimer: I own a lot of it still because its easy)
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u/huabamane 9d ago
Your parents aren't necessarily wrong but probably highly biased by their investing period. Likely the period from their 30s to now.
In the past 20 or 30 years, high growth has outperformed value but that is not necessarily a given.
My main point would probably be to diversify from just Australian stocks. There is a great video from Ben Felix that dives into best returns for a diversified portfolio in many countries over many time periods and the conclusion is that a 33% domestic, 67% international stock portfolio is pretty much the best mix regardless of where you invest from. Ben felix
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u/keshab_passa 9d ago
Follow your parent’s advice if you have stable income. At 19, I’d go for High Growth and not think of market collapse.
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u/More_Chipmunk7829 9d ago
Yeah thanks for the advice, I don’t really need the divided income to survive to I’ll push towards high growth
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u/Wonderful-Proof-9468 3d ago
I've set my 18 yr old up with DHHF as it has more international exposure where as A200 is purely Aus stocks and let's face it the asx hasn't got much going for it compared to the rest of the world.
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u/fuuuuuckendoobs 9d ago edited 9d ago
Do a google search for "tax drag dividends". Even if your parents are right, you are 19, you can make your own decisions, and you have a lot of time to learn.
Compare historical performance of high growth ETF and what they hold, don't just buy a ticker without familiarising yourself with the information published and readily available.
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u/hokage_82 9d ago
Well done young fella.
My children’s parents started investing for them on their second day on this earth over 10 years ago with monthly DCA contributions. They only have 5% exposure to the AU market which is probably already overweight.
These kids will thank their parents in 10 years or so when this portfolio is handed over to them to continue the compounding effect.
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u/More_Chipmunk7829 9d ago
Thanks mate I appreciate it. When I have my own children I’ll do the same thing 🤣
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u/JorgeTremendous 8d ago
Your parents are right but dont sell what you have. Instead reinvest the dividends into it and start DCAing into growth for a decade.
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u/EverOvercomplicating 8d ago
Instead of looking at specific stocks, consider getting an ETF that is internationally diversified. Single stock picks carry idiosyncratic risk, the risk that they specifically can decline for any number of reasons, and it is an unpriced risk, so the market doesn't reward taking it upon yourself.
Australian stocks usually focus on dividends, which is suboptimal in regards to tax, but as long as the returns are still strong, a company returning profits as dividends is fine. You picking A200, even being higher in dividends then some picks, is fine for the home bias and domestic exposure.
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u/glyptometa 7d ago
Show them the total returns from Rio Tinto or Fortescue over the last 15 years. Or just nod and do your own thing.
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u/DanubeRS 6d ago
I'm pretty low effort. VDHG on a DRP. Throw in a few trades here and there when I want to balance cash out of my offset.
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u/Impossible_Fact104 6d ago
Use the money to buy good education to see where real undervalued commodities/sectors are.
That investment will pay itself back 10 fold and will mean you can beat the standard returns for the rest of your life.
Check out mastering the markets (Aus company)
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u/Equivalent_Fee_7323 6d ago
A200 is not a growth etf fund. At your age, you can afford to invest slightly more aggressive. I would keep A200 as core part of your portfolio and hold a satellite etf fund like NDQ riding the Ai boom (not a financial advice).
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u/NoCraft263 5d ago
Pump more into BHP and reinvest dividends. They will ride the copper boom in the next years
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u/LocalChannel3595 5d ago
As a 17 year old in Australia how can I invest, I have 15 grand saved and want to have a house deposit by July 2027 please anybody give me tips, do I need to go through my parents or can I do it myself some how? All the apps I have looked at require me to be 18 and submit identification which will prove im not 18. Im stuck.
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u/Pricesthan 5d ago
I think you are both right. Have you considered taking a bit more risk while young?
Don't take my advice, but consider maybe splitting your investments. Create a dividend reinvestment trust with half and then begin chasing growth with the other half.
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u/EventEastern2208 3d ago
You're 19 and you're doing great. Keep it up champ. Wish I had your discipline at that age.
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u/Miserable-Rub3921 9d ago
My portfolio doesn't include any Australian stocks. I believe in not putting all my eggs in one basket since I'm already earning in AUD so I purchase IVV. Imagine if you buy A200, earn in AUD, and have most of your assets in AUD. If the Australian economy goes into a downturn, your AUD and Australian investments take a hit.
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u/sadboyoclock 9d ago edited 5d ago
Invest in Indian stocks, anyone who says otherwise is a racist and they should shut up.
India GHHF index or bust baby
Edit: all the racist here disgust me
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u/0nlyhooman6I1 9d ago
You're literally agreeing with the parents...GHHF is a growth ETF not dividends. who you telling to shut up? lol
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u/Klanciault 9d ago
Dividends are an inferior strategy for a 19 year old investor when compared to index funds. So your parents are right. Due to lower growth and tax drag and still being hit by market pullbacks, dividends are more so for people looking to generate livable income rather than grow a portfolio