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Australian vs. International shares

Discussion in 'Beginner's Lounge' started by mcowa13, May 2, 2019.

  1. mcowa13

    mcowa13

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    I have just started into buying stocks to keep long term, have done some day trading previously which allowed me to buy from all markets.
    Is it worth paying the overseas taxes and organizing an international broker to buy the bigger and possibly better stocks or am I better off sticking with Australian market?
     
  2. Zaxon

    Zaxon The voice of reason

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    Here is the comparison between the US and Australian markets over the last 10 years:
    upload_2019-5-2_10-42-12.png

    So you would have been better off investing in just the ASX over that period. Plus you get to own your shares outright via CHESS, rather than being a beneficial owner via a holding company. That's the reality.

    However, the theory says you should diversify across sectors and regions to reduce risk. This is a good idea. Will the ASX outperform the US in the next 10 years? There's no reason to suggest that past performance will necessarily repeat.
     
    mcowa13 likes this.
  3. BoNeZ

    BoNeZ

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    What metric are you using to compare the USA and Australian markets?

    Since the GFC lows in 2009 the ASX all ordinaries has risen from 3090 to 6400 and is still below it's all time high while the S&P 500 has risen from 666 to 2945 and is well above it's pre GFC highs.

    If you want exposure to overseas markets you can do it via ETF's or some Australian brokers allow you to trade directly.
     
  4. Zaxon

    Zaxon The voice of reason

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    One which I mixed up, by the look of it. OK. Let's try this again.
    upload_2019-5-5_17-17-38.png
    VAS = Australian S&P 300 (coloured)
    IVV = US S&P 500 (black)
    Both "Australian" ETFs, so that should zero out the currency difference, since IVV isn't hedged.

    So, the US market has outperformed the Australian market over the last 10 years.
     
  5. BoNeZ

    BoNeZ

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    That's what I was expecting :)

    There are other things to consider like dividends, franking credits and exchange rate changes but if you wanted to keep things simple just buy IVV or another international ETF.
     
  6. Zaxon

    Zaxon The voice of reason

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    If we want to include dividends (but I guess we're still not considering franking credits here), we can compare their Total Return:

    VAS:
    upload_2019-5-6_23-44-25.png

    IVV:
    upload_2019-5-6_23-45-4.png
     
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