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Most liked posts in thread: Vanguard ETFs for dividends

  1. Bill M

    Bill M Self Funded Retiree

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    If it was me and I wanted to be sure my 500k was there in 12 months plus interest then I would go 100% into 4 separate bank accounts and get 2% interest.

    Everything else is risk. Like others have said, the market can and has done previously sunk 20, 30 or even 55% in a matter of 12 Months. Do you really want to risk your 500K in the sharemarket? I'm not saying that it is not a viable investment, I'm saying what will you do if turn your 500k into 250K after being caught in a market crash?

    Disclosure: I hold the VHY ETF, I know the risks and I can handle a 50% drop if it happened overnight.

    That is probably the question you should be asking yourself. Anything can happen in this crazy world of ours, good luck.
     
    barney, aus_trader, Iggy_Pop and 4 others like this.
  2. InsvestoBoy

    InsvestoBoy

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    Everyone has raised some good points about caution but nobody has raised the most important and obvious points of all:

    Firstly:
    9 times out of 10, when your investment pays out the dividend, the share price declines by a commensurate amount!

    As soon as the business returns some capital to you in the form of a dividend, the share in that business is immediately worth less by the same amount.

    The dividend is not your "return" per se, the return was already generated (hopefully) by earnings. The dividend is simply a transfer of cash on the business balance sheet, to your own balance sheet as a partial owner of the business.

    Secondly:
    Over the course of 1 year, the volatility of the asset will fluctuate by a lot more than the dividend amount. You could invest on Day 1 and see the asset price down by the entire expected annual dividend by Day 2, in a relatively normal market.


    You can't invest in long duration assets with an expectation of short term returns.
     
  3. Iggy_Pop

    Iggy_Pop

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    ETFs may not be the best place for an 8 month investment. The ASX is at near record highs and there is a high chance of a correction at some point as happens most years. Typical corrections do range from 5 to 20% and this is considered normal. The market typically recovers but this may take some time. There is also a chance of another GFC type correction which depending where which ETF will be higher than the 20%. You could easily get caught with the real estate market looking good at the same point as a correction. If you want to take the risk, my thoughts would be a mix of ETFs and LICs - VAS, VAP, PL8, WAM. You may get lower risk in a world index such as VMIN which is supposed to have lower volatility.

    Iggy
     
    barney, aus_trader, Faramir and 2 others like this.
  4. Bill M

    Bill M Self Funded Retiree

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    Yes I can, it doesn't affect me because mine is all in my super fund and I am in pension mode, so no tax.

    But I can say with some confidence that when I held the likes of SYI, VAS and VHY outside of super I didn't have any problems either. You see at year end at around August the ETF's send you an annual statement clearly telling you where to insert all your bits and pieces at tax time. So wherever there was CGT, it would say something like "insert at item J" and then that is what you do. I handed these annual summaries to my accountant, I think it took him around a minute to enter each one on my return. It wasn't that bothersome to be honest, it's all laid out for you and what they give you is what they give the Tax Office, so just enter as is.
     
    barney, aus_trader, sptrawler and 2 others like this.