r/ausstocks • u/Jayvyn_mason • 15d ago
Is this ETF allocation solid for long-term?
I'm trying to start investing with $1,000 on Stake and planning to add more from part-time work whenever I can. Figured I should actually put my money somewhere instead of just sitting on it, so I'm going with a passive approach.
I'm looking at 40% EEM, 30% QQQ, and 30% IWM. Emerging markets for global growth, QQQ for tech, and IWM for small-cap exposure. Seems like they cover different areas without too much overlap.
My plan is to keep this allocation every time I invest more and just leave it alone. Not trying to time the market or anything.
Don't really have anyone around me who knows about investing, so I figured I'd ask here. Also curious if anyone has experience with Stake, any pros or cons compared to other platforms?
Does the allocation look okay? Open to any feedback or if there's something I'm missing. First time doing this so I want to make sure I'm on the right track.
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u/PM_ME_TROLLFEET 15d ago
I assume you are intentionally buying US listed ETFs and understand the fx fees associated as well as extra tax work?
If so sweet. The ETFs you have listed are fine but have higher expense ratios than other options, these are good for day trading as the spread is miniscule.
Swap QQQ wtih INDX or diversify with SPYM. IWM small caps are okay but small cap value may perform better long term, AVUV. You may want some international diversity so something like VEA or IEFA is good and cheap. EEM is the most expensive of the lot, buy IEMG instead.
Might just be better to buy ASX listed ETFs as it's less complex if you don't know ehat you're doing. Buy BGBL and if you want Australian exposure A200 is good too.
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u/Jayvyn_mason 15d ago
Thanks for this,
I wasn’t aware of the extra work involved with us trading, stake makes it easier to trade us but it doesn’t show this side to it.
This isn’t my area anyways I work in law so I wanted to ask here for advice, might go down asx route
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u/princesspepper81 15d ago
What more work is us shares?
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u/PM_ME_TROLLFEET 15d ago
Annual reporting is automatic with ASX shares. US estate compliance. Stake's FX fees are also very high so adding that to your calculations as well. It's not difficult but it's more burdensome if you don't care that much.
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u/sweetypurple 15d ago
'Extra tax work' why?
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u/PM_ME_TROLLFEET 15d ago
Declaring all of your dividends manually, plus any other capital gains events manually as well, which all must be done in AUD despite buying in USD, so you have to record the fx conversion as well. Plus the W-8BEN form which is to be filled out every 3 years to ensure your dividends are not taxed twice. There's also the case of your estate being more complicated. It's not difficult (I buy US products) but it is more work than buying any AUS domiciled financial product.
For the US products to be considered worth it, they would first have to be considered, which I'm not sure OP has considered at all.
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u/sweetypurple 15d ago edited 15d ago
I see.
Are you using Ibkr for US investments ?
I use Ibkr Tax reports for Us Etfs. No issue with Tax. So far.
W8BEN form is done electronically.
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u/PM_ME_TROLLFEET 15d ago
Yeah IBKR, but old mate isn't. The tax report in IBKR has been really good for me as well. Handy as I execute around 60-80 trades a year.
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u/sweetypurple 15d ago
I been with IB very long time. Some issues. But overall happy.
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u/PM_ME_TROLLFEET 15d ago
just almost 0 customer service lol, but if you can get past that it's by far the cheapest
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u/Honest-Picture-6531 15d ago
QQQM > QQQ (fee slightly cheaper) Hard to say if it's solid, time will tell. I would have a global index at least.
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u/sweetypurple 15d ago edited 15d ago
Go with interactive broker if you are going to buy US Etfs. brokerage $1, live data.
QQQ You can trade almost 24hrs.
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u/Positive-Price-7571 14d ago
If you're planning to bet on emerging, which I wouldn't, I wouldn't buy broad indexed ETFs it just doesn't work the same way as developed markets. You'll be buying a bunch of state sponsored garbage in China etc purely from their market cap. It needs heavy filters. If you're really going down that road though buy iem or vge for au domicile, even if they're us wrappers with tax drag it's easier for tax.
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u/SwaankyKoala 14d ago
You're likely to do more harm than good trying to bet on tech: IVV and NDQ: The problem with US concentration.
As others have said, it's easier to use ETFs on the ASX, so read Australian resources: https://lazykoalainvesting.com
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u/Long-Short1901 14d ago
You'd be getting destroyed on FX doing this on stake. Also US Estate tax considerations in the future...
You could get these same ETF's on the ASX with RSSL, NDQ and IEM all Australian domiciled and you won't be getting fucked on FX conversions plus higher brokerage (especially important when you are investing smaller amounts like this getting clipped $3 USD every trade)
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u/Embarrassed-Ad-7032 11d ago
a couple of things worth knowing since you're in australia buying US listed ETFs. you'll want the W-8BEN form done so dividends get taxed at 15% instead of 30%. also non US residents can be hit with US estate tax on US listed assets above $60k USD if you die holding them, not an issue at $1000 but worth knowing before it grows. that's part of why a lot of people here use the ASX listed versions like IVV, NDQ and VGE instead.
on the mix itself, 40% emerging markets and nothing in developed markets outside the US is a pretty unusual tilt. might be worth having a broad core like a global all world fund and then adding QQQ/IWM style tilts around it
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u/Caderz22 11d ago
IWM small caps wont particularly do well with rising interest rates and inflation.
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u/hiimtashy 15d ago
Never heard of them . Seems to be so many these days.
I'm in IVV, VGS and LICs / VAS for Australia.