When you start investing, you're going to bump into a lot of options, a lot of noise… and a lot of hype. However, at Get Rich Slow Club, we don’t push a singular view of what’s “good” (or “bad”). Because in real life, there is more than one way to be right.

That's especially true with Vanguard's Diversified High Growth Index Fund (VDHG) . A lot of folks might be right choosing VDHG, but for the person next to them it might be something else entirely, depending on many factors. These include risk tolerance, financial situation and personal goals. So when a listener asked us whether investing in VDHG long-term is a good idea, we leapt at the chance to explore the question more deeply.

In this episode, we hope to unpack these factors in-depth so you can be confident to make your own investment decision. With that said, everything we discuss here is general information only and not professional advice. We are here to inspire, to get those gears turning. But, when it comes to any specific investment advice for your situation, consider a chat with a qualified financial adviser.

What is the Vanguard Diversified High Growth Index (VDHG) ETF

VDHG is essentially a fund of funds. It’s an exchange-traded fund that includes everything from the Australian Shares Index Fund (mirroring ASX 300) to the International Shares Index Fund (featuring big tech like Microsoft and Apple). VDHG also includes specialised funds such as the Global Aggregated Bonds Index Fund Hedged, which aims to mitigate currency risks if you’re investing outside Australia.

In many ways, VDHG is like a giant investment basket that gives you a bit of everything across various markets and sectors (this is called diversification ). Inside this basket, there are shares from 16,000 different companies through the ETFs we mentioned above (among others). These are the 90% of the basket that could potentially grow and increase in value in the long term, though it generally carries more volatility.

The remaining 10% are in defensive assets like bonds. While these are low-risk low-reward assets, they are meant to soften the blow to the ETF’s value in case of short-term downturns inherent in all sharemarkets.

Fees and managing your investment

VDHG comes with a management fee of 0.27% annually. Now, anything above the industry average expense ratio of 0.24% might be expensive at first glance. But, in VDHG’s case it’s due to broadly diversified structure that makes the convenience worth the cost.

As we mentioned, VDHG behaves like a mini-portfolio since it covers so many indices and assets. This means that, despite the cost, you don’t have to worry about constantly adjusting your investments. It’s all managed for you, saving you time and potentially a lot in brokerage fees if you were to try and replicate this yourself.

Investing timeline and dividends

VDHG is designed for the long game – at least seven years or more. This is the ideal time for weathering market volatility and taking advantage of growth during various market cycles.

While you’re in it for the long term, VDHG makes sure you feel the ongoing benefits. Any dividends it earns are paid out quarterly, which can be a little reminder of why staying the course is worthwhile. They can be reinvested to supercharge compounding growth or used as passive income to enjoy along the way.

Two ways you can buy VDHG

1. Buying VDHG through Pearler

Pearler is designed with long-term investors in mind. For those who like to keep things cost-effective (and who doesn’t?), they offer brokerage of $6.50 per buy, which can be reduced to $5.50 per buy if you opt to prepay .

Pearler also has an Autoinvest feature called Automate. You can set aside a certain amount – say, $200 weekly – and Pearler will execute the purchase once your savings reach a set amount (say, $1,000). Automate helps you stick to your investment cadence while helping you save on unnecessary brokerage fees over time.

And for those keen on precision, Pearler’s Share Investing Frequency Calculator can help you figure out the best times to invest based on how often and how much you want to put in. It also shows you the associated brokerage fees, so you can make sure you're getting the most out of every dollar.

2. Buying direct through Vanguard Personal Investor platform

Alternatively, Vanguard Personal Investor is a more direct route if you're exclusively investing in Vanguard ETFs. Here, the main draw is the zero brokerage fee on purchases of Vanguard ETFs, with a $9 fee applicable when you’re about to sell.

However, some users have noticed that the platform can be a bit cumbersome and information may not always be readily accessible. It’s definitely improved over the years, but it’s worth seeing if it fits your preferences.

Which one should you choose?

While we've focused on the above two as your options, there are many other brokerage platforms out there worth trying. As you explore, make sure to carefully read the Product Disclosure Statements (PDS) and the Target Market Determination (TMD) to fully understand each platform’s terms. Lastly, keep in mind that the investing platform you choose is important. But, the specifics of ETF you invest in has a more significant impact on your investment outcomes.

Comparison between VDHG and DHHF

VDHG is a name that echoes through forums and finance groups alike – it's a crowd favourite for a reason. Many investors prefer the simplicity that VDHG brings to the table. One unit gets you a piece of everything, thanks to its investment in seven different funds that include 16,000 companies globally. Plus, its 10% defensive assets might not stop a fall in portfolio value during economic downturn, but it may cause less of a jolt.

Where VDGH is broadly diversified, BetaShares Diversified All Growth ETF (DHHF) is more focused. It's built around four funds and includes around 8,000 companies – half of what you’ll get from VDGH. What really sets DHFF apart, though, is that it skips the bonds and fixed-interest assets, which makes it a 100% growth ETF. So, DHHF is a popular choice for those who can accept volatility in exchange for the potential of higher returns over a long period.

On that note, the choice between VDHG and DHHF comes down to risk tolerance and financial circumstances. VDHG is popular among beginners because it offers a well-rounded, generally less volatile entry point. In contrast, DHHF attracts more confident investors, often because they have the financial buffer to wait out short-term volatility. A substantial emergency fund provides the peace of mind needed to stay the course and benefit from the potential growth of DHHF.

Costs should also be a part of this decision-making process. With a management fee of just 0.19%, DHHF offers a slight cost advantage over VDHG. While this difference might seem minor, over the long term even a small reduction in fees can compound into substantial savings. Even so, that may not matter to an investor that prefers the convenience and breadth of an all-in-one ETF like VDHG.

Alternatives to VDHG: popular ETF pairings in the Pearler community

If an all-in-one diversified ETF like VDHG doesn’t quite fit your investing style, there’s always the other option: a DIY portfolio . With this approach, you could hold two or three ETFs to match your specific preferences and investing goals. For instance, some investors prefer a larger percentage of exposure to international markets. Others might select a specific percentage of Aussie shares to benefit from franking credits , which can potentially reduce their payable tax.

Here’s how some folks in the Pearler community are pairing their ETFs:

VAS and VGS

The Vanguard Australian Shares Index ETF (VAS) tracks the return of the ASX 300 Index, while the Vanguard MSCI Index International Shares ETF (VGS) mirrors the performance of international markets. As the names suggest, this pairing allows you to decide just how much of your portfolio is invested in Australia versus internationally. Deciding on a 50-50 split or perhaps leaning more towards local shares? You can rebalance your portfolio split however and whenever you want with this pair.

VAS, VEU and VTS

Another popular option is the combination of VAS, Vanguard All-World ex-US Shares Index ETF (VEU) , and Vanguard US Total Market Shares Index ETF (VTS) .

• VAS , as mentioned, tracks the performance of the ASX 300 Index that comprises companies with market capitalisation above $100 million.
• VEU seeks to track the global markets, excluding the U.S., which helps diversify against regional economic fluctuations.
• VTS mirrors the performance of the entire U.S. sharemarket, not just the top 500 companies, to benefit from the largest economy in the world.

For many investors, this mix is a good start for building a diversified, long-term investment portfolio. However, whether these three ETFs alone are "enough" can depend on several factors. These include an individual’s financial goals, risk tolerance, investment timeline, and specific financial needs. Some investors might require additional diversification across other asset classes like bonds, real estate, or specific sectors that these ETFs do not cover.

With all of that said, we're all about sharing general information to inspire and educate. But when it comes down to building a portfolio that really works for you, nothing beats personalised advice. That’s why we always recommend consulting with a financial adviser. They can help you invest in specific assets with precise allocations based on your individual needs and circumstances.

Do your own research, as well. Look at how ETFs build their portfolios. You can also explore Pearler’s community profiles to see what others are investing in. Keep in mind, though, you won't see everyone's entire portfolio, just what they're currently investing in. It’s a great educational tool, but make sure to do your due diligence before investing.

And if the overload of information is holding you back from actually investing, any diversified ETF might be worth looking into . It’s not a must, but investing doesn’t have to be complicated. Despite what the clickbait articles and stock analysts might say, there really isn’t such a thing as the perfect portfolio.

The noise is loud, but it didn’t exactly ask you what your financial dreams are. So, it’s impossible for anyone to declare any one path as "the one" for you. You’re probably better off starting somewhere and letting compounding do its work early.

Is VDGH a “good” long-term investment overall?

At the risk of sounding cliche, whether VDGH is a good investment really depends on your individual circumstances. If you're not keen on micromanaging your investment portfolio, VDHG might be a good all-in-one ETF to get started. You're essentially buying shares of around 16,000 companies from all over the globe… all in one go. You don’t have to worry about picking multiple funds and rebalancing their allocations – VDGH does all that for you.

However, we suggest considering how long you're willing to invest. VDHG is typically recommended for those who plan to invest for seven years or longer. So, think about when you might need to access your funds. If you're likely to need them sooner, this might not be the best option.

Also, how much you invest and where you do it matters. For example, investing $500 every fortnight sounds like a solid plan. But, make sure the platform or broker you choose doesn’t charge you too much for investing that amount. It’s the last thing we think about when we invest, but high brokerage fees can significantly erode your returns over time.

Final thoughts

Every time we dive into these chats, it hits home just how personal finance really is. Obviously, VDGH isn’t some fly-by-night meme coin. It’s passed every checklist there is for a sound investment vehicle – everyone nods to that. But the real question remains: is VDGH right for you ?

So, think of this guide as just another piece of your financial education puzzle. You're gathering bits of knowledge, trying to see the big picture of your financial future. If things get too complex, remember, there’s no shame in asking the expert. Financial advisers and tax accountants are there to guide you through these decisions.

If you’ve found this episode helpful, consider sharing it with a friend or dropping us a review. And if you’re just starting, our first 10 episodes are a great place to continue building your foundation. Catch us on Get Rich Slow Club socials, and follow us at @tashinvest and @anakresina for real-time updates.

Happy investing!

Tash & Ana