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I am 51 and currently have in my portfolio VGS, VAS and NAB. I was given NAB shares in 2008 and just kept them. I was thinking of adding SOL (LIC) and VHY (ETF). I believe having this mix would add more diversification/ growth (SOL), dividends (VHY) and be tax effective through franking credits. All will be DRP and DCA until my early sixties where I could use the dividends.
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Hey Brendan.
I can’t give personal portfolio advice, but here are some thoughts…
VAS and VGS already have a very high level of diversification and quite a good balance between growth and dividends. So I’m not sure adding SOL (Which is already in VAS) and VHY (which doubles up on VAS biggest companies) is adding a massive amount of difference.
That said, if you believe in SOL as a long term investment manager and believe they will continue to outperform the market, then that is something genuinely different from what you already have. They do own private real estate, unlisted businesses, and high yield credit, which is not something most people get exposure to if just holding index funds.
VHY is really more so if you just want to juice the yield of your portfolio (franking credits included) while trading off growth. The other option is simply adding more VAS than VGS which would boost the portfolio’s yield by itself.
The other thing is how big of your portfolio you make these holdings. If they’re quite big, say 15-25%, then you’re adding a decent amount of risk (especially with a single company like SOL), and if too small (say 5-10%), then is it really making much difference? It’s not an easy thing to decide on, but hopefully this gives you some things to think about. By themselves, I can see merit and usefulness in both SOL and VHY – it’s just deciding whether they make sense for your portfolio and where exactly they fit in.
One thing I’ve learned is you don’t want to complicate things unless you expect a new holding to be highly useful/different in some way. But many of us fall into the trap of adding things because they seem interesting, when they aren’t really needed and our boring portfolio is more than sufficient.
Anyway that’s much more than I planned to write haha all the best.
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Depending on when you got NAB in 2008 you could be on a big capital gain if you were to sell. So consider how much you sell in any year against you income and whether you want to hold off until retirement. That said, it is on a good dividend yield and 100% franked, so provided the business doesn’t look risky there is no compelling reason to sell in my opinion.
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