How many ETFs do I actually need? I’m overwhelmed

Get Started Investing

Host Jess discusses her personal struggle with an overcomplicated ETF portfolio after only five months of investing. She sits down with fina

Key takeaways

• Managing a large number of ETFs (20-40) can become a full-time job due to the need for constant monitoring.
• All-in-one ETFs like DHHF provide 'instant diversification' and automatic rebalancing by managing inflows effectively.

Main topics

• ETF diversification strategies
• All-in-one vs. Regional ETFs

Notable quotes

You can start and end more simply.

Conclusion

For investors seeking long-term wealth without high administrative ove

Transcript preview

Speaker 2 (0:00) I feel like I may have over-complicated things quite quickly. Like, I'm only five months in. I'm up to seven ETFs. Speaker 4 (0:06) I've seen people come to us with 27, 30, 40 ETFs. Are Speaker 2 (0:12) you scared I'm going to listen to what you say and just go straight out and do it? Speaker 4 (0:16) General advice only, obviously. Is it Speaker 2 (0:18) normal to over-complicate your portfolio at the start? Speaker 4 (0:22) You can start and end more simply. Speaker 2 (0:28) Welcome back to Get Started Investing, a show that helps you make the most of your money. I'm Jess, and this year I finally started investing after spending years completely avoiding thinking about money. So naturally, as a beginner, I have plenty of questions about investing. As it turns out, so do you. So each week I sit down with an expert to answer them. This time we're tackling how many ETFs do you actually need? I reckon one of the hardest parts of starting to invest can be deciding what to actually buy. Should you choose one diversified all-in-one ETF or build your own portfolio using a few different ETFs? This is something I've actually personally been thinking about because just five months into my investing journey, I've actually ended up with seven ETFs and a stock. I've started wondering if I'm actually diversifying or just overcomplicating things. So in this episode, I'm sitting down with Glenn Hare from Fox and Hare. We're Speaker 4 (1:14) going Speaker 2 (1:14) to unpack a question from community member Hamish, who wants to know the answer to this as he builds his first ever ETF portfolio. Alrighty, let's get into it. Thanks so much to MLC for sponsoring this episode and helping us keep all of our content free. Glenn, welcome back to Get Started Investing. Speaker 4 (1:29) Great to be here. Speaker 2 (1:30) Today, we're talking about something we actually haven't talked about together, which is the investing piece of the puzzle. Speaker 4 (1:36) All right. Speaker 2 (1:36) Yeah. Speaker 4 (1:37) A fairly big piece of the puzzle. Speaker 1 (1:39) But Speaker 2 (1:39) just for context, so when I went on my, like Jess gets investing journey, you were there right at the start, which is when I like set my first goals. Solving Speaker 4 (1:47) all your life problems. Giving Speaker 2 (1:49) me life problems. I've never planned so much in my life. And then you came back last season and we talked about like how to manage money as a couple, which was interesting, but you and I haven't actually spoke about the investing piece. So we had this question and I'm going to play it for you. And I kind of want this to be the base for our chat. Speaker 3 (2:07) Hey, equity mates. My name is Hamish and I'm looking to start investing in ETFs. For my core, I'm looking at broad diversified ETFs. I'm weighing up the global all-in-one ETF, something like BGBL or DHHF versus a combination of more regional specific ETFs, something like IVV, XUS and VAE that minimizes overlaps. I'm looking at understanding the pros and cons of these two different approaches. Thanks, Heaps. All Speaker 2 (2:37) right. Thanks, Hamish. So he's basically talking about buying like a diversified ETF, a global ETF, or building like his own portfolio using regional ETFs. Is that right? Speaker 4 (2:47) Yeah. Speaker 2 (2:47) Yeah. Now this question caught my attention. I wanted you to be the person to answer it because as I said just before, like you were here when I set all of my goals and everything like that. And then I kind of went off and started. Started Speaker 4 (3:00) your investing journey. Speaker 2 (3:01) Started my investing journey. But I do feel like I've had a bit of a break now between recording and I feel like looking back, I think I've overwhelmed myself a little bit. Speaker 3 (3:11) I Speaker 2 (3:11) feel like I may have overcomplicated things quite quickly. Like I'm only five months in and I'm up to seven ETFs and a stock. Speaker 4 (3:20) Okay. And a stock. And a stock. Controversial. I know. Just a random stock. Speaker 2 (3:25) No, but I really wanted to use this conversation to chat to you about because I actually really want to know your views on like what you think a beginner investor should start with. Yeah. But first of all, is it normal to overcomplicate your portfolio at the start? Speaker 4 (3:38) Yeah, it is because you obviously want to be doing the right thing and you listen to something, you read something or one of your mates tells you about something, you're like, oh, I'm not doing that. I need to be doing that. Or that sounds much better than what I'm doing now. I want some of that. How did yours come about? Like how did you end up with Seven and ETS and a Stop? Speaker 2 (4:00) I think what I've been doing, and I guess I've been learning on the podcast pretty publicly, but I think people may do this themselves as well. Like every time I've learnt something new, I felt like I've had to, not like I've had to, but I felt this urge to like act on it. Speaker 4 (4:14) So Speaker 2 (4:14) I think I need to learn how to separate, like being able to learn about something, but not necessarily. do it straight away for my portfolio. I feel like it's that new shiny toy, everything I look at. Speaker 4 (4:24) Yeah. So each time you're hearing about a new kind of investment opportunity, you're like, oh, that makes a lot of sense. I need to be in that. Speaker 2 (4:32) Well, just to recap where I'm at. So the three, the reason there's so many, so I have the non-geared versions. Speaker 4 (4:38) Like diversified. Speaker 2 (4:39) I Speaker 4 (4:40) have, Speaker 2 (4:40) yeah. So I have BGBL, which is a globally diversified ETF, A200, which is an Australian. ETF, top 200, and then BEMG, which is emerging markets. Speaker 1 (4:50) Then Speaker 2 (4:50) what I did is I went the geared options, but I kept the non-geared options of those. And then I started building out a satellite portfolio. So I have like AI-NF, which is a infrastructure. The Matic ETF. Sorry, this is going to sound really complicated to everyone, but we'll get there. And then GNDQ, which is the NASDAQ 100 geared again. And then I bought a stock, Eli Lilly. So after we met in the original Jess Gets Investing, I was learning about all of these parts of investing that I think are good, but I think I just did them really, really quickly in a condensed amount of time. For Speaker 4 (5:25) sure. So Speaker 2 (5:25) I wanted to just really bring it back today, sit down with you and be like, I just want to know what you think, a beginner. should start with. Speaker 4 (5:33) Yeah. I mean, first of all, it's awesome that you've taken a leap and actually done something and educating yourself on the options. But in terms of overcomplicating it, my personal opinion is I think you have. And out of interest, so you're still regularly vesting on a monthly basis. Yeah. How are you managing that across your portfolio, across seven different options? Speaker 2 (6:01) Yeah, so I have stuck to the same amount each month. So the dollar cost averaging approach is what that's called. So I've been doing $1,500 a month into my core. Yeah. Speaker 4 (6:12) My Speaker 2 (6:13) core being those three global ETFs. When I decided to go geared, I just stopped putting it in the non-geared. Speaker 4 (6:21) Okay, so all into the geared? Speaker 2 (6:23) Yeah. So I'm not doing both at the same time now. It's kind of like stopping one, doing the next. And then the satellites, I've just been taking turns on where I put my satellite money is what I call it. So I put like, I think I've got $200 a month I've allocated to be able to play around with a satellite and it was AINF and then the next time it was GNDQ. So like I've just kind of played around. My Speaker 4 (6:47) first comment, Jess, is what you've done. you know, in my view, isn't a bad thing. You know, you've still got a very diversified portfolio, as you've alluded to, your investment in Australian shares, international shares, emerging markets, giving you exposure to Asia and, you know, South America. You've got a geared element. We don't need to go down that rabbit hole today, but that's giving you, I guess, higher risk, but potential for higher return. And my understanding is all of this is for long-term. Long-term wealth creation. It's not money that we're putting away anytime soon that you want to access. No, 20 plus Speaker 2 (7:25) years, yeah. Speaker 4 (7:26) 20 plus years, cool. So in terms of how many ETFs are too many, like I've seen people come to us with 27, 30, 40 ETFs and potentially also including direct equities as well. And it can be very overwhelming. And also managing a portfolio that size is arguably a full-time job. And if you look at some of these funds of funds, they give you exposure to exactly the same underlying investments through the one structure. So I'll elaborate on that. So if I use DHHF. Speaker 2 (8:07) The one Hamish asked about. Speaker 4 (8:08) Yeah, the one that Hamish asked about. So the specific example. So that particular fund is invested in. australian shares it's invested in in international shares both um the us market as well as developing markets excluding the us so think japan