Why Choose the Personalised Path?
If you like the idea of ETF investing but want more control over asset allocation than a one-size-fits-all fund like VDHG, this is for you.
Alternately, if you want simplicity read Shortcut: The Easiest Way to Start Investing for Retirement
Instead of relying on a pre-mixed portfolio, the Personalised Path allows you to adjust your exposure to stocks, bonds, and global markets based on your needs.
Key Benefit: You decide how much risk, how much diversification, and how new investments are allocated over time.
Building Your Portfolio: The Core Strategy
Step 0: Pick your Broker
Pick a broker and sign up.
Example Brokers (Click to expand)
Step 1: Pick Your ETFs
Select 3–5 ETFs that provide broad global diversification. This allows control over bonds vs. stocks and exposure to different markets.
Step 2: Set Asset Allocations
Decide your target split (eg 100% equities or 80/20 stocks & bonds?). This helps align risk level with your long-term goals.
Step 3. Decide how much to invest each pay day
How much do i need to invest (Calculator)?
Step 4: Make Regular Contributions
Allocate funds based on strategy (eg monthly deposits into ETFs using dollar-cost averaging). This smooths out market volatility and maintains balance over time.
Deciding on Asset Allocation
- We have no opinion on the short nor medium term market trajectory.
- Could not expect to guess with any certainty of the long term outcome of any single stock.
- Don't hope to presume that any single countries stock market will fare better or worse than any other.
As such we buy the world. Or we could say we diversify our investments.
In the Shortcut strategy we achieve this through 1 sole ETF, VDHG. Roughly speaking this is 40% Australian Shares, 40% Developed Markets (predominately US), 10% Emerging Markets (largest being China) and 10% bonds/cash.
This is a good portfolio, you can read more about it here, but some may dislike a couple of decisions:
- The ASX (Australian Stocks) make up just 2.5% of the worlds financial markets by value. Therefore 40% is a heavy-handed home country bias to have.
- Bonds/Cash are only going to maintain value (against inflation) rather than the overall intention of growth. Although the 10% allocation is small and is intended to lower risk and volatility.
- Hedged vs Unhedged - VDHG has both, but basically what unhedged means is that not only are you exposed to stock market risk, you are also at the mercy of currency risk. And Currency (pairs) don't have the long term growth expectation that stocks have.
- High (for an ETF) fee of 0.27%. You pay for the simplicity, albeit <$3k pa on a $1m portfolio.
Example Portfolio Structure 1
25% VAS | 0.10% fee | No Hedging Required
60% VGAD | 0.21% fee | Hedged
15% IEM | 0.69% fee | No hedged equivalent available
This achieves less home bias, albeit still higher than 2.5%, 85% of the portfolio is not subject to currency risk, removal of non-growth assets, and a similar fee (lower by 0.0155%).
Example Portfolio Structure 2
25% A200 | 0.04% fee | No Hedging Required
60% VGS | 0.18% fee | Not Hedged
15% IEM | 0.69% fee | No hedged equivalent available
This achieves less home bias, albeit still higher than 2.5%, only 25% of the portfolio is not subject to currency risk, removal of non-growth assets, and a reduced fee (0.2215%).
Example Portfolio Structure 3
25% A200 | 0.04% fee | No Hedging Required
60% VGS | 0.18% fee | Not Hedged
15% VGE | 0.48% fee | No hedged equivalent available
This achieves less home bias, albeit still higher than 2.5%, only 25% of the portfolio is not subject to currency risk, removal of non-growth assets, and a reduced fee (0.19%).
Flexibility
Managing Your Investments Over Time
You have your plan, signed up to a broker, made your first trades with what you can afford, per allocations. Now what. Well, you know how much you need to invest and the frequency (calculator).
Dollar-Cost Averaging (DCA)
Invest small amounts regularly. This ensures you buy at different price points, avoiding panic-driven timing decisions, both when prices are up and prices are down. Measure the current value of each ETF in your portfolio against the your planned proportions and buy the one most out of sync (ie lower proportionally than planned).
Rebalancing
Do you or rebalance or not. If you perform DCA as above frequently then you shouldn't need to. If things go too far out of sequence, then you need to reflect on the implications of selling existing stock, and taking the tax hit, to enforce the rebalance
Pros & Cons
| ✅ Pros | ❌ Cons / Trade-offs |
|---|---|
| More control over allocations | Requires active management-not fully passive like VDHG |
| Reduces home-market bias | ETF selection matters**—wrong mix can lead to overexposure |
| Tax efficiency via broad ETFs | Can be harder to automate compared to a single fund |
| Tailored to individual preferences | Higher transaction costs if buying multiple ETFs frequently |
Risks & Considerations
- Market Risk: Stock ETFs fluctuate in value - this strategy still faces volatility like VDHG
- Allocation Risk: Picking the wrong weightings could lead to imbalanced exposure
- Currency Risk: If holding unhedged global ETFs, AUD fluctuations will impact returns
- Decision Fatigue:Ongoing fund allocation choices require some involvement over time
Alternate approaches?
- Shortcut: Set-and-forget investing with a single ETF (VDHG)
- Custom Route: Designing Your Own Investment Strategy Beyond ETFs (coming soon)
- Gold, is it the ultimate investment?
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