Vanguard’s Fab 5 Funds Are Still A Ticket To Ride

lennon

The Beatles song, “I Am The Walrus” was playing when I first walked into my high school senior English class.

My teacher asked us to analyze the lyrics. I figured John Lennon wrote it in a Moroccan teashop under a cloud of hashish. Lyrics like, “Sitting on a cornflake” and “Elementary penguin singing Hari Krishna” seemed to be fueled by acid or ganja.

That may be true. But the DVD, Composing the Beatles Songbook, claims that Lennon wrote it to confuse scholars who were trying to dissect the Beatles’ songs. Investors who are new to index funds may feel the same way.

Image by Pixabay

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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11 Responses






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  2. Jonathan says:

    At 36 years old, I’ve been a faithful Coach Potato for three years with VTSAX, VTIAX, and VFISX. Each year, I find my reallocation process very straightforward between the three funds. At this point in the game, I don’t feel the need to switch strategies, but the Fab five approach is intriguing.

  3. Anthony says:

    Hi Andrew,

    Great site and really informative posts. Plan to go out and buy the books this weekend. I have a few questions if you would have the time to assist.

    I am 39 year old from Ireland (currently non resident) but currently in Dubai. The plan is to return to Ireland in 2 years when kids are ready for school. I am new to investing and trying to take this move home into consideration (maybe overthinking it) in deciding how to build a portfolio and it has me frozen with over reading and searching for info!!!

    I don’t trust most of the sharks advisers in Dubai and as a result I have mainly kept savings in cash earning very little and understand I need to be more proactive for my family’s sake. Currently I possess the following:

    EUR account in Ireland – approx EUR 270k or USD 300k (Earning 1.2%)
    USD accounts in Dubai – approx USD 500k (Earning very little) –
    USD account in Jersey – approx USD 100k (Earning very little) – Mainly to keep the cash out of Dubai and Ireland.

    I am thinking along the lines of the following:-

    1. Emergency cash – Keep USD 50k for any emergency situations;
    2. Deposit on a house – Keep USD 150 – 200k in a fixed deposit to make a downpayment on a house when we return home in 2-3 years and not have a huge mortgage;
    3. That leaves approx. – USD 150k – 200k to build a portfolio.

    I have seen read the article on the Fab 5 and was wondering if it would be suitable for me, questions would be:-

    1. Which Online broker account would be best if moving home to Ireland (was thinking of IB but are they US based and would it have tax implications?

    2. When purchasing ETF’s or Funds where is the best place for them to be domiciled if I will be based in Ireland?

    3. What would a good mix of funds/ETFs be to start, is it better to stay away from Income generating funds if I will be based in Ireland and open to paying Income tax at a high rate. Or if there are automatic reinvestment of income are you liable to income tax?

    4. If I open a brokerage account is the money safe i.e. are there compensation schemes in place in case a broker goes belly up?

    5. Currently no pension in Ireland and I don’t think there are similar accounts like SIPP’s or ISA’s for me to invest in.

    Sorry for all the questions but mind is boggled with info and as I said it is resulting in me doing nothing?

    Thanks for any help
    Cheers
    Tony

    • Hi Tony,

      Your mind won’t be boggled after you read The Global Expatriate’s Guide TO Investing. As a non American, you can’t buy Vanguard’s Fab 5 funds in the form that I mentioned them. Honestly, Tony, there’s far too much to tell in this comments section. Please read the book. If you have questions after that, I’ll help. But to do your questions justice would take me far too much time in this comments section. http://bit.ly/globalexpat

      Cheers,
      Andrew

  4. Anthony says:

    Sorry that was meant to be USD 50k in Dubai account not 500k (I wish)

  5. Darien says:

    Hi Anthony,

    Pardon me for joining the conversation. I’m also a mid 30’s expat in Dubai.

    But I implore you to read Andrews Book first, and then reread it.
    I got the book, read it twice, made my wife read it and then read other books to make sure Andrew’s strategy checked out.

    Only then did come to this site to ask Andrew questions on my final portfolio allocation. He was great in giving the final tips and encouragement.

    Do this and you will have confidence in your final decision.

    Warm regards,
    Darien

  6. Sara Macmillan says:

    Dear Andrew,

    My husband and I read both of your books, inspiring us to leave our less-than-honest financial advisor and take control of our own investing. We have been following the couch potato for Canadians using TD International, now Internaxx. It’s been great – and we massively appreciate your books and the advice in them. As expat Canadians now living in the EU, we were investing in Vanguard and iShares products on the Toronto sick exchange. But now we are restricted from buying from them as they do not have KIID documents. Is buying similar Vanguard stocks from the UK market a sound strategy for us?

    • Hi Sara,

      Are you interested in trying Interactive Brokers or use a (semi) robo advisor, like Wealthbar?

      Cheers,
      Andrew

      • Owen says:

        Sarah and Andrew,
        Can you explain this further? I have a Canadian-centric portfolio, all in CAD, through Internaxx. Will I not be able to buy more funds from them? I haven’t added to Internaxx in a while as we have Vickers in Singapore too.
        Thanks,
        Owen

  7. Sara says:

    Hi Andrew,

    We’re hoping to keep to Internaxx. We want to avoid the possible inheritance taxes you mention for US domiciled ETFs. Is using the UK market a bad bet?

    • Sara, you can use the same ETFs via Interactive Brokers (the same ETFs that I listed in my book, trading on the Canadian exchange). If you stick with Internaxx, that’s fine, but you won’t be able to build a Canadian-centric portfolio, such as those outlined in my book.

      Cheers,
      Andrew











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