As Australian investors approach retirement, their focus may shift from just growth strategies to investments that provide more accessible and stable income.
One simple and effective way to do this is through ASX ETFs.
For Australians looking to build a straightforward retirement portfolio without spending hours researching individual shares, a two-ETF strategy can be an effective solution.
One combination that continues to appeal to income-focused investors is pairing:
- Vanguard Australian Shares High Yield ETF (ASX: VHY)
- Vanguard Msci Index International Shares ETF (ASX: VGS).
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A balanced approach
The Vanguard Australian Shares High Yield ETF provides low-cost exposure to companies listed on the ASX that have higher forecast dividends relative to other ASX-listed companies.
Meanwhile, the Vanguard international shares ETF invests in around 1,300 companies from developed countries, excluding Australia.
The attraction of this approach is balance.
VHY focuses on higher-yielding Australian companies, giving investors exposure to many of the ASX's largest dividend payers, including banks, mining giants, and established industrial businesses.
For retirees, this ASX ETF's attractive distributions and potential franking credits may help provide a reliable source of passive income.
At the same time, VGS delivers something many Australian portfolios often lack – genuine global diversification.
This ASX ETF provides access to thousands of companies across the United States, Europe, and Asia, including major global leaders in technology, healthcare, and consumer brands.
A portfolio split between the two could offer a practical combination of steady income and long-term growth potential.
Important retirement points
One of the biggest mistakes retirees can make is chasing the highest possible dividend yield.
While income is important, total returns still matter. A portfolio also needs growth to help combat inflation over a retirement that could last decades.
That is where VGS can play an important role. While it may offer a lower dividend yield than Australian shares, international equities have historically delivered strong long-term capital growth.
Meanwhile, VHY can continue generating regular income from established Australian businesses, with the added bonus of franking credits that may improve after-tax returns for some investors.
Importantly, this strategy also keeps investing simple. Both ASX ETFs are low-cost, diversified, and easy to manage.
This makes them an attractive "set-and-forget" option for long-term retirement investors.
Foolish takeaway
The advantage of ASX ETF investing is the instant diversification and set and forget mentality in just a couple of trades.
By combining broad Australian exposure with global diversification, investors can build a low-maintenance portfolio that balances income today with growth for tomorrow.
Rather than trying to time the market or pick individual winners, this approach allows investors to stay consistently exposed to high-quality businesses around the world.
