1st draft 520k ETF/LIC portfolio strategy, criticism wanted

WAX makes up a portion of its dividend from trading activities so the underlying yield isn't as important as you are more paying for trading expertise than passing through dividends from a diversified portfolio. Value on paying a 25% premium for Wilson's management (with associated fees) is the consideration I would be looking at.

WLE plays in an area where it is possibly harder to achieve out-performance. Since inception the WLE has outperformed the benchmark by 2% before fees etc (http://wilsonassetmanagement.com.au.../WAM-Leaders-half-year-media-release-FY18.pdf)
With its's 1 and 20 fees you are behind an ETF which tracks its benchmark (STW). Interested to see if WLE can jump its fee hurdle going forward.

 

Was thinking that CDizz might be choosing WAX for it for it's higher div. so was pointing out that div. is paid on nta price,something or him to take into consideration.

 

Thanks monk. Yeah I won't be buying anything at such a high premium. Just trying to get the framework in place then I'll buy in parcels when the time/price is right. Would start with something like AFI and the ETFs before pursuing the LICs that fluctuate between discount and premium

 

I chose WAX for my draft strategy as an example of a well performing small-mid cap LIC. I'll watch it and wait for the premium to drop to where it makes sense to purchase, otherwise I'll switch it out for something else similar that is priced better at the time. MIR etc

But yeah, so next step once I feel comfortable with this plan is figuring out it's implementation and the order of purchasing.

I have all cash upfront so will be able to buy a large amount to start but I should probably take my time to feel my way through. However I envision buying the large caps, etf, reit, and DJW relatively quickly. I'll time the PMC and WAX purchases more carefully and am prepared to wait months before I decide to stick with them or replace with something else that makes more fiscal sense at it's current price

 

I realise that it's good to get specific advice however I found some great answers in these threads which might give you some direction to provide further comment/focus your questions.

My portfolio. Does this look ok?

Building a Share Portfolio for Income

 

Brilliant, thanks Mac for another useful link

 

Oh and how can I forget @Nodrog's brilliant Beginners guide to LICs .There are versions as the guide was revised and refined. The guide is in the thread - Beginner's Guide to Investing in Listed Investment Companies along with some excellent commentary that I like to remind myself of occasionally.

 

Thanks, yeah I've read through that a few times over the weeks. It's a really great way to learn the ropes

 

I've read and reread this a few times and it still doesn't make any sense to me. The dividend is paid as cents per share. It isn't paid as a % of NTa or any other figure. The yield you see on the ASX or other sites is (dividend / current share price). Unless I am totally misunderstanding, NTA plays no part in either the amount of the declared dividend or the yield % quoted.

 

If NTA is at a 25% premium you are effectively buying a dollars worth of underlying shares for $1.25. Hence less shares bought and fewer dividends received.

 

This is correct. But @b0b555 is also correct that the yield quoted is what you get...8% gross yield is the right figure, whether you're paying a premium or not. Because the yield is measured at a point in time against the share price. If the share price goes up, the yield will be lower etc. regardless of what NTA has done.

That's where the confusion is coming from.

 

I stand corrected & apologies.I did think the yield was paid on NTA as bOb555 said, my understandind was if you paid lower than NTA the yield increased & vice versa.Big OOPs there, sorry.
p.s. great post again today Snowball on your site!

 

Hi Falcon,
I have been trawling through these old posts. In your opinion how much livings expenses (ie cash) should be held?
Cheers
John

 

Ranges from 6 months to 5 years but is dependent on your circumstances.

 

Question lends itself to a broad range of answers. Stage of life, risk profile and individual circumstances will have a huge impact on the answer.

 

Peter Thornhill holds 3 (or was it 2?) years of expenses in cash. In the last 118 years there hasn't been more than two consecutive years of negative returns, so his buffer should allow him to ride out any disasters.
I guess anything more severe, you'd make adjustments in your life and scale back your expenses (if possible).

 

Simple, as you say put aside a bit for a rainy day and spend less you earn.

 

416 days. No more, no less!



As per comments above....there is no one answer for this. Personally, a couple (2) years expenses in cash makes sense to me.

 

Thanks everyone!

 

A thought to throw out there. What is the definition of living expenses?

I include:

1. Water;
2. Gas;
3. Electricity;
4. Rates and fees;
   
5. House/Contents insurance;
6. Car rego and insurance;
7. Mobile phone and internet;
8. Health insurance; and
   
9. Other stuff I've omitted because I've forgotten.

Those alone account for a fair whack of funds for some but of course there is no allowance there for food, petrol and the like e.g. car servicing or tyres.

In my case they are covered a few times over but I don't put aside money for survival rations.