$200K - Aiming to dump in ASX (Local/International/ETF/Direct Shares)-SMA/MF or likes of CommSec

Discussion in 'Shares & Funds' started by Never giveup, 10th Mar, 2020.

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  1. Never giveup

    Never giveup Well-Known Member

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  2. Never giveup

    Never giveup Well-Known Member

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  3. Never giveup

    Never giveup Well-Known Member

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    @Nodrog : Mate, if it has been tested and proven that Index investing/ETF investing is a winner compared to actively Managed Funds then why there are so many companies running managed funds to beat the market?? Moreover, so many qualified (and rich) people buying those managed funds with heafty fees&charges.....?
     
  4. jprops

    jprops Well-Known Member

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    It's human nature to want to beat the market. It's not impossible for a fund to beat the market, it's just that statistically you are unlikely to pick the one that will (consistently)
     
  5. Luca

    Luca Well-Known Member

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    It is the time in the market not timing the market that makes you rich. If you really want to go deep on this topic I would suggest you read "unshakeable" by Tony Robbins.
     
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  6. blob2004

    blob2004 Well-Known Member

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    Qualified and rich people can be good at business and what they do but horrible at investing their wealth.

    Most financial advisers will recommend managed funds to beat the market as it will generate more fees for them and also sound more "flashy" to capture clients. Who wants to invest in an adviser that says he can get you normal market returns?

    There is already an incredible movement to index funds if you look at net fund outflows since the 2000's. Basically less and less people are invested in managed funds everyday. I highly recommend reading some books such as "The four pillars of investing" by William Bernstein to get a good idea.

    For the record, there are managed funds that can beat the market, but picking them is like throwing a dart on a dartboard because the best performing ones have a higher chance of ending up as the worst performing ones the following years. There are people that can beat the market, but only very few can do it consistently, and close to none after fees and costs.
     
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  7. Nodrog

    Nodrog Well-Known Member

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    +1
     
  8. George Smiley

    George Smiley Well-Known Member

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    Can't really blame all of them in this regard. Human psychology is such that when you are successful you are programmed to seek outperformance because you are an exception to the herd. This desire and ingrained belief naturally translates you to overrating your chances of outperforming the benchmark.

    I do have one question though- is their discernible improvement in active fund performance during bear and/or the early stages of bull markets? I imagine there is, particularly in the early stages of a bull market when value becomes easier to identify.
     
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  9. blob2004

    blob2004 Well-Known Member

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    There was a table from William Bernstein that showed on average most active funds fare worse in a bear market. I will look it up when I get home.
     
  10. blob2004

    blob2004 Well-Known Member

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  11. Never giveup

    Never giveup Well-Known Member

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    Wow....even for CORE (VAS and VGS) and SATELITE (Managed Funds and Direct Shares) approach has higher chance for not to outperform the index...

    Bloody all that research, and finding new companies, putting strategies, hedging can't be done by an individual who wants to spread 200K initially and build on it compared to ManagedFunds that guves that exposure with fee

    I think I liked @Big A opinion around spreading evenly among few quality stocks and @Blueskies #2 low fee ETF

    @Nodrog doesn't say much but gives a very good direction with his evidience based approach and experience
     
  12. Nodrog

    Nodrog Well-Known Member

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    VAS & VGS are the Index operating as an ETF. Satellites are OPTIONAL best left to punters who live in hope that decades of data supporting index funds outperforming the vast majority of active Mgrs might be wrong:rolleyes:.

    Who cares whether active mgrs do better in a bear market, that’s short term thinking. Markets over the long term Only head in one direction - UP! Focus on what’s likely to perform best Long Term, all the evidence favours index funds.
     
    Last edited: 14th Mar, 2020
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  13. Nodrog

    Nodrog Well-Known Member

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    Further have you looked at VAS fact sheet (linked below) for example. The largest 300 companies in Australia with a Mgr fee that’s peanuts ie 0.10%. The nature of cap weighted indexing over time effectively results in the bad companies being replaced with the good and what’s no longer relevant being replaced with companies that are. It’s sometimes referred to as Self-Cleansing. Hence nothing for you to do but sit back, relax and forget about it. With so much evidence suggesting the vast majority of active fund Mgrs and self managed investors underperform the index why would you even bother taking that path?

    https://api.vanguard.com/rs/gre/gls/1.3.0/documents/7639/au

    Not advice.
     
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  14. Never giveup

    Never giveup Well-Known Member

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    Very valid point @Nodrog

    Just for clarity- initially I only have 200K (nothing more) so just for scenario modelling is it worth going VAS and VGS 100K each to grt regular divis and saving to start DCA to turn that 200K into more (million perhaps long term)

    OR

    200K all in VAS

    Or

    Some.in Bank Shares -I know direct shares hold high risk however at present some are at 9% yield

    Ofcorse not talking about advice but be open with opinions
     
  15. Big A

    Big A Well-Known Member

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    Hey @Never giveup , reading your post I think your a little lost and looking for direction. Please don’t take that the wrong as most come on here in a similar situation, including myself.

    I’ll state the obvious first. It’s a little dangerous to set your strategy based on advice from a forum. But to be honest the information you will gather from this place will be as good as any other source of not better. What your getting here is what real people have done with their own hard earned. So there’s no hidden agendas.

    personally I think what you just said going 50/50 vas and VGS is a good plan. I hold both of those right now. VAS being my single biggest holding in any one fund. VGS will soon be the second biggest single holding.

    The start is always daunting. Take your time and ask as many questions and as many times as you need to, till you have some confidence in your decision.
     
  16. Never giveup

    Never giveup Well-Known Member

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    Thanks mate, I actually spoke to local FA and considering SOA
     
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  17. timetoact

    timetoact Well-Known Member

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    I've posted this before, but to reply to your post.

    I started my share investing journey post GFC, so I am far from a seasoned investor.
    I made good returns picking shares that had been way oversold but had solid fundamentals and high cash levels. Some of this was luck, but buying companies that were cashed up was a pretty good strategy in hindsight.

    I am currently trying to work out how to deploy my funds this time around.
    From my research, index funds over the long term are almost certainly the way to go.
    However I do think a few key share purchases during severe downturns can significantly outperform the market over a short - medium time frame.
    My reason for this is that some companies just get much more oversold than others.
    i.e. Market is down 50% and company X is down 80%. Market doubles to get back to previous level. Company X does 500%. (see above, company X must have cash to see out the turmoil).

    So the question becomes, can you make the gain, sell out, pay tax, invest in index funds and still be ahead. Most will say no. I will probably have a go.

    The above said, GFC was very different to where we are at currently. At the depths of the GFC the fear was that the companies you were buying wouldn't be around in a few months time. So the potential increase in SP to business as normal was much, much higher than now.
    We are no where near that yet.

    Hope that helps
     
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  18. Never giveup

    Never giveup Well-Known Member

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    Really appreciate mate....
    Great example
    "i.e. Market is down 50% and company X is down 80%. Market doubles to get back to previous level. Company X does 500%. (see above, company X must have cash to see out the turmoil)."
     
  19. SatayKing

    SatayKing Well-Known Member

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    From way back in the LIC tread. Don't hold me to either the accuracy or whether it works long, long term but It does give some idea. Alternatively it confuses the issue even more.

    You'd need to go further back a couple of pages in the relevant thread to find out why it was done.
     
  20. Never giveup

    Never giveup Well-Known Member

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    @SatayKing
    Legend.....