Asset Allocation

Discussion in 'Share Investing Strategies, Theories & Education' started by dunno, 25th Feb, 2019.

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  1. Anne11

    Anne11 Well-Known Member

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  2. Nodrog

    Nodrog Well-Known Member

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    The combination of dividends and cash cushion can work nicely in a SORR situation. Some investors think say the 5 year cash cushion is needed to cover 5 “full” years of expenses if shares crash. But it only needs to “top up” any income shortfall resulting from a cut in dividends. In which case that 5 year cash cushion will likely last many more than 5 years.
     
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  3. Nodrog

    Nodrog Well-Known Member

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    Seeing it appears anyone game enough to post their portfolio has now done so maybe we can continue on with asset allocation ideas.

    For those wanting a well diversified asset allocation the portfolios from Robo mob Sixpark (who it appears stole them off @The Falcon:)) I think are pretty damn good. I have posted the following elsewhere at times but here is likely a more appropriate thread:

    D2784CD5-A6CA-44AD-AE1B-9FBF2CEA5865.jpeg
    https://www.sixpark.com.au/news/2017/why-six-park-is-reducing-its-allocation-to-australian-bonds

    These have a lot going for them given the number of issues it addresses considering what an Aussie investor is faced with including home country risk, concentration risk, limited product availability etc.

    With the addition of Global Infrastructure / Reits the appropriate portfolio could in part also be useful if Labor succeed in abolishing franking credit refunds especially for those looking for income such as retirees.

    For a bit of fun I went through the Robo questionnaire including risk assessment and this is what was recommended:

    EB872B31-6437-4827-B601-F04B0E9E8818.jpeg

    As a retiree, given my stage of life and income focus if EM was removed then added to Australian Equities and Bonds replaced with a HIA / Term Deposits I would consider this quite a decent asset allocation recommendation.

    Perhaps the pros / cons of these asset allocations might stimulate further conversation in this thread?
     
    Last edited: 2nd Mar, 2019
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  4. Anne11

    Anne11 Well-Known Member

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    The author did mention that this approach is used in the first 5 or so years of their retirement, after that he will switch back to more equity to achieve long term growth.
     
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  5. Nodrog

    Nodrog Well-Known Member

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    Yes, saw that thanks.
     
  6. kierank

    kierank Well-Known Member

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    I have had one too many bottles of good Shiraz tonight for me to add any value :p.
     
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  7. Nodrog

    Nodrog Well-Known Member

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    Well yes of course. And given what you spend on wine I don’t think you come under the category of Value Investor:).
     
  8. number 5

    number 5 Well-Known Member

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    Hi team, I've been a long time reader but haven't signed up until i saw this thread tonight. Thought it would be good to post my share allocation and see what everyone thinks.

    I have 2 INV properties (ADL), one of which i am planning to sell later in the year to put the funds into my share portfolio instead. Sick of the hassle re tenants etc.

    I am 30 and earn very good money. I invest as much as possible as long term i want to move home to ADL from MEL and that will significantly reduce my income.

    I basically top up my portfolio with each monthly pay, aiming to get my allocation to something as close as possible to the following.
     

    Attached Files:

  9. Nodrog

    Nodrog Well-Known Member

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    Asset allocation looks great to me. Well done.

    Of course there are countless variations but excellent diversification whilst keeping costs very low.

    Some might suggest the usual ASX is only around 2% global market cap ... but I think the 50 / 50 split between Aus / Global is a nice position of least regret.
     
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  10. Fargo

    Fargo Well-Known Member

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    I don't think you would be happy to hear my thoughts on this. I think it is stupidity. Investing for present or past yield may give you a higher income over a short period. It is the price of a share that determines yield you cant say it doesn't matter the less it is worth the higher the yield. You should be investing in companies with rapidly growing revenue those companies will have a high P/E ratio some fly under the radar, but over 5 or 10 years time they will deliver much more income. Even 50% plus p/a , on original price , and have 100% CG sometimes in one day. Often they will get 200 or 400% gain in about 3 years, you can take your original capital out, and leave in more than you put in originally. These growth shares could give you an INFINITE ROI, as your capital has been withdrawn. After 5 or 10 years they can return more in one year than, crappy dividend share have returned in total for 10 years.
     
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  11. kierank

    kierank Well-Known Member

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    Totally agree, I have never considered myself a Value Investor :p.

    I have always considered myself a Lifestyle Investor.

    Each “investment” must either:
    1. Directly improve my lifestyle OR
    2. Generate funds to enable me to improve my lifestyle
    for me to purchase it.

    I would put my Shiraz collection in the first category although, sometimes I am not sure whether it should have a place in my portfolio ;).
     
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  12. Froxy

    Froxy Well-Known Member

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    @number 5 i like the portfolio, simple low cost 50/50 split with tilt to small caps and Asia. May use it as inspiration for my international breakdown if you don't mind!
     
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  13. Nodrog

    Nodrog Well-Known Member

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    A few experienced others here have used a similar international combination. So it appears great minds think alike:).

    IJR is US small caps only as opposed to VISM but given the extreme low cost and size of US in the global index it appears to be the better choice.

    VAE vs VGS is simply a personal choice with it not being uncommon for investors to favour Asian exposure whilst wanting to avoid the likes of Russia etc.
     
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  14. Redwing

    Redwing Well-Known Member

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    Last 5 years of VGB

    02 Mar 2014
    Buy 212
    $46.990 Price
    $9,961.88 Value

    upload_2019-3-3_5-21-9.png
    upload_2019-3-3_5-19-22.png
     
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  15. SatayKing

    SatayKing Well-Known Member

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    Would you please stop that? I could be very well tempted. Not really though :)
     
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  16. Fargo

    Fargo Well-Known Member

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    Just checked my portfolio A no brainer to me PME ( medical imaging) Bought for 80c, 5 years ago. On Friday up 70c to $14, 5% , another almost 100% in just one day alone, at 12c the yield may seem crap 0.9%, it was even way less than this when I bought , but It is a yield of 14% on purchase price. Much better income (4x infact) than the paltry 3c that PT would get for his 80c invested in crappy LIC's, After 5 years what appears as low income blows what appears has high yield out of the water. You have to look 5 years ahead , not at the past or present, and ignore the noise and fluff.
     
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  17. number 5

    number 5 Well-Known Member

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    Thanks Nodrog. Always nice to have someone say you’re on the right track. All my close friends/family are obsessed with property so I’ve spent many hours on these boards reading yours and others thoughts/posts. Simple and low fee was/is my plan.

    No worries!
     
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  18. Burgs

    Burgs Well-Known Member

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    Thank you for all your comments, much appreciated.
    I have been doing a lot of research lately and this forum has been superb.
    I originally had a wrap & advisor 12 years or so ago and paying hefty fees.
    So I went solo and VHY & WDIV seemed a good idea at the time.

    WDIV I would like to keep for international diversification and I like the benchmark:

    The S&P Global Dividend Aristocrats Index is designed to measure the performance of high dividend-yield companies included in the S&P Global BMI (Broad Market Index) that have followed a managed-dividends policy of increasing or stable dividends for at least ten consecutive years.

    I realise I need to add further international say with VGS & VGE as examples.

    Recently added AFI & BKI to start getting away from VHY, which I am happy to keep doing over time.

    So my question is, I have a fair bit of money in VHY, showing as a loss on Commsec, is it worth getting rid of VHY and buy an index and or more LIC's with the funds?

    Tough question I face, I realise no responsibility for advice :rolleyes:
     
  19. SatayKing

    SatayKing Well-Known Member

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    Well, I ain't no mathematician and few skills in that regard but..........

    It seems there are about 16,000 members of this forum of which a relatively small number who would be considered active – depending how active is defined. A goodly proportion of those probably would have no interest in shares as an investment. So those who are is unlikely to be large overall.

    That smallish number is only a tiny proportion of the general population who have an interest or involvement in shares. So the views of one or two who favour a specific approach or even disdain for other approaches don't carry much weight in that context.

    Read into that what you will.

    PS: Same applies to my views but then it is all about me.:)
     
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  20. Nodrog

    Nodrog Well-Known Member

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    True that a couple of opinions here probably count for little.

    And unless one is trying to be a stock picking genius (good luck) then there’s some universally proven things the average investor, more interested in living their life rather than trying to beat the market, can do that should keep them out of trouble and lead to a great outcome over time:

    1. Be honest about your risk profile, SANF is paramount. Nothing will work if you can’t stay the course through good times and bad.
    2. Avoid investing in direct shares unless you’re prepared to spend a lot of time in this pursuit. Even then the odds are against you bettering a passive approach.
    3. Avoid trading, speculative investments and exotics such as hedge funds, private equity etc.
    4. Diversify across asset classes.
    5. Diversify across geography.
    6. Diversify across time eg DCA.
    7. Maintain your balance across asset classes tax effectively.
    8. Maintain a cash reserve.
    9. Minimise tax.
    10. Importantly implement the above in the lowest cost manner available with fees being the one major thing you have control over eg traditional index ETFs, low fee LICs.

    So when considering asset allocation how many of the above criteria have been satisfied?

    Others of course will have different views.
     
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