ASX Through The Floor

May be of interest

http://www.afrsmartinvestor.com.au/...top_managed_funds_etfs_AsnroTddXhlmBjFn5EJeBL

 

Hi Skater, if you are looking for stability then no single LIC or ETF can provide that for you. Risks are various but mainly ;

- Manager risk ; ie. manager doing something stupid or criminal which results in loss of capital. This can largely be mitigated (in particular Vanguards "owned by unit holder" structure is pretty much bullet proof.

- Market risk ; equity risk that an investor is exposed to merely through being in the market. This is hard to mitigate.

When I think of risk, I consider risk of permanent loss of capital. Not volatility in the asset price.

Reading between the lines of what you are after, I think a portfolio comprising ETFs split between Australian and International equities, Property securities, Government and Corporate bonds and Cash would more suit your risk profile, and for the interested amateur quite doable. You'll need a bit of an interest though as you should be rebalancing and quite comfortable with what you are doing.

So ;

Now, I am going to go against what I have said about "managed funds" here. Vanguard have Managed index funds that provide a simple solution for someone in your position. The fees aren't particularly onerous and I have it on good authority that they will extend wholesale pricing levels (0.36% for the growth fund) for a minimum investment of $100k. (all their material says $500k, you just need to call them up.).

https://www.vanguardinvestments.com.au/retail/ret/investments/funddetailVGIF.jsp

What this fund does is holds a portfolio of 70% growth assets (Oz and Intl equities, listed property) and 30% income assets (bonds and cash). which might provide the right kind of compromise between performance and volatility. These are set and forget products, additional investments can be made via Bpay and income is paid into your account. If you have a trust, ideal vehicle to own this type of investment for streaming of income to multiple beneficiaries.

Also, if you are thinking of taking some money off the table (with regards to property) perhaps in addition also consider SMSF given the advantageous tax environment. I personally have 2 portfolios, one is in a discretionary trust and one is SMSF. In future I'll also add a Pty Ltd beneficiary for the trust...lots you can do here.

Hope this is of some assistance - bear in mind I am just an interested punter and this is not specific advice. I still think reading those books in the stock investment resources thread - particularly a random walk, and the economist guide to investment strategy would be helpful for someone even wanting just to use on of these Vanguard products. Also read everything on Vanguards site, their educational material will be helpful.

Good Luck !

 

The younger guys here at work, I tell them all just to get 5k into a vanguard managed fund and then set up an investment plan for at least $100 month and just let it invest in the background out of sight. I think some of them think I get a kickback from Vanguard or something.

 

Ha. As someone who is often annoyed by the dogmatic approach of Bogleheads, I cant fault Vanguard itself. Its a good company providing good products at very fair prices. Your suggestion is a good one, besides from the obvious immediate savings benefits also because Vanguard does a good job on "mindset" for want of a better term, it gets people thinking about saving, planning, long term investing etc and introduces them to concepts that they will benefit from in the long run.

 

Yes, that is what I was meaning as well.

No, I'm aware that it isn't specific advice, and understand that if I get myself into hot water, it's all my own silly fault. I have no Super, and Hubby hasn't really got a lot either as he's only really worked in paid employment for around 15 years or so. Before that we were self employed & withdrew it all under hardship. So, there will be no SMSF here.

We've already sold three properties & have the funds sitting in various off-sets atm. I don't want to do anything drastic, so was only thinking of putting a small amount on & see how comfortable I am with it and would want a yield higher than the current interest rates, and like I said before, looking for something that I can set & forget, not some sexy product that I've got to constantly monitor.

 

This is the direction I'm travelling and am wondering if @The Falcon or anybody else has any thoughts on lump sum investing v's dollar cost averaging in over a period of time. Its a life changing 70% of net worth, so definitely if I was going into equities only then I would be taking the DCA route probably over 18mths, but does it matter so much with a portfolio diversified between the different asset classes, especially if rebalancing yearly?

 

Hi Skater,

My Dad got me into shares years ago. I still hold them.

When my kids godmother gave me $100 each year I invested them for the kids in shares when they were just pre teen. The eldest cashed in most of his to help with his first deposit at 28 and the value via drp was just over 9k. Westpac shares have been kind to me, I have put everything into drp where possible to grow, when we retire we will set to direct deposit. I have other shares personally, but Westpac is a big part of the personal portfolio.

I am saying in a roundabout way, educate yourself, take the risk, put in a small amount $10k is fine for one stock. You will look for income, like you did with your properties. I don't buy and sell, I hold. As I said on ss my Westpac shares today pay me in dividends grossed up (that is the net dividend paid plus the franking credit) very close too the original purchase price from 1994.

My personal portfolio is not huge about 10% of our net assets, I have more in super in shares about a third of our smsf money in shares the rest is cash and property.

What I like is no hot water systems, property management and phone calls for repairs, I had three hot water systems and flooding issues in one month this year.
I like that the dividends as opposed to rent generally come tax paid. Property we receive gross rent after repairs and management fees and pay tax on the profit. I avoid managed funds, am interested in ETFs . I have a family member buying ETFs for retirement, and I think I will buy some too. Gives diversity in one stock purchase.

What I don't like but have lived through is the volatility, watching the shares slide Monday was not fun, but I waited and bought some cba shares on tues afternoon. Time will tell if that was bad timing, but they will sit in the smsf in retirement.

Skater do what you have advised others in property, research it, at least with shares you can do it in bite size chunks, and like property u can sit out the bad times and wait for price to recover.

 

Nice post there Vicki. I liked it!

I also bought up earlier this week with the same simple strategy. Buying to hold for long term.

Looking to get a little more later today too

 

Hey Butler, this may be of interest ;

http://awealthofcommonsense.com/investing-a-lump-sum-at-all-time-highs/

 

Thanks Falcon- have read a bit about value averaging and would choose it over DCA, just used DCA in my post as more people are familiar with it. Will be good to read about it again to re-inforce.

By question was really about LSI v's DCA/VA.
For an extreme example: If I was transferring into a 100% stock portfolio then I would only have peace of mind VA in over a period of time. But does transferring into a balanced portfolio mean that you can VA in over shorter period of time or even lump sum invest because the portfolio is balanced with other (hopefully uncorrelated assets) and you are rebalancing yearly? Or do you just VA into each asset class over the same time period that you would have if your were transferring into stocks only?

 

Yesterdays winning funds oft become tomorrows losers, be careful chasing past performance rather than having a strategy.

Check out The Persistance Scorecard past winners have a hard time staying there

 

@The Butler, I think that reading the article and comments will be helpful - LSI investment is most effective more often than not. DCA/VA is really more a downside risk mitigation strategy and is suboptimal historically - however, tell that to a Sept 2007 LSI investor

You mention peace of mind - A major consideration and this is why the answer is always "it depends", we can know what the historical results tell us and act accordingly - but can't know how individual investors will react / be affected.

Given you are talking about a balanced portfolio holding bonds and cash as well, I agree with your line of thinking, timing is less important than an all stock portfolio.

Personally I am all stocks - when I approach early retirement I will begin building a cash and bond portfolio from business and investment income, on the investment side using perhaps 50% of dividend income for cash/bonds and 50% reinvested. I will try to avoid stock - cash/bond manual rebalancing given tax considerations. Fortunately I have some business interests that will allow rebalance from inflows rather than sell down.

 

Here's a thought also from Warren Buffett that would apply to many re: the recent stock market fall

“If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the ‘hamburgers’ they will soon be buying. This reaction makes no sense... Prospective purchasers should much prefer sinking prices.”

Also William Bernstein said

if you’re in your 20s or early 30s, you should “pray for a long, awful [bear] market,” says financial adviser William Bernstein, author of If You Can, a short ebook about investing for Millennials.

Different if you're a retiree of course, you'd be hoping for it to go in the other direction

 

Here's a quick snapshot showing the ASX200, All world (Ex US), US and Fixed interest over the last 2 years (minus dividends)

STW (blue), VEU (red) ,VTS (green) , VGB (brown)

 

So.. what is your conclusion? Not everyone knows these stuff like you do you know...

 

Hi radson,

After the APRA changes, I feel maybe it is time to look for something else to invest. How do I get an account with vanguard? I am 38 years old now. What would be the strategy you would recommend?

 

The link does not work...

 

No crystal ball, nothing to see so I just keep on keeping on, last top up was into the ASX

 

hello guys.......never invested in Australian stocks.....but wants to start investing in stocks.....I have one question can I invest from my super into managed fund like vanguard......advice will be appreciated thanks

 

Check out the diversified options at the bottom of the link

https://www.vanguardinvestments.com.au/retail/ret/investments/managed-funds-retail.jsp#fundstab