LIC & LIT Beginner's Guide to Investing in Listed Investment Companies

I’m still not sure how relevant this is to the LIC Guide. Need to think about it.

 

I have a question about LIC investment. I recently purchased AFI and it asked me about DSSP and DRP. I know what DRP is but how does it differ to DSSP and should I tick it?

 

DRP = dividend reinvestment plan, you get shares at market price instead of cash as a dividend. good if you're not a disciplined saver and if you plan to never ever sell the shares. You need to keep excellent records of every acquisition or selling can be a major tax-headache. You will still need to pay tax on the value of shares received each year.

DSSP is like DRP but has some mechanism that allows tax to be deferred until shares are sold. Not sure how it works, I haven't looked into it.

 

Hi @Nodrog basically it seems to me that after beginners buy their first shares the next questions are (1) what do I do with the letter they received from the associated share registry about registering tfn, communications, or how do they start drp and (2) what do they do with the paperwork when they have received dividends or DRP statements.

 

See page 14 of attached:

 

Another great thread.

Thanks to Nodrog for putting together the Beginner's guide. I found it a a great start to understanding LICs and I appreciate all your hard work in creating it. Thanks also to everyone who has taken the time to post in this thread to help newcomers like myself.

I'm off to read the LIC thread now. Should I start from the beginning in 2015 and read the full 298 pages or should I start with more the more recent thread?

 

See if you can filter by removing shorten comments, it may save a few pages worth

 

Read the whole lot with a notepad and several coffees! You won't regret it

 

Lucky work is relatively quiet today then!

 

Same here! Re reading some notes and pages I already printed out from the thread!

 

Is there a way to just print out the entire thread? Even page by page? Would make it easier to read than sitting in front of the computer for a week.

 

I believe someone did a pdf style format of Peter Thornhill's thread a while back but other than that it was just a simple copy paste job to a word document for me!

 

Actually I just figured out the whole "right click and select print" thingy!! 1 forum page equals 4 pages of paper but since it's work's printer I don't mind! hahaha

 

At least you'll look busy

 

Best to filter by removing all @Nodrog posts. That’ll reduce the number of pages considerably. And as a result will probably even make a lot more sense.

 

You did end up with version 3 of the LIC Guide I assume (attached):

 

Yep that's the one I've got.

 

So I now know my next step is to get legal and tax advice (@Terry_w expect a call as soon as I can sort my annual leave out)

However, in the meantime I'm trying to decide what to do with some funds and wanted to make sure my thought process and math is correct. I'm not asking for advice on what I should do, just on the math and process.....

So my wife and I currently have $650k sitting in offset accounts against various IPs. The IP loans we can currently offset against are all around the 4.8% pa mark. We also intend to sell our PPoR later this year and expect to net somewhere around $500k.

Option 1 - Stick it all in the offsets
$1.1mil @ 4.8% = $52,800 saved.

Option 2 - Put it all in LICs
Assume 4% yield grossed up to 5.71%
$1.1mil @ 5.71% = $62,810
Tax @ 39% (37% + 2% Medicare) = $24,495
After tax return = $38,315

IP Interest payable
$1.1mil @ 4.8% = $52,800
Tax deduction @39% = $20,592
Interest actually paid = $32,208

Return - interest = $6,107

So with option 2 the dividends cover the interest and come out $6,107 ahead?

 

Where will you live?

 

I know someone who Air BnB's it everywhere. One place they paid $200/week, including all utility bills. I don't thin they lived in the main house either (in a flat or somewhere). If you had no possessions to speak of and didn't mind the transient lifestyle, it could be a money saver.