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

Thanks for your response, you are right... if I take some time to investigate further I would be able to answer my own questions.

I do however intend to contribute more as I further my knowledge. I however am hesitant to contribute until I have actually had some realtime experience. At the moment I am just trying to gather as much info & different views to formulate my own plan

 

Thanks @Snowball, all very valid points and food for thought. It's clear I have more to learn about LIC'S. Looks like I'm in the right place

 

I've knocked up a new section for the beginners guide for this. Just waiting on my esteemed LIC critics to get back with their comments. It'll provide info also for those who want to put in a little extra effort to get best bang for buck.

 

As @austing mentions, the more we contribute, the more we test our knowledge and enforce what we have learnt, as well as contributing to the greater knowledge. Similar to you, I am doing a lot of reading and testing my knowledge to grow some wings and contribute more fully to these growing threads.

I'm also reading a lot about structuring. One point I've learnt is that these are longer term investments and fundamental set up is important. Read threads by @Terry_w and @Paul@PFI and bring back to your own expert team (solicitor, accountant etc).

 

ANOTHER UPDATE TO LIC BEGINNERS GUIDE (See attached PDF V3)

Updates include:
1. New section:
- LICs vs ETFs
2. FAQs:
- Why invest in more than one similar LIC?
- When buying should I check current NTA against historical NTA?
- DRP vs Bonus Share Plan
- What is a LIC Rights Issue?

Feedback welcome.

 

Yay!! Thanks @austing

 

Awesome! Thanks @austing

 

Thanks @austing , I've been reading about LICs, ETFs etc last few months with considerable input from yourself. Read the intelligent investor and I will be slowly changing our cash to a mix of high interest cash and LICs/international ETFs as a defensive portfolio. We are only 33 yrs old so plenty of time to invest. The next crash I will buy up with our remaining cash.

We sold our PPOR because being in defence, you get such a good deal with discounted homes. Will slowly convert that equity into higher yielding assets.

 

My humble approach would be plenty of reading while the proceeds from the PPoR is sitting in an interest bearing account. I am looking to realign my investments after reading more broadly. It is never too late to start, but is better the earlier you can start (rather than unwinding what's been already been set in place).

 

Much less nowadays, 0.14%

You're right, 2016 payments (quarterly) Franking level 81.3% for 2016

31 Dec 2016.. 92.7798c
30 Sep 2016.. 102.0137c
30 Jun 2016.. 18.0775c
31 Mar 2016.. 84.6678c

 

@Redwing,

I hope you don't mind me stealing your Captain Dividend image?

 

Bear in mind the author of the Beginner's Guide to LICs (alias Captain Dividend) doesn't fuss with a lot of what is written. No matter what he says about keeping it simple beginner's will inevitably read about NTA discount / premium, calculating it, SPPs / DRPs, how long before I can live off the dividends, fully franked dividends etc etc and want answers.

There are no real secrets, keep it simple and just keep investing. The other stuff is just icing on the cake, not the main game.

A famous investor @Pier1 has been very generous in divulging one of the world's greatest investing secrets:

0. Spend less than you earn,
1. Borrow less than you can afford,
2. Select your chosen LIC/s of choice (preferably those that have been around over 50 years),
3. Buy what you can when you can,
4. Reinvest all the dividends,
5. Participate in SPP where offered,
6. Pin the ears back buying when the market collapses,
7. Never sell.

Fine tune it if necessary but it's that simple.

Bugger with that admission there goes my book contract.

PS: Not advice.

 

Steal Away...I thought of you as soon as I saw it

 

Famous in their lunch hour maybe!

 

And so humble to boot, remember:

0. Spend less than you earn,
1. Borrow less than you can afford,
2. Select your chosen LIC/s of choice (preferably those that have been around over 50 years),
3. Buy what you can when you can,
4. Reinvest all the dividends,
5. Participate in SPP where offered,
6. Pin the ears back buying when the market collapses,
7. Never sell.

 

The MER for VAS is around 0.14% while the LICs you mentioned range from 0.14 to 0.18%. There are internal tax advantages in LICs around CGT, they can smooth dividends but most importantly they can avoid certain overweight sectors ie reaources and avoid any rubbish. In the ASX top 200 there may not be too many rubbish companies that must be avoided. This probably applies to a small/mid cap like Mirrabooka or QVE.

I personally have both ETFs and LICs. Before I started reading here all I wanted to buy was VAS, VTS and VEU. Some say if you have money to invest buy LICs when cheap otherwise buy the ETFs.

Therefore, the LICs and ETFs you refer to are similarly priced. There are even LICs with lower MERs ie AUI, DUI CTN etc. ARG and VAS do similar things but if you look at their historical performance including dividends you can see they are different.

Not advice

 

Excellent post as always but minor error, CIN not CTN.

See how the Long term investing template can easily be modified to suit one's preference:

0. Spend less than you earn,
1. Borrow less than you can afford,
2. Select LICs (> 50 years old) when cheap, ETFs when not,
3. Buy what you can when you can,
4. Reinvest all the dividends,
5. Participate in SPP where offered,
6. Pin the ears back buying when the market collapses,
7. Never sell.

 

And always keep in the back of your mind ,no one can control the stock market ,.
The forecaster is the market itself not the forecaster..
And the only crystal ball that always reflects the brutal reality of the future of business and economics is the stock market..

 

Thanks, totally correct of course.

No forecasting suggested here so far that I can recall. As @Pier1 has said:

3. Buy what you can, when you can,
6. Pin the ears back buying when the market collapses.

There's a big difference between forecasting vs taking advantage of opportunities when they arise.

Cheers

 

Captain Dividend,
Do you always participate in SPP? What if price is still expensive? How much do you suggest on buying? Whatever money available to retain asset allocation?