Early 30's and $100k to invest..

If you were in your early 30's, looking to invest $100k with a set and forget strategy, where would you place your money? A few factors:
- modest combined family income and 2 kids
- looking for a passive strategy with regular contributions of $500/week
- 1 IP worth $400k, cashflow neutral
- Additional $20k sitting in separate rainy day savings account
- Goal/timeframe: financial independence in 20 years (comfortable on ~$80k/yr)

I understand this doesn't paint the whole picture. Not looking for specific advice but would love to hear different views/strategies/criticisms/questions to ask etc

VTS/VAS 50/50 split?? 100% in bitcoin?? (joking) Fire away....

 

Is there a ppor?

Youll need around 1.6m plus your own home. Consider inflation, more like 2m at least.

You probably need a lot more leverage thank you think.

 

I would look at the Vanguard Wholesale options.

 

As mentioned previously numerous times over, vanguard accepts 100k buy in or their wholesale managed funds. You can even have 5 or 6 different individual funds if you please as long as balance of 100k is met. So a person could go vanguard high growth fund along with a vanguard conservative fund, or do it individually via vanguard single asset class wholesale funds.

 

MLT - 25%
VGS- 25%
WHF- 25%
VAS- 25%
Then go out and live your life with your family and enjoy the incoming dividend streams. Life’s to short to worry to much about the perfect strategy but find one that makes you feel comfortable and let’s you sleep well at night.

 

I’d go with a bigger buffer: I try to have 60-80K+ on the side. Depends on your risk profile and if your partner can support you if something happened to you.

Australia is only 4% of the international equities market.
I’d through in some VGE/VAE to cover emerging markets and make a bigger ratio into VGS.

I personally am not bothered with a wholesale fund, Selfwealth is nice and cheap at $9.50 brokerage regardless of size. You could aim to invest quarterly.

For me, $100k to invest, (provided my buffer is maxed out) I’d put as a lump sum:
VAS 20k
VGS 50k
VAE 10k

With DRP ticked for all the index funds.

remainder into individual stocks of my choosing (based on growth and dividends. My choices will be DDR and ALU).

Once again, that’s based on what I would do with the money. The market is a bit lofty with the drama of trump/China and possible recession in the future but it’ll always be like that regarding uncertainty in the market.

 

Thanks @Trainee, unfortunately no PPOR - rentvesting as they say. Yes I think in the past the figure was +$2.5m when playing with a few calculators. Super and some eventual inheritance will also help the equation but I try not to include that.

When you mention leverage, are we talking about margin loans?

QUOTE="pippen, post: 703556, member: 6558"]As mentioned previously numerous times over, vanguard accepts 100k buy in or their wholesale managed funds. You can even have 5 or 6 different individual funds if you please as long as balance of 100k is met. So a person could go vanguard high growth fund along with a vanguard conservative fund, or do it individually via vanguard single asset class wholesale funds.[/QUOTE]

Thanks @sharon and @pippen I will take a look into these

Thanks Geoff will have a read of this thread

Thanks @jimmy, I've actually got a similar allocation when I began dipping my toes into the equity world with some play money not too long ago. The sleep at night factor is definitely a big one for me! My initial strategy was to focus on property but I'm exploring the options of achieving the same goals through equity investing to save the ongoing headaches that come with properties.

@pippen I would like to know the answers to these questions if you have any insight?

Appreciate the reply @bobbyj . I actually use Selfwealth for the small amount of ETF's I hold at the moment! Emerging markets are something I haven't entertained yet but will take a deeper look. Seems like a good play for a long term hold. I probably should reconsider that buffer amount on second thought.


Another question for all.. what would you consider conservative growth estimations of indexes such as ASX200 and S&P500? 10%?

 

Lakehouse Capital Small Companies Fund. Run by Joe Magyer . The minimum investment has been reduced from $250k to 100k, Transfer the money and forget, but you should read the monthly newsletter or at least the performance report. It probably already has ALU, DDR NEA and the other WAAX stocks and similar in it, and other ones that are to illiquid for the big fund managers to take advantage of while they have a low market cap. If you are inclined to go for the more conservative VTS/VAS. I think the Lakehouse Capital Global Growth Fund would be much better and you dont have to wait for months to get a measly dividend you can take your earnings any time or let them compound.

 

[QUOTE="

Once again, that’s based on what I would do with the money. The market is a bit lofty with the drama of trump/China and possible recession in the future but it’ll always be like that regarding uncertainty in the market.[/QUOTE]
Don't buy the market then. Buy into a fund that is very selective and can keep an astute eye on every company which has less than 30 companies more than that the risk of under performers increases and the chance of out performance doesn't improve either. Why invest in the 31st best choice. 10 or 20 is probably enough.

 

Don't buy the market then. Buy into a fund that is very selective and can keep an astute eye on every company which has less than 30 companies more than that the risk of under performers increases and the chance of out performance doesn't improve either. Why invest in the 31st best choice. 10 or 20 is probably enough.[/QUOTE]
Well to be the devils advocate, hasn’t it already been shown by Bogle that it’s very rare for active fund managers to beat a basic index fund over the long haul?
Even if they were to out perform the market for 2 decades, the fees would get you. Once they’re very successful, they end up getting too big to maintain the edge and end up underperforming the market.

Each to their own. Active fund managers require an active investor

The true set and forget investor should stick to the market performance and go with a low fee index fund (which isn’t me by the way).

 

Leverage.

 

Hey @Taco, the advantage of the wholesale funds is basically protecting yourself from you, so more behavioural in my opinion. No brokerage only a small buy/ sell spread, and you buy direct from vanguard via bpay and you can set this up for every week month quarter etc etc a set amount. The fees are similar to etf and the etf invest in the same underlying fund as the wholesale fund (in vanguards case) only with etfs you can get in and out multiple times of the day via trading online whereas with the mfund you get thr closing price at end of the day.

If you are prone to logging on commsec all day and checking and checking and your life is dissapearing before your eyes and you cant simply put in a market or limit order via commsec then just maybe the mfund via wholesale could help with these demons via bpay at regular intervals.

May not be the most superior product assembled but may be a good plan for defending against yourself.

I suggest a nice strong black coffee or 2 and sit down and read and then read some more on the vangaurd website and look at plain library and education on the website, along with the search function on this site.

Only then will you gain an understanding of the prducts and justify your approach. Could be an etf approach via 3 funds where every time you amass 5k it gets shuttled into an etf or it could be mfund with bpay or it could be etfs and lics.

Dont rush and do the reading!

Enjoy!

 

Well to be the devils advocate, hasn’t it already been shown by Bogle that it’s very rare for active fund managers to beat a basic index fund over the long haul?
Even if they were to out perform the market for 2 decades, the fees would get you. Once they’re very successful, they end up getting too big to maintain the edge and end up underperforming the market.

Each to their own. Active fund managers require an active investor

The true set and forget investor should stick to the market performance and go with a low fee index fund (which isn’t me by the way).[/QUOTE]
If you are talking about Jack Bogle isn't one of his quotes "mutual funds are a form of witch craft" Of course he his going to selectively use data to show his products in the best light he is not going to show alternatives to his products are better.

 

@Taco

The long term data of the stock market suggests a 7% real return (after inflation) annually. However, due to inflated prices and high CAPE right now one should temper their expectations in the short term. Most professionals (Bernstein, Bogle, Big ERN etc) have suggested a lower return somewhere between 3-5% real annually for the next decade. Probably higher for ASX compared to the S&P due to relative valuations.

 

Still waiting for any active manager to come forward and claim the win on Buffett's bet that they can outperform over the long term. Since it seems so easy to do I'm surprised no one has accepted the free money on offer.

 

Is ppor something youll want? Sure you can just rent long term, but usually a PPOR gives you a lot of psychological stability.

If you want to get a ppor in Sydney, that will probably be a good chunk of change for the deposit, and costs will probably be higher than rent so that impacts your savings.