First timer 60k - poke holes in my approach

Hi all,

My partner and I are in our early 30s and own two resi properties and have never invested into shares but have been educating ourselves on shares in the past year. Our overall investment strategy was leading us to purchase a commercial property this year, but with the way things are going we’re considering pausing this for 6-8 months and dipping into the share market for the first time instead.

We had saved a good deposit for a commercial purchase, so aiming to preserve that for when we end up buying rather than use all of it, and essentially investing the amount we can know we can save in that 6-8 months which is circa 60k. Nothing huge but it seems a good time to do it.

Here’s what I’m thinking of doing and I’d love for people to critique it, point at potential issues or any tips.
- Invest 20k twice into established LICs, say for example 20k Milton, 20k Argo
- Invest 20k into an index ETF for Asian countries (assumption is they’ll bounce back and do better than Europe/US coming out of this crisis)
- Do this in a month or two when I start to see the light a the end of the tunnel for the world economy (happy if it’s back on the rise and not pure bottom of the share prices), and also happy to wait that time as I think the economy, and therefore share prices, have a bit more tough time to go through
- Invest all at once, not fussed on dollar cost averaging just to keep it simple
- Purchase these shares in a trust account so I can re-distribute income from dividend between partner and I (this one if still yet to be determined, need to do more research)

Why I’m doing this: more of a dividend focused investor but hedging bets a bit, like the fact that value is low now so good opportunity. LICs appeal due to their structure and dividend focus. ETF for international appeals because both super accounts have an Aus skew. Not interested in timing the absolute bottom, just happy getting good value and letting it grow when the world economy bounces back.

 

How will you feel if the market drops around a further 25% after you have invested $60K?

 

I would feel ‘ok’. I’m a bit of a perfectionist so I’m not going to lie and pretend I wouldn’t care, but considering my timeframe if it takes 10 years to go back up to the level I bought at, and then another 10y g good growth or dividends then it’s still a win isn’t it. In an ideal world I’d keep these LIC shares, dare I say it, forever, and not sell the ETF for decades.

Yes half of my PPOR loan. The other has been debt recycled into my IP. Not sure what you’re alluding to but if doable I would use my split loan for these too (though maybe a complicated with the trust structure I was thinking of using, not sure maybe you know more about this!).

 

80% IP, 75% PPOR. Yep would recycle 60k of debt in my scenario.

 

I'm doing the same thing with Argo and Milton.

No way I would dump all the money on them in one hit. I'd at least do it in $5k parcels over the next couple of months. VAS was on my list too, jumped in at $83 and again at $63 and now I've got no more dry powder allocated to VAS. They got down to $58. Bigger parcels if you think we're through the other side but otherwise DCA I reckon.

Willy

 

Personally I see this as an issue you should work on. Focus on "good" not "perfect". Just my 2c.

 

Out of what you have suggested for me the choice is the easy. Asian technology tigers, EFT, ASIA the only concern is India turning to crap and FX rates. 50 large tech companies, including Tencent, Alibaba, Samsung, JD.com. Baidu, massive on line markets even coffee is ordered on line in China now. Tailwind with video streaming, online payments, gaming, A I. Has high liquidity. Has a cap of 10% in one company and rebalanced a couple of times a year, Has shown its resilience and out performed the ASX and way out performed the LIC's you mentioned which have had no growth to compensate for the recent plunge . I will be buying under $7.00 about to put buy order in now. Even a 25% drop now will mean nothing in 10 years time with the potential of this. No-body can pick the bottom and only a fool believe the can.

 

I think it's pretty clear that I should consider dollar cost averaging so will take that on board!

What do people think of the value of LICs in these times when dividend distribution is starting to get slashed around the world and likely coming to Aus too? Would we anticipate these stocks prices to tank further (providing an opportunity to buy for future long term dividends)?