Forced into early retirement, considering investing in serviced apartments to generate cash flow

Thanks, ok, I'll give it a couple of years then

 

Don't forget it could go down in value too. But have a look at some of the graphs in the LICs threads of what happened to dividends when there were dramatic drops in the value of the sharemarkets.

 

If the threads are too long to read... the answer is..... these are great times to accumulate shares. Dividends hold up reasonably well but prices drop. Therefore yields improve...

 

[QUOTE="tobe, post: 567067, member: 23"

id think about using your offset funds (re-borrowing) to purchase shares, and even consider a margin loan. There’s no income to claim against now, but there may be in the future if everything goes well.[/QUOTE]

Terrible advice for someone who has little knowledge of stock market and no income to take on margin loan

It could destroyed him with margin call

 

Correct that the LIC threads are long but I read all of them & lots of good stuff,but a more simplified blog is 'Strong Money Australia',well worth the read for Cdizz.Also CMC Markets is $10 per trade.

 

Good stuff, I'll add it to my reading list

 

I put 100K of play money into AFI, BKI, CIN and WAM in late 2016. So far the results are underwhelming. AFI has done OK. The rest are ordinary.

AFI is up 8.73% after accounting for growth and full participation in dividend reinvestment
BKI is up 0.28% after accounting for growth and full participation in dividend reinvestment
CIN is up 2.11% after accounting for growth and full participation in dividend reinvestment
WAM is up 3.08% after accounting for growth and full participation in dividend reinvestment

Meanwhile, dual occ values are up 70K upon revaluation - that represents growth of @ 12% and dual occ rents are up 11% in the same period ( 1 year)

Historically, I recognise that these things tend to average out to similar results over 10,15,20 year periods. My point is simply that right now dual occs are seriously outperforming...

 

I enjoy being alive and all, but 10,000 years ? I think Id get a little bit bored

 

Terrible advice for someone who has little knowledge of stock market and no income to take on margin loan

It could destroyed him with margin call[/QUOTE]
Lucky we both aren’t financial advisers then innit?

I wasn’t suggesting he use all his savings, his offset funds and a margin loan,

I was suggesting instead of using his cash, he gears. More tax effective. with $500k invested and $30k income he would be paying payg tax. Using borrowed funds means there’s less tax payable as he can claim the interest paid plus he’s got the funds he hasn’t used still in the bank earning interest and SANF.

 

Are you sure the yield improves on your investment if the SP drops lower than your purchase price?

 

The dividends don't change so much... they usually go up each year if you bought well. When the share price that has dropped but the company hasn't essentially changed then dividend yield tends to be better. It's a buying opportunity. Then the share price should later bounce back as sentiment changes.

 

Of course yields go up if share price drops, your buy in point wont change the mathematics. It is ROR that is important there is often an inverse relationship with yield, yields increase as total returns decrease.

 

Have a look at the Vanguard website too. One of the pre mixed wholesale funds could do the job for you with low fees and paid by b pay. Not advice, I don't know you but it's a simple place to start.

 

Thanks yeah, I've been looking at vanguard

 

Lucky we both aren’t financial advisers then innit?

I wasn’t suggesting he use all his savings, his offset funds and a margin loan,

I was suggesting instead of using his cash, he gears. More tax effective. with $500k invested and $30k income he would be paying payg tax. Using borrowed funds means there’s less tax payable as he can claim the interest paid plus he’s got the funds he hasn’t used still in the bank earning interest and SANF.[/QUOTE]

So what would the cash/offset split be to make up the 500k?

 

Yield wont change if you own the share unless the income goes up/down. I see loads of older retirees with CBA who would not consider selling at $89 or $35 if that happens....They bought at $2.60 and get an annual div of $6.14 after franking....236% return annually.

And they wont sell for fear of the CGT impact. They intend to die with CBA shares.

Each investors position will influence actual yield. Yield for a potential buyer is a different matter

 

I think it depends on how you calculate yield. Warren calculates on the original purchase price. Smarter people calculate on current valuation....