Ideal Passive Income Portfolio for Retirement - advice from forum experts

The Super Fund which I refer to are like: HESTA, hostplus etc.
If in a scenario i am picturing: the earning from LIC are similar to the industry super fund, would it not be a no brainer to choose super to invest to rather than LIC? OR am i still missing something?

 

Yes, you are missing something. You should invest in super but at the same time be aware that you can't access the funds until preservation age which could be 65, for example. That's not good if you want to retire at 50. In that case you need your incone to be outside of super.

In my case I have investments inside super, for when I retire, and investments outside of super, in case I choose to retire early. I don't have actual plans of when to retire because I am having too much fun doing what I am doing. However, I have structured things this way to give me flexibility in case I decide to retire early.

 

I think this was answered below...

 

I wouldn't invest for Dividend yield by using borrowed money. I only know of one company where the returns are worth the risk. There are not many that are good investments where the yeild will cover the cost of money, often dividend come at the cost of growth and share drop by the amount of the dividend. It is future earnings you need to invest for. RFF for example it pays a 5% dividend, which is bugger all ,when you compare it to its consistent growth of about 30% pa, with compounding, amounts to doubling every 2 years. something like that you can take out you original investment in 3 years, and have 300% of it for free after 4 years. I invest in it for growth. I consider investing for dividends a waste of capital. It is hard to get a company worth investing in that pays more than 1 or 2 % yield.

 

Only if their returns are EXACTLY the same. How likely do you consider that to be?

 

And for an extended period at (years - decades) that... the returns of ASX listed companies are published.

 

5% with no additional costs. Many IPs have sub 5% yields with costs....

I agree, as with all investments during the accumulation phase, you need to look at both CG and income. RFF has done well in the current expansion of agriculture. Providing an active manager can provide income to cover the cost of borrowing, and provides CG, why not, just the same as IP investing. As you say, investing is about the future, but share investing is a lot more agile than IP investing. Both have it's role and it's not about one or the other but understanding the role of each in one's portfolio.

 

I agree, its not about one or the other RFF is an investment in property. The share market is just the vehicle to access it. I think it is a no brainer. They have very solid income assured, long leases, payment, in advance with 2.5% increase pa, distributions increasing at 4% pa, retain 30% profit for re-investing, has solid assets backing it, have diversified properties with excellent very profitable solid exchange listed tenants including TWE and SHV.

 

Ah this answer has taken away some of my confusion.
Thank you

So we all would like to have our asset grow as much as possible, whether it is property or shares or managed funds/LIC.

We can purchase property or shares or managed funds/LIC thru SMSF for effective tax purpose and we can leave the chosen product in the SMSF to grow til we decide to change to eg : income stream

Pls correct me if i am wrong.

 

Forgive my ignorance. What is RFF?

 

Thanks Sash. Thanks for allowing me to sabotage your thread.
I am slooowwwwly getting there

 

NP...I am learning a lot here too...I am property guy....I understand shares/super....but LICs and ETF....that has opened a new world.

A couple of years ago I tried cover calls...for income...not as easy a it sounds...crashed and burned....did not lose much though....

 

Rural funds group. That's its asx code

 

Something from the left field..but I have large amount of my Super in the Perpertual Industrials Share (Australian) fund....where you have at least 200k in it...I find that it has an excellent rate of return despite the higher MER ...some like 1%.

I used this fund in the mid 90s and had the same result. Also during a major correction it also tends not to drop as much.

Anyone had this experience? Any comments would be appreciated.

 

One of the better performing funds over the long term. Lucky you have it in your Super Fund and not your own name otherwise CGT will be an issue. A lot of the distribution often comes from trading profits not the pass through of dividends from the inderlying holdings.

We hold PIC a Perpetual LIC.

 

You are correct.

When I had it in my own name CGT was an issue as it is an active fund...not as active as others but still active.

 

And why I like the older LICs. Nearly all income is from the pass through of dividends from the underlying assets in their portfolios. Minimal CG.

 

You na what think this thread has been brilliant..I started this thread mostly as Passive Income outside of Super. ...and it has delivered. Learnt a lot..

But you know what I am the laziest guys I know....and as for Super...I don't like the idea of setting up a SMSF..that is more work and paperwork. I will start a thread if people want to grow Super within the confines of an Umbrella fund or Industrty fund....I am sure you will contribute as Nodrog given your extensive experience....

 

Fair enough SMSFs can be a pain. However there are things you can do with a SMSF that can’t be done (or the fund doesn’t allow) with other Super funds. And from memory when you start a Pension CGT will apply as Industry / Retail Super Funds have to transfer your holdings to a Pension Trust. A few having been trying to find ways to reduce this impost but I’m not sure how successful they have been.

 

my understanding is this about 10% correct?

what prevents some to setup a SMSF just before retirement and move funds to draw a pension and neutralze CGT?