Ideal Passive Income Portfolio for Retirement - advice from forum experts

@The Falcon had some insights on MMM

It looks like the underlying VHY fund has historically beaten VAS, who knows what the future holds due to weightings

 

I have been off VHY for 3-4 years at a guess - I do not endorse it anymore.

 

Hi Oracle, just in regards to your point 1) above.. I'm still doing a lot of learning and want to ask..

Articles I read that recommend to follow an index and even Warren Buffet himself always says to just follow an index, but these articles and advice are always in reference to the USA.

Here in Australia isn't it different? Like if you were to buy VAS you would get a lot of stuff in there that if you follow PT, you don't really want like minors, and stocks that don't pay much dividends and probably leaning too much towards banks and finance.. Wouldn't the results of following an index be a little flat say in comparison to an LIC?


-Frank

 

where would we all be but for those friends and parents who pull us aside and provide us with this sort of advice

 

Yes you can. I'm with Hostplus in pension mode. I have a certain % invested in their balanced fund, certain % invested in fixed interest and a certain % in cash. I draw the minimum 5% pension. The % invested in cash is where the next years pension is drawn from so I have 5% allocated to it. To ride out any market downturns I have 3 years (15%) pension set aside in fixed interest. The amount invested in their balanced option should do most of the heavy lifting in generating growth/future income. Every 6 months i can rebalance the %s.

 

Well done. Basically the three bucket approach. For many why bother with a SMSF if you can do this with HostPlus. And if franking refunds were scrapped you won’t be impacted in most Industry Funds.

Curious about how you rebalance thanks. Do you only take from the Balanced fund to top up others in good times then draw on fixed interest bucket to ride out bad times until Balanced Fund recovers? Or do you move funds back and forth every 6 months to maintain balance?

 

That's why it always pays to have 100% focus on the speaker and analysing their message ,because being in the company of high end longterm property investors
like that Man may only happen a few times in your investing life..
I also meet a few like Ian over the years at CBA and other banks AGM..The ones that sit alone,always in the second row watching everything and looking for any manipulation of accounting data..But they never ever complain ..

 

@Nodrog. I am 'rebalancing' in a few ways.

Firstly, I'm over 65 and have a part-time 'retirement' job that allows me to meet the over 65 work test. With that job, I am salary sacrificing about 50% into a Hostplus accumulation fund.
Secondly, I am also saving monies outside super. I have been advised by Hostplus that with my pension account I can 'cancel it', then roll over monies from the accumulation account into the pension account plus hopefully some non concessional $s (from a line of credit) and restart a new pension fund with the higher funds under management.
I only started pension last year so this will be my first year that I try doing the above. I am expecting a significant inheritance so trying to get as much funds as I can within the super umbrella over the next 5 years. I am no where near the limits due a property settlement about 5 years ago and the reduced contribution caps mean that I need to develop strategies such as this.

Lastly, the Hostplus Balanced portion of the funds invested have been growing in $ and this growth allows me to change %s in the investment mix periodically - I plan to try to do it every 6 months. This way I will try to have between 3 (15%) to 5 (25%) years pension monies in Cash (5%) and Fixed Interest (between 10% to 20% depending upon my feeling about economy) from which to draw the pension. Hopefully this 'reserve' will allow the funds invested in shares to recover from any downturn in the economy. At least that's my current plan.

 

Thanks for that. Well planned.

A couple more questions thanks.

1. When Hostplus roll over the Accumulation Account into a Pension Account does that trigger a CGT event?

2. Is insurance mandatory in the Accumulation account?

3. From what I understand Term Deposits are only available through ME bank. Therefore one can’t take advantage of the Gov’t $250K per ADI Guarantee by spreading cash around? Are you able to check your account Dashboard to find out the current Term Deposits interest rate please?

My initial research on HostPlus suggests it’s an excellent fund. For those interested in the indexed Balanced Fund the fees are rediculously low. For many this seems a far superior option compared to SMSFs since the balance limits were introduced.

 

Hi @Nodrog
Re 1 - triggering a capital gains tax event - good question - The pds says "rollovers into pension account - you dont pay tax on any funds you roll over from another super fund to begin a pension account except where your rollover comes from an 'untaxed' fund" so I'm presuming not. As I'm over 65 I will ask. I only started pension fund in July 2017 so this will be my first rebalancing using the method above. I'm currently waiting on a line of credit to be set up from refinancing home loan before I contact Hostplus to arrange a meeting with financial planner to progress.

Re 2 - no I dont have insurance so presume that it is not mandatory especially due to my age. I couldn't quickly see it in the pds.

Re 3 I tried checking for the term deposit rates but I couldn't see them mentioned/quoted at all as an available investment. I dont even have a 'dashboard' tag - I see it before I log in but it doesn't show up after I log in.

Re the indexed balanced fund, yes I understand that the fees are ridiculously low and believe that this is the fund recommended by that barefoot dude but I understand that the balanced fund (which has slightly larger fees) outperforms the indexed balanced fund in an after fees comparison. I just cant find the rates to compare.

I did want to try to use the choiceplus option to invest in LICs but they only have a very limited range - AFI, ARG, MLT. I was worried that with my 5% pension drawdowns, the income from the LICs might not be as great as if I invested in the Hostplus balanced option. In the end, I thought it was better to keep my arrangements inside super simpler.

As usual not advice

 

My partner and I have been going back and forth with our decision to renovate our PPOR. We are both in our mid 50's and are mortgage free. Our PPOR is worth between 1.7-1.8 mil and if we renovated (400K) the house would be worth 2.5-2.6 in today's market. We would probably hold the house and mortgage costs for 3 years. Or we could downsize now and move to a cheaper city to buy PPOR for 1 mill, put extra money (non-concessional) 300K each into our Super and/or invest in shares. I suppose I would like to take advantage of the extra funds we could put into Super before they change the rules again (recently reduced from 450K to 300K)

 

I just found the rates in Money mag Jan 2018.
Best Balanced Super Funds page 80
Hostplus - Balanced Option. $18,976m 1 yr return 13.2%; 3yr 9.7%; 5yr 11.8% Annual cost for $50K is $678.

Lowest Cost Balanced Super Fund page 86
Hostplus - Indexed Balanced $24.4m 1 yr return 10.3%; 3yr 7.7%; 5yr 11.1%. Annual cost for $50K is $88

I hope that I'm comparing apples with apples in the above.

Not advice

 

Here is something interesting I found based on point 3: Super misses out on government deposit guarantee - Cuffelinks
Summary: Deposits are not covered in a public superannuation fund. Do they mean public sector funds or is it broader?

 

It is broader. Deposits in such super funds are invested in the trust's name, not yours, so the $250K guarantee does not apply. SMSF's allow you to invest directly in your name and hence the $250K per individual per ADI government guarantee is available.

 

Re Term Deposits I’m setting up this as detailed in linked post. Been looking at it, absolutely awesome. So simple, paperwork only once, reporting done for you. It’s been around for a long time but until now I hadn’t really needed Term Deposits. Hence I’d never taken much notice of it. Gov’t Guarantee applies as still invested in name of investor.

“Australian Money Market” - Term Deposit Platform?

 

Sunsuper, an industry fund, have 2 different options:
1. cash and
2. capital guaranteed

Investments | Sunsuper

I'm guessing cash is not covered by the government guarantee. I'm 100% equities in super but I'd like to think I have a guaranteed fallback in cash if required.

I will contact them to confirm the difference, but the fees on 2 are significantly higher.

 

I have dual occupancy properties that are two incomes in one property for strong cash flow and property in a SMSF for the benefit of rolling it into a pensions at 60 and having no tax on the rent or capital gains tax.

 

What do you generally think about TLS shares. They have been hummered lately and I am becoming interested.

 

"Hammered lately" being the last three years? Anyone trying to pick the bottom and hope they bounce back? Div yields are still good.
Interesting times ahead with 5G rolling out soon.

 

I have a small holding in TLS. Been losing value ever since I bought into it! Someone with a crystal ball said price was likely to continue dropping to $2.50. If it gets close to that figure I might buy back in