Ideal Passive Income Portfolio for Retirement - advice from forum experts

The balanced account in Hostplus (and most other Super funds too) has done well due to a long bull run. I prefer a goodly percentage of old LIC's as bond proxies - despite the share price they will reliably pay their dividends through gloom and boom. I also couple that with VGS etc inside Choiceplus.

As for choosing the one with less fees - good returns come and go, but fees compound for ever. :-/

 

Bump

Ok …. this was originally started in 2018

What do the experts on PC think today

 

Can’t speak on behalf of everyone else but I just continue to average in (DCA) however due to current valuations relative to earnings any additional funds above my monthly average I leave in cash (offset) as opposed to additional equities.

 

I definitely am not one of the experts and I haven’t gone back to read all the responses. But I am going to guess that most would probably say that a good strategy / plan in 2018 would still be a good plan in 2021 and should still be just as good in 2031.

I believe the only strategy that would fit that description is a simple whole market index based portfolio. VAS & VGS would pretty much do.
Any other tilt or bet would be based on current belief that a certain sector will outperform in the near term. Certain tilts could possibly deliver superior returns at any given time assuming that sector has it’s time in the sun. Eventually all things being equal will mean you need to make continues changes in those tilts to keep up with the next hot sector. That’s betting that you will be able to pick which sector is the next big thing and you can time your way in and out of that sector.

If I was to start again today I would just hold VAS & VGS. 50/50 and throw in as much as possible as often as possible. Besides equities I still have no issue holding some unlisted property trusts which I currently hold and the mortgage syndicates but maybe as a smaller percentage than current. Slowly getting that balance fixed now.

 

…and you would probably not need a Financial Planner for this strategy

 

I just wonder about the underlying purpose of the question. Do you have any thoughts on the matter? If so, it'd be nice if you would post them.

 

You sure would not.

I know this question is for @MTR , but if I may spew some thoughts on where I think the questions are coming from.

@MTR comes from the property side of this forum and looks to be peeking into the world of equities. Your asking questions and reading up many of the old and very wise posts regarding equities and the strategies that others have implemented in their portfolios.
You are hearing by many about simple, index based strategies and they make sense to you. But your a property person and even though the theory on equities and these strategies you are reading about seems sensible and makes good sense to you, your still cautious and uncertain. You want to and will dip your toes in but can’t yet commit to going in full throttle with equities.

At this point you need to keep asking questions and hearing pretty much the same thing over and over to till your comfortable enough to dip in a little further. This process could take some time in which you will keep going in circles till you finally overcome the fear of the unknown that is equities.

Could this be what your going through or was that just me?

 

Fair enough. Then putting it in a different way. @MTR, ignoring the distraction of certain posts, what aspects did you find most useful in this particular thread (linked below) and have you implemented or commenced any action on them? I ask as the concepts in the thread has many similarities to this one.

Peter Thornhill 2021

 

I would be inclined to too but part of me (probably unjustifiably) thinks there's risk in dumping all your eggs in Vanguard and the possibility, if any, of them going bust etc and you losing your dough.

 

Is such a thing even possible? Could a fund that holds an index actually go bust?

 

Probably not...but I personally wouldn't bet the house on it.

 

In which case there will be no share market.

Have a read of the link in this post, especially point 9 which, although from BetaShares, applies to other index providers should one go belly up.

Risk of having all investments with Vanguard

 

Based on the original post you linked to I would say DHHF or VDHG would be simple products that are all in one products which would seem to fit the risk appetite indicated but would give superior diversification and automatic re balancing. DHHF is fairly new but VDHG covers the period of the thread, so we can take a look back at a relevant outcome.

1.5M into VDHG at inception of NOV 2017 and withdrawing 0.4% monthly (4.8% pa) would give the following withdrawals.



Total withdrawals = $268,045 and Capital Balance at May 2021 would have been $1,748,468

Above amounts ignore tax, on the assumption that tax payable = franking credits received, which unless you had a lot of other income shouldn't be to far off.

 

I dont know what to say…. I can not get excited about company financials this is a big problem for me.

So I think I work on just keeping it simple, I like efts Vhdg and IVV, what I read is good over long term

I just invested $200,000 REITS, 7.5% yield paid monthly, tax deferred. I am comfortable with this as I know director/owner and a good track record over 20 years. Industrial, WALE 11 years. Will continue to invest here

I am also still waiting for the crash with one eye open…. Ok shoot me

 

Excellent. Thank you.

Keeping it simple and being comfortable with your investments is important. Both need to be from your perspective and not that of others of course.

Keep at it.

 

If you don’t mind sharing, where did you find a industrial reit that’s paying a 7.5% yield? Most high quality asset industrial reits are paying in the 5% region at the moment.

 

The industrial fund is spread over several properties, Qld, WA. They also look at properties on larger land component.

Fully subscribed, this was a very good return, I should have put more money in this one.

These guys know what they are doing, Director’s FIL who I know has been invested in the fund for 20 years, got a track record of growth and returns. Can vary from 6% dependent on acquisition/s

One of thr Directors was once Director of largest commercial agency in WA. Anyway best not talk it up, as it is the funds always get fully subscribed

 

Fair enough.

I went down a similar path. Went from resi to unlisted property trusts as I was unable to get my head around investing heavily in equities. Once the penny dropped with equities I realised I was very overweight reits. Have rebalanced over the last 2 years but probably still a little heavy in reits.

Tread carefully with the unlisted property trusts and the managers you invest with. Moving forward I would most likely focus on holding only unlisted with Charter hall and maybe centuria. I would be very cautious of smaller managers who operate open ended funds. You are vulnerable to future acquisitions dragging down your yield and the overall asset quality. I experienced this with Heathley. Went in with a starting yield of 8% and within 2 years it was in the 6% region. They added assets that dragged the yield down and with assets that i don’t believe were of a higher quality. It’s the only unlisted fund I have invested in that has had the yield reduced and the NTA has gone no where.

Point being question how a manager is able to deliver a higher yield than the other players holding assets in the same class. Higher levels of gearing and lower quality assets / locations is normally the only answer. No magic formula for higher yield exists.

 

Is this the new venture set up by JD in conjunction with another firm? JD being former CEO of HP? If so i agree it looks interesting and they've had an incredible response to be fully subscribed in less than a month. Sorry for the code, i take it you wish to keep things close to your chest

Muir/momentum also have some industrial type funds, including a single asset one they recently closed but have a decent history to give some comfort.

I've only participated in one similar, via our smsf about a decade ago. A big box retail complex in Clarkson, for many years returned 9% paid monthly, then droped but still to between 7 and 8%. It's currently on the market as the syndicate members voted to carry on with the planned 10 year divestment, will be interesting to see the result considering recent very high sale figures in this sector.

So for others thinking about such investments they can work, once invested we literally did nothing apart from maybe 2 emails a year around tax time and monthly returns have been paid from day 1 like clockwork
I believe around 90 odd percent of the initial investment has been returned in the 10.5 or so years since the beginning and as a stab in the dark I'd anticipate each member getting about 1.30-1.40 in for every dollar back from the sale of the complex so capital growth was low but overall a result we were happy with as it also balanced out some of the other more capital and less income focused smsf investments we had

 

That would be a concern for me. A manager that doesn’t regularly update its investors with how the fund is going and regular valuations. Maybe a little different for a single asset fund but still would want regular communication from the manager.
When things go to plan and the distributions are flowing, investors don’t care what the manager is doing. It’s only when things go pear that investors start to ask questions. I prefer to ask the questions first.