LIC & LIT Listed Investment Companies (LICs) 2019

Agree that even with higher fee and taxes most people who arnt that engaged would get a much better result in the long run.

 

True, but let's face it anyone who's gone to the effort of seeking out Barefoot and subscribing is likely engaged enough to manage this portfolio strategy.

 

Isnt it for the idiot grandson? Assumong they arnt subscribing to grandpas newsletter

 

Pre-paid from the first ETF distribution. Non-refundable.

I am blowed if I understand why people pay for these newsletters. If they can make an effort to find them why wouldn't they make an effort to explore investing without them.

Maybe it's a case of "I want someone to lead me to the path of riches without doing anything myself."

I don't know obviously.

 

It's a but of a cult. The book drove me nuts with the way it is written, very authoritative as if it's the only finance knowledge anyone would need. But then it would have gaping holes and what I would consider some suspect recommendations. Well meaning though I think.

A lady at work was going on about it so i had a look. The guidelines in it were not good for her situation so I gently did the "have you considered" line of planting ideas in her head.

Some people just want to be told what to do unfortunately. At least Pape seems to be well meaning. Although I didn't realise he was pitching direct share investing which makes me question either his knowledge or motivations. How can anyone in this day and age without a conflict of interest think it's superior for the average investor?

 

I still know many who think direct investing and trading is superior even though their returns are extremely ordinary & I'm being 'kind' there. Unfortunately I was greatly influenced by their thinking for too long, to my detriment, but looking back I'm grateful that I woke up a few years ago & am now getting more peace of mind & results through income investing, mostly learned here. Try to pass this knowledge on but seems only a very small few are slowly moving in this direction.

 

Prior to The Barefoot Blueprint paid subscription his recommendations from memory were AFI, ARG and BRK perhaps with a global index fund thrown in for good measure?

 

Thanks. Starting to get a glimmer of an idea. While I have bought books I have never been inclined to sign up for newsletters (if they were on offer) by any of the authors - especially if I had to pay as I am a cheapskate. Paid for the book and ya not getting any more!

Never read any of Mr Pape's stuff.

Hmm, he matured? In a money making sense.

 

Scott Pape seems to do a good job of educating his audience, I haven’t seen much firsthand that seems far off the mark to me. All very reasonable and sensible for the audience.

I have now seen a copy of the report that outlines the idiot grandson portfolio (thankyou to the person concerned) and again in full context everything seems reasonable.

A pretty good list of finalists before he culls to the three, he selected. IOZ seems to be the only one for my money missing from the finalists, it seems to not have been there from the start, and neither was the Multi funds from Vangaurd, probably because they contained bonds and it seems he was after all equities.

Not sure how relevant for Australia is culling the Blackrock funds because they are for profit and Vanguard is not.

He gave the LIC’s fair consideration, but in the end didn’t go that way.

The domicile issue didn’t seem to concern them. I suspect if he truly puts big money into this portfolio to fund his charitable work it will be via a company so the estate issue will be mute, most of his followers would be under the 6 odd Million total wealth where it becomes an issue so long as the treaty laws don’t change.

I prefer VGS because of the domicile and because it has a hedged counterpart. If VEU becomes domiciled in AUS, I would consider a rejig of my portfolio if VGS fees don’t drop.

The allocation to global is a debatable point – I allocates more globally, but 25% is probably a huge improvement in diversification for most of his audience and it’s all unhedged. He intends to consume the income so the non Aus allocation will ramp up over time because of higher retained earnings outside Australia.

I think Michael Kemp is his direct shares guy. If it is, I rate Michael highly. People Knocking direct shares do know that your LIC’s are filled with direct shares. If you have a problem with direct shares the issue is YOU not the shares.

My answer if I get asked ‘that’ dreaded question by an acquaintance is still; salary sacrifice into super or VDHG. I have probably even suggested Barefoot book for a beginner even though I haven’t read it. From what I have seen and heard; he seems like a decent educator for a novice investor – Is that not the case?


Just some quick random thoughts on the topic of the minute.

 

Domicile aside, VEU is a such a great ETF. The inclusion of emerging markets at 0.09% MER is a great selling point. The only thing that annoys me about it is the 5% Australia exposure But no ETF is perfect.

 

If I followed the individual stock picking guidelines though - what do I do now? It seems like the newsletter service is being stopped. So who advises me when to sell? Or do I just keep them forever and hope that history doesn't repeat and many of the companies aren't around / much smaller in 20 years? Do I now sign up to his stock pickers service? To me that's the problem with owning individual shares even if you have a guru telling you what to do. If the ride stops what do you do next? Sign up for Motley Fool?

Exactly my non-advice!

I agree in principle, and have mentioned it elsewhere so won't go into much here, but there are no caveats if you don't do exactly what he says. Something as simple as "if you think you might ever rent the house you just bought out paying off the loan faster could cost you a lot of tax savings in the future - so it might be better to put your money into the offset account". These are the massive things that don't rate a mention at least in the edition I read.

I think its great someone is doing this sort of education, I suppose my sceptic radar got alerted when i heard about the newsletter and stock picking recommendations. The people I know who have read the book should not be doing that.

 

I subscribed to Muttley Fool for a year when I thought I knew what I was doing. Problem is, I like buying shares but I don't like selling them, unless they're in a screaming profit situation, so I'd "buy" some of their recommendations but when they said "sell" I wouldn't, and so I still have some dogs in my portfolio that one day I hope will come good. Or at least get back to par. Still wonder if I should just bite the bullet and take the loss but I don't have much by way of profits to write them off against that I would actually sell, so they just sit there - taunting me.

I recognised that this was a problem I had, rather than a problem with the advice, necessarily - but when it came to resubscribe I didn't because I was a tad alarmed at the short time frame between something being a buy, and turning into a sell - that said a lot. Plus I realised that there were so many, many people selling advice of this sort, and it all clicked for me at that point. Lesson learnt.

Jeez I was a great stock picker in 2008/09 though. Can't imagine where I went wrong...

 

Looking back at the original email touting the grandsons portfolio (he also plans to use this portfolio to fund his new not for profit financial endeavour)

Transcript of email as follows:

"So in the next 12 months of my ‘swan song’, I’m doing something a little cray-cray (but in a good way):

I’m going to take $100,000 of my own money, and invest it (for my financial counselling work).

And for YOU, dear reader, that’s a very good deal.

Because you’re going to see me invest a hundred grand right before your very eyes, and build an entire share portfolio.

But this won’t be just any portfolio.

See, this money needs to throw off juicy dividends to fund my financial counselling outfit every single year.

And it has to be risk-proof enough to last for generations.

After all, in the future there will be all sorts of risks -- stock market crashes, panics, and depressions.

And the biggest risk of all:

My idiot grandson.

Okay, so I don’t have a grandson right now, obviously. But I’m sure I will have many. And odds on one will be the black sheep. He’ll be an ‘instagram influencer’. He’ll be like, “Screw that old-man Barefoot, he’s been dead for years … I’m going to take control of this money!”

But I don’t want him to mess with it. So I need to invest this $100,000 so simply, so powerfully, that my descendants will never, ever, have to tinker or touch this money.

And once I’m done, it will just keep on paying me dividends, automatically … for a lifetime!

Like we say on the farm: plant once, harvest forever.

 

Anyone care to give me some *not advice*? I won't hold it against you if it goes tits up.

I didn't want to start a new thread as in the end it's about LICs and probably ETFs as well and I'd probably get random thoughts from people who inhabit other areas of this board - not what I'm after.

The situation is that I'm in a DB super fund and have about 2 years-ish left to retirement. The account has a sub account for "excess funds" which is where you've contributed too much and it can't be applied to the DB fund because there are max DB contribution rules (which have nothing to do with superannuation max concessional contribution rules, BTW).

This sub account contains a significant amount - $190K - and I've only just, whilst roaming around looking for information, discovered that I can roll this amount out to another super fund, and still keep the DB bit operating while I continue to work here. It can be invested amongst 8 bog standard investment options you'd expect to see in a super fund, but it's very difficult to drill in and get any detailed info about them. I've sort of moved most of it to cash anyway for now.

I can and will set up a direct investment super account in which I can buy individual ASX shares - top 300 I think - the question is - when I've got the rollover in and sitting in cash in the new account - do I just work out the strategy and go "all in" on the one day - bang! - or sit by and bide my time (in essence trying to time the market) and buy as and when I think it's a good time, watching asset prices / NTA etc. as LIC purchasers are wont to do.

As I can't have more than (I think) 15% in any one share (damn superannuation trustee thing...) then I'll have to buy most of the granddaddy LICs and a few ETFs as well - the question is not about what to buy, but how to buy. It will all be going into the stocks we discuss in this particular thread. No individual picks.

It's sort of a different take on the sort of thing discussed here all the time - go when you have the money, or try and look for opportunities, but given the amount involved, I'm a little undecided - any thoughts appreciated!

 

What kind of allocation are you looking at? As this might decide in part what you do.

IOZ, STW, A200 and VAS give you up to 60% Aus indexed so there's a large amount to dump quickly without worrying about NTAs etc.. I wouldn't be paying any premiums for LICs, happy to pick them up if they happen to be at a discount.

DCA vs lump sum is your decision and depends on psychology Vs historically optimal IMO. Ie dump it all is likely optimal, if you happen to be the unlucky sod at the pointy end of a crash how do you feel?

 

Why move it out? Was cash a decision you made or did the current fund force that? What is it's present return compared with similar funds?

Hand it to me and for a small fee of my chosing I'll look after it until you need the money. Provided I, as the responsible entity, decide it's in my best interest.

 

@RogTheBear I’m guessing the old DB scheme is with one of the large banks? If so I imagine the accumulation offerings for excess are higher fee?

Have you or likely to exceeded the Total Super Balance Limit?

Do you have significant assets outside Super?

 

Reporting of returns here is worse then a dodgy LIC manager!

 

Seems identical to Buffet's plans for his estate to pass on to his wife, no? What's he supposed to do, set up a robot crystal ball spitting out monthly tips for the next XX years...

 

Why did he cut the 5 LICs?