LIC & LIT Listed Investment Companies (LICs) 2019

Why would you say that regarding a young investor? Surely any risk of short term underperformance is going to be more likely to balance out, the longer the investment horizon...

 

@Simon Hampel

We may need to get this LIC thread back on track lest we upset the retirees



There was this one posted a while ago by @Burgs

Introducing: my brand new “idiot grandson” share portfolio

 

Hmm, may not be possible if the outdated, and now offensive, psychological classification of idiot is applied.

Idiots.—Those so defective that the mental development never exceeds that or a normal child of about two years.

So unless the grandson can use a crayon and colour in the big "A" on a piece of cardboard...

Why? It would be breaking with tradition. Not on I say.

 

Thanks Redwing, some great discussions regarding the portfolio, seems it has turned out to be bit of a fizzer. I think a few of us were expecting something a bit more elaborate. Shows that the quality of knowledge shared here is second to none. Well done everyone.

 

@SatayKing

The LIC thread on some days

 

Well to be expected with me and @SatayKing being the main train drivers.

Eyesight and other functions deteriorate with age. The above could be seen as age discrimination.

 

A few things it seems.

One was that this was not destined for someone who was going to be living off the dividends from the portfolio.

He pointed out that LICs may be preferable in this case but that it’s a personal choice. Revisited this idea apparently and is still happy to have family members invested in AFIC for retirement income.

Intgerestingly, he also mentioned that after a long time investing in LICs he pays little attention to NTA as he said ones like AFIC tend to trade at close to fair value most of the time.

Other goals were simplicity, something ultra diversified and easy to stick with.

 

Opportunities and risks in the evolving LIC/LIT market

McCormick is very highly regarded as an LIC analyst albeit more active in his approach.

 

All my ex-super, ex-individual stocks wealth at the moment is LICs, so I'm heading towards ETF - Aus and International - being probably 50%, and the rest being LICs. For no particular reason other than it feels like the right thing to do. So yes, could go in them whenever.

I was incorrect about the 15% thing too, as I discovered when I dug into the investment list in more detail - that's for individual stocks that aren't ETFs/LICs - you can buy all the current ETFs and LICs, and provided they're quite diversified - ie. ARG, VAS as an example of each to 100% - but not, say, the more specialised Wilson funds and something like Vanguard Small Companies (VSO) where it's pegged at 30% max. So not as constraining as I posted - which is good.

I guess I have this feeling that the world's going for an economic tumble soon and want to be able to capitalise, but that's the thinking that's led me down the wrong path and making bad decisions before. It may never happen, and then I've missed out.

 

I made the cash decision - only just did it and as usual was probably wrong. Anyway I'm going to move it out. The problem I have with the other options available is the lack of information I can find on them - returns are OK - I'm guessing I'm paying at least 1% of assets built into the unit price - likely more. Can look after them myself AND pay fees to the account provider and LIC/ETF managers for probably half that. Plus I just want to control it and have it investments I understand.

Thanks for the offer... what's your cut?

 

Yes. Bank DB fund. Not actually run by the bank though, strangely. Fees are probably higher but I don't know as it's really difficult to find the info - and as the bank would really prefer we all left the damn thing anyway so they don't worry too much about updating stuff like that... I got onto the product manager of the fund yesterday and pointed out a few problems with the exit forms/processes so he's going to take care of the transfer for me and save me some time. He still owes me many favours.

Not going to exceed the super balance limit anytime soon, and I'd say of my total "retirement wealth", 2/3 is in super and 1/3 is in shares and cash. Lots of cash because of pending real estate purchase up your way as I've alluded to, at some stage in the next 2 years, for which large chunks of cash may be necessary, but probably won't be, but just in case. I'd prefer it invested, but that's a dangerous move just now, in case I need it. This position will clear up in the new year.

It sounds, from what I've read, like my investment philosophy is reasonably close to yours, and so I'd rather have the money under my direct control and subject it to benign neglect than in these funds. I mean, if this stuff all works - and I believe it does - then putting as much as I can in is to my benefit.

Plus the actual DB component is still there and growing and will pay a nice lifetime indexed pension.

I'm guessing my thinking at this point is what @Hodor said above - get into ETFs relatively quickly but wait and watch a bit on LICs...

 

I’m likely going against previous views in that if it wasn’t for the fact we already have a SMSF with a sizable portfolio I’d prefer it to be in a low fee Industry Fund preset option so I could forget about it and let them invest and organise pension withdrawals for us. I’d be happy then to simply focus on investing in ETFs / LICs outside of Super where there’s no rules / headaches.

Re direct investments in Super funds in the case of LICs I’m not sure if it’s changed but with some funds it wasn’t possible to participate in SPPs and Rights Issues?

I’m no doubt biased against direct anything in the Super environment because of constant tinkering by Gov’t etc.

So in summary perhaps:
DB indexed pension
Low fee Industry Fund preset option
LICs / ETFs outside Super

 

Thanks. I now understand your reasoning. It resonates.

To be determined after extensive negotiations which will, from my perspective, last approximately one nano second or less.

 

As I'm in the super business myself, I'm pretty close to the government tinkering - annoys me too - but I am across it in detail and can hazard a guess at the next directional push, so I'm comfortable with a direct investment super fund so long as I understand what I want to do with it, and have the discipline to operate it to the strategy - which I do.

I'm getting to the stage where I'm going to start generating income outside of super sufficient to be paying tax on should I suddenly retire and just be living off investments / super - as I can't move assets outside of super - ie. current shareholdings - into super without generating CGT events (I assume) I'm having a real think about the best structure for the future.

On the rights issues etc. this falls under the "corporate actions" section in the documentation, and you can participate if the trustee decides to let you - they have no reason not to but it's a bit hard to work out how this will actual work in reality.

This is what it says: "When a corporate action is announced, we will make a decision on the action to take and, where possible, you will be given the option to participate in the corporate action. We are not, however, required to seek your approval. Should we allow investors to participate in a corporate action, notification will be provided to you outlining the options for participation."

This doesn't worry me so much anyway.

If I put it into an industry fund I could never speak of it at work. They'd shoot me!

Anyway, the new account's set up now and the rollover out is being processed already thanks to inside contacts. Fingers crossed they don't accidentally close the DB fund as well.

 

In that case it sounds great. I forgot about your background.

At least unlike a SMSF you only need concern yourself with the investments themselves.

Firstly I assume you are maxing out $25k concessional contribution? You could make non concessional contributions to the new Super fund with any spare cash / dividend income. When retired and if under 65 you could sell external assets and use the $25k concessional contribution into Super to eliminate CGT. Or if a significant correction / bear market occurs resulting in personal holdings moving into a loss situation a non concessional contribution to Super could work. A few ideas which you are likely already aware of.

Not much sense paying more tax outside of Super than needed. The future DB pension would likely soak up some / all the personal tax free threshold? Hence favouring Super may result in best tax outcome.

 

The DB pension, when I get it, sshould be tax-free as I'll be 60 - there are caps according to the plan's interaction with tax law but I'm nowhere near them (sob!). Be a nice problem to have! That's my understanding of how it's supposed to work anyway.

Hadn't thought of the continuation of the concessional contributions allowance once retired, but good idea if I have spare income / cash. Obviously I have to keep an accumulation super account open to put them into but that's simple enough to do. Exactly what I do with the remaining "in super" amount that's not eligible for the DB pension - which will be a significant amount, close to a third of my entire "retirement wealth" - in terms of converting that amount to a retirement account, a transition account or leaving it in accumulation, or some combination of the above will be something I'll have to work out at the time depending upon various factors.

Meanwhile I have $190K floating around the super system somewhere which hopefully arrives where it's supposed be soon... at least I have the ears of the respective product managers - this must be very stressful for people who don't work in superannuation.

Maybe if the markets have a Trumpocalypse Impeachment mini-meltdown it will all come together nicely.

 

Was just looking some LIC's SOL

Great run up over 2018 but down from a high of $30.12

 

Simple price chart only (and a crappy one at that from Yahoo) on some of the older LIC's

I was wondering what LIC's the LIC investors are currently looking at for good value

Kids funds need an LIC injection





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