LIC & LIT Listed Investment Companies (LICs) 2019

“Portfolio” (as opposed to sentiment based share price) return of BKI vs other large cap focused LICs:

 

This is part of the reason for small capital growth. Dividends aren't free money, they are priced into the stock price which drops by an amount equivalent to the dividend paid. The higher the dividend the lower the growth.

Personally, I wouldn't invest in BKI. Worth using the search function as it's been discussed here many times.

 

Cheers for putting in the time and effort with this @SatayKing! Some things are just best for set and forget and get on with life! Its amazing what can happen with compounding such a figure (5k) over the long term!

Imagine if one could could pay rises in tax refunds and abit extra in!

 

@SatayKing , curious whether you invested in your kid's names for 18 years? If not, in what structure? I was thinking how to handle the high tax for minors. Thank you!

 

Ta @pippen. Not sure if I haven't made an error somewhere in the calcs but I think it's pretty close.

Not a hope in hell was I going to do anything to include rights issues or SPPs. Too hard for me and it wasn't done for that purpose.

If someone is below the tax free threshold (although one would wonder where they got the $5k pa!) then, yes, any refund of franking credits could also be thrown into the mix. Give it a further kick along for sure.

Time for somebody else to those calcs if they are inclined. I'm worn out - and in fact it only happened because it's crap outside due to the smoke haze around here (but I'm very grateful I'm not actually in the centre of the source of the haze) and I decided not to head outside this morning.

 

My children were originally left funds via a relative's Will (badly drafted too by the way.) As their Trustee - they were minors at the time one not even being two years of age - I invested in it LICs as Authorised Trustee, i.e. SK as AT for <SK Junior A/C>.

Receiving the funds via a Will they were taxed as if they were adults and so the tax-free threshold applied. For a couple of years after they turned 18 I continued to look after it as they wanted to get settled, didn't want the money as they knew what would happen if they got hold of that amount of money straight away.

One took the lot right away and now it's gone, gone baby. Still gets money via my late wife's Testamentary Trust though as do the others - I assume since I'm no longer involved in administering it.

Grandparents, I'll say it again. Look after your grandchildren in your Will and not just your children.

 

Thank you! I was just thinking whether we should set up a discretionary trust now to distribute income in the future but it is not worth the cost till we have a big sum to invest in shares. Currently, investing shares in personal names only when the pay comes in so never have a lump sum to start the discretionary trust.

 

Ok @SatayKing here is one for you! i know you said no thought was given in relation to nta, economy, market sentiment etc etc but cast your mind back to 2007 to 2011 where the income from argo went 2.1k to 2.5k 2.5k 2.5k and 2.8k dividend income in 2011. How did you go about just hanging in there with it? Was it benign neglect, was it a different hobby or a general lack of interest in the market and knowing long term the market usually returns a positive result??

Would be nice to hear your behavioural thoughts during this phase as I recall from @Nodrog saying throughout this forum the best time to buy is when he felt sick in the stomach! Also many so called long term investors would chop and change after a year of 2 of stagant returns or maintained dividends and look for the next best thing and seeing your post and seeing argo buys at 3 dollars and then a few years later at $8.50 and later again at 6 dollars reinforces the long term approach of focusing on income and not fluctuations in share prices!

Would love to hear your views as well as others on this topic!

 

The phrase "**** ting bricks" covers it.

But.

Having watched other people in 1987 almost crying in frustration they could not contact their brokers as the phone lines were overloaded (remember folks, there was no online stuff in them thare olden days) trying to get out. Eventually they did sell swearing on the Bible they would never invest in shares ever again. Then the market came back. With a few hiccups around mid-1990's.

Until 2000.

Young gun traders using margin loans to the max not able to meet the margin calls, all sold up and left with a quarter of a mill or more of debt. "They sold my shares cheaply" you understand. Hmm, right. Bye, bye lovely new car and various other toys - or even the PPOR. Then the market came back.

Until 2007.

Close to internal meltdown. So not good to watch the prices plummet. No way could I be cool, calm and collected and not look at the prices. And I was dealing with more than my personal holdings. Multiple entities and close to being overwhelmed. Stressful time. For the shares I held on behalf of my children I did nothing at all. Kept the DRPs in operation. Ignored that aspect. Had to for my own sake.

Tight control over the margin loan in operation at the time. In hindsight too fearful as due to the LVR of the shares held v the actual outstanding debt, I had around $800k I could have used in the loan and the markets would have needed to drop by over another 50% before I was in margin call. Looking for cash and some debt to participate in capital raisings (WES at $13.50, etc, SPP's from various LICs.)

And then the markets came back.

You get the picture. And the same internal angst will happen to me when the markets tank next time around. Will have to work through it all over again. Happy days ahead.

 

As for the lad you mentioned, from another post of his I believe he'll be too busy wringing his liver out for a while to be able to provide a reasoned response.

 

A further thought or thoughts which just came to mind.

Obviously each person will deal with any future downturn in their own way.

I have probably given myself some protection from taking action when it comes to the SMSF. I haven't touched it since March this year and it's all back in accumulation phase anyway. Apart from distributions from ETFs, the LICs now participate in the DRPs. Essentially I ignore it to a large degree and, hopefully, will continue to do so. Maybe that could be viewed as my personal protection plan. PPP a new abbreviation. Shall patent it and make more money via royalties.

This assumes of course the companies continue with the DRP arrangements. They have the right to terminate it under the T&C's and I believe at some stage one was reviewing whether to continue with the its DRP. If they are cancelled it things could get interesting.

Hands up those who have actually read - in full - the T&Cs of each DRP or BSP for that matter?

 

I’ve been busy trying to master the below Yoga asana:

 

Ah. Working your way up from the bottom I see. Well done.

 

I hope these yoga poses don’t become necessary:

 

I suppose anything’s better than PU-King.

 

LOL.

 

I've got a massive spreadsheet full of similar calculations - having "discovered" this method of investing by finding Mr Thornhill from Googling various "retirement" queries, and then, when Googling "Peter Thornhill" often ending up here and reading what you guys were writing. So I wanted to stress test the theory with as much historical data as I could get, using as many of the LICs discussed in this thread as I could - not just for my benefit, but because my girlfriend relies upon me for investment direction (I sort of wish she wouldn't sometimes, but she does...) and if I was going to go down this road, I wanted to be sure about it.

I also put together a 40-odd page document to give to some friends of mine who won't be in as good as position as I will be at retirement in the hope that, when they get there, they "quarantine" at least a portion of it for investing this way, rather than plunging it blindly (they're currently in a DB savings fund with no pension / retirement option, so upon retirement it has to go into the market) into whatever managed fund / asset mix whoever they get advice from recommends - they are absolute babes in the woods WRT investing.

In the process of putting together that document, I developed my spreadsheet and the more I dug into the figures, the more the numbers led me to the general theme of this thread, and that's when I transferred the additional $200K in my DB fund that wasn't DB benefit into a self-invest super fund and deployed it to the various LICs and ETFs discussed herein. And joined this place.

Not a cent of dividends yet as I started this in the last days of September, but the tap should start to flow in about 5 weeks time, I reckon... looking forward to it. The actual portfolio has gone up by about 4.5% since then, not that that matters much - and I'll be interested to see if there are any dividend increases of note in my holdings. I suspect not, but I also know that, in the long run, it shouldn't matter. They will come, in good time.

 

So, which ones did you choose? One or two, or spread it a little wider?.....

 

Well NOW you tell me! Sheese.

Awesome stuff there @RogTheBear. Darn good going and fingers crossed it assists your friends.

Have to hope they believe the evidence.