long term investing with lic's etf's and funds.

Hi guys,

Its my first post here and I must say I am highly impressed with the knowledge and input from all posters.

I currently have holdings in Argo investments as well as TLS and employee share plans with BHP and S32.

In addition I am invested in vanguard retail managed fund International share fund and hope to hit the 100k mark in a year or 2 and then sell the fund and reopen in the lower fee wholesale fund.

I understand this will trigger a CGT event however I'm holding for the long term.

My plan is to use argo and also eventually bki as my vas component in addition to getting some WAM capital or even QVE as my Australia equity allocation.

If I sell the vanguard fund and then reopen as a lifestrategy wholesale growth fund the target weighing of the fund is around 31% and this will be boosted via my holding I mentioned above to capitalise on the franking credits of arg,bki, and wam or mir.

In addition 24% of the fund weighing will go to the vanguard international wholesale index and I guess I could improve this by getting some IJH us small caps but not something I'm set on.

the remaining weighings of the fund will be allocated to global reit's, Australian reit's, emerging markets and fixed interest.

I know my personality and I prefer the fund as I can bpay in and the fee at wholesale level is not that expensive and long term it will suit me.

I question whether using the lic's I mentioned above would be a benefit and what would you recommend when the lic's are trading at a significant premium to pre tax nta as argo and wam and especially Mirrabooka investments seem to trade at? should I just keep pumping into the wholesale fund and wait for opportune times to get into the lic's again????

sorry for the long post, I'm trying to build up a substantial nest egg and I don't want to beat the market or day trade I just want the market return with as little fuss as possible. I currently save around 70%of my income and I also salary sacrifice into super around 20% with the employee match and have paid off my ppor, so I'm debt free and still pretty young at 33.

hope some ppl can give me some suggestions as I have seen a couple advisors and they keep pumping their own products heavily laden with fees and commissions and quite frankly the advice and suggestions on this forums outweigh the advice given by these chaps.

 

Why not consider the ETF equivalent (VGS) now and pay the same fee as the wholesale unlisted version of the fund. Won't need to incurr CGT down the track. VGS invests in the underlying wholesale fund anyhow.

https://static.vgcontent.info/crp/intl/auw/docs/etfs/profiles/VGS_profile.pdf?201600804|121700

Ignore my first answer perhaps as I thought you meant the wholesale International fund.

The Lifestyle Fund is a good product but you are stuck with that asset allocation for good unless you sell the lot again incurring CGT if your needs change. And with the good there is potentially the bad such as indexed small caps and emerging markets albeit only a small allocation.

Sounds a little confused. You say you know yourself and prefer to BPay into a fund but you are then going through a broker to buy these other bits and pieces.

Given that you already own ARG and are considering investing in other LICs why not also invest directly in the other asset classes as it would save having to sell later incurring CGT. Plus the fee would be as cheap as wholesale.

Here's an example of a simple LIC and ETF portfolio off the top of my head:

GROWTH ASSETS
VAS / ARG - Aus large cap
QVE - Aus mid / small cap
VGS - International (replace existing retail Intnl fund with this)

INCOME ASSETS
VAF - Aus fixed interest
Cash - Online high interest account

Most of the property is already in VAS and VGS. Adding separate funds for these is merely overweighting property.

In Australia small cap index funds are rubbish due to the spec mining component.

Emerging market allocation in the Lifestyle fund is only 3.5%. Why not drop it completely.

Maintaining balance between the above can be done by adding savings when available to the underweight asset classes. In retirement do the reverse.

As you can see by just adding QVE and VAF to your existing holdings of ARG and VGS (replaces retail fund) this pretty much covers most bases.

Given your interest in Vanguard's Lifestyle Fund you might find this thread useful:

Boglehead/Vanguard way to retire.

@Redwing is great value in this area.

Alternatively just ignore the above, keep it simple, accumulate $100K, open a Vanguard wholesale lifestyle account, set up a monthly BPay deposit into the fund then forget about having to do anything!

No advice here, only personal views especially in my case as I'm not liscenced to give advice.

 

Appreciate your reply,

Yes I have some different options in what you mentioned as well as what I posted as well.

The major one is that I'm not hell bent on the growth or high growth lifestrategy funds only as it is a premixed template I guess it would save time and mental energy in trying to time the market etc etc.

My other option was to continue to build up to 100k in the international fund and then basically open it again in the lower mer .18% wholesale fund and in the meantime build up my holdings in argo, bki as well as Mirrabooka investments/wam capital as my vas component.

Or I could open the wholesale fund and go 50k Australian shares and 50k international share fund both in wholesale (or go 60kinternational, 40k Aust and continue to build up my vas, bki, mirabboka and wam capital funds ticking over by drp's and holding everything for at least 20 years

I honestly prefer the boring passive old school lic's such as Argo, Milton, BKI, WAM and MIR and I honestly think that the above would be a pretty decent portfolio along with the drp's and franking credits and as I already had the retail fund opened first with vanguard before I purchased any other stocks just unsure of the path to head down.

 

In the meantime i think i will stop making contributions to the fund and instead build up my positions in the previously mentioned lic's whilst reading and educating myself on the threads recommended before deciding which path to head down for the long term!

 

This is not a bad deal with 0.26% p.a management fee for minimum 25k invested. Certainly gives vanguard a run for their money

Australian Equities 33 – 37%
International Equities 21 – 25%
Emerging markets equities 0 – 4%
Australian Listed property 4 – 8%
International Listed Property 2 – 6%
Australian Fixed Income 8 – 12%
International Fixed income 13 – 17%
Cash 3 – 7%

https://www.ssga.com/Legal/AIT/Product Disclosure Statement/State_Street_Passive_Balanced_Trust_PDS.pdf

 

Will have a good look at that, just wondering on opinions on if for instance i have 1000 a fortnight and allocate 500 for the internatio

Thanks for the reply, will definately have a look through this.

I have a question in relation to adding funds to lic's whilst they are trading at significant premiums.

Say for instance i hold argo, bki, milton as well as qve, mir and vgs and i intend to add to the australian large cap lic's yet they are trading at significant do you guys wait it out and build up savings in high interest savers ?

Ive even read some peeps jus buy into vas as that point?!

I dont see how this would benefit me if i already hold the large midcap lic's at low cost!

Any insights here? Also these investments are outside of super for me so at the 37% + 2% tax bracket.

Cheers peeps