Mitigating Major Risk Strategies?

Discussion in 'Share Investing Strategies, Theories & Education' started by MJK, 27th May, 2019.

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  1. Zenith Chaos

    Zenith Chaos Well-Known Member

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    If there's a crash, rather than selling and buying - the ETF shorts are a valid hedge. The problem is they cost money to hold so you must have conviction, which I haven't had as yet.
     
    Zenith Chaos, 7th Jun, 2019
    #41
  2. Nodrog

    Nodrog Well-Known Member

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    He he yes I know. Just not my thing anymore.

    Give it a go when you think the times right and let us know the outcome.

    These strategies are often used for portfolio protection. However the beauty of being a share “income” investor is that protection against portfolio (capital) falls in value is unneeded. Hence I have no interest in “paying” for this protection, more importantly taking on the added risk of getting it wrong and the added stress that goes with “taking a bet”.

    The concern is if you feel the “urge” to do this sort of thing now you may well have the same urge in retirement. It can be addictive especially if you’re fortunate to have a win at the start. Trouble is when in retirement if you get it wrong (the majority will) the cost and potential capital lost is permanent. The regret and capital loss can be very painful. If you’re younger you can always return to work to recover the loss but who wants to do that. For the older retiree well bad luck, lower your lifestyle expectations.

    I’m just very thankful I got this sort of thing out of my system when young.

    Others will of course disagree with me but just my experience with such things.
     
    Nodrog, 7th Jun, 2019
    #42
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  3. Zenith Chaos

    Zenith Chaos Well-Known Member

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    Australia's financial services sector is the largest contributor to the national economy, contributing around $140 billion to GDP over the last year.

    1. Save as much as you can but at least 15% of your salaried earnings plus all dividends. Spend less to save more.
    2. Every 2 months or $5k, whichever comes first, invest in one of these funds based on your risk aversion. If unsure base risk aversion on years to, or since, retirement:
    < 2 - conservative (VDCO),
    2 to 5 - balanced (VDBA),
    5 to 9 - growth (VDGR),
    > 9 - high growth (VDHG)
    3. Starting 10 years from retirement put 1/10 of your yearly spending needs into a high interest savings account. Use this as the emergency spending / retirement bucket. If possible maintain this at around one years' spending during retirement.
    4. Don't sell any shares unless selling down as part of 4% SWR to fund retirement.
    5. Use a low-fee industry super fund and max out contributions once taxed at 45% or within 9 years of retirement, whichever comes first.
    6. Forget about investing and enjoy your life.

    Not advice.
     
    Zenith Chaos, 14th Jun, 2019
    #43
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  4. wylie

    wylie Moderator Staff Member

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    I'm curious to know how you chose this fund? You say you had it when the GFC hit. Was it one of the only funds you held that did so well?

    We are going to probably need hubby's super to fund a development within a year, so for the past two years, knowing we need to protect the capital, I've moved some of it to lower risk areas when world events (we hold mostly international shares - high risk category) caused such fluctuations these past two years.

    Going forward, if we don't use it all, or as we sell down out of property and invest elsewhere for an income stream, we'd like to put it somewhere that we can relax and not check it so often. I've checked our super balances and fluctuations more in the past two years than in the total combined 40 years before that.

    I'd like to go back to not worrying so much about it, so a fund that did so well through the GFC looks like a good place for us to start.
     
    wylie, 14th Jun, 2019
    #44
  5. SatayKing

    SatayKing Well-Known Member

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    7. Stop reading financial headlines.
     
    SatayKing, 14th Jun, 2019
    #45
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  6. SatayKing

    SatayKing Well-Known Member

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    Had an experience once a stock broker also having a preferred list to flog to clients. Sons of Gwalia. Fortunately I escaped without too much damage.
     
    SatayKing, 14th Jun, 2019
    #46
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  7. SatayKing

    SatayKing Well-Known Member

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    I was much amused at one stage when I sat down with the FP to discuss the SMSF. Only hold LIC's and ETF's. Apparently as it is 100% equities, no property, no bonds, blah, blah, it is viewed as high risk.

    Hmm, certainly doesn't reflect how I view myself being boring, conservative and staid.

    So much for the value of standards.
     
    SatayKing, 14th Jun, 2019
    #47
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