My portfolio. Does this look ok?

Well I don't need income for 8- 10 years.. Does this mean I should buy dividend paying industrial stocks like I was going to and simply re invest the dividends to create growth? This method would create growth right?

Or is this a case of having to re evaluate which stocks I buy right now and target stocks for growth and then sell in 10 years to buy dividend paying industrials for income.? Option B here sounds messy.


-Frank

 

Oops my mistake..

My post read

VTS 50% + VEU 50% ?
VGS 50% + PMC 50%?
VGS 50% + VGE 50% ?

--

I was typing 50% so much that I accidentally did this for the VGS + VGE example too. I wouldn't do 50% for VGE.. Would probably be more like VGS 80% + VGE 20%..

By the way the above isn't 50% of my proposed portfolio it's just the international allocation break up example..

Thanks though for pointing out the potentially expensive error though


-Frank

 

And a huge CGT bill.
Reading the PT thread, the approach appears to be buy and hold so tax doesn't come into play. Reinvest dividends until you need to live off their income. I'm choosing my stocks now to last me into forever more.
The other option could be a portion of income shares, and the other portion of growth focused shares, to sell off the growth shares at the time of retirement to invest further into the income shares. There will again be CGT payable but at least it isn't all in then all out.

 

Yes this is more or less what I was contemplating.. Portion of growth shares to later sell..

I wonder what PT's thoughts would be on this.. More than likely he wouldn't like the CGT triggers I'm guessing. And probably no need not enough gain in the end compared to just re investing dividends.. .. Who knows.


-Frank

 

Yes, the difference in capital gains would have to be larger to take into account the CGT payable on selling those shares, opposed to simply reinvesting the dividends and not needing to sell.

(There's also the psychological side of selling - far easier to know that it's a set and forget portfolio, and not needing to make a decision at a time down the track).

 

Frank, have you read Peter's book?

The goal is to buy dividend shares and keep buying dividend shares still you can live off the income.

Dividend stocks will still grow in value, so if you buy at $6 a share 5 years ago, and they are now worth $8 a share they are still paying 6% yield per share, so you yield on the $6 shares has grown to 8% yield.

No doubt I'm terrible at explaining this, if someone else can give it a go?

Regards,
Arc

 

Hi Archaon,

Yeah I have read the book.. Just confirming what I read I think..

I have honestly done so much reading about investing, not just the book but in this forum and all over the net in such a short time that my mind has turned to mush a bit lately lol

But yep I get the idea I'll just stick to the dividend plan.. Thanks for explaining.


-Frank

 

Perhaps you need to put down the internet and go for a getaway somewhere, head to the GC and lounge on the beach perhaps.

 

That's normal. My mind turned to mush many years ago and never recovered.

 

Strange you should say that.. Its been a busy year with selling family home and buying another and freeing up some cash (hence wanting to buy shares) and right now slight renovation work and new furniture delivery etc.. Currently renting off the new owner here.. I was thinking just today that once I move out of here I'll head straight to GC for a week and then come back and into the new house.. heh

-Frank

 

Yeah but yours is because of too much home brew

-Frank

 

Ditto

 

Unless VGE is the best performing stock!

With diversification your best basket you'll be wishing you'd loaded up and you'll forget the others that underperform that could have just as easily been over weight.

 

Now you've done it



The future however, is a mystery

 

I agree with @austing by keeping it simple. The US is expensive right now so you might underweight VGS slightly and get a little more PMC. Anywhere from 50/50 to 80/20 aus/international is good.

VAS ASX 300 ETF
MLT ASX LIC

VGS INTERNATIONAL ETF
PMC INTERNATIONAL LIC

Consider adding these if you feel they add the weight or diversification that you want, noting that the yield on VTS and VEU are lower than you want:
QVE ASX ex20 LIC
WHF ASX LIC Industrial
ARG/AUI/BKI ASX LIC manager diversification
VEU international EX-US ETF
VTS international US ETF
PAI Asia LIC

Remember though, work out a good tax structure first. Is this going into SMSF? If in your own name you will pay too much tax after around 37k income. Speak to an expert about this part.

 

Why not buy & hold the growth stocks to offset any capital loss elsewhere in portfolio?
Eg If you bought TLS & ALL, TLS should be paying 6+% but who knows where the share price goes, whereas ALL (or CSL/REA/XRO/ALU) would be more likely to have a rising share price but the dividend is low.

Say with the above you went 80/20 TLS/ALL
Call the weighted ave div 5.5%
If TLS dropped 10% over x years, you'd need ALL to gain 40% over the same time to preserve your capital.

With ETF/LIC the proxy for a growth stock might be NDQ

 

So Frank did you end up buying today? If so, what did you get and what allocation did you settle on?

 

The poor bugger, he already appears wrung out. And now you add to it!

Carry on.

 

@Archaon : Not always the case, at times price can go up and dividend payout remains the same, so the yield goes down. It depends on whether there are any earnings growth and how much is CAPEX is needed to fund that growth.

@Frank Manno : Have you read Benjamin Graham's books? I am a bigger fan of value investing than dividend or growth investing. If you dont wanna spend time researching, best take Warren Buffett's advice and just dump your $$ into an index fund

 

Hi Tony!

Yep I bought yesterday (Thursday) This is going to get addictive it's like shopping

I bought $10k MLT and $10k ARG so far. I was going to buy $10k VGS today but can't decide between VGS or VGAD. These 2 seem the same except VGAD is hedged.. Any opinions on these two?

I'm building this portfolio slowly so the allocations don't matter too much just yet as its just the beginning. I'm just buying $10k parcels for the moment possibly every 4-6 weeks..


-Frank