My portfolio. Does this look ok?

Yes very interesting. I think every investor has at least some CBA shares..


-Frank

 

@Frank Manno:

• Read the beginners guide and read Peter Thornhill's book.
• In the meanwhile, you can get a snapshot of his investing principles at this interview.
• Think carefully before investing in lumpy assets like property. Not saying it is good or bad but the transaction costs of getting in and out are enormous .
• Spend a couple of weeks reading these threads about Peter Thornhill and Listed Investment Companies.
• Come back and ask questions here.
• Then go and speak to a financial advisor if you have to.
• You have more time than you realise to figure this out and do really well. You might strongly feel like doing something NOW. Anything even. That is exactly the time to stay calm and keep learning.

Not licensed to give advice.

 

Mate leave your money in the bank until you learn a little. You haven't made the money which is hard to know how to keep it.
Read these 3 books first, they are written for everyday Australian peeps. They are easy to understand and you will be in a better position to take direction, these 3 books alone will give you more info than any financial advisor can and will save you thousands in fees. If you're still lost after reading these books go see an advisor or two.

1)1 million for life by Ashley ormand.
2)Super smart money by Michael Holmes(also a wealth advisor). Excellent info on superannuation and taxes.
3)Motivated money by peter Thornhill.
4) keep reading as much as possible on property chat.

Also attend peter Thornhill event but only after reading these books first or you will be confused, and might buy lic's in the wrong structure, your returns will be different from own name to superannuation.

If after all this you are still lost. Message @kierank and bribe him a bottle of his favourite, and lunch. He's into property and shares and seriously switched on as he's done what most are trying to achieve.
You will also require professionals to help with structures, accountants/lawyers/brokers if borrowing.

Many other members here that can also help but just keep reading for now and it will become easier. Once you get through the info I'll pass you onto those that have helped me if needed.

And again, do not touch your money until you get educated.

 

Thanks mate for the back-pat.

I am happy to give my opinion but, after 40 years in this game, I am still making mistakes and still learning .

I assume I will do this until the day I ...

 

Diversification - you haven't got it and you need it in the following order of priority:
1- across risk reward asset types: shares, bonds/cash, property (via trusts are OK).
2- across industries: not just shares the financial sector for example
3- across countries and markets: Australia, US, Europe, Asia, emerging markets etc
4- across company size: large, mid and small caps.

At this point you appear to know very little about investing. The fact you didn't buy 1.5 million of CBA shares is a very good thing. Therefore I would ask your accountant about tax strategies before investing any of the money. They may suggest trust structures, your own name, or superannuation. Do that first.

Once the tax structures are known but before you learn about investing, you need to get the money working. The options I am choosing below are all low cost and relatively low risk, although apart from cash these are buy and forget, not to be sold within 10 years. If you might want the money for something else, keep it in cash.

Firstly, reduce risk by splitting the money into $250K parcels. The government will guarantee amounts smaller than $250k and they need to be spread across unaffiliated financial institutions.

Secondly, it wouldn't hurt to diversify with a small percentage of the money you have. You have platinum international - is that listed (PMC) or unlisted (A managed fund). I personally don't like the managed fund but I don't mind PMC because of fees and capital gains tax implications.

You need diversified Australian and International equities that could be achieved with VAS and VGS OR Vanguard's wholesale fund. They will generate an ongoing income for you. I'd be tempted to say $200k split 50/50 between them is better than cash. When you do some research and learn more yourself you may want to add to these positions. I'd also consider a position in Bonds via VAF or the wholesale fund. $50k would be sufficient.

This leaves you $1.25 million that you would put in 5 different accounts until you know what you're doing.

This is not advice and not to be taken literally. Go out and find out what I mean by the government guarantee, Vanguard, VAS, VGS, VAF and the Vanguard wholesale fund. Then read the thread on Listed Investment Companies. Then research risk reward and understand your risk appetite.

Only then young grasshopper will you understand that lifting a boulder off the ground like Yoda is a lifelong journey while learning to invest globally (including Australia) with index ETFs, LICs, and a small percentage in bond equivalents as well as some cash reserves for when the market inevitably drops, is probably simple and acceptable enough to be attainable within a few months of reading.

 

Very good advice especially that end bit above..

Thanks..


-Frank

 

I've already ordered Motivated Money.. Will get on to those other 2..

Wont' touch it, thanks..


-Frank

 

This is interesting I didn't know this.. Guarantee in what way, what could go wrong if I left $1.25 in 1 account? I'm doing this to get the maximum interest rate. The bank sees I have a large amount so they give me a 3% rate.

Get the money working by investing a small amount in some funds like the ones you suggested. Is this what you mean? I know it wasn't advice but you're suggesting to get some of the money working and put $1.25 in the bank (across different accounts) until I know what I am doing.. Right?

And in this way the money is working by having $250 invested and $1.25 getting interest from bank accounts.. Yes?

Know what. I'm going to email my Financial Advisor who knows my personal situation and ask him what he thinks about those funds / bonds that you mentioned and if he agrees I will invest those amounts into them and relax for a while, maybe go for a short holiday to get my life back lol and then read everything everyone has suggested..

The advice in this forum is unbelievable than you and to everyone else helping with my situation.. Seems I have tone of learning to do, but its fun


-Frank

 

Good post. For ***** and giggles.... Top of the head. Seeing Frank wants c. 40k pa now from divs say 600k into VAS or the wholesale unlisted funds (probably better!!) and 400k into VGS.

Has no super, use the 300k lump sum non concessional contribution (3 year bring forward). Any of the big industry funds work...Take the conservative/guaranteed option which is all fixed interest..ideal in super. Need to talk to an accountant about what else Frank is able to do to get more in to super, could use up his concessional cap of 25k per annum going back a few years (4?) and then going forward up to 25k pa tax deductable (concessional) if not being paid super....he really needs an accountant to sit down with him and work through this - we have a couple of good ones on the forum.

Could be as simple as VAS & VGS + one super option and one savings account (600k/400k/400k/100k). Rebalance every couple of years from income as Frank still working a bit. Get progressively more into super over time. I think it definitely worthwhile to build a relationship with a good accountant now.

 

Hi @Il Falco. What's the benefit of Vanguard wholesale fund compared to VAS? I thought the fund had more expensive management fee. Is it somehow related to brokerage?

 

Nothing in it on the cost side, 14bps vs 18bps.

It comes down the the behavioural aspects. Once you open a brokerage account you open yourself up to a world of distractions, and the opportunity to fiddle with your portfolio at will. Buying/selling of unlisted funds is a much more deliberate act and i think much easier to ignore noise this way....imo of course.

 

When you say the wholesale unlisted fund , which fund do you mean do you mean VAP ?


-Frank

 

@Frank Manno good to keep track of this thread but remember don't touch the money until you understand the basics!
Happy reading

 

Wholesale class ;

Vanguard Australian Shares
Vanguard international shares

 

Google what Warren Buffett has to say on index funds.

Unless you have a very high degree of confidence that the person managing your money is likely to outperform the market over time, then you're better off going with an index fund.

In your portfolio above, I can see $10k invested in an index... paying a financial advisor 1% to put your money in an index fund defeats the purpose of an index fund IMO

 

Investment Products

Investment Products

 

https://www.guaranteescheme.gov.au/qa/deposits.html

Although unlikely, so is any Black Swan event, which could see you lose your $1.25 million if sitting in a single account. In 5 separate accounts you would lose nothing.

 

I have been researching and spoke to my advisor and have become interested in those shares that both you and @Il Falco have mentioned

VAS, VGS, Vanguard Wholesale..

What about the AU Banks and the CBA Scandal? Royal Commission?

Do you know if those Vanguard funds lean heavily towards the AU banks? Would it be a bad time to buy those funds right now due to them having possible bank shares that can drop in value ?

i.e. wouldn't it be best too buy when the bank shares within those funds are cheaper? Or would this apply only for those who want to buy direct bank shares and not bank shares within a fund?


-Frank

 

VGS is international so no exposure.

VAS is the ASX 300 with cap weighting, so big exposure to the banks.

Wholesale funds can have large or no exposure depending on the product.

 

It is not a huge amount - so if you want to play and learn go for it.

If you ramped up those numbers in the same percentage and said it was your only asset - I would be concerned you are going for a yield play when yields are tight already.

If market yields loosen from 6% to 8% your portfolio capital will fall 33% all other things being equal (8-6)/6

Of course you need a financial product advisor for managed funds brokerage advice - but sticking to one theme will make you really rich or broke.