Nearly ready....but still lots of questions.

I've been here doing a lot of reading, and I'm still wary, but getting more comfortable the more I read. I have a substantial amount of money just sitting around in offset accounts and would like to move some of it into LIC's or EFTs, but unsure how to start. Once the funds are invested, they will no longer be offsetting other loans, so essentially they will come at the cost of the interest I was saving on those loans. This being the case, income is important.

How do I find out the best funds that have a high yield with low fees?

If, for example, I wanted to move, say, $200k, would I be best to do it in a lump sum.....or would it be best to split the deposits up into smaller lots. I presume I'd be better off putting a smaller amount into a few different funds, rather than the whole amount on just one fun.

How do I find a decent broker? What questions should I be asking? What kind of price is reasonable for them to charge? @Nodrog , @The Falcon , @Snowball , @oracle

 

Best to diversify across a few different market sectors, e.g. small/mid cap, large cap, reit etc. I personally like to use dollar value averaging as a way to enter a market, but simpler methods like dollar cost averaging also help spread the timing risk.

Assume the loans being offset are IP loans (in which case the interest is already tax-deductible) but if any are PPOR loans, then look into debt recycling.

I forgot to add, if you have an InvestSmart account you can quickly search managed funds by e.g. 3yr return; drill down to each fund's page to get its growth/income split, as well as the ICR (indirect cost ratio i.e. fees)

 

I think NAB have very competitive brokerage. But we are talking about $10 bucks difference. Not a huge amount. Also, once you invest > $30K in one transaction brokerage is fixed percentage of around 0.11% with most major brokers.

I would just use one of the big four whichever one you are currently banking with to keep things simple and in one place.

If income is important you should look at old school LICs. They will smooth the dividends so there will be predictability with income received.

Cheers,
Oracle.

 

Thankyou, but as mentioned, I'm only interested in LIC's & EFTs, not managed funds reits, small/mid/large caps & not dollar cost averaging.

 

Legacy reasons? Sorry, not sure I understand.

Define 'small amounts'. I was thinking min $10k at a time.

 

e.g. the broking arm of whom you bank with.

Small can mean the amount at which minimum brokerage (flat fee) becomes a higher amount than their %-based fee.

 

Yes, income is very important, and I've read a lot about the old school LICs, which is where my head is at. I want something that is more or less, set & forget.

I currently use NAB, CBA & Westpac. So if I use an online broker, it would be obvious to use one of them. Should I start with a traditional broker first though?

 

You are going the right way with LICs.
I wouldn't bother with a traditional broker.
NAB, Westpac and CBA. Out of these I've only used CBA for shares but I can say CBA's system is easy to use and the phone app is good. Trades are easy. Maybe unbelievably I look at the phone app around every second day - its easy to use to look at the market. I did have a ANZ account (Etrade) in the past - but I found it very unfriendly to use.

 

You can head over to the LICs thread, lots of discussion there.

one of the latest posts ( in the last few days) had the old school LICs ( low fees, reasonable dividend yields)

BKI 6.2% grossed up (after fees, at current price)
MLT 5.8%
ARG 5.6%
AFI ( i don’t remember, also around 5.something)
WHF 5.something

 

LICs according to age..
1. WHF (1923),
2. AFI (1928),
3. ARG (1946),
4. AUI (1953),
5. MLT (1958),
6. BKI (2003/1980 for BKW).

Not an LIC but consistent dividends
SOL (1872)

And, with regards to yield, have a look at Peter Thornhills' video on "beware the yield trap".

 

I forget who said it (Marcus Padley perhaps), but "the higher the yield, the closer the price is to zero".

I always keep that in mind and think of the heady days of RCY (Rivercity Motorway), BCS (Bris-connections) and the Babcock stable (BBI, BBP, BBW...)

Juicy yields of 10-20% that annihilated holders.

 

InvestSmart is still a good starting point... you can search LICs and ETFs by return or even yield (obviously be careful of the yield trap)

 

Yes, I'm currently digesting that mammoth thread. I WAS reading it.......then I went on Holidays. For some reason it's now got something like 800 posts on it. Seriously, you guys got nothing better to do?

 

Yes.....when I say yield, I mean to say that the yield is important, (because I need yield to live off dividends), but I'm looking for growth as well. Not looking for anything speculative.