Passive Investment Involves more than just buying an Indexed Fund

A good read for those interested

Passive investing involves more than just buying an index fund

 

The first option of Market Cap based index fund is all you need. Find a low cost provider like Vanguard and keep investing through thick and thin times.

When the likes of Buffett, Bogle, Charles Ellis, Burton Malkiel can't think of better way for average investor to invest and they each have been in the industry for over 50 years.

Humans being humans can't just accept average market returns thinking they are above average and so they should be able to achieve above average returns.

Cheers,
Oracle.

 

It sounds like Michael Yardney wants you to actively manage your passive investments through him. Kinda defeats the purpose and simplicity of them...

 

DFA link didn't work

I was going to have a read

 

Thought I'd share this blog post from a fellow PropertyChat member @Snowball

Talks about investing in shares to derive a growing income stream for early retirement.
Investing for Early Retirement - Strong Money Australia

 

And collect a fee for assets under management? LOL

 

Seriously, that's a horrible read. Reads like an add a slimey financial controller would give a pensioner.

Very good, if not basic article which really most people should read.

The only thing I would add is that in the real world, it is easier to leverage highly through banks for property, in order to compound capital gains over time. Thus, this can then be turned into equities to provide a much better income stream.

 

Completely agree mate. Coincidentally I just posted the exactly the same thoughts on fiaustralia subreddit moments ago. I think you worded it better though

Rent or Buy • r/fiaustralia

 

Basic was the idea

Thanks for sharing @Jack Chen

I’ve also written some more detailed posts on how I approach shares for income if anyone was interested...

Key Lessons to Making Money in Shares - Strong Money Australia

And yesterday this one...

Dividend Investing - A Perfect Fit For Aussie Early Retirees? - Strong Money Australia

 

A good article written by Stuart Wemyss who has written a book called Property Puzzle. It’s one of the few books I’ve seen which puts a plan together for investors who plan to live on income from their property portfolios.

The essence of the article attached is promoting the benefits of indexing but emphasising that it may still be wise to seek advice when implementing a passive strategy.

Regards Jason

 

I've read Stuart's newsletters over a lot of years (don't know him/never met him) & I have to say he's one of the few people in Oz that always comes up with interesting, enlightening, & thought-provoking ideas and articles.

Alongside Chris Bates of Canopy Private they are probably my favourite two finance-heads to follow, not vested interests or pro-property/pro-shares for the sake it, just pro-common sense.

Financial planners rarely popular on a property forum, of course, & yet could save you a LOT simply by knowing the rules...

Just my 2 cents!

 

geez this forum can be harsh! could everyone accurately describe the 3 passive investing methods before reading? i couldn't.

 

There aren’t 3 approaches.

The “academic” approach is in fact just fundamental indexing (“smart beta”) DFA have been factor tilting to small/value for a long time. This is based on Fama/French research as Research Affiliates is based on Arnott/Hsu both come up with different criteria to try to do the same thing...find and implement factor tilts through screening that outperform cap weight.

 

yeah well obviously, you know what i meant

 

Same as a good savvy accountant, not talking about your garden variety either,

 

..... I always have a little giggle when investors call shares a passive investment..... right.... so is property if you chose not to trade.

MTR

 

MTR..it is...if done right...it is the right share vehicle....lots of guys using LICs and ETFs which is producing stable income.

Trouble with property is it requires maintenance and watching it closely...as you get older..it will be harder to manage.

Guys like @SatayKing @oracle @Nodrog @Il Falco @The Falcon have made it work...some of them have retired on it.

I am planning to do this to maintain consistent CF and also continue with property.

 

I know @Nodrog is retired. For me I still have few more years to go.

But I have a challenge for you. Feel free to buy any property and have any property manager of your choice. And switch off emails and net banking and phone calls from property managers for one year. You have to completely detach yourself from that investment. I and am sure @Nodrog are happy to take that challenge for our shares and will come back in a year and see how passive property investment is. Just hope during that time the tenant hasn’t trashed your property and done a runner or worst your property is burnt down. Shares don’t age with time and don’t require things being replaced or things like heating unit or oven stopped working.It would be interesting to see you spend your time sorting these issues out in your 70s. I can assure you it doesn’t sound passive at all to me

Some of us have travelled down the road of property and shares and know what we are talking about when we say shares are truely passive when purchased as a diversified portfolio. It is something unless you do it and see it for yourself will not understand it.

Cheers
Oracle.

 

Falcon/Falco are full of ****. Outside of super all investments are in private companies and are at the opposite end of the spectrum from passive.

That slowly starts to change in 2018.

 

I agree..and if they are in another country it is even harder.

But I think there is a balance somewhere, the way I see it is:

1. I want to invest about $1.5-2m in ETF/LICs so I get an income of say 60-100k income. More reliable
2. Get the remaining amound in rent say 80-100k but this is more unreliable
3. Super (from 60) get about 40-60k per annum - my play fund.