Peter Thornhill

over 15yrs putting away 20k/month would do it. assuming starting capital of $100,000, dividend return of 5% and 5% shares price growth/yr, with DRIP.

would end up with approx $405,000/yr in dividend income.

 

Nice to have that cash flow to put away 20k a month over 15 years!

 

yeh, a headhunted fund manager, as he was, could prob do it quite comfortably.

prob would need to be on about $1mill/yr to be able to do that

 

Is there a cost to apply for a margin loan and is there an account keeping fee to keep it "open", ready at a moments notice to pick up shares cheaply during a market crash?

 

@austing you magnificent man, thanks for the great update.

I can't believe Peter has gotten 16% per annum?!? And he says hes not a stock picker. That's a way higher rate of return than the index. I cant see how its all just from avoiding resources. Maybe he is taking into account franking too. But still. That's wild. Good on him

 

Saving $20k a month over 15 years.

Fund Mgr gets bandied around a lot but the reality is Peter was a sales mgr / director in nearly all later roles. There's plenty in the industry who get head hunted for much, much less than $1m pa. It's taken him 29 years to get from $941 pa at 41 to around $400k pa at 70. In addition to regular investing and reinvestment of dividends, leverage and aggressive buying during corrections / crashes over three decades turbo-charged the process. Were you buying / leveraging into the market during the GFC, not only dirt cheap shares / LICs but fantastic capital raising opportunities? That's why I ignore figures being pumped out of a spreadsheet etc because there are too many variables based on an individual investor's behaviour. Peter still continues to run courses etc (work per say) even at 70 because of his deep belief in philanthropy. And the reality is he loves it. He certainly doesn't need the money for himself nowadays.

We're likely to come close to or exceed Peter's financial outcome (in today's dollars) by the time we're 70. And I can assure you we've earned nothing like the amounts you mentioned over that timeframe.

Peter, I and others that I can refer to if necessary of significantly varying incomes during our working lives are past having to defend ourselves as if all this stuff is a fictitious pipe dream. We're all financially independent, we know what we did to get there. It certainly wasn't based on somebodies spreadsheet calculation. Saving hard, an excellent strategy, conviction, patience, leverage and having the balls to buy when others are heading for the hills is what's needed. Sure a high income will significantly increase the end result. But how many really need $400k pa minimally taxed in retirement. Many would be thrilled to have $100k pa or less tax free.

Anyhow I think I've exhausted about all I can contribute to this thread. The strategy is really so damn simple I'm surprised the thread's gotten this long.

Cheers

 

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I can see where the confusion arose. When I was referring to LOCs I meant against property. So probably my fault in that I was unclear. That said, Peter has / had margin loans but tended to keep the
LVR below 20%. A figure I would not exceed myself if I ever did use a margin loan.

Perhaps a bit bearish at the moment but like others I've been wrong many times. As I said earlier I can only roughly be more confident of my view at market extremes especially during times of fear. I don't think the market has reached the advanced stage of euphoria yet. A reminder I'm just an amateur investor. I tend not to predict but merely take advantage of opportunities whenever they arise. So in the accumulation phase I just kept nibbling away, took advantage of occasional dips, discounted capital raisings etc but kept LOCs at the ready for major opportunities whenever they arose. No one has a crystal ball that works.

 

Got to remember he knows a number of knowledgible people in the industry. So he may have received a few tips. His financial planner is an ex-Perpetual colleague I think. Some ideas there perhaps. He also bought into a number of incredible growth stocks like CSL very early on. But it appears his stock picking is more along the lines of diversification across sectors than analysis skill. Of course leverage and buying aggressively during market crashes gives a big boost to performance. But the biggie is the focus on Industrials (no mining stocks) minus property trusts.

Phew, a lot of questions today.

 

29 years at 16%pa requires less than 20k a year to get to $10m which gives 400k divs at 4%.

Yields are all higher than that and add on leverage at opportune times and contributions drop quite a bit, although 20k would have been a lot in the late 80s.

Anyway well done to Peter. He has shared so many details and given so much advice. Be happy if I do half as well

 

Note the following:

He's referring to performance over 16 years (not 29) which included excellent buying opportunities during the GFC and that's his Aussie SMSF valued at around $6m. There's also their non-Super share portfolio (conservatively geared), his U.K. SMSF and his wife's UK share holdings. They have dual citizenship.

When people plug stuff into spreadsheets there's so many variables that are difficult to account for. Apart from buying during major crashes there's all sorts of other things that can speed up the process.

During a phone discussion awhile back Peter mentioned a simple strategy which I was aware of to double dip during capital raisings. Hold shares and LICs in personal names and SMSF so when a heavily discounted SPP or other capital raising arises both entities can take advantage of it. The SMSF then buys the shares issued in individual names. Use of in-specie transfer means no or minimal transaction fees. End result is the SMSF effectively gets a second bite at the cherry, the new shares issued to individuals are moved into a no or low tax environment and a there's potentially a boost to SMSF performance!

Imagine the opportunity of transferring massively beaten down shares in one's own name during the GFC to the SMSF. There are other strategies all of which could potentially have increased performance of the SMSF during this period.

Always try to think outside the box!

Speaking of philanthropy Peter is not only intending to be generous with his money but his generosity with his knowledge is massively appreciated by people like myself. A truely wonderful man.

As always a reminder that I'm only an amateur investor. DYOR.

 

I had used ANZ shareinvesting & CBA CommSec, both didn't have setup or maintenance fees. As far as I know, only paying the monthly interest.
I think I was lucky having account managers helped me in setting up both accounts, all I did:
1. Ask for best rates
2. Get my shares transferred
3. Sign the papers

 

Ok beginner question here.
Who here uses stop losses for lic's. If so how much percentage?

I read the Keith's thread and he mentioned it's something he should have done but didn't prior to the gfc.

 

No so losses, plan to hold them forever.

 

Not sure if Keith still invests that way nowadays. He tends to dissappear from here until either property / shares are great value (times of gloom). Perhaps a good trigger for when to buy. I think he takes a more buy and hold approach nowadays but I can't be sure.

Stop losses are used by traders. Their focus is mostly on capital gain and the focus is often shorter term. Thornhill, I and long term, buy and hold investors have no use for stop losses. We buy for the dividend income and ignore capital fluctuations.

 

Interesting. Would have thought stop losses would now have a place, as a security blanket especially since some shares dropped 53% during the gfc. I understand holding long term, but how many can resist holding off knowing how bad it can get knowing what we know now.

 

the first 1.08 mins

 

@Intrigued_again,

Thanks for that.

Fantastic post especially in response to the above question. I could listen endlessly to Munger's wisdom. 92 years of age and still one of the very few best investors in the world.

 

It's great for those that can hold through this, I hope I can too when it happens again.
Watching say 200-300k drop continuously over a year plus period and seeing 50% losses would be extremely difficult not to sell out along the way.
Fast forward the years at retirement age of 60+ with 2-3million, and I wonder if I and others can hold off selling. Easy to say this.
I have watched my propertys drop 500k during the gfc, and if we weren't living in it at the time, I would have pulled my hair out. It was easy to hold property as it has a purpose. Roof over our heads.
But shares? Time will tell, but I'm happy to give it a go.

 

@austing how did you cope during the crash?
Sell anything?

 

He's been over this a few times in different threads - he bought more. Even borrowed more money at the time to do so. This had a great effect on the long term outcome, buying in gloom.