Peter Thornhill

Thanks so much for taking the time to report back to us @Banawarra ! This place thrives on such quality contributions

 

I emailed Peter a couple of months ago about QVE. In his own words as part of greater discussion on this:

He sees nearly all new breed LICs as "Traders" NOT "investors". QVE like others appears to be dependent on the skill of a couple of key stock pickers (who won't be around forever). And they "trade" within a medium term timeframe. Plus he's appalled by the huge fees many of the new LICs are charging.

As for small caps it's not his focus with direct stocks. He has however added the occasional dividend "growth" stock to his direct share portfolio from what I understand. And more so in the past than now I'm guessing. But the LICs he holds (ARG, MLT, BKI, WHF) have more than enough exposure to mid and small caps. That is, if one is a long term investor looking to benefit from Australia's economic future rather than some stock picker trying to find the next "winner".

I own QVE and MIR but the reality is you DON'T NEED THEM! The recent bull market in small caps has resulted in great enthusiasm toward this sector of the market. Now it looks like large caps are coming back into favour with even Geoff Wilson getting more excited about the big banks. Ignore this performance chasing.

Take a good look at the portfolios of ARG, MLT, BKI and WHF. For the "big picture" investor there's more than enough exposure to mid and small caps. Importantly remember QVE was designed for SMSF investors who mostly hold a handful of "DIRECT" stocks such as the major banks, BHP, TLS, WES, WOW etc and little else. Those of us who invest in the older LICs are getting a dramatically more diversified portfolio than the typical SMSF who only holds a small number of direct large cap dividend paying stocks.

For the likes of Peter, @keithj and myself our focus is on the big picture. That is, investing in Australia's future in particular the Industrial companies within the ASX which reward shareholders with a growing stream of dividend income.

Why the greater focus on Industrial companies. Again I'll post the same chart I posted last night. Note the yellow line which represents the Industrial companies vs the All Ords and Resource Sector. The incredible power of dividends compounding at work. Keep staring at this chart until you "get it"!


There's been a lot of discussion in recent times about fundamental analysis of LICs. For those who have a shorter time frame, are performance chasing and focus more on the new breed "trading" LICs this is certainly useful. However all of a sudden it seemed simple LIC investing had turned into something complicated that required a degree in accounting and financial analysis to be able to invest in even the simple and boring older LICs.

Rubbish I say! For those investing long term (and I mean long term) for growing dividend income in the likes of older style, buy and hold LICs such as ARG, MLT, BKI and WHF it's unimportant as far as I'm concerned. Why, because these are merely long term holders of less speculative dividend focused stocks representative of the Australian economy. Importantly they are "dividend harvesters" NOT "active traders". And their fee is extremely low. Essentially the index less the rubbish with a low fee and a focus on dividends.

If all you ever did was invest regularly in these older style LICs over your lifetime the end result is likely to be very rewarding! And I like to regularly remind myself of one of Bogle's favourite quotes:

KEEP IT SIMPLE (still working on this even after 30 plus years of investing).

Not advice, personal view only.

 

You win post of the day @austing, PC should provide a gift prize!

Great contribution!

 

Thanks for the summary.

Really have to hand it to Peter, he is rock solid in his strategy and staying the course.

Part of me is tempted to attend one of his lectures, yet at the same time I know exactly what the big picture outcome will be - buy X, Y and Z and don't bother with anything else.

 

Quite so. Trouble is, idiots like myself constantly need reminding of this. Investing is dead easy. Mastering oneself far less so for many of us.

 

Investing is simple, but not easy!

 

Never tired of your borrowed chart @austing I can tell you are well again. Good to hear from you.

 

True wisdom right there!!

 

Have about 20 pages left to read through peter's book, read through this thread this arvo to get a better understanding. Had no idea about shares and I think it's time to diversify away from property as I don't believe I can get the same returns over the following years.
So please bear with some of the basic questions I may ask, and direction is welcomed and appreciated.

Would you invest in all 4 or just 1(ARG, MLT, BKI, WHF)?
20k in one or 5k in each?

Would a trust be a smart move to set up to own the lic or personal names? Just curious on basic advantages.

Tax and structure

Would like to start small at first. 20k, is this enough or should I go more? what's the first step to purchase. I mean I'm a super stupid beginner and only learnt the termonology of LIC and dividends a few days ago.
I spent all afternoon reading through the thread, every 2 minutes I had to google all the acronyms so I could try and keep up.

 

Austing mentioned to me earlier when I was starting out that it can be an advantage to put 5k in each seperate LIC as compared to all into one. Not only does it give better diversification but any bargain SPP or bonus share issues that come up will be available to you from all 4 as opposed to just 1.

 

A trust would be well worth considering to own shares.

 

Terry is it for distribuation of funds and asset protection?
Anything else that makes it worth it?

Rough Cost to set up?

All property is in my personal name which takes advantage for tax purposes, but wife doesn't own any as yet.
Best way to set it up? Cheers

 

Mainly for the tax savings.

See a lawyer to set one up. I charge $1650 with 2 hours of legal advice thrown in .

 

Will I get 1650 back in tax savings? Kidding. Have a meeting already this week to sort super and diversify into shares. Was trying to learn as much as I can now, so I can understand any acronyms he may throw at me.

 

You will probably save much more.

 

At what dollar average would you opt for a trust structure? Say 200k portfolio or less?

 

$5000 or more?

It all depends.

 

I meant portfolio worth of shares to begin thinking of opting for a trust, or did u actually meant having 5k on shares?

 

Yes $5k worth of shares - if you intend on buying more.

if you wait till you have $200k worth of shares you will have a bit of a problem. You will need to transfer then into the trustee's name and trigger CGT or sell them and repurchase in the trust.

You will also have weakened asset protection as well as.

 

Also should ask. If 1 million owned outright it property can generate about 40k income a year after taxes if a person had no other income.
Bout 4%. Maybe more if rents are better.
Using lic strategy, what return could you achieve?