Property & Infrastructure Funds Real Estate Investment Trusts (REITs)

A lot of care as BetaShares has applied to wind the thing up.

 

Just having a look and saw Centuria Metropolitan REIT (ASX:CMA) had a name change to Centuria Office REIT (ASX:COF)

It continued up after your sale up to $3.25 but then fell sharply during the Pandemic

 

That’s looking like really good value at current prices. If I wasn’t in simplification mode and moving away from holding any individual shares, being that COF is my only remaining individual share I would consider buying more at this price.

 

I realise this is an old post, but would you still opt to keep cash in a term deposit as opposed to a bond given the current climate? The specific bond I'm referring to is VBND.

 

personally , not me

i nave increased my holding in selected REITs as a substitute for bonds or term deposits

if you desire fairly quick access to your money pick liquid ( heavily traded ) REITs

for shorter term parking of cash i have a 'savings account ' that pays monthly interest on relatively small amounts ( hundreds of dollars as opposed to hundreds of thousands of dollars )

maybe when the economy is clearer to me , i will start looking at bonds again

cheers

 

I don't know much about bonds.

My FP has recommended I invest 30% into bonds (VBND) and 20% into Aus fixed interest.

They have also suggested investing 10% into REITs. I know nothing about them so am doing some research.

I don't really require quick access to my cash, it's just there in case there's a downturn/emergency.

 

VBND is hedged also, with Bonds considered fixed income, plus your fixed interest and REITS it sounds very defensive, and that may be suitable for where you are in your journey (or not)

What do they recommend the other 40% in?

 

VBND

Vanguard Global Aggregate Bond INDEX (Hedged) ETF (ASX:VBND) Share Price - Market Index

Products


**I don't really require quick access to my cash, it's just there in case there's a downturn/emergency. ***

that is the catch 22 of investing .. you really need it in an emergency but can you get it out in a week ( or month ) without taking a big financial hit .. that depends on how many folk have an emergency at the same time

Financial Terms Dictionary

this site is US-centric but a lot of it ( except for tax stuff , translates to the local market

don't be afraid to research more , or ask questions ( i sure as heck don't know it all )

cheers

 

yes i agree BUT MsNewbieInvestor might be older and needing security of income , or the FP is a bigger bear than me .

now i am GUESSING VBND has a degree of floating rate components in the portfolio , and thus the section of fixed interest rates ( OR the fixed interest component is a little higher risk , like when i dabbled in corporate debt several years back )

now of course i am heavy in shares but i have been in the market for 10 years and so have picked up some real bargains ( some are up 400% plus AND pay dividends )

but that was then and this is now , the next BIG drop could be months away or 12 years away

when do you play safe and when do you gamble that is a very personal choice

 

this might help on VBND

 

I'm in my early 60s and retired. My goal is $100K net income pa. Beyond that, I just want the capital to grow for my children.

The portfolio proposed by my FP is approx 55% growth and 45% defensive. The growth component consists of approx (+/- 5%) 30% int equities, 20% domestic equities and 10% REITs. The defensive component consists of approx (+/- 5%) 30% bonds (VBND) and 20% Aus fixed interest.

 

I'm sorry, I wasn't very clear. I will still be keeping some cash in a "high interest" bank account for quick access. Likely enough to last me two years, in case of a downturn.

The bonds and fixed interest are something that my FP has recommended as defensive assets -so they don't need to be quick access, because the plan is not to ever need to sell anything in my share portfolio. I'm aiming for a 'set and forget' portfolio.

Thank you for that helpful link -I have bookmarked it.

 

For the Aus fixed interest component, are you referring to something like VAF:

Vanguard Australian Fixed Interest Index ETF

or high interest savings accounts? The best HISA at the moment (one that I am using) is a Macquarie Savings Account which is paying 1.2% on the first 250k and .95% over $250k. It doesn't require any transaction gymnastics such as a certain number of card withdrawals or a certain amount deposited per month. Second best (also using) is AMP at .85%.

 

Yes, VAF is what they've recommended.

Thanks for sharing those HISAs -the Mac one looks good. I've found that savings accounts appear to be doing considerably better than term deposits of late.

 

if the current economy ;let's go this time , and you need an income , i don't know where will be a safe haven , i am thinking i can live on a pension ( with no extra income ) if i have to , but would prefer a cash income stream

now sure i weathered March 2020 OK ( sure i had a series of medical appointments to distract me )

but last year was a confidence shaker , supply chain disruptions , lock-downs rent moratoriums

almost everything except bank withdrawals restricted

' set and forget' didn't work out for me , buy and WATCH ( and decide if need be ) worked much better

good luck , Greece and Cyprus ( crisis ) changed the rules

 

We sold our former PPOR last year so suddenly had to park the money somewhere while we worked out what comes next. We ended up with 20 bank accounts, chasing the highest interest taking advantage of introductory bonuses etc, plus keeping an eye on the $250k government guarantee. Now the number of active accounts has dropped right down, and our plan is now heading towards a VDHG/VAF/VBND/LICs mix. Our situation is more complicated as we are currently non-residents and live in northern Europe, so the balance between AUD/EUR investments is important. It also makes property investment in Australia subject to higher taxation, and harder to manage when you can't be there, hence we won't be investing in Australian property at the moment.

HISA are much better than term deposits at the moment.

You can do a search here:

Savings account search engine | Mozo

A couple of things to watch:
Banks have a habit of dropping interest rates and not letting you know..
The rules for getting bonus interest can be complicated - one bank provided a 26 page product disclosure statement, and buried in there was the catch that deposits had to be cleared by the 28th of the previous month to get the bonus interest..

The Mac bank account is our favorite now, with the best interest, no complex rules for getting that interest, and their web site & app are good too.

 

goodness

am tempted into a similar situation ( but am an Australian resident )

thanks for sharing yes things could get complex for me as well if i take the option

am more likely to park the cash in the stock-market ( very carefully ) but still there are traps aplenty )

cheers

 

Thank you, I appreciate the helpful tips.

Ha, we also had several bank accounts in an attempt to chase the highest interest and spread our risk via the government guarantee!

I have heard of LICs, but we are likely to start with all ETFs and then go from there.

 

I've been looking into this. A major broker's account seems to offer protection as the funds are segregated and help in trust. So in theory even if the broker goes broke customer funds cannot be touched.
Still doing research on this.

From left of field.
When the GFC hit managed funds cancelled withdrawals. So that may happen again.

What if trading is suspended on ETFs and LICs if it happens again?
Local brokers blocked GME trading for "market integrity".
Can this happen to ETF and LICs?
Has it happened before?

 

a short answer to your 'left of field '

YES it could happen again ( and some of it has happened in the last 10 years to boot )

but although i am not a huge Warren Buffet fan , i do listen to his wisdoms

and among those wisdoms is the question what if the share market closed for 10 years

one of the parameters to choosing an investment is do i want to hold ( some ) of this stock forever , , now sure events and decisions MIGHT change later , but i set that as an early hurdle ( and there is medical debate on whether i will live for another 10 years )

VERY RARELY do i consider buying a stock for a short upward trend and then sell , completely , and two of those i didn't get my entry price so walked away ( yes i missed out , but at the higher price the risk/reward balance was never in my favor )

now added to that is the chance of banks restricting withdrawals , either cash withdrawals or freezing all withdrawals until a situation calms down

in relation to the first part there have been managers in the past who have NOT kept the clients funds segregated , illegal yes , but it has happened anyway ( obviously in all ended badly )

this is one reason i have so many holdings in various companies , i expect some will fail for various reasons ( i just normally know which ones when i buy into them )