Share Portfolio

For the investors building a share portfolio I am curious on the value today

What is aim? $500k $1m, 2m, 3m ...etc

Are you on track? And what is your expected retirement income

I ask this question as Not many investors will retire on 6 figure salary from property, but will it happen with shares??

I am sure anything is possible with persistence, but some luck comes into play.

 

Here is the answer. I believe you read @truong's post but it could be the nuance wasn't easily discernible.

 

5M

 

With shares people often quote the 4% rule - if you have a $2.5M portfolio, you can withdraw (dividends or selling, doesn't matter) 4% / $100K from it each year going forward (+ adjust for inflation)

It's only a rule of thumb, and its success depends mainly on when you retire. But as long as you are properly diversified, I think it's a good rule.

 

Yes.

 

Is the aim not always as much as possible? As much income as is possible within your earning means, that you will be able to invest and earn a passive income from.

For me it’s an ever moving target. Maybe that’s because we are past the amount which we need to be comfortable. Any increase from here will be to cover lifestyle creep.

Being someone who focuses on living on the income from an investment and not touching the capital / growth I find you need a bucket load of shares to achieve a very high income level. I guess that’s why property trusts appealed to me. 7% income and also some growth. Needed a lot less money to achieve my passive income target. Now that I have achieved that target and some I am comfortable enough to put everything from here on in equities for an average 3% or so yield. That’s based on average yield from a index style aus / international portfolio.

 

See here is a good example. Sorry @Speede, using your post as an example. So here we have someone saying $5m. I’m assuming that’s because that is a figure they feel is reasonably achievable. If My working income is $5m a year I would say my figure is $50m. Because I should be able to reasonably achieve that. I mean you could spend all $5mill every year and have nothing at the end. But anyone with some sense earning $5mill a year for many years should be able to build a $50 mill portfolio.

 

The aim is to always be a net buyer of equities throughout your life. What that can mean is the final value of your portfolio will be way bigger than your wildest imagination on what could be possible all because of the 8th wonder called compound interest.

Something you might find interesting "Warren Buffett didn’t start making huge money until he hit his 50s? In fact, about 99.7% of his wealth has been earned after his 52nd birthday. - Link

And this is a guy that bought his first stock at the age of 11 and has been buying ever since.

Cheers,
Oracle.

 

Yes. Two years ago I posted this spreadsheet that used historical data to show that someone starting to invest in 2001 in a LIC portfolio and dollar cost averaging every quarter would have achieved a comfortable retirement (58K as per the then ASFA standard) by the year 2017.

To achieve 6 figures as you’ve asked, I guess it would take just a few years more, probably 24 years in total. No luck required -- unless you call the GFC a stroke of luck! -- just discipline and the correct approach.

No selling, no market timing, no attention given to total portfolio value.

 

$2.5m excluding Super...that's the goal.

 

To be really radical one should maybe call dividends the “real money” and portfolio value “the false money”? Sure, the two are ultimately linked (dividend = portfolio value x yield) and many people will insist they are the same thing, but by focusing on the wrong one you’re so susceptible to being derailed on your investment journey.

IMHO it’s a case where the way of looking at something is of the essence. The same can be found in meditation where meditators looking at the world would come to the realisation that it is false while most people looking at the same world would find it pretty real.

Not saying that one vision is truer than the other, just that one is more conducive to serenity while the other brings busy-ness and potential injury. It comes down to which one you like the most.

 

So in short you basically focus on higher yields like bank shares etc?

 

Not necessarily.

For example, NAB in December 2019 paid $0.83 as a dividend with $0.36 of franking attached. CSL in October 2019 paid $1.46 as a dividend with no franking attached.

The first has a high yield and the other not.

 

I never said that. Wrong way, go back.

 

Right

 

Thanks @truong, you have a wonderful way with words. It’s what I keep banging on about but seemingly not communicating the message very well.

Importantly you’re not trying to turn this into a technical debate about dividends vs capital appreciation etc (not saying one vision is truer than the other) but highlighting that wonderful behavioural outcome (more conductive to serenity vs busy-ness and potential injury) which comes from focusing on share dividends vs capital appreciation.

And to be clear I gather like me because I know most of the Listed Funds you hold you’re not referring to so called yield traps but quality LICs / index ETFs or for the stock picker quality direct shares.

For newer members here I’ll repost yet again this fantastic post by @truong describing his GFC experience. There’s some great lessons in his post:

 

My target is around $1.5M to $2M excluding super.

Aiming to grow super to $1M+ over 12 years.

 

Surely the target is irrelevant as all the posters are different ages?

because of the bite of inflation a retiree needs less than a school leaver

 

Will rebuild around $6-7m or longs for myself. When the next bull kicks in 2-3 years later, will be piling into calls with around $1m or so.

But not now. Now is time to short. Tech and bio will halve again. Consumer will fall 30-40%. Travel will fall another 70%. The only safe ones are things like Coles, Virtus etc which will languish done around 10% or so.

 

For me ..... I am waiting to see my my target shares hit gfc pricing, it could be a long wait though

in the mean time cash ready to go