Simple strategy going forward.

If you had to pick and stick with an investment strategy for the next 20 years (i.e. no selling and redeploying funds elsewhere or changing ratios in which you invest during that period), how would you go about it with the intent to retire and live off any combination of the below?

- The sale of assets to hold cash
-Redeploy assets accumulated over the 20 year period to higher income producing assets. (eg high yielding shares or LICs)
-Passive income from the already accumulated portfolio (I.e. Income from shares purchases during the 20 years)

eg.

10% Fixed interest ( e.g. Bonds/High interest savings account)
20% International Share ETF's (e.g. VGS, IOO)
50% Large cap Australian LIC/ETFs (e.g. AFI, MLT, WHF, VAS, VHY)
20% Small/Med Cap Australian LIC/ETFs (e.g. QVE, MIR, IJH, MVS)

At 20 year mark, sell international shares and small/med cap shares and purchase more high yielding LICs.



For this example assume all cash used for investing is after tax and super is non existent.


Keen to hear people's thoughts.

 

My choice: Passive income from the already accumulated portfolio (I.e. Income from shares purchases during the 20 years).

Start with the end in mind, don't buy other inferior assets then pay a crap load of CGT to change strategy in 20 years time to meet income needs.

The following look like a good strategy. First time I've posted these charts.

Pre-retirement (the yellow line):


Post retirement:


Add in franking credits and these charts look even better again.

Have fun.

Cheers

 

Why do people bother with international shares and small/med caps shares then?

 

Forgive me if I'm wrong but aren't these Shares also as per your statement:

International shares optional as free kick from franking absent and currency fluctuations cause havoc with cashflow in retirement. And the above charts very much include mid / small cap Industrials which are a source of future dividend growth.

 

Apologies, I made an assumption you were are a fan of the bigger LICs which were predominantly large cap stocks.

What's percentage of stocks do large LIC's like AFI, ARG, MLT hold in small/medium cap stocks approximately?

 

One of our largest holdings MLT is from memory around 60% Top 50 (not just top 20) and most of the rest mid / small caps. ARG is probably similar, maybe a bit greater exposure to Top 50. AFI Top 50 is 78%.

Larger LICs aren't just Top 20. In terms of weighting, mid / small caps might be great for future growth but I personally prefer large caps to be the greater part of our portfolio as risk is lower for these in terms of going bust and dividend reliability.

Which would let you sleep better:
1. 70% top 50, 30% mid / small caps
or
2. 70% mid / small caps, 30% top 50?

Option 1 does it for me.

 

All cash I understand, however why zero super? If you have 20 years (if I read the scenario correctly) that is one place I would be allocating funds.

For me the split might look like:
- max super cap contribution (which changes the percentages for the remainder)
- majority portfolio individually selected AUS and international (my focus is SIN) shares
- 5-10% gold/ silver for when the financial system goes kaput

Weird question for a property investment forum, or have I missed something? Can't I have at least a couple?

 

Question was asked excluding property for that very reason. Looking for answers outside of property.

Super excluded due to not being able to access it well pass intended retirement age.


Interested to see you would have commodities in your portfolio for risk management but not bonds. Any particular reason?