Starting my share journey

The friend’s BIL no longer uses margin loan. The relatives started a wholesale goods business after a few years struggling and working for other business owners. They are doing much better now but in a different field than property developments. I think they have huge appetite to take risks and are willing to work hard. They are very astute but greed got in the way back then.

 

That’s very gutsy of you. Well done. Kudos to you for staying the course and now enjoying the upside!

Did you go in hard eg: did you match the portfolio amount in your buys during those dips?

 

Great read everyone, sure beats A Financial Review.

My question is would you be suggesting the same portfolio for someone on the smaller scale of disposable income?

i.e. $10k pa available to invest
Ppor lvr 80%, my only debt
6 month emergency fund
No investment propertys

 

Yes, but your investment frequency would be reduced to minimise fees.

Investment Frequency Calculator

This calculator can tell you the optimum frequency to invest.

Example, $4k into VAS and $6k into VGS per year it says to invest every 8-14 weeks for VAS and every 5-10 weeks for VGS. So if you wanted to do them at the same time, you could just buy on the first monday of every second month (which is 8-9 weeks apart)

 

Hi bythebay,

No, I don't think I misunderstood. Assets: 8,000,000@40%LVR = debt of 3,200,000, leaving equity of 4,800,000 + 500,000 in super & 300,000 (approx) in offsets = networth of 5,600,000.

Even if this is out by a fair margin either way, you are doing very well for a mid 30's couple. Remember on this forum there are people earning, either through business or wages staggering sums of money. Then there are more ordinary people like myself - a teacher.....

Would point out, I've learnt heaps from those who run a business or those with higher wages/assets and I wouldn't be where I am today without their assistance and willingness to share/impart knowledge.

I looked at borrowing funds for property in a SMSF. Had borrowings approved a couple of times, but decided that I'd go ungeared in my SMSF and buy ETF's and LIC's. I have enough gearing outside my structures. Same with the Family Trust - no gearing in here either.

But you may decide gearing works for you. You are younger than me too and buying a property in your SMSF with a view of paying it down may work for you. - I'm 50 and decided not to take on that risk.

I'd encourage you to set up a SMSF. Its not as scary as people make out. You just need a good accountant who, in the accumulation stage organizes the tax and auditing side of things. Its surprisingly simple.

I think its more complex later on when you draw an income (ie when you are 60), but I'll seek advice then....

I've been buying shares since 1999 I guess. But not seriously so. Mostly property. My wife was in an employee share plan and gradually accumulated a number of ANZ shares, which is why we have a fair few of these in the portfolio.

Ventured more seriously into shares when I set up our SMSF and Family Trust. Family Trust since 2010 and SMSF around 2015-2016.

I had been reading a lot of strategies of how to convert property equity into income. I also read KeithJ's posts on the Somersoft forum, which I think you've read. He converted or drew up equity in his property portfolio around 2000 or so and invested into shares. He generated enough income to quit his job. That was an eye opener for me.

Another inspirational character on somersoft was Dazz who ventured into direct commercial property. He was an amazing investor, but am not sure what became of him. I considered investing in commercial property (very seriously nearly did on a number of occasions). I settled for an unlisted property trust and considering the lock downs in Victoria over the past two years, I'm happy I did.....

My experience in the GFC around 2008 or so was unpleasant in shares.. I was very frightened and sold down at the wrong time. I made a mess of our super funds having invested in MTAA's Target fund at the time. This was invested in commercial property and was slaughtered.

After that I took our money out of MTAA and moved it to Rest and invested in Aus and International shares. Thankfully it grew substantially. I was very happy with Rest at the time. From there I moved our super into our SMSF around 2016-2017.

I was making stupid decisions with the shares I was buying in the Family Trust and had no way of measuring the shares. I read about Sharesight (Stock Portfolio Tracker | Sharesight) and have since subscribed. I have set up my 3 portfolios (SMSF, Family Trust and shares in our own names) on Sharesight and found it fantastic for measuring/monitoring our portfolio. I'm able to make much more informed decisions now. I highly recommend it.

Our SMSF (thanks to Nodrog's posts) is currently invested as follows. The cash is intended for further purchases of VGS, IVV, new purchase of VISM and VAE. Waiting for dips in the market.




Family Trust is not as 'neat' investment wise as I invested before I had done a lot of reading. It is designed to produce dividends. Cash to be invested in VAS and WHF (offer coming up). During Covid I actually transferred our ANZ holdings from our own names to the Family Trust. I did this when the shares hit rock bottom at around $16, thereby generating a loss in our names. This was a trick I learnt from an investor on somersoft named Alex back in the GFC.... The portfolio currently looks like this:



Shares in our own name were purchased since 1999 or so. Its a real mess as I had no idea. When Bill Shorten was threatening to cut franking credits I invested money in our names into Vas. It currently looks like this:




The total portfolio, including SMSF, Family Trust and shares in our own names (and cash) looks like this: Very underweight internationally. I will invest more funds in international shares through the SMSF. Sharesight seems to have split Vas holdings into three on this report as we hold Vas in each of the portfolios.


My experience through covid was much better than the GFC. I was more experienced and knew to hang on. My neighbour however advised me to move to cash. Glad I didn't as the recovery has been huge and I would have destroyed our portfolio. I also employed a technique of transferring ANZ shares held in our own names to the Family Trust. As previously mentioned, I learnt about this trick in the GFC but didn't have the knowledge, or a family trust set up at the time to use it.

Here is an image of the dip and recovery of our portfolio.....




The dip (covid) wiped off about $250,000. I was concerned, but held on. The portfolio is now $465,000 more than the previous high on 13 Jan 2020. (Just before Covid). Obviously this amount includes savings and super contributions as well as dividends etc. But it is illustrative and I'm glad I didn't panic and move to cash.

That is understandable. Its also much more difficult to get borrowings now. I sold a property early last year before covid that I probably should have held.....

I found it helpful to generate a scenario spreadsheet. (Actually it was a table). With possibilities of generating an income if I sold certain ips and kept others. I find it helps me with my journey to financial independence.

Yes, and they generate income, which can be more difficult to do with property.

I've had heaps of help from many on this forum, including @MTR and @Player over many years. Going back to the Somersoft forum when Melbourne was moving hugely in price around 2007 and I was accumulating properties. Memories of the good times and two most knowledgeable, successful and approachable investors that I've had the pleasure of meeting....

Some financial independence websites (Australian based) that I regularly use and have gained inspiration from are:

The FI Explorer - Journeys in financial independence
This site is amazing - he gives extremely detailed figures and his portfolio dates back to 2000.

Financial Independence. Wealth. Freedom. | Strong Money Australia
This is another good site. Property focus - strategy is to sell down IP's and invest in shares. He doesn't give $ amounts, but outlines a lot of strategies which are useful.

How we plan to retire early off dividends (mostly) - HisHerMoneyGuide
This is excellent too. Some ip's in the mix as well as a share portfolio. Couple in their 30's I think.

 

Everyone’s risk profile is different. When we had our PPOR debt all we wanted to do was to have a much lower LVR, which acted as emergency and for SANF. Having 80% LVR for us leave no margin of safety. As in the case with Covid last year, my friend lost his very long term stable job, his wife at the time lost hers and they had a large investment mortgage and the divorce/lack of cashflow forced them to liquidate the portfolio before the bank forces them to. Not a good situation to be in.

It seems like the sentiment is that when the markets are at all time high, a lot of people start to have appetite for investing in shares.

 

That was noticed with some investors. In March/April last year there were some who decided not to hold on to shares but who may have thought the previous year shares were the thing; "I'll never sell. I'll stick it out." Nup. It can be tough if you look and see your $100k drop $30k or more. While don't look, don't touch can be said many times, the reality is a number will.

 

BEST GENERAL THREAD ON PC!*

Thank you to all the experienced folks for the very open sharing, and to those who asked all the noob questions that I also wondered about but not yet asked.

* Well, in the investing section.

 

So here's one: why VGS over VTS, which has outperformed it?

VGS is 68% US shares anyway, and less than 10% in any other market. The rest of the world follows the US market mostly, and US shares alone have outperformed International shares as a group.

My thinking had been a VAS/VTS split. (quite like VISM too).

 

Why I dont need a FP

 

@Jingo what a post, sooo much to unpack!

We have 5 teachers between our immediate families a most meaningful profession. My parents really encouraged me get into teaching and I seriously considered studying for it about 10 years ago. Respect to you and all the great teachers out there.

Yes I remember Dazz too! I used to love reading his posts. I just went back to see if I could bring up some of his older posts circa 2000 but the oldest one that came up was 2004. I’m sure he’s enjoying a very comfortable retirement in a nice part of the world.

I will check out Sharesight great tip and generate a scenario spreadsheet - polish up my excel skills I also look forward to checking out the 3 links you kindly shared (I had a quick squik of the first link - very interesting and detailed!).

Thank you for being so open and sharing your journey, strategies and portfolio breakdowns. It’s so helpful for a newbie like me to read about them (shout out to @Big A as well). I hope you don’t mind me asking some questions, I don’t mean to be intrusive I’m super curious and eager to learn, please don’t feel at all obliged to respond unless you’re comfortable.

When your money grew substantially in REST, did you just leave them in their nominated allocations or did you re-balance the allocations over time?

Re strategy of transferring shares to FT, does that mean say you hold $10,000 of share A (500 units at $20 each unit), and say the price per unit drops to $8 and your holding becomes $4,000. You transfer $4,000 from your own name to the FT (this means you have a $6k capital loss when it comes to tax time) which you can claim against capital gain if you have any that year, or carry the $6k loss forward for future offsetting. The impact on the FT is the FT now has $4k worth of share A. Sorry if I’ve completely missed the point … just wanted to play it back to see if I’m getting it.

I believe FT is usually a discretionary trust. Am I right to assume the dividends earned on the shares held by the FT become distributions that get distributed to the beneficiaries?

Very interesting! I have to confess I looked into testamentary trusts many moons ago but never really investigated FT.

I’ve picked up a common theme running through many of the contributors in this thread - all have given recognition and credit to others on the forum who have so very generously shared their knowledge & time over the years. It’s really quite a lovely community here. Good to see @MTR already here and yes I also remember reading @Player ‘s posts from back in SS days.

Your SMSF and the FT’s portfolios look like they have a healthy mix of ETFs, LIC and direct shares, domestic & international. Sorry to hear GFC was tough, I’m sure you were not the only one who found it challenging. I shudder to think what I would’ve done … sounds like it paid off as that experience gave you the confidence to stay put during COVID. 250k is a huge number, but 465k is even bigger massive congrats to you on growing your portfolio so handsomely over the last year and half! I hope they keep growing to new heights!

 

Can't speak for others, but for me couple of reasons for VGS over VTS:
1. it's locally domiciled so no W-8BEN forms.
2. diversification. So much can happen over next 40-60 years. I prefer broader exposure than solely USA, in one holding.

 

Borrowed from Whirlpool link

Note, some brokers like NAB will sort the W8Ben for you

Or there is this from Aussie Firebug

Filling Out A W-8BEN-E Form - Aussie Firebug

 

Introducing: my brand new “idiot grandson” share portfolio

 

But at the end of the day, remember what @SatayKing says IDGAS IAAM



And do whats right for 'you'

 

Note, VTS already includes US small caps. VISM (small caps) is a great match for VGS (large and mid caps).

 

Yes, noted. Sorry, I wasn't suggesting both VTS and VISM, rather either/or depending on your tastes.

VGS is hardly what you would call diversified. Do you think if the US tanks that the 4.3% holding in the FTSE will offset anything?



Go 50/50 VEU/VTS if you want actual diversification from the US.

 

There are benefits to not being solely concentrated to the US, which VGS provides. Also the case of AUS v US domicile.

If people have VTS, they also tend to have VEU and maybe VAS if they want additional Aus exposure (VEU has Aus stocks in it, so VAS would be a booster).

If you want to stay Aus domiciled, you can look outside Vanguard. IVV is an Aus domiciled US S&P500 ETF.

 

It’s not quite that bad, US is about 58% market cap weight once you add in emerging markets, another great diversifier.

Yes if US tanks it will be painful, but if it goes sideways for a decade like in the 2000’s having some ex US diversification will be valuable.

 

The US has numerous strong international companies also

When last I looked Coca Cola had 45 bottling plants in China, surveys in China also showed a penchant for numerous Western Brands.

RTG Brand Relevance Survey in China 2017






How to Succeed in China: Brand Secrets