Suggested portfolio for around $1000 000?

Discussion in 'Share Investing Strategies, Theories & Education' started by Butterfly88, 15th Dec, 2017.

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  1. Butterfly88

    Butterfly88 Well-Known Member

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    Hi all

    Wasn't sure whether to fall onto the back of @Frank Manno 's thread about his inheritance. We are ab out to be in a very similar situation and I, too received an initial advice from a "wealth advisor" who was also wanting to charge 1% of the first million. Got his name from another forum here.

    Here is a sample portfolio he offered appreciate thoughts on this. Is it complex to bamboozle us into thinking he is worth the dosh? P.S. received my Thornhill book in the post today. Weekend sorted.

    Sample portfolio for a client with 1.3 million (I've rounded the figures):

    IOZ Ishares S&P/ASX 200 598 000
    MVW Vaneck 212 000
    PMGold 25000
    SOL Soul Pattinson 9 585
    WLE WAM Leaders Pty Ltd 100 000

    International Equities
    GDX Vanexk Gold Miners ETF 25 000
    IEU 10 000
    MGE 11 000
    MICH 10 000
    MOAT 10 000
    NDQ 12 000
    QUAL 11 000

    Cash and equivalents:
    Macquarie 30 000
    AMP Business Saver 280 000

    Would love @Nodrog perhaps feedback? Cheers in advance.
     
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  2. Hodor

    Hodor Well-Known Member

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    What are you trying to achieve?

    MVW is weighing away from Top 20 then WLE is tilting back towards it. Seems odd to me.

    There's no rush, work out what you want and speak to a few different people. Then start to form a plan.
     
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  3. pwnitat0r

    pwnitat0r Well-Known Member

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    Ask him for his investment track record and whether he has consistently out performed the market.

    If he can't provide this track record, he's not worth paying the shirt on your back to manage your money.
     
  4. Observer

    Observer Well-Known Member

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    Geez, 14 entities to manage. That sounds excessive to me. Not sure what your objectives are though.
     
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  5. Butterfly88

    Butterfly88 Well-Known Member

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    Hi again. Definitely will do this @pwnitat0r (interesting handle). Cheers.
     
  6. Butterfly88

    Butterfly88 Well-Known Member

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    Hi again. Objective is to create cashflow and growth consecutively. Wanting minimum $50 000 cash flow.
     
  7. Observer

    Observer Well-Known Member

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    For me that would something simple like a few LICs or ETFs (e.g. VAS and VGS) plus a bit of cash in saver/offset account.
     
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  8. Kat

    Kat Well-Known Member

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    I'm going to tell you what I told Frank.

    "When I read that list of assets my initial response was "the advisor is trying to justify his fees/retain business by adding an unnecessary level of complexity"... a good option would be to use LICs for Australian shares, and Vanguard wholesale for anything else."

    This may also be of interest:
    Core-satellite Approach
     
  9. Butterfly88

    Butterfly88 Well-Known Member

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    Thankyou @Kat Will read up on this..
     
  10. Hodor

    Hodor Well-Known Member

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    Vanguard high growth wholesale fund has averaged over 5% p.a. distribution with growth. 1.3m gives you over your $50k, plus can invest 20% of distributions to increase units and ongoing income automatically I believe.

    Not saying you should do the above. Good yard stick to measure the other options against.

    Might want to seek advice on structures as well as the vehicle.
     
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  11. Nodrog

    Nodrog Well-Known Member

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    There’s others far more qualified than me to comment on this.

    But seeing you asked I’ll offer a few comments.

    Your Objective is to create cashflow and growth consecutively. Wanting minimum $50 000 cash flow.

    Break it into Australia and International.

    Australia:
    Large Caps - IOZ (passive), WLE (active)
    Equal Weight - MVW
    Mid Cap - SOL
    Gold - PMGold

    In all fairness to the advisor the Australian portfilio isn’t bad but these are all effectively diversified funds. So holding less than 1% (eg SOL) is going to have negligible effect on the portfolio. Same with Gold. It’s too small a holding to really add anything and offers zero cashflow.

    I personally would prefer passive or low fee, low turnover active for large caps (active Mgrs struggles in this segment of market) and active for Mid / Small Caps rather than an Equal Weight ETF. I have no interest in Gold at all.

    International:
    Gold miners - GDX
    Europe - IEU
    Large caps (unhedged) - MGE
    Infrastructure (hedged) - MICH
    ...

    I stopped listing the others as all these holdings are too small to have any impact on the overall portfolio and introduce unneeded complexity. Plus some of these ETFs (MOAT / QUAL) have little history to prove they work over the long term in the “real world”. In all fairness though the advisor may be looking to add to these over time. Just seems an odd combination though.

    I just think this could be simplified and a better selection of product used that offers a greater and more tax effective cash flow. And a 1% advisor fee on the first Mil in addition to the fund Mgr fee is going to eat into cashflow.

    If I was paying 1% for advice I think I’d be expecting better.

    But I’m just an amateur investor so cannot give advice.
     
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  12. Anne11

    Anne11 Well-Known Member

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    Pls borrow from the library or buy the book One Million dollars for Life by Ashley Ormond. He has also mentioned the core/sattelite strategy too.

    My impression is there are too many small amounts on the International allocations.
     
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  13. Chris Au

    Chris Au Well-Known Member

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    And specifics against each share suggested. Eg, what is it about IOZ over other shares - and what track record does this share have to supports his reason. I dropped a previous advisor because the advice was too vague (couldn't do the above) and this forum provided the specific comments I am needing to allow me to choose x share over y. In all fairness, the advisor may be using modelling/analysis in arriving at his recommendations, however transparency in approach would be great to support his decisions to provide credibility to his choices.
     
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  14. Snowball

    Snowball Well-Known Member

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    Seems like too many unnecessary holdings/too complex.

    10k+ per year for this...geez I couldn't sleep at night charging that!

    Gold won't help income so I wouldn't include it.

    And over 20% cash holdings seems like overkill which dilutes income further.

    I would go with simple low cost LICs and index funds. Stick to funds that will help achieve the main goal of steady and increasing cashflow over time.

    Check out the Thornhill and LIC threads for some ideas on what this would look like.

    Learn to be your own advisor and pocket that 1%.
     
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  15. SatayKing

    SatayKing Well-Known Member

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    Not my call but if one is looking for income, why include holdings which don't produce any? Unless there is an intention to churn to obtain CG. Is that the planners intention which could be why the 1% fee is involved?

    Also does the planner receive commissions on the recommended products which, if so, would effectively pump your overall management expenses higher than the 1% quoted?

    Many questions but I don't have the answers for you.

    I use a FP but only on a fee-for-service basis and only when I require technical advice. All investment decisions are mine.

    As always, it's your money, your choice, your decision, your responsibility. A planner's advice is just that and you're the one signing the cheques (or BPay or EFT or whatever.)
     
  16. Zenith Chaos

    Zenith Chaos Well-Known Member

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    Constrain yourself to less than 10 stocks. Make sure you cover AUS / International and Large / Mid / Small caps. As long as your allocation is reasonably balanced and you are trying to buy at good value you should be fine. There is enough advice on this thread to answer all remaining questions.
     
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  17. Nodrog

    Nodrog Well-Known Member

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    Doesn’t apply anymore due to FOFA.
     
  18. SatayKing

    SatayKing Well-Known Member

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    Ah ha. Shows you how much in the way of financial advice I receive.
     
  19. Nodrog

    Nodrog Well-Known Member

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    And here’s me thinking it was due to you getting up too early before the little grey cells were awake:D.
     
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  20. SatayKing

    SatayKing Well-Known Member

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    They rarely are in any case. That's my excuse for doing dumb things and I'm sticking to it.