The Motley Fool - Everlasting Income

Has anyone ever been a member of The Motley Fool before?

As a total newbie who only has time to skim the forum once or twice a week, this Everlasting Income seems to be the kind of thing mentioned here about selecting good businesses with a dividend to live off.

Just wondering if anyone has used their services or has comments on this program?

Motley Fool Australia » Everlasting Income Order Page

 

Probably not a fair assessment but it was raised in the following post with some further discussion in subsequent posts:

Listed Investment Companies (LICs)

All I can say is I hope their investing is better than their advertising.

And the fee:

Won't be getting any of my money that's for sure.

If they renamed it to the "Motley STOOL Everlasting Income Fund" it might be a worthy competitor for my proposed "Laxettes Income Maximiser Fund".

Not advice.

 

Some time ago I paid $89 for a year's subscription to MFs Dividend investor.. cheap lesson. I never bought anything, but I watched what they recommended.. and as you might expect they got some 'right' and some wrong... I'm pretty sure I could have achieved the same or better by doing my own research.

 

I prefer my dartboard. If I miss completely I just buy a LIC. I'm so bad at darts that my investing is coming along in leaps and bounds.

 

Thanks for the feedback! You're all helping me learn quickly and my sense of scepticism is coming along in leaps and bounds. Although I do feel dirty and a bit like I'm cheating by being swayed to shares over property on a property forum!

 

Personally I wouldn't touch it. It boils down to this. You pay almost $5k and for your $5k you get this:

Scott Phillips would simply be telling you precisely which shares to own at any point in time in your portfolio… when to buy, sell, or rebalance… and exactly how much you can pay yourself in income each month.

You’ll technically still be executing the trades, but you won’t have to do a shred of the days and weeks of painstaking research… intricate analysis… and complex calculations that go into managing a portfolio in an optimised manner.

You simply follow along with everything Scott will be doing inside the Everlasting Income portfolio on our members-only website, as well as the instant alerts he’ll send you whenever he believes the portfolio needs to be adjusted.
​

Basically, you would be paying for overpriced stock tips (in my opinion) but you have to actively manage the investments yourself for a promised 4% return. Personally I think that is a low return for the level of risk.

Pulling investments out of the air, I came up with a portfolio split 1/3 VAS, 1/3 ARG and 1/3 MLT. The long term average dividend return for each (since 2010) is:
VAS - 5.70% p.a. (franking varies. Currently 91.95%)
ARG - 5.98% p.a. (fully franked)
MLT - 6.94% p.a. (fully franked)

That averages out to 6.21% p.a. excluding franking. This is much higher than Everlasting Income and the ongoing management fees are very low.

Not advice - past performance is no guarantee of future performance.

I was going to tag @wombat777, @Hodor, @austing, @ErYan, @Redwing to weigh in here. Pretty much, just VAS is going to outperform Everlasting Income but I would like more diversification than that.

My opinion is that VAS, ARG and MLT would be a reasonable place to start and over time you could add more holdings, such as AFI and WHF.

This strategy is as easy as looking up the NTA and if the LIC is trading at a discount to NTA If none are, buy VAS.

An introduction to Listed Investment Companies
LICs or ETFs – what you need to know - Switzer Super Report

 

I am a property guy but there are issues with property. I have seen people retired with property and the ongoing costs are a killer: council rates, water and sewer rates, building insurance, landlords insurance, land tax, repairs, property management etc, etc. It goes on and on and can consume 30% to 40% of rent coming in. On top of that there are tenant hassles.

How about an investment with a solid and reliable 6% per annum excluding franking credits with none of those costs? Sounds good to me. I will be diversifying into Listed Investment Companies (LICs) and Exchange Traded Funds (ETFs) over time to build up retirement cashflow without all the costs associated with property and minus tenant hassles.

 

I wish I had more hours in the day. Everyone here has been so helpful with their advice and links to information since I signed up!

Is it seen as too narcisistic to put up a post about our family situation and seek general advice? I am carrying guilt from not being strong enough with my wife (then GF) in 2012 got sold the snake oil and ended up with a 1 BR NRAS apartment in Fortitude Valley using some money her Dad left when he passed away! The value has fallen since and immediate future is obviously not looking too great. I just don't want us making more naive, uninformed mistakes!

 

Members of this forum love responding to those types of threads!

 

I've heard mixed things about Motley Fool depending which service, and so forth. In the end it's a good start, with some hits an dmisses. It points you in the right direction but frankly there is nothing better than self educating so you take some assumed knowledge into decisions yourself.

The whole idea of index ETFs and LICs is intriguing. Having done well in the stock market then burned in the post 2011 resources slump, I am definitely behind the 8 ball in investment earnings, but I think the lesssons and eventual long road ahead will see me profitable. HOPEFULLY! If not I continue to burn a hole in my pocket with whoever I invest in haha.

But I definitely would want to test Warren Buffet's theories about just plodding along and investing in an ETF.

I think if one invests a set proportion into an index ETF, and for me I want to find a medium growth, part dividend yielding ETF tracker, then if you continue this savings habit surely you will be one up at the end of a few decades.

I am planning to narrow down to an index, a high yield, and a mix, and maybe an overseas ETF, a LIC or two, and then contribute regularly a small proportion, and see how this goes in the next 5,10,15 years to an active management portion e.g. picking my own stocks.

Would be keen to hear if anyone has done the dig through on said ETFs above and could shed some light on some of the better performing ones, relative to performance, and the management team behind it. Although as usual - past performance does not correlate necessarily to future performance.

 

Not another nras thread... could be a long read. Hehe

@Hazey prob best to start a fresh thread with your story and your thoughts in the general section. I'm sure you'll get lots of suggestions.

 

Wholly agree with @Perthguy 's suggestion of maintaining a shopping list of ETFs and LICs to regularly top up. Throw in only the odd direct stock if they satisfy income and dividend growth checks. Capital growth is a bonus but don't overlook it.

Always assess and compare income and total return performance of any candidates against an index. Quick and easy to do with the sharesight "Share checker" function.

@SaberX

• it is easy enough to evaluate performance in sharesight. Manually enter trades going back say 5 years is a start. Also extend it back to 2005 just before the peak prior to the GFC. Much easier to interpret overall results of a mix of ETFs / LICs.
• Avoid picking just one LIC or ETF. Better to diversify into a number of them, but check fees and performance for each one.

@Hazey I started out my share investing with advice from Motley Fool. That was with their stock-picking share advisory service, although much much cheaper than than this price-gouging service they are establishing. It served it's purpose as it got me started with a number of stocks. My knowledge is well beyond that now.

If you want an alternative that's free, take a look at the free Dividend Yield Scans on Market Index ( you can also sign up for regular e-mails ).

Dividend Yield Scans Overview

But DYOR on results.

Also - Be vary wary of property ETFs and listed property trusts.

 

@SaberX, just general advice i'd gleaned from Peter Thornhill... take the resource stocks out... invest in Industrial companies.

While resource stocks did very well 2003-2007, over the long term they perform worse than industrials.

 

Yep, we all learn from each other's comments and others are probably thinking the same questions that you are. There is a great thread - Beginners guide to LICs started by the generous @austing . so if it's a LIC type question, add it to that thread to build the overall knowledge base. I am endeavouring to add more to that thread - more posting = more active thoughts and more insights. (don't they say the first step to commitment is to make a public promise....)

Yep, lots of NRAS threads in the property sections. Do a search for NRAS at the top - I find the search function on PC great.

Looks like @wombat777 may have started some great answers for you!

 

Number one rule: no-one knows with certainty what will happen, which applies to The Motley Fool.

Read the links above and:
Listed Investment Companies (LICs)
Exchange Traded Funds (ETFs)

$400+ on Peter Thornhill plus his book would probably be money better spent.

 

And the attached for some light bedtime reading:

 

Thanks everyone. Just found the time to pop back on. Looks like some reading to catch up on, but with just 3 weeks to get organised and move to Melbourne from Timor-Leste (East Timor) my empire building may have to wait

 

Fixed that for you

 

The everlasting income service is $5,000 one of fee to get access to fairly sophisticated investors to reccommend a low to med risk portfolio of Dividend stocks yielding around 5% fully franked.

Say you're 35 and use it for 15 years and your balance is $500k that equates to a management fee of $333 per annum. Compare that to a high yield etf with a fee of 0.3% that would cost around $25k for 15 years. Just under $2k per year.

With big long term outcomes likely to have similar total returns.

The everlasting income portfolio is comprised of around 19 stocks with a mix of blue chips and mid caps paying a higher dividend.

So long term a massive difference in fees especially if used for 20+ years for two services that will offer similar returns.

Thoughts

 

I wonder if there is anyone on here who is an everlasting income member and how they have found he service and it's performance?

Would love to hear