Where Do I Go From Here?

Hi all,

Im in a financial rut. Not a bad one but I am just not sure what I should be doing with my investments.

A bit about me - 34 single, renting. Salary 65k. 45k in super. Block of land in the SW of WA - I gave 200k to my folks about 5 years ago to avoid them selling it. Its on a beautiful island and I dont want it out of the family. The title hasnt been transferred over as it was stuck in probate for a while but Dad and i intend to transfer to my name.

I was extremely lucky enough to inherit a nice portfolio at 25 which I did nothing with for the first 5 years. I had never been good at money, or interested (huge regret now - especially since reading the thread on Young Investors here!!). The portfolio consists of ABC, ANN, ANZ, BHP, BSL, CCL, CTX, DLX, NAB, ORI, STO, TWE, WOW. Roughly 40% in BHP. Current portfolio value $825k. The first few years I used the dividends to fund my lifestyle - I have very itchy feet and travel is a huge vice. I lived in the UK for a few years and travelled Europe. I've got that out of my system (sort of ) and I want to now better my financial position (i know the portfolio is nothing to scoff at but i could be doing a LOT more).

Most of my inherited shares were purchased in the 1990s (some prior to 1985 so have a CGT date of 2003 - date of death of rellie). A realised gains report tells me that I would have a CGT gain of around $450k if i sold everything (which i wouldnt do but just for info's sake).

In 2015 I opened my own trading account and have an additional portfolio of around $37k in shares - ALU, APT, BWX, EML, FMG, GEM, MQG, NEA, NXT, SRX, WEB and a couple of HK stocks.

I am absolutely terrible with saving money which is why i plug anything into shares, so i cant access it quickly. Im asset rich but cash poor. I know i should diversify my investments - but to me the property market seems hard work (adulting is hard for me sometimes :/) and I dont really want to get into it alone. Have floated the idea with two close friends to buy a place together but their financial position wont allow it. To be honest I dont mind renting but i realise its dead money. My ability to service a loan concerns me but I dont know why because im sure i could afford it.

I feel like im going about this all the wrong way! Im trying to read as much as I can to learn about investing but im a bit stuck. My focus is really on the stock market but i realise that i've got my blinkers on with regards to all other areas.

I guess my queries for you guys are:

* What steps would you be taking in my position?
* Do i sell some shares and take a hit with the tax man in order to get a good deposit for a home loan?
* Is having all my money in the stock market such a bad thing?
* What financial goals should i be prioritising?
* Do i just pack it all in and move to Bali and live out the rest of my days there? (juuust kidding)

Any insights from you wise folk would be welcomed!

- Apocalypso

 

don't give up on the property idea but maybe leave it on the note paper until the ( property and share ) come back to sensible levels ....

IF you do decide to buy property ( to rent out or live in ) i would suggest avoiding taking on debt to do so ( cash up front on a modest property and given time for inflation is boring but profitable ).

how about some 'compulsory saving ' that is switch the shares in the larger portfolio to say 50% cash divs and 50% DRP ( called DRIP in the US )

The Perks Of Dividend Reinvestment Plans

don't panic BHP doesn't have a DRP so that would stay 100% cash divs. ( and some others do not usually have a DRP operational )

but from memory ABC , ANZ , CCL and WOW do have a plan .

this will slowly increase your assets in that portfolio but also still keep your franking credits intact ( while they still do that )

if servicing the debt worries you , don't go looking to take on the debt ( sometimes your instincts can be a wonderful guide ) but mainly this isn't the time to be taking on more stress ( worry ) either .

sadly the ( over-valued ) stock-market is still the best game in town ( if valued by risk v. reward )

it is just plain hard to find a good low risk strategy currently .

maybe some variable rate , interest bearing securities , but that takes a lot of research and careful thought into each purchase ( i do NOT like interest-bearing basket ETFs you are just expecting too much from your fund manager ).

apart from your nice inheritance , did you ever consider that you are in sync which the current feelings of your generation ( which is not an entirely bad thing as an investor ) ( i have always been out of sync , which gives different opportunities , not better , just different )

so let's take a different twist on 'owning property ' since you have already a share trading account , how about some REITs ( the down-side here is no franking credits on most of them )

i prefer BWP over SCP ( but hold both )

( BTW what happened to the SCP and S32 you should have got as bonus issues when they were spun-off from WOW and BHP ???? SCP has a DRP plan S32 doesn't )

others i hold are CMW , MGR , INM ( currently in a down trend ) , ABP, SGP and several others just like shares timing of buying can be very important .

use that international travel as an extra educational asset

in the 1990's i went to Europe and Hong Kong and have since preferred Asia over Europe in my international investing focus ( although i do invest a fair bit into NZ in preference to Asia currently )

another possible twist to your property thoughts .... would you build on that land on the island ???

if yes , research solar/wind technology ( and battery backup ) and an 'off grid ' option , maybe your 'Bali ' is near Perth , and you are part-way there
, this will take time and getting planning permissions but might not entail taking on extra ( major ) debt .

you are thinking and exploring options .. that is far from being 'stuck in a rut '

cheers !!!

 

We meet again Twisted nice to hear from you. I really appreciate your thoughts and enjoy reading your posts.

I should have mentioned that i participate in a couple of DRPs- i think WOW and CCL off the top of my head. Im constantly toying with the idea of doing it with the others that offer it. Since my BHP divs went down a few years ago i held back but they are back up to a nicer amount now so i can probably afford to change them now. I did forget about S32, have them too. SCP were sold way back when i wasnt paying attention to the multitude of paperwork that gets mailed out from the share registries and missed filling out a form to keep them. Learnt from that one! If only they would switch to email for all correspondence now- the wasted envelopes drives me bonkers!

Im keen to dip my toes into other markets but i trade with nabtrade and think they only offer HK and China (for the asia markets). Do you recommend a platform i could use that has access to more markets? I am interested in the india market. Was researching some managed funds that invest there, only just this morning.

Building on the block is definitely in my focus. I thought about getting a couple of tiny homes and making a modular sort of house. Something i could gradually do. Really i just want a campfire to sit around, but you’re not allowed to camp there sadly - even on your own land! Being on an island the whole building thing seems very time consuming and complicated to arrange being 5 hours from where i live so a batch kit or easy structure is desirable- at the moment for where i am in my life. Environmentally sustainable is absolutely the goal and something that works with the island & with the gorgeous south west landscape. The island has no shops and will stay that way hopefully!

You’re right about me being in line with my generation. I know so much more than my mates re finance and investing- and yet i know such a small amount. I just feel i have such a good opportunity to grow my wealth and really set myself up so i can be a grey nomad at 50

You’ve given me some great accronyms to google and research so much appreciated! Love these forums- such a good sounding board and good to hear perspectives from other generations.

Are you a financial advisor yourself? Or do you engage in one? I like the autonomy of doing it all myself- and i love managing my portfolio. I am excel obsessed so my record keeping is pristine and there are so many tools out there i believe i can do it myself. I feel like reading these forums is a great way to get an understanding of what is out there. But a financial advisor could be good for me- who knows!

Woops sorry a bit wordy above

 

*** Are you a financial advisor yourself? Or do you engage in one? ***
NO ( to both )

i lived each day as it came ( and hoped to wake up tomorrow ) until 2007 ( aged early 50's then )

then my mother died ( not totally unexpectedly ) but mother had the power-of-attorney over a different hospitalized relative ( nursing home actually ) the rellie lived on until 2010 ..

i was delegated to house-sitting while mother went on her last big trip ( the direction was not the planned one )

suddenly my world changed markedly ( in 2007 and then 2010 and then in 2017 again )

my solar/wind/battery fascination ( i invested in solar arrays on the properties i now own ) is not about the environment or climate , it is about cost reduction and lowering my reliance on government services ( in QLD the state government still owns the grid ) sadly batteries were not a viable option when the solar arrays went in , but some sort of change ( adjustment is possible in the future )

i try to learn from everybody ( i have a lot of dead school-friends who showed what a bad idea some adventures can be ) and young and old can teach a lot as well ( sometimes good outcomes , sometimes dangers you would never suspect ).

in 2007 i suddenly had money and land ( and right in time for a mid-life crisis )

instinct one was to liquidate it all and buy a very nice Ferrari and have maybe the best week of my life .

instinct two , was to realize i might never get a pension and might have to get serious about the rest of my life ... HOWEVER i also had my last known relative ( on the maternal side of the family ) stranded in a nursing home ( i always assumed this estate would go to charity and friends much the same as my mother's threats .. but heck i was sick of the family litigating over money and land , so i had no plans of challenging any wills , i simply out-lived everybody , which turned out to be no certain thing )

the rellie's will that was enacted was written at the end of WW2 ( before mother was even married , nor the relative ).,. so as the last known surviving close relative , (you have to go back to 1840 to trace the distant branch in the UK )

PS my fathers side has been estranged since 1972 ( and that is fine by me , am just sick of the family in-fighting as well )

i use Commsec and Bell Direct ( Bell Direct is built around the inherited shares portfolio )

Commsec account is built around what i have bought and sold myself ( from mothers estate and later earnings ) is was just easier to open a CBA and Commsec account ( i didn't even have a bank account at the time mother died .. i was the 'ghost in the system ' , and still get dropped out of it from time to time )

i don't trade as such just make opportunistic adjustments .. say MQG goes up 200% ( which it did for me ) i took the cash invested out and put it into BHP ( in that big dip before the S32 demerger ) not so much planned as an opportunity grabbed ( BHP and MQG are now roughly equal No. 2 holdings )

i use the two platforms at the budget ( no extra costs )level ) , i have gambled all my life ( in other areas ) , now i hold TAH ,CWN and DNA , so have just shifted the way not actually quit gambling .

i have deep trust issues , but that is my problem ( or blessing ) i like to be in control whenever i need to be ( which might make the near future rather unpleasant depending on which bits of DNA i inherited .. but that is the cards i was dealt my job is to play them the best i can )

in 2011 two grey nomad ( whose opinions i respect ) associates made a similar comment on the East Coast of Australia , so i jumped on a bus ( Greyhound ) and had a look for myself ( Sydney , Canberra , Adelaide ( and a few places in between ) and saw the opinion was well founded , jumped on THAT train to Perth to look around over there and saw short term and long term opportunities abounded ( JYC alone paid for that trip and it wasn't my only winner spotted ) .

i am still pro-WA when investing in Australia but have been looking at 1 NZ 2 Asia , 3 India as stronger focuses ( this is on the bold assumption i will be alive in 2020 )

remember i used to live for today ( that turned out to be a chillingly realistic attitude , especially in hindsight )

my traveling days are over ( ambulance rides and helicopter flight being the possible exception ) but i didn't have big plans like that anyway ' home' was always just a resupply depot .

if you go for modular style housing don't forget to go for permission to 'bolt on bits ' at the same time say plan for a two bedroom duplex , but plan and get permission for extensions ( like extra bedrooms garages and granny flats/offices etc )

you don't have to add these on ( anytime soon ) but even if you sell later it may add $$$value

my ' batch ' opportunity was in NZ ( my paternal grandfathers estate ) part ownership inherited in 1969 , but the Kiwi mob are hungrier for money than me and sold it without consent of notification until after the fact ... but realistically i could have expected no less .

' dead to them ' is something i can live with ( saves raking through all the skeletons over there , that has some really bizarre twists to it , so mothers stored letters illustrated to me )

the poor bloody lawyers have missed out on a fortune though ( wink )

PS .. i said i had trust issues ( i said nothing about them being irrational , LOL especially as the family history unfolds )

one thing i have learned is THINGS CHANGE . not always the way you wanted it too , or even expected , so ..

your choices are

1. complain about it

or

2. look for a way to exploit that change ( or limit the damage )

( and thus i don't plan to trade heavily but sometimes there is a GOOD opportunity just sitting there ... and i needed to be aggressive , but careful to achieve my aims , anyway )

i was going to learn TA and FA and charting , but made simple maths , a pocket calculator , and some simple rules work for me ( so far ) ... after all when am i planning for .. tomorrow , 2020 , 2022 , maybe something beyond .. your guess is as good as mine ( again quite accidentally the correct choice for me ).

take care

at your age , food in the pantry and next weeks rent covered was all i cared about .

cheers

 

probably one bit of advice that might be important .. is to get a FULL medical check up .

i have permanent heart damage , which caught everybody totally off balance and they as so busy trying to stabilize it they haven't worked out the cause , the extent of the actual damage or even how long i have had it , ( but i look (comparatively fine and healthy .. until you start measuring stuff .. then folks start to panic and worry

you tell folks i have a disability pension and they think i must be the best fraudster they have ever met

Widowmaker Heart Attack Explained by Cardiologist • MyHeart

not only am i completely atypical with this but the closest thing to a symptom i have had with this was circa 1980 , which the doctors claimed was a 'grumbling appendix ' and sent me on my way

and all was apparently all fine and good until until i had my first ECG in July 2016 even then they knew something was badly wrong , but not what was wrong , the last half of 2016 proved very stressful for various medical staff . and got even more twisted after February 2017 .

next month the various medicos might finally examine in detail what the problem (s ) is

( lung function below 50% heart function has now recovered to 30% , but the medications are still being increased or upgraded )

... and they have only checked out two body parts and some selected blood-tests ( i might easily have some more surprises for them )

( i wonder what a FULL check-up will tell them if they remember to give me one , LOL )

 

this was the first problem detected , compounded by an extremely irregular rhythm AND jaw-dropping high blood-pressure , i knew about the blood-pressure since 1980 ( and the fast heart rate) but took on middle distance running , marital arts and later body-building ( shame no-one mentioned the irregular heart-beat until 2016 , i might have visited the GP more often .. i didn't bother between 1985 and 2016 , i just worked on keeping fit and busy )

Fast Heart Rate - Symptoms, Causes and Treatments • MyHeart

What is NSTEMI? What You NEED to Know • MyHeart

What is the best stent for our patients? • MyHeart

so now have i am, with a bio-absorb able stent ( withdrawn from use 3 weeks after the implant )

but of course it isn't so simple , i also have one inch of visibly weakened coronary artery hiding under that new dissolving stent .... will it heal/repair by February 2020 ( or will the stent decaying provoke another blockage/aneurysm/lesion as was noticed during November/December 2016 ).

this might help explain why i didn't consult a financial planner

how do you explain the estimated time-frame is 20 minutes or maybe more ??

 

You're in a fantastic position and have done really well not to blow it given you seem to think you're a terrible spender, maybe it's not that bad.

What is best for you is possibly very different to me. If I was in your position, wanted a house and to do so grey nomading at 50.

Look at indexing, it's boring and you don't need to follow markets. You can get exposure to Australia, Asia, US or wherever. Read twisted's link on the losers' game for a background on how hard beating the market is. I wouldn't sell anything as tax is prohibitive, I would be cutting all DRPs and directing dividends into a handful of ETF indexes for the next decade to establish a core portfolio of Indexes. Why take unnecessary risk which is unlikely to pay off?

Wanting a house you need a deposit. You either need to save cash or sell down some other assets at some point. If you get the title from the land you might consider using that as a deposit after thinking about the risks.

 

indeed , Apocalypso83 has done ( and is doing ) a lot of things right ,

but is it time to change a winning formula ???

certainly a great time to learn and consider the options , if there is a downturn , a list of targets ( and plans ) can be very helpful .
residing in W.A. should give some property investor potential , but will the banks/government spoil that ???

my leaning toward improving the land that he will soon have , is based on a theory progress on the project would absorb any spare cash ( that might not carefully invested elsewhere )

***
Do i just pack it all in and move to Bali and live out the rest of my days there? (juuust kidding)
***

does hint to me there is a bit of pressure being felt ( understandable in uncertain times but is it a good mindset to have when looking at taking on a mortgage ??)

i assume buying and then sharing with the current house-mates has been considered carefully ( if buying a new property ) but how will the banks accept that idea ??

( personally ) would i put up the existing property as collateral .. NO
but in my personal case i doubt i could even get a car loan currently , even though i have plenty of collateral in say WOW alone .

'grey nomading ' is an easy 10 years away unless there is sweet deal one a caravan/motor-home/house-boat offered that should probably go in the 'things to do ' basket

 

I should add Listed Investment Companies (LICs) would be another area to look at.

Seeing a financial planner to consider a more effective structure would be worthwhile, just need to find the right one. You mentioned wanting to do it yourself, they might give you guidance or at least hint at the things you have no idea about to get you looking in the right direction.

IMO for the vast majority pick individual stocks in a mugs game. Results aren't guaranteed and time input is high and ongoing. Having a low cost core portfolio just makes good sense, you can then decide if you want to run a more active strategy. Obviously if you feel that is a terrible idea then the rest of my comments aren't very helpful.