Where to from here?

Discussion in 'Investment Strategy' started by Tony, 17th Aug, 2017.

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  1. Tony

    Tony Well-Known Member

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    28th Jun, 2016
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    Hi all,
    Interested in your thoughts as to what your next move would be if you were in my position.
    1. Non deductible debt = 0
    2. IP exposure Sydney & Brisbane mortgages at IO with some funds in offset

    Serviceability will allow me to purchase one more at around $400-450k mark. Current advice is to look to Melbourne - any suggestions where for this range for balanced CG & yield?

    Options as I see it:
    1. Go the one more. This will use some of the current offset
    2. Don't buy any more & concentrate on debt reduction & use offset amount to invest in LICs
    3. Use paid off PPOR to get LOC to invest in LICs

    Or combination of the above of any other suggestions

    Thanks
     
  2. Big Will

    Big Will Well-Known Member

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    Not enough information for real thoughts as there are to many things that would change my thoughts.

    E.g. New child coming into the world, how old are you, when you looking at retiring, what is your risk profile, do you have money invested elsewhere (business/shares?) if so what % is the property vs shares? etc etc.

    /Start rant

    LICs are not always the answer a lot of hype on the forums about them but they carry the same risk as all investments. Argo (LIC) in the last 12 months capital is up about 5.26% REA (direct share) is up 11.1% or VGAD ETF is up 10.77%.

    If I was to include income/dividends the total numbers are
    Argo (LIC) - 10.98%
    REA (direct share) - 13.77%
    VGAD (ETF) - 15.49%

    FYI I picked the better of the two largest LICs AFI total return was 10.28%

    Of course there are better and worse performers on each WorleyParsons are up in total 50.13% but Dominos are down -42.39% this is the risk/reward for direct shares.

    For the last 5 years
    Argo - 13.00% p.a. (AFI was 11.61% p.a.)
    REA - 36.89% p.a.
    VGAD - 8.63% p.a.

    Add in WorleyParsons -10.4% p.a. and Dominos 37.54% p.a.

    This shows why you need diversification and I hope show that LICs are just a rose by another name.

    /endrant

    If you don't have any shares I would consider diversifying into shares as being all in property I would consider risky.
     
  3. Tony

    Tony Well-Known Member

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    Big Will - thank you for your reply and thoughts.
    I wasn't sure what information to provide. Some Answers. 40 years old flying solo with no partner or children and nothing on the radar. Would like to retire in 10-15years and risk profile is fairly conservative. I have only invested in property and have about 1000 Telstra Share that my parents kindly bought me when they first floated. Id say the split would be 99.8% Property 0.2% Shares. Never done that sum before and probably says something
    Does this provide some more information.
    Thanks again
     
  4. Big Will

    Big Will Well-Known Member

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    Personally myself I would look more towards shares (Direct, ETF or LICs - not in order) or building up offsets - depending on risk appetite.

    When/if you choose to find a suitable partner your serviceability will likely improve (2 incomes) but remember STD (sexually transmitted debt) but also asset protection if you can.

    Even though I live in Melbourne I would be hesitant to invest here right now due to the boom - who knows where the top is but would maybe consider Brisbane (join the hype haha), the issue I see is that you are already heavily exposed to property so shares be where I might consider.

    No one knows which investments will make the most money in the shortest period however by diversifying you reduce your highs and lows - e.g. if you had WP went up by 50% in the last year and Dominos went down by 42% so if you equally invested in both 1 year ago you would of been okay - yes been better if you put it all on WP 12 months ago but if you put it all on Dominos you would be crying - that is diversification.

    Property might go up 20% this year or maybe shares do, maybe property drops by 20% then again maybe the shares do. Long term both will likely go up but diversifying generally means lesser peaks and lesser troughs.
     
  5. Tony

    Tony Well-Known Member

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    Sydney
    Thanks again for your time in responding Big Will
     
  6. CROMAX

    CROMAX Active Member

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    Melbourne
    Maybe not ideal, but what would selling some Telstra shares do to your offset accounts for cash flow?

    Look into silver. Super cheap ATM.