Thank you for all the info. I will now work on 4% returns. I have today placed a small buy order for VAS just to check it out. What I don't want is suddenly some years into my retirement to suddenly find that the income stream is insufficient or losing badly to inflation and suddenly am forced to return to some work or apply for benefits. So overall, I am still aiming for 5m net worth, with an anticipated 2m PPOR and if I get the 4% returns regularly on the remaining 3m, I will be retiring comfortably. I am anticipating the bulk of this 3m designated for income generation will be viable stockmarket - a combo of direct shares and ETFs and maybe LICs.
High Yielding Shares Again
- Thread starter MTR
- Start date
Thank you for all the info. I will now work on 4% returns. I have today placed a small buy order for VAS just to check it out. What I don't want is suddenly some years into my retirement to suddenly find that the income stream is insufficient or losing badly to inflation and suddenly am forced to return to some work or apply for benefits. So overall, I am still aiming for 5m net worth, with an anticipated 2m PPOR and if I get the 4% returns regularly on the remaining 3m, I will be retiring comfortably. I am anticipating the bulk of this 3m designated for income generation will be viable stockmarket - a combo of direct shares and ETFs and maybe LICs.
Ok, now lets look a bit deeper...
Vanguard HY Unlisted since inception (2004) , Distribution is 5.36%.....with franking between 70-90% each year....so lets call it 70% franking to be on the conservative side....grossed up that is 6.96% pa distribution vs 7.03% for the REIT Index...now what happened to the capital base in the last 10 years (including the GFC, a once in a generation disaster).
Vanguard HY index = 3.58% pa
Vangard REIT index = -1.99% pa.....yep, that's a negative folks....a deadset wealth destroyer, the lead in the saddle bags!!
I'll take the stocks thanks
Hi Erko
Just wondering where the above came from
Just having a quick look on Vanguards site the VHY ETF commenced 26 May 2011 and the Wholesale Vanguard High Yield Managed Fund commenced 14 June 2000 - the 10 year gross performance there is listed at 9.57%
Same fund, total return 9.59% pa. I've just broken out distributions and growth.
Great post Austini
For those whose main expertise is in property but want to build wealth over the long term with equities I humbly suggest to print Austini's post and put it away for those times when reflecting about their long term strategy.
I drip fed funds over many years into ARG and a couple of years ago sold them (breaking a component of Austini's strategy but I did this in order to start again as I was getting too comfortable) and put all the money into super. DCA and using the DRP was great.
I have since started a similar strategy in order to fund our child's long term education needs. Basically I use a margin loan, pay funds regularly into that loan and keep a very, very conservative LVR. If a GFC style event comes, more funds go into the loan and I will go shopping for these shares.
I have only 3 shares in this strategy and use the DRP (fully franked shares)
50% Mirrabooka Investments (MIR) LIC
40% Australian Foundation Investments (AFI) LIC
10% A direct share that I think will go gangbusters over time (won't mention it here as I am not on the site to pump & ramp
)Great post
regards
Cannot edit the first link above for MMM but as its worth a read, will try again
Australians - Listed Investment Companies (LIC) as investment option?
Looks like it is working
Australians - Listed Investment Companies (LIC) as investment option?
Looks like it is working
MIR is an interesting one, trades well above book due to high yield. The senior citizens love it....its in the AFI stable.
Aside from MLT / BKI / ARG I am in AMH which is where Ross Barker, Bruce Teele et al money is....makes sense to align your holdings with the managers
Aside from MLT / BKI / ARG I am in AMH which is where Ross Barker, Bruce Teele et al money is....makes sense to align your holdings with the managers
MIR is an interesting one, trades well above book due to high yield. The senior citizens love it....its in the AFI stable.
Aside from MLT / BKI / ARG I am in AMH which is where Ross Barker, Bruce Teele et al money is....makes sense to align your holdings with the managers
MIR is my preferred LIC for mid/small cap exposure. Others I hold are AFI, ARG, DJW, MLT, AUI, PMC, WHF. There are of course others worth holding. Even though there are similarities with some of these holding a number of them provides greater buying opportunities at times.
NTA issues can be an advantage/disadvantage in regard to LICs but I prefer some of
them to ETFs for a number of reasons but mostly because dividend income is more consistent. But I do hold STW ETF.
Pity most are so expensive at the moment. But for nervy, procrastinating, chopping/changing or trigger happy investors perhaps DCA and extra buying when the market is on the nose is the better strategy. If you're using strategies such as DCA and you're in it for the very long term then the current price and NTA etc is not all that relevant.
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Years ago I invested in share based managed funds, one that comes to mind is the Platinum Global Fund. However, I would never touch managed funds again mainly because you can't control your tax liability, ie, CGT, effectively, you can invest on 29 June and you could receive a CGT bill due to the sale of assets by the fund. One year I had a CG of about $20,000 meaning that I had to stump up tax for an asset that I had no say in the sale of (poor grammar )
LICs do not have such issues.
regards
)LICs do not have such issues.
regards
True but index ETFs have to regularly rebalance creating tax events..the conservative LICs are very tax focused, so will sometimes hold rather than sell to avoid tax events...obviously that potentially brings in other issues itself. LICs also have LIC CGT concessions they can pass through.
Spot on Austini
I'm with Austini on spreading the love
but realistically how often would say Vanguard re-balance something like its VAS (ASX300) ETF From Vanguard
ETFs tracking an index generally have low portfolio turnover, they typically hold stocks that make up the underlying index, so there is rarely a capital gains tax liability to investors.
And from elsewhere
Yes we know all this Redwing VHY for example rebalances twice a year, VAS probably the same. They need to buy sell in line with changes in market cap.
Are ETFs more tax effective than active managers that churn, yes most certainly.
Are they more tax effective than the LICs that are managed with tax in mind? On balance, no.
VHY for example rebalances twice a year, VAS probably the same. They need to buy sell in line with changes in market cap.Are ETFs more tax effective than active managers that churn, yes most certainly.
Are they more tax effective than the LICs that are managed with tax in mind? On balance, no.
There are many posts about LICs here that I agree with, especially Austini's who is in it long term like myself.
Attached is a summary I keep on some of the LICs I watch (green indicates the top tier, orange the bottom tier) if it could be of help to somebody.
Excluding the smaller holdings my LIC portfolio consists of AFI, ALF, ARG, CDM, DJW, MFF, MIR, MLT, WAM. Over the last 10 years it has achieved on average 5% yield and 10% total annual return with almost no tinkering from me apart from the occasional buys.
By the way I also like ETFs.
Attached is a summary I keep on some of the LICs I watch (green indicates the top tier, orange the bottom tier) if it could be of help to somebody.
Excluding the smaller holdings my LIC portfolio consists of AFI, ALF, ARG, CDM, DJW, MFF, MIR, MLT, WAM. Over the last 10 years it has achieved on average 5% yield and 10% total annual return with almost no tinkering from me apart from the occasional buys.
By the way I also like ETFs.
Attachments
No WHF Truong? that's another I hold, was one of the few mainstream LICs trading below book recently....very nice spreadsheet that though, I must say
CIN is one that has often traded well below NTA, This is Allan Rydge's vehicle for his wealth....low MER but from memory about 40% holding of Amalgamated Holdings, the rest large cap blue chip, I think I have seen it at 20% discount to book not long ago...might be of interest to me if it gets back there, long term as lower AUD should help AHL's prospects.
CIN is one that has often traded well below NTA, This is Allan Rydge's vehicle for his wealth....low MER but from memory about 40% holding of Amalgamated Holdings, the rest large cap blue chip, I think I have seen it at 20% discount to book not long ago...might be of interest to me if it gets back there, long term as lower AUD should help AHL's prospects.
No WHF Truong? that's another I hold, was one of the few mainstream LICs trading below book recently....very nice spreadsheet that though, I must say
CIN is one that has often traded well below NTA, This is Allan Rydge's vehicle for his wealth....low MER but from memory about 40% holding of Amalgamated Holdings, the rest large cap blue chip, I think I have seen it at 20% discount to book not long ago...might be of interest to me if it gets back there, long term as lower AUD should help AHL's prospects.
Indeed WHF is among the oldest ones and quite worthy of inclusion.
In addition to what you're saying about CIN, there may be a liquidity issue too as the trade is so thin. CIN is included on my watch list for historic reasons i.e. I bought it a long time ago when I was learning the ropes and only wanted the largest discounts on offer, but often there are valid reasons for such discounting! I've kept this small quantity of shares because they have performed OK.
I too would like to see some of the discounts of old but I think discounting will generally be much harder to come by as LICs become more and more visible to the general public. So one needs to become more used to premiums I guess.
Yep, SMSF has changed the game as far as LICs are concerned...the days of picking up AFI and the like at 10-15% below NTA are gone for now I think. Book value or a couple percent off for the big boys is probably good enough for the timebeing.
Thanks
I had also read JIT's thread where he had moved from individual shares, to index investing via ETF's, then into LIC's and finally back to individual stocks
LIC's such as AFI claim to outperform the all ords accumulation index, though I oft wonder how they would compare with the all ords accumulation index and regular investing and rebalancing also as is done with the LIC's
It's all interesting
I had also read JIT's thread where he had moved from individual shares, to index investing via ETF's, then into LIC's and finally back to individual stocks
LIC's such as AFI claim to outperform the all ords accumulation index, though I oft wonder how they would compare with the all ords accumulation index and regular investing and rebalancing also as is done with the LIC's
It's all interesting
Just wondering well always wondered actually.
If people have accumulated some good wealth during their lives in whatever field they're in , why do they wanna mess around with the stress of shares and 4% stuff ?
Seems you must be very good at whatever you've been doing , why not stick with that ?
Like say your area had always been property , just sayin, as an example . You could easily set up something with a much better return , even with enough leeway allowing for downturns .
Or , now l ask bc l wouldn't really know but , couldn't you do 4% or better in a nice safe bank account somewhere, with a decent lump sum like some guys are talking here ?
Although shares , if you get it right , l get that they can be so much less complicated and easier than say property .
If people have accumulated some good wealth during their lives in whatever field they're in , why do they wanna mess around with the stress of shares and 4% stuff ?
Seems you must be very good at whatever you've been doing , why not stick with that ?
Like say your area had always been property , just sayin, as an example . You could easily set up something with a much better return , even with enough leeway allowing for downturns .
Or , now l ask bc l wouldn't really know but , couldn't you do 4% or better in a nice safe bank account somewhere, with a decent lump sum like some guys are talking here ?
Although shares , if you get it right , l get that they can be so much less complicated and easier than say property .
