Gone fishing portfolio in Australia...

[The Falcon]

^ this is my point about slicing and dicing into small portions.

The legendary Wellington Fund has returned 8.23% per annum since 1929-2013.
60-70% stocks 40-30% bonds. This gives you an idea of the kind of return you might expect over the long term.

Just on the fund manager risk with Vanguard - every fund is it's own seperate legal entity, owned by the unit holders, Vanguard is only the appointed manager.
There is plenty of info and discussion on this online if you are concerned about manager risk....no issue with mixing it up with the other index providers if you like.

I note that Vanguard AU has a bit of a tilt towards Australian entities in their diversified funds, this is probably due to franking. Something to bear in mind depending on your tax situation (is this for super? If so franking credits rule..go long Australian high yield )

 

[redwing]

Looking at the ASX Accumulation Index it has returned 8.8% over the last 10 years to June 30th 2014

20 years is 9.4%

30 years is 11.7%

 

[The Falcon]

Looking at the ASX Accumulation Index it has returned 8.8% over the last 10 years to June 30th 2014

20 years is 9.4%

30 years is 11.7%

Yep, all equities is all you need if your going really long.

S&P 500 , 1950-2013 11.3% pa.

How easy is that

People like a sea anchor though....

 

[VYBerlinaV8]

I think the principles are applicable anywhere. Specific asset allocation, low cost funds, rebalance every year or two.

The problem I see to make this work is the fact that we don't have as many choices of funds, specially if investing through a super fund (not SMSF).

Principles are fine, provided you understand how and why to apply them.

I'm not seeing anything that suggest that the investment allocation described in this thread is any better or worse than any other.

For my retirement, I'd rather hold plenty of well yielding property, spice up the returns with some decent shares and hold a reserve of cash that I allowed to grow over time. My plan is to never consume the asset base, but rather to just live off perhaps 90% of the yield, using the remaining 10% to increase my cash reserve to insulate me from problems as time goes by.

 

[WASP]

Principles are fine, provided you understand how and why to apply them.

I'm not seeing anything that suggest that the investment allocation described in this thread is any better or worse than any other.

For my retirement, I'd rather hold plenty of well yielding property, spice up the returns with some decent shares and hold a reserve of cash that I allowed to grow over time. My plan is to never consume the asset base, but rather to just live off perhaps 90% of the yield, using the remaining 10% to increase my cash reserve to insulate me from problems as time goes by.

Hi VYBerlinaV8

How big does your asset base or how much positive cash flow do you need from property, cash and shares for that?

 

[VYBerlinaV8]

Hi VYBerlinaV8

How big does your asset base or how much positive cash flow do you need from property, cash and shares for that?

My plan is to have my PPOR paid off, plus $3M in income generating assets (in 2005 dollar terms). In practice, I'm aiming for about $5M worth of unencumbered assets within the next 10 years, generating 4-5%pa yield. I already have a nett position well in excess of $2M.

 

[ellejay]

Principles are fine, provided you understand how and why to apply them.

I'm not seeing anything that suggest that the investment allocation described in this thread is any better or worse than any other.

For my retirement, I'd rather hold plenty of well yielding property, spice up the returns with some decent shares and hold a reserve of cash that I allowed to grow over time. My plan is to never consume the asset base, but rather to just live off perhaps 90% of the yield, using the remaining 10% to increase my cash reserve to insulate me from problems as time goes by.

How would you plan to hold your cash, what rate would you be looking at? Just wondering who has the best rates for this.

 

[VYBerlinaV8]

How would you plan to hold your cash, what rate would you be looking at? Just wondering who has the best rates for this.

The cash is really just risk management, so I'd hold it wherever was convenient. If I had any debt to offset I's use that first, then whatever high interest account was sensible.

I wouldn't want a huge amount in cash, probably no more than 10-15% of the portfolio value. Any more than that and I'd go and buy some more assets.

 

[The Y-man]

I wouldn't want a huge amount in cash, probably no more than 10-15% of the portfolio value. Any more than that and I'd go and buy some more assets.

An interesting thought just hit me.

Suppose you had a property portfolio worth $1m (fully paid off), so you hold $100k in cash (10%).

Later that portfolio value up to $2m (just form CG). Do you increase your cash reserve to $200k correspondingly?

The Y-man

 

[ellejay]

An interesting thought just hit me.

Suppose you had a property portfolio worth $1m (fully paid off), so you hold $100k in cash (10%).

Later that portfolio value up to $2m (just form CG). Do you increase your cash reserve to $200k correspondingly?

The Y-man

That's a big buffer, glad mine doesn't need to be that big or I'd be working forever. The more money you have the more you need sometimes.

 

[ellejay]

The cash is really just risk management, so I'd hold it wherever was convenient. If I had any debt to offset I's use that first, then whatever high interest account was sensible.

I wouldn't want a huge amount in cash, probably no more than 10-15% of the portfolio value. Any more than that and I'd go and buy some more assets.

That makes sense, okay, something else to save up for

 

[VYBerlinaV8]

That makes sense, okay, something else to save up for

Save the cash once you are getting some investment income. My plan is simply to cap my annual spending at perhaps 90% of my investment-based income, so as to build a cash reserve that I can use to smooth any bad years.

 

[ellejay]

Save the cash once you are getting some investment income. My plan is simply to cap my annual spending at perhaps 90% of my investment-based income, so as to build a cash reserve that I can use to smooth any bad years.

I did factor in an amount that I called 'contingency' into my monthly amount needed to semi-retire but I didn't think about being strict and actually putting that amount away each month in a savings account . That's a really good idea. I'll do that but mine will probably only be about $500pm leaving a couple of Ks for food, bills and a few hundred for leisure.

 

[VYBerlinaV8]

An interesting thought just hit me.

Suppose you had a property portfolio worth $1m (fully paid off), so you hold $100k in cash (10%).

Later that portfolio value up to $2m (just form CG). Do you increase your cash reserve to $200k correspondingly?

The Y-man

Yeah I'd say so, but I wouldn't do it all in one hit, and certainly wouldn't sell viable assets to do it. I'd just let the cash balance drift up until it was about right then plan on buying some more assets with any surplus.

 

[VYBerlinaV8]

I did factor in an amount that I called 'contingency' into my monthly amount needed to semi-retire but I didn't think about being strict and actually putting that amount away each month in a savings account . That's a really good idea. I'll do that but mine will probably only be about $500pm leaving a couple of Ks for food, bills and a few hundred for leisure.

If that's what works for you then great. By taking action and saving regularly it puts you ahead of most people I know.

Over the years that $500pm will add up, and will be available in the event of emergencies. As your investment income grows the pressure will come off anyway as you will have alternate sources of income, and saving will be easier.

 

[ellejay]

If that's what works for you then great. By taking action and saving regularly it puts you ahead of most people I know.

Over the years that $500pm will add up, and will be available in the event of emergencies. As your investment income grows the pressure will come off anyway as you will have alternate sources of income, and saving will be easier.

We do intend to eventually spend the capital too which obviously makes a difference. We'd just be living on income for a few years until closer to superann then start selling properties one at a time.

 

[VYBerlinaV8]

We do intend to eventually spend the capital too which obviously makes a difference. We'd just be living on income for a few years until closer to superann then start selling properties one at a time.

Why's that? My plan is to have enough to just spend the yield, and then treat whatever superannuation comes in as a bonus.

 

[ellejay]

Why's that? My plan is to have enough to just spend the yield, and then treat whatever superannuation comes in as a bonus.

Well we don't have anyone to leave it to, so what's the point off popping off your perch and leaving hundreds of thousands to already well off distant relatives having economised for most of life? I think I have 20 years or so until I'll be able to access super so we'll spend some of this money during the 20 years while we're still fit and well. In the meantime other properties are being paid for and in 20 years should replace most of what we spent. So we'd be able to sell those and have enough to top up whatever super is worth by then.

 

[VYBerlinaV8]

Well we don't have anyone to leave it to, so what's the point off popping off your perch and leaving hundreds of thousands to already well off distant relatives having economised for most of life? I think I have 20 years or so until I'll be able to access super so we'll spend some of this money during the 20 years while we're still fit and well. In the meantime other properties are being paid for and in 20 years should replace most of what we spent. So we'd be able to sell those and have enough to top up whatever super is worth by then.

Fair enough. Hope it works really well for you!

 

[ellejay]

Fair enough. Hope it works really well for you!

Thanks, and you.