Mix in some leverage at around 40% LVR then the 9.5% - 10% long term market return becomes close to 16%-17% . Not a bad return for passive investment.
Cheers,
Oracle.
High Yielding Shares Again
- Thread starter MTR
- Start date
Mix in some leverage at around 40% LVR then the 9.5% - 10% long term market return becomes close to 16%-17% . Not a bad return for passive investment.
Cheers,
Oracle.
Too many people have mentioned Vanguard, so I need to investigate this further. As I mentioned in one of my posts, I tread lightly with managed funds, ie fees, no control. Also I have memories of SS members getting burnt some years ago with Macquarie Fund, this fund apparently protected the initial asset base, but it went pear shaped. I never invested in this product but I am sure there are those still recovering.
I like what China has to say, at some point you just have to jump in.
Anyway, I am going to check this out today.
Thanks
I invest in ASX300 ETF. Mainly because it tracks the ASX300 index which has historically produced around 6-7% CG and 3-4% dividend yield (+franking credits). Resulting in 10-11% long term returns.
I am still in my accumulation stage so income is not as important as CG. And total returns are much more important then individual returns of CG or dividend.
Reason for using ETF is it is easy to setup margin loan with broker and buy ETF just like you buy shares in individual companies. Also, structure of ETF makes them more tax efficient compared to index funds, because units in ETFs can be created/destroyed without triggering CGT to the ETF holder. The CGT is beared by the market makers responsible for managing the creation/destruction of units.
Hope that helps.
Cheers,
Oracle.
Yes, I cant just continue with resi property, its incredibly high maintenance, I recently offloaded old properties and now building/developing, however still have tenants etc to deal with. I had 2 trashings this year, where the tenants left all their goods behind, anyway enough of my ranting and raving.
The point is share market is perhaps more volatile but I guess if one can have a balance it could work out well, blue chip shares and quality resi properties.
Cheers
MTR
Yes, I cant just continue with resi property, its incredibly high maintenance, I recently offloaded old properties and now building/developing, however still have tenants etc to deal with. I had 2 trashings this year, where the tenants left all their goods behind, anyway enough of my ranting and raving.
The point is share market is perhaps more volatile but I guess if one can have a balance it could work out well, blue chip shares and quality resi properties.
Cheers
MTR
It is always sad to hear about bad tenant experience, luckily enough, so far, I have never had any issues in this regards.
But I think shares would have its own intangible problems
As with any form of investments really
Income in favour of capital growth.
A managed index fund is an oxymoron: if it's indexed to an indice, what exactly is being 'managed'?.
ETFs are lower cost (eg 0.15% for VAS) but are slightly more complex to buy as you need a trading account.
Hi Homepage, if you go the website you will see Vanguard Australia offer Retail Managed and Wholesale Managed
There would have to be some kind of management, the index funds may not be as 'active' as others
Vanguards Aussie Index is only the top 300 and a number of their other funds are specific (i.e. the high yield and property funds), all would see some companies drop in and out over their lifespan?
Vanguard has traditionally very low fees, due to being an Index Fund. It depends on how much you want be involved in the whole process. Personally I think purchasing shares because they have a high yield is akin to buying just any property because the rents are high. It's not a great strategy.
Remember, you are buying a piece of a business. A business that by all intents and purposes might not be there in five years or something happens and they have to cut their dividends or a myriad of other issues. If you don't know much about the market, best to suck up the cost of having the professionals manage it for you so you can concentrate on other things.
I hear what you are saying and agree with this. So what I want is a good business to start with that also provides high yield, is this not possible? For example bank shares CBA??
Hi MTR. I don't know, I don't invest in the banks. Like Wazza says 'If you don't understand it, don't invest in it'.
Edit: MTR, I read a book by Peter Lynch a few years ago called One Up On Wall Street. In my opinion, the best book ever written for non-professionals that want to invest in shares. In the book, he says that you shouldn't consider buying any shares in any business until you can give a five minute rundown to someone off the top of your head as to why it's a good business to invest in. That made a heck of a lot of sense to me then and still does now.
Edit: MTR, I read a book by Peter Lynch a few years ago called One Up On Wall Street. In my opinion, the best book ever written for non-professionals that want to invest in shares. In the book, he says that you shouldn't consider buying any shares in any business until you can give a five minute rundown to someone off the top of your head as to why it's a good business to invest in. That made a heck of a lot of sense to me then and still does now.
Of course.
I think have had some great feedback from SS to start my little journey down this road. Keep posting everyone, the more the merrier, something will stick eventually.
Cheers
MTR
Another option you might wish to consider if you are looking purely for income is to open up a Bond account. FIIG offer accounts to retail investors with a minimum balance of 50K. According to the website, you can get an indicative return (at present) of between 5.85% and 6.54%.
https://www.fiig.com.au/sem/achievebalancea?gclid=CO_W083E_b4CFVcnvQodiDUAKA
I'm not suggesting it's either good or bad, just that it's an option you may wish to consider.
https://www.fiig.com.au/sem/achievebalancea?gclid=CO_W083E_b4CFVcnvQodiDUAKA
I'm not suggesting it's either good or bad, just that it's an option you may wish to consider.
I had a work colleague who was heavily into LPT's, or REIT's they were doing great but they suffered badly when the GFC hit. I'm not sure whey sit now or what his asset allocation was but it was heavily geared towards income and dividends at the time, I believe some funds also were frozen for a period
A 90% drop needs a 900% recovery just to get back to even
You can check out the S&P/ASX 200 A-REIT chart here
I can tell you from experience those with LPTs or REITs during the GFC were brutally hit. they have recovered some what but it wasn't pretty.
these funds were generally highly geared and when push came to shove they had to sell or write down assets at huge losses.
If you have property assets outside of your PPOR I'd not allocate anything to LPt's or REITs. yes the yield can be good, but a LPT is not like owning a property....
What happened to Australian LPTs also happened to hundreds of banks around the world, their leverage made them vulnerable and share prices dropped 80%+ or were wiped out.
LPTs have lower leverage now and many have consolidated back into Australian assets since the GFC. Many have recovered nicely. I would consider them lower risk than Australian banks.
LPTs have lower leverage now and many have consolidated back into Australian assets since the GFC. Many have recovered nicely. I would consider them lower risk than Australian banks.
Enjoying this thread.
I have found it prudent to do a considerable amount of research on individual companies. Checking balance sheets, vision statements, management structure and style (passive/aggressive) etc. Just as you do when contemplating an IP purchase.
Having a cash reserve, if possible, allows the investor the opportunity to purchase stocks when the market drops/ crashes.
I hold shares in only 4 companies, directly. Initially, adopted the strategy of dividend reinvestment along with dollar cost averaging by topping up monthly.
Different circumstances now, so take dividends to raise passive income level.
I have found it prudent to do a considerable amount of research on individual companies. Checking balance sheets, vision statements, management structure and style (passive/aggressive) etc. Just as you do when contemplating an IP purchase.
Having a cash reserve, if possible, allows the investor the opportunity to purchase stocks when the market drops/ crashes.
I hold shares in only 4 companies, directly. Initially, adopted the strategy of dividend reinvestment along with dollar cost averaging by topping up monthly.
Different circumstances now, so take dividends to raise passive income level.
Hi MTR, we own COH (Cochlear).
I think it is undervalue. It is the market leader in its industry and it has been approved by European and FDA, so they have big market.
I would suggest, to understand the stockmarket, you have to be in it. So just buy shares in some companies. Don't wait until the newspaper report the crash. By the time you read the news, the big investor would have snapped them.
I am still learning too....
I bought QAN....am still learning...it's very cheap considering they have huge asset. They just need to replace Joyce and the shares will go up.
I think it is undervalue. It is the market leader in its industry and it has been approved by European and FDA, so they have big market.
I would suggest, to understand the stockmarket, you have to be in it. So just buy shares in some companies. Don't wait until the newspaper report the crash. By the time you read the news, the big investor would have snapped them.
I am still learning too....
I bought QAN....am still learning...it's very cheap considering they have huge asset. They just need to replace Joyce and the shares will go up.
