High Yielding Shares Again

[Macca]

Bugger, 50% isn't low risk though, particularly when the LVR limit on a lot of stocks is that or lower, This seems to be a pretty typical story actually. Often the story goes like this ;

1. load up on a hot tip on margin, often a spec miner with all of their savings.
2. be dumbfounded when it blows up and swears off stocks for life.

A little education and common sense could have saved these folks a lot of heart ache. Personally I would not take LVR above 33% on margin, and nothing spec. Always have buffer ready to dump in. Margin has great value but its a sword with two edges. The other one is where they just crap themselves in a GFC scenario, run for the exits with the herds and lose their shirts....when they should in fact be doing the exact opposite. I've got buy trade confirmations of ARG and AFI at low 5s and 4s from October 2011 when the herd was crashing through the turnstiles....and will be ready to do it again when the time comes...only this time I wont sell them for 15-20% profit. (Amateur mistake that ) I keep the trade certs in my drawer and look at them from time to time as a reminder!

He was offered $1m to go with his $500k, a total of $1.5 M to invest but he thought 50/50 would be safer

In 2007 CFDs were 90% lend on blue chips, BHP, CBA etc, that was blood bath for some, bad when you are 30, awful when you are 60 years old.

 

[willair]

BUT FORTUNE FAVOURS THE BRAVE?!?!?

it does not favour the brave. it punishes the stupid.

taking out a monster loan and throwing it all on one stock is the definition of stupid. even if it works out it is not smart, its luck. dont confuse the two.
.

It's not luck because sometimes success can also be the enemy with too much information and I have seen a few other trading portfolios of other people that bought into one or 2 bank just after the GFCmac1 and they have made serious after tax profits..

 

[baby blue eyes]

I prefer to use the property equity as a loan. No margin calls, so to me it's safer. The interest rates are below the dividend yields on a lot of stock at the moment. Not currently buying now several moths ago I purchased a tiny portfolio in a family trust that is supporting itself and maintaining capital values before I dive in deeper if the market moves downwards

 

[redwing]

I believe there is an advantage of VGS and VGE over VTS / VEU in terms of withholding tax implications, because they're Australian domiciled funds / not CDIs. It is discussed in this thread: http://forum.mrmoneymustache.com/investor-alley/australian-investing-thread/350/

Also I read this re: US Estate Taxes for overseas investors

Those with stock and bond investments that trade on a U.S. exchange could be on the hook if their investments exceed just $60,000 USD. Decades ago, this was considered a lot of money. But not today. The exclusion rate hasn?t budged. And the tax could be hefty, starting at 18 percent and rising to 40 percent for accounts exceeding $1 million.

Here?s how it could work. Assume an Australian lives in Malaysia. She opens a brokerage account in Kuala Lumpur. She buys an iShares MSCI Malaysia stock market ETF. She may never have stepped on U.S. soil. She isn?t using a U.S. brokerage. But this ETF trades on the New York Stock Exchange. So if she accumulates more than $60,000 USD before falling out of a Petronas Towers window, her family might receive an unusual condolence letter from the IRS. ?You owe us money,? it might say.

 

[The Falcon]

Theoretical US estate tax possibility is void when using Trust structure

 

[dajackal]

I prefer to use the property equity as a loan.

I just started doing this to purchase VGS etf shares. Previously was using my own money by drawing from PPOR offset.

Waiting for a dip before I purchase more to protect my downside risk.

 

[seven]

Vanguard VGS v VGAD

Hi Guys

I have been looking over the vanguard website.

there are 2 international ETF's listed. One is unhedged - VGS and one is unhedged - VGAD.

What are the pro's and con's of these? What is best for a retired investor who wants growth and yield.

I am following a Bogglehead (I think) strategy with the intention being a good chunk into VGB, then another chunk (technical term) into VAS or VHY, then another chunk into international shares VGS or VGAD.

I only vaguely comprehend the need to rebalance(actually I don't get it at all) and may be better off going into a Vanguard Balanced mutual fund and just let the experts handle it........the mutual fund strategy doesn't really sit well with me though , just a gut feeling.

Sev

 

[Gendry]

^ I posted about this a few pages back. But realised that I didn't actually include the link to the thread I mentioned. It's quite informative.

And unhedged returns have been quite good historically for australians if you have less than 50% internatinal equites. From halfway down the page of this (very informative) thread on Australian index investing:

"For the long term I prefer unhedged.
- Hedging is imperfect and does create some drag in returns
- In expectation over the long term a costless perfect hedge should be neither positive nor negative
- Historically for those with a long horizon and less than about 50% international equities results have been stronger without hedging for Australians, providing better diversification (See page 5: https://careers.jpmorganchase.com/jp...8630198939.pdf ).
- The currency hedging throws off income so isn't tax efficient

In the past I've split 50:50 hedged to unhedged (which I think will also be fine) but now more than 90% of my international equities are unhedged."

Thread link - http://forum.mrmoneymustache.com/investor-alley/australian-investing-thread/350/

 

[redwing]

Re: Hedging and Index Funds

In Dan Bortolotti's book, Guide to the Perfect Portfolio, he outlined the true cost of hedging when comparing a U.S.-listed S&P 500 ETF to a currency-hedged S&P 500 fund. In theory, their returns, in local currencies, should be the same, but they're not even close. The currency hedging costs the hedged fund between 1 per cent and 3.5 per cent every year.

According to Raymond Kerz'rho, a director of research at PWL Capital, currency-hedged funds are burdened with high internal costs that drag down results.

 

[Of The Vultures]

I'm looking at putting some money in regularly into an investment for our newborn and I came across this article:

http://www.sunshinecoastdaily.com.au/news/put-away-some-cash-yourn-newborn-it-adds/2283313/

Does anybody know if there is a fund out there that tracks the All Ordinaries Accumulation Index? I'm a bit lost as to how one goes about investing in this.

Cheers

 

[The Falcon]

Ok, not mentioned in the article is the onerous tax paid by kids...an index fund like Vanguards unlisted Australian share fund, or the listed ETF (VAS.AX) with dividend reinvestment plan ticked will do the job. To get around the tax on kids earnings issue the preferred vehicle is an investment / insurance bond which then invests in an index fund. Last time I looked Austock had access to the Vanguard product via their investment bond structure. FWIW I set up one with CommInsure for my daughter when she was born.

 

[gnokkybbob]

anyone knows what happen to RFE share? Will it ever recover??

 

[Of The Vultures]

Thanks Erko, I was going to put the investment in my name, not the child's but I think I need to speak to some tax and finance people for advice before I do anything.

 

[pinkboy]

anyone knows what happen to RFE share? Will it ever recover??

Looks grim.


pinkboy

 

[D.T.]

anyone knows what happen to RFE share? Will it ever recover??

Not possible to recover , they've had Receivers appointed mate

 

[Crabnet]

anyone knows what happen to RFE share? Will it ever recover??

Just looked and a poster on another forum said Ferrier Hodgson advised them that a decision will be made late January.

http://www.afr.com/p/business/companies/james_packer_backed_collapse_burnt_tqtc3Rfz2czz3a8UmM4ZWK

The 40 per cent plunge in the crude oil price has claimed its first Australian victim, with shale oil developer Red Fork Energy unable to repay its debts and forced into receivership.

The Australian-listed company, part-owned by long-time Packer family adviser Ashok Jacob, has been developing two shale oil and gas projects in Oklahoma in the United States.

KordaMentha was appointed as a receiver and manager of collateral on Thursday, after Red Fork failed to meet its obligations to financier Guggenheim Corporate Funding. It had lent at least $100 million to Red Fork.

The Perth-headquartered company?s directors appointed Ferrier Hodgson?s Martin Jones, Darren Weaver and Benjamin Johnson as joint voluntary administrators.

 

[MTR]

No doubt there will be more victims along the way

 

[redwing]

Thanks Erko, I was going to put the investment in my name, not the child's but I think I need to speak to some tax and finance people for advice before I do anything.

Re: Vanguard as posted above , can you open a Beneficiary Account direct?

 

[Intrinsic_Value]

High Yielding as been a good strategy and should be a good strategy into the near future.

But get the hell out of dodge if Australia starts to into a recession, those high yields are primarily supported by banks. You don't want to be in Banks at the START of a recession.

Not interested in WES or WOW at all in the mean time. They are going to experience abnormally low profits for a while. (refer my Coles/Safeway Post)

 

[js1]

Personally love GILD,COH,AHZ,( AZO ( But way expensive now ) picked up 200k aud of tsla average price of $65, think tsla will be $500 a share.