Motivated Money by Peter Thornhill... Shares for Property Investors!

It didn't specify any means as to pick one company over another though, or part any advice on how to read fundamental nor technical information on them.

Then you missed the point of the book, as I don't believe it was intended to discuss those details.

It was discussing asset selection and retirement income streams, in the context of peoples usual perceptions about the various asset classes, eg. residential property, LPT's, term deposits etc...

And comparing this to traditional financial planning ideas on how to structure your portfolio when you retire.
 
I think for the most part that it is very hard to outperform the index in the long-term, regardless of what strategy you use.
This is an old wife's tale perpetuated by "property only" investors who use reverse logic to justify their own investments when you remind them that Greater Sydney has been a minefield for years. It is the largest single market, afterall.

No property investor will admit to having "dollar cost averaged" into the Sydney market over the last six years but why not? Because they claim to have invested in "better" markets is why. It's easy to pick the city about to boom but impossible to select stocks. Am I the only one who can see the duplicity in this?

You accept as normal that you are allowed/expected to choose markets successfully ('Tis easy:)) but I am deemed to be having myself on when I say say that I can do better than "the market"?

Get real. :eek:
 
I believe its nearly impossible for ANYONE to consistently outperform the market in the short run, medium run and long run.

IV,

I'm just curious... then why do you actively invest in shares?

Has your personal share portfolio outperformed the market?

Intrinsice_Value said:
...i believe a sensible private investor can achieve outperformance by concentrating on the medium to long term.

I don't understand... I thought you just said that it was nearly impossible for ANYONE to consistently outperform the market in the medium to long run?
 
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Then you missed the point of the book, as I don't believe it was intended to discuss those details.

It was discussing asset selection and retirement income streams, in the context of peoples usual perceptions about the various asset classes, eg. residential property, LPT's, term deposits etc...

And comparing this to traditional financial planning ideas on how to structure your portfolio when you retire.

Then it's possible you took my quote out of context then. My point was that the book spent 200 pages saying amass as many shares as you can. I already know this and try to do this. It bothered me that it didn't offer anything further.
 
Most people I know who are doing nicely and living well at the same time (a big boat anyone?) are in business. They use property where required and shares for retirement.

The best way to retire is to sell the business complete with a 5X5 lease on your commercial premises. But they don't seem to want to retire early. :)

Agree entirely.

Business, own business CIP, PPOR - all potentially CGT free.

Some other property, and shares for retirement.

Simple really.
 
Yeah yeah, but I think I put the wrong emphasis on my statement. I'm not saying you have to predict the future, I'm saying that other things about the asset classes are prolly more important than performance. Such as greater liquidity in shares (quicker exit in front of disaster), or greater leverage in property (more buying power).

If we think there'll be a difference in asset performance, it'll prolly be offset by making the right (or wrong) individual decision on those other issues.

You make some great points, picking the asset class is one thing, and then using it in an appropriate and effective manner, tailored to an objective, is another.
 
Does anyone seriously think investment is easy and formulaic? It sound as if we are being asked the formula.

Breaking News! There ain't one. You swim, run, ride a bike as you wish but anyone telling you they know what will get you there fastest is a liar.
 
Because they claim to have invested in "better" markets is why. It's easy to pick the city about to boom but impossible to select stocks.

Probably yes, because there are more variables involved that you can control.

Whereas, with shares, you have very little control.

But, as you may have read, I'm just about to start piling into stocks! :eek:
 
Does anyone seriously think investment is easy and formulaic? It sound as if we are being asked the formula.

Breaking News! There ain't one. You swim, run, ride a bike as you wish but anyone telling you they know what will get you there fastest is a liar.

It's never easy, but certain asset classes, strategies and approaches are more likely to lead to success for more people when used appropriately, than others.

eg. shares are probably better than Ostrich farms, for most people.

Ultimately though, you need to do what suits you, your individual personality, risk profile, interests and overall life and financial objectives.
 
Probably yes, because there are more variables involved that you can control.

Whereas, with shares, you have very little control.

Are you serious? Property is seriously effected by three tiers of governments. Politicians are like little children with adult hatreds.

And if you have read what I have written you should have come to the conclusion that I think you are doing the wrong thing just because someone said it is a good idea.

You would need rocks in your head to dive into todays markets (all markets) without a clearly thought out plan of attack and a narrow focus of what investments will survive GFC MkII best. I believe cash to be the second best pick, for what it is worth.
 
Then it's possible you took my quote out of context then. My point was that the book spent 200 pages saying amass as many shares as you can. I already know this and try to do this. It bothered me that it didn't offer anything further.

Perhaps it wasn't written for you Dave?

You are probably in the top 20% of financially literate Australians. These books are for the other 80% I believe.

I meant this in a nice way mate :)

Cheers,
 
But it reminds me of Wall Street: Why cant the majority of funds managers out perform the S&P: because they are sheep, and sheep get slaughtered.

I know I'm going back a way quoting this but I just had a thought on this. Prolly why the majority of fund managers dont beat the S&P is because they index themselves against it, all their stocks are in the index, and they have costs. So it would make sense if they failed on average to outperform.
 
IV,

I'm just curious... then why do you actively invest in shares?

Has your personal share portfolio outperformed the market?

Intrinsice_Value said:
...i believe a sensible private investor can achieve outperformance by concentrating on the medium to long term.
I don't understand... I thought you just said that it was nearly impossible for ANYONE to consistently outperform the market in the medium to long run?

did i miss out a word,

let me state it again,
I think its nearly impossible for ANYONE to consistently outperform the market in the short run, and the medium run, and the long run.

Notice all the 'and's.

Why do most professional money managers underperform in the long run? because they have their hands effectively tied to the short and at best medium run.

Yes over longer periods my portfolio's have always outperformed, but i am small (ie i dont have huge chains of money that i have to invest profitably) and i can take a longer term view point. I do frequently underperform in the short term though.
 
did i miss out a word,

let me state it again,
I think its nearly impossible for ANYONE to consistently outperform the market in the short run, and the medium run, and the long run.

Notice all the 'and's.

Why do most professional money managers underperform in the long run? because they have their hands effectively tied to the short and at best medium run.

Yes over longer periods my portfolio's have always outperformed, but i am small (ie i dont have huge chains of money that i have to invest profitably) and i can take a longer term view point. I do frequently underperform in the short term though.

Thanks, that makes sense now.
 
I get what your saying, my point (though a bit radical for some) is that from the outside you don't know what's going on inside any of the listed corps.
You cannot rely on "experts", stock pickers, analysts, brokers and least of all company press releases etc.
Surely the drop of 08/09 made this obvious once again.
All you or anyone else can have is an opinion, because the facts you wont have until long after they've happened.


Yes you are correct in that only opinions can be created, because a shareholder is generally not an 'insider'.

But this doesnt mean those opinions created will have a random chance of being correct.

Its a bit like running an insurance company. Some insurance companies tend to be more profitable over time than others? why? and the answer doesnt lie in revenue maximisation or underwriting the latest fads.
 
Damned by faint praise. :D The "other" 80% are as dumb as dog poop.

Just applying the 80/20 rule as it seems to illustrate just about everything these days :)

But you are right. I take my 2 yr old nephew to soccer skills every thu morniung. Last thu I was listening to the happenings with Julian and Kevin and arrived ready to chat about our new PM with the mums. None of them were aware of the leadership struggle or that Julia had been sworn in. Given it had dominated the media all morning and was on everyone's lips I had to wonder ...

But after I brought them up to date it was all about how a female PM will bring huge changes because females have different values and then which politicians they liked and which they didn't. I never really thought of elections as a form of Miss Australia before...

Some didn't even know which party they belonged to.

I came away with a new found sense of how dumb the average suburban Australian really is.
 
Just applying the 80/20 rule as it seems to illustrate just about everything these days ...................... it was all about how a female PM will bring huge changes because females have different values and then which politicians they liked and which they didn't. I never really thought of elections as a form of Miss Australia before...

It's mostly about the spin and the promotion and to whom the communication style of the candidate appeals the most during the lead up to the pageant/election. :D That's why JG's predecessor got voted in.......he was slick :cool:

Some didn't even know which party they belonged to.

I came away with a new found sense of how dumb the average suburban Australian really is.

Agree Simon; Whilst I see the 80/20 rule in most facets of life also, I wonder if those ratios should be revised in the dumbness category to 95/5. The datasphere (in the absence of original thought on the part of most people) perpetuates this dumb and dumber cohort. ;)
 
I think I will do the same, but with my ''limited sphere'' in shares.

That's why an SMSF is well suited to share investing for me, as I won't be able to access the $ for at least 25+ years!

I'm glad that the statistics support the theory behind this approach.

I'm sure it's something you're aware of JIT, but bare in mind your above share/MF strategy will work only if you're prepared to work till 60-65-70(?) before you start living off those dividends. If that's the plan, all good. :)
 
I'm sure it's something you're aware of JIT, but bare in mind your above share/MF strategy will work only if you're prepared to work till 60-65-70(?) before you start living off those dividends. If that's the plan, all good. :)

Steve,

I am 30 now, so another 25 years will take me to 55, where (based on the current rules), I can access some of my SMSF $.

It's not that far off!... and what if I live till 90?!

This is my personal preference only, if you want access to the money earlier though, invest the money outside super using a DT.

I think some people here are offended by the simplicity of the strategy suggested, as the mindset is perhaps that investing should me more complicated?

The way I see it, for retirement, and lets take the age to be 55 in my example, I want the following:

A high long-term income stream.
An income that grows at a faster rate than bank interest or rents.
An income that will be relatively stable in the medium to long-term, but this doesn't necessarily mean a ''guaranteed'' income or an income that will necessarily rise every single year.
An income that is obtained passively and not dependent on my personal exertion, effort or time.
An income that is earned in the most tax-effective manner possible, ideally tax-free.
A capital base that increases over the long-term, but granted that it may fluctuate dramatically in the short to medium-term.
Low or no leverage or bank control.
Minimum costs for the actual investments made and transactions involved.
Minimum costs for managing the portfolio.
Minimum involvement by external ''advisors''.

If these are the objectives... then what is the most effective way for me to achieve them (I basically need to buy an effective future income stream that meets the above criteria)?

IMHO:

Dollar-cost averaging into Australian industrial shares via index funds, and for the most part, not ''diversifying'' into other asset classes to achieve this outcome as per traditional financial planning theory.
Starting the process as early as you possibly can.
Re-investing the dividends while you are accumulating.
Holding on for as long as you can before accessing the money, and letting the compounding growth of the money and time take its effect.
Investing the money in the most tax-effective manner and structure possible, ie. maximum tax-deductible contributions into a SMSF, and in some circumstances, this can be done with gearing, creating a two-fold and significant immediate return on investment, regardless of the actual performance of the investment.
Accessing the money at the most tax-effective time, ideally when the SMSF converts from accumulation to pension phase.
Minimising buying/selling or trading activity to minimise tax and costs.

For me, this is an income-driven and super-based strategy, that is passive but effective.

To grow your capital base as big and quickly as possible though, I feel that you need to use as much leverage as you possibly can, as fast as you possibly can, and this can only effectively happen outside super, and with assets that give you the greatest leverage (with lowest risk)... ie. residential property (RIPs or CGT-free PPORs).

The other means being via business or own business CIPs (which have preferential tax treatment), or other CIPs.

I am happy to take criticisms on my planned strategy.

My two-pronged approach involves geared up RIPs and PPOR outside super, and Australian industrial shares via index funds inside super.

With the possibility of business/own business CIP/other CIPs in the future.

Note: There is no mention of index funds in this particular book, and this is central to my planned strategy.
 
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