Shares as part of your overall investment strategy...

[sfulop]

Hi guys,

I have no doubt that there are threads on here already about this but I was just curious of people's opinions about using shares in combination with property as part of an overall investment portfolio? If there are threads on this I'd love to be directed towards them.

So, how have you / do you use shares as part of your overall investment portfolio?

Regards,
Steve

 

[VYBerlinaV8]

I use shares as part of my overall investment portfolio.

A couple of years ago I set up a margin loan facility and used it to increase the size of my shares portfolio. I contribute monthly (to my managed funds), and contribute borrowed money monthly also.

I have tried to size my ongoing contribution such that in about 12 years time, the equity in the shares portfolio will be about $1Million. Once it reaches this level, I will convert the portfolio to 'yield mode' (ie not reinvesting the distributions), and will use this yield to supplement my income.

I pay the interest on the monthly contribution borrowings each month, and pay the expected interest for the following year each June (out of my cash reserve).

 

[jaycee]

LOL

My split between property anssd shares = $25k/$1M or about 2.5%

But I'll get it growing... slowly

 

[Luv2Travel]

Mine is about $500 / $1.2M, so about 0.04%

I am going to start looking into shares though to add to my portfolio. I never used to like the idea of them as I don't want to be studying the share market every day but realise I don't have to be a share trading genius to invest long term in some blue chip stocks.

 

[Gools]

I'm pretty much the same as VY apart from the borrowing bit.
I use it for cash flow and also use some DRP programs to increase holdings in stocks that have some DRP discounts.

I'm in the early stages of my shares adventure but have a return of about 6% not including a good chunk of franking credits. So property for good long term capital growth and shares for the cash spin off already.

Gools

 

[Sunfish]

I can understand why the young, with limited capital and even more limited time, go for property but by the time you retire you should have graduated from res property to commercial property and/or shares. (Property is "easier" for beginners too.)

With this in mind you can't start on shares too soon though. It's positively scary the number of people who think they can "switch" within a year or so. It ain't that easy.

I like the idea of "seasons". There are multiyear periods when one is better than the other. This does not mean you sell out and buy the other, to me it means that's where your "new" investments go. When the pendulum swings back the other way, that's the way you go.

 

[Bill.L]

Hi all,

Just remember that your 9% super contributions are probably going into shares, so you need to include this in your calculations.

bye

 

[jaycee]

What if you havent included super in your calcuations your shared above at all Bill , just your non super investments ?

What if you super fund is defined benefit one based on your Salary and length of service, how do you factor this in ?

 

[Sheryn]

So, how have you / do you use shares as part of your overall investment portfolio?
Regards,
Steve

Steve

IMHO - you do not invest shares until you have paid off your PPOR, have raised a family and have money in the bank that you are prepared to lose.

Did I mention you still need to be working to replace the funds you lose while you are learning about shares.

Having said the above - you need to educate yourself by reading etc.
1. Money management principals
2a. Fundamental analysis - is it for you.
2b. Technical analysis & charting - is it for you.
3. Have at least 100K that you can lose....hopefully not
4. Margin lending - understand that you sould NEVER EVER get a margin call on your loan. You should be in control of when you enter a share and when you exit a losing share.
5. Subscribe to quality newletter (and analysis if needed) and read forums. The Chartist is a good one.
6. Software & data subscription
7. PAIN when you have to sell at a lose.
8. Discipline to do what you have to do on a daily or weekly basis.

Now if you have a relative/friend that is a successful trader investor they may help you but you are responsible for your decisions and actions.

9. Look at the big picture (world) and think? What are interest rates doing are consumers buying, what is our dollar doing etc.

In answer to your question - yes I use shares as part of our overall investment portfolio, currently that ratio is a small portion. I am watching to see what happens end of September & October as to whether I will increase the ratio.

Remember = No one looks after your money as well as you unless you can employ someone to only look after your money. I cannot so I do it myself.


Good Luck
Sheryn

 

[VYBerlinaV8]

Steve

IMHO - you do not invest shares until you have paid off your PPOR, have raised a family and have money in the bank that you are prepared to lose.

Did I mention you still need to be working to replace the funds you lose while you are learning about shares.

Having said the above - you need to educate yourself by reading etc.
1. Money management principals
2a. Fundamental analysis - is it for you.
2b. Technical analysis & charting - is it for you.
3. Have at least 100K that you can lose....hopefully not
4. Margin lending - understand that you sould NEVER EVER get a margin call on your loan. You should be in control of when you enter a share and when you exit a losing share.
5. Subscribe to quality newletter (and analysis if needed) and read forums. The Chartist is a good one.
6. Software & data subscription
7. PAIN when you have to sell at a lose.
8. Discipline to do what you have to do on a daily or weekly basis.

Now if you have a relative/friend that is a successful trader investor they may help you but you are responsible for your decisions and actions.

9. Look at the big picture (world) and think? What are interest rates doing are consumers buying, what is our dollar doing etc.

In answer to your question - yes I use shares as part of our overall investment portfolio, currently that ratio is a small portion. I am watching to see what happens end of September & October as to whether I will increase the ratio.

Remember = No one looks after your money as well as you unless you can employ someone to only look after your money. I cannot so I do it myself.


Good Luck
Sheryn

Getting a margin call does not mean automatic sale of shares. It simply means you have to rebalance the loan. Risk management solves this, provided you are sensible.

 

[Sheryn]

Getting a margin call does not mean automatic sale of shares. It simply means you have to rebalance the loan. Risk management solves this, provided you are sensible.

Risk management of your money is why you should never get a margin call IMHO. Bottom line if you are classed as a trader loses are tax deductions just like electricity & rent but you need to minimise your costs.


Cheers
Sheryn

 

[alexlee]

IMHO - you do not invest shares until you have paid off your PPOR, have raised a family and have money in the bank that you are prepared to lose.

This is very, very conservative. Paying off the PPOR can be greatly speeded up with debt recycling, and the bigger the IP portfolio, the faster this can happen.

Risk management of your money is why you should never get a margin call IMHO.

Again, very conservative. One could, for example, refinance an IP and use the proceeds to buy shares. The chance of a margin call on a resi IP loan is very low.

Just remember that your 9% super contributions are probably going into shares, so you need to include this in your calculations.

If you're in your 20s and have a 20 year plan, should you really include super as part of your assets at all?

 

[Ridin-High]

Margin loan just depends on appitite for risk. Same principles apply it can increase or decrease your wealth quicker. I personally use one.

I have a mixture of resi property and shares with 80% resi property, 20% shares. Looking to increase share holdings. My end game is to live on income from the shares... Previously it was to live off income from Commercial property.

I do believe in a balanced portfolio with lots of different assets which perform well @ different times. So i'll continue to evolve and learn about new asset classes etc.

Regards,

RH

 

[normailson]

This was one of those "aha" moments so many years ago.
The key to the question for me is leverage not percentage growth. I don't doubt for a minute that a share can have a much greater percentage growth than an IP.
However, property allows me to be exposed with little risk and no margin calls to the tune of millions. Could I sleep at night with that exposure to the ASX or other more volatile markets? The answer is a resounding "No!"
Subsequently, a shares portfolio is something I dabble in (to the tune of tens of thousands and it varies all the time) until I can buy another IP.
When I understood that leverage is the key and not gambling for percentage growth, shares become an income exercise while IPs became my wealth creation exercise.

 

[Ridin-High]

This was one of those "aha" moments so many years ago.
The key to the question for me is leverage not percentage growth. I don't doubt for a minute that a share can have a much greater percentage growth than an IP.
However, property allows me to be exposed with little risk and no margin calls to the tune of millions. Could I sleep at night with that exposure to the ASX or other more volatile markets? The answer is a resounding "No!"
Subsequently, a shares portfolio is something I dabble in (to the tune of tens of thousands and it varies all the time) until I can buy another IP.
When I understood that leverage is the key and not gambling for percentage growth, shares because an income exercise while IPs became my wealth creation exercise.

You are technically gambling on percentage growth in your investment property's as well you know this right?

 

[joeExpat]

Was 60% property, 40 % shares 3 years ago.
I think property will perform poorly for a while and I'm more comfortable with shares so have sold down, now only 20% property (one left), 30% shares (including short positions) and 50% cash.
This is the first time in over 15 years I've had most of my assets in cash, but I believe it's the right place to be right now.

 

[VYBerlinaV8]

Risk management of your money is why you should never get a margin call IMHO. Bottom line if you are classed as a trader loses are tax deductions just like electricity & rent but you need to minimise your costs.


Cheers
Sheryn

I guess that's a bit more conservative than my approach. As I've posted previously, I've been margin called twice now, and covered it with cash both times (cash is a great risk management tool!). As a result, I've never had to sell when I don't want, and have been able to continue buying shares when they're cheap. In fact, the only shares I've ever sold are when I convinced my wife to sell her Telstra shares (at $7.50!!!!) to contribute to our first home deposit. I don't plan to ever sell me shares.

 

[Ridin-High]

I guess that's a bit more conservative than my approach. As I've posted previously, I've been margin called twice now, and covered it with cash both times (cash is a great risk management tool!). As a result, I've never had to sell when I don't want, and have been able to continue buying shares when they're cheap. In fact, the only shares I've ever sold are when I convinced my wife to sell her Telstra shares (at $7.50!!!!) to contribute to our first home deposit. I don't plan to ever sell me shares.

why would you sell TLS for they are the best company in the world lol!

I hate telstra so bad

 

[intrigued]

Steve

IMHO - you do not invest shares until you have paid off your PPOR, have raised a family and have money in the bank that you are prepared to lose.

Did I mention you still need to be working to replace the funds you lose while you are learning about shares.

Having said the above - you need to educate yourself by reading etc.
1. Money management principals
2a. Fundamental analysis - is it for you.
2b. Technical analysis & charting - is it for you.
3. Have at least 100K that you can lose....hopefully not
4. Margin lending - understand that you sould NEVER EVER get a margin call on your loan. You should be in control of when you enter a share and when you exit a losing share.
5. Subscribe to quality newletter (and analysis if needed) and read forums. The Chartist is a good one.
6. Software & data subscription
7. PAIN when you have to sell at a lose.
8. Discipline to do what you have to do on a daily or weekly basis.

Now if you have a relative/friend that is a successful trader investor they may help you but you are responsible for your decisions and actions.

9. Look at the big picture (world) and think? What are interest rates doing are consumers buying, what is our dollar doing etc.

In answer to your question - yes I use shares as part of our overall investment portfolio, currently that ratio is a small portion. I am watching to see what happens end of September & October as to whether I will increase the ratio.

Remember = No one looks after your money as well as you unless you can employ someone to only look after your money. I cannot so I do it myself.


Good Luck
Sheryn

This all sounds pretty stressful, I took a different approach and learnt how to read the books. And also started my own small business and recieved a good income which I still love doing today this taught us what business is all about.

When we started in shares our first income from shares was $364.00PW, 17 years ago its now $7200.00PW there abouts. the income has grown by about 19% PA over that period, thats enough proof for me the income just keeps increasing, we have never sold one share only ever brought when the price was down.

Regards

 

[The Y-man]

So, how have you / do you use shares as part of your overall investment portfolio?

We used them as the primary means of speeding up the process of saving up for a deposit for the first property we bought. In the right time of the so called "cycles", shares will rippingly outperform the cash market - so instead of taking years to save up a deposit, this might be done in under one year!

Cheers,

The Y-man