Financial Thread

[earl]

Unless you have insider knowledge, stay out of shares. You’re at a major disadvantage over the real players.

This is incorrect. You don't have to pick share to buy shares. You buy the index which means you buy a tonne of shares.

Your super will be doing exactly that.

I mentioned this above but it's a key point. Cash over time loses value. Shares over time increase in value. It's more risky long term to be invested in cash. The problem is when people can't handle the ups and downs and sell at the wrong time or they think they can pick individual shares. Sometimes individual shares work out but why bother. You are basically guaranteed that a share index will perform over the course of your lifetime. The trick is staying the course.

 

[Cultured_Bogan]

Hoping a combination of Superannuation and investment properties can set up my retirement in 9 years time.

About to commence doing the same. Switching to SMSF.

 

[Papacito]

Unless you have insider knowledge, stay out of shares. You’re at a major disadvantage over the real players.

This is incorrect. You don't have to pick share to buy shares. You buy the index which means you buy a tonne of shares.

Your super will be doing exactly that.

I mentioned this above but it's a key point. Cash over time loses value. Shares over time increase in value. It's more risky long term to be invested in cash. The problem is when people can't handle the ups and downs and sell at the wrong time or they think they can pick individual shares. Sometimes individual shares work out but why bother. You are basically guaranteed that a share index will perform over the course of your lifetime. The trick is staying the course.

Of course you can buy an etf or index fund. For many people it's an easy way to invest.

Although.... if you did, your asx 200 index purchase from 2007 would be worth much less than if you'd invested in cash or your home.

The real problem with index funds in Australia is that we have the second most concentrated sharemarket in the developed world, with the top 10 stocks making up about half of the total market cap.

Effectively your returns are pegged to very large, mature companies with poor growth prospects relative to other investment classes. Your risk profile is also amplified, by being over-invested in a few sectors.

 

[TillLindemann]

Unless you have insider knowledge, stay out of shares. You’re at a major disadvantage over the real players.

This is incorrect. You don't have to pick share to buy shares. You buy the index which means you buy a tonne of shares.

Your super will be doing exactly that.

I mentioned this above but it's a key point. Cash over time loses value. Shares over time increase in value. It's more risky long term to be invested in cash. The problem is when people can't handle the ups and downs and sell at the wrong time or they think they can pick individual shares. Sometimes individual shares work out but why bother. You are basically guaranteed that a share index will perform over the course of your lifetime. The trick is staying the course.

Of course you can buy an etf or index fund. For many people it's an easy way to invest.

Although.... if you did, your asx 200 index purchase from 2007 would be worth much less than if you'd invested in cash or your home.

The real problem with index funds in Australia is that we have the second most concentrated sharemarket in the developed world, with the top 10 stocks making up about half of the total market cap.

Effectively your returns are pegged to very large, mature companies with poor growth prospects relative to other investment classes. Your risk profile is also amplified, by being over-invested in a few sectors.

Yes I'm not a massive fan of index tracking, but I can see its appeal to some. It's certainly safer than the other extreme, of chasing speccy miners or tech unicorns.
I hold about 20 shares, so feel pretty well diversified. But the companies I've chosen and their weighting would not resemble an index fund at all.

 

[earl]

VGS or any international fund solves the problem of just purchasing the ASX 200. VAS is the ASX 300 and it's done exceptionally well for me.

The most logical way I've seen to invest is to use only an international index fund and a domestic bond fund. Your bond fund provides your cover for when the market goes down and the international fund is the most diversified stock index you can get.

I invest in the ASX and I don't see it as a huge problem at all. I mean if the Australian economy goes bust I'll have bigger problems that my ASX exposure.

 

[TillLindemann]

VGS or any international fund solves the problem of just purchasing the ASX 200. VAS is the ASX 300 and it's done exceptionally well for me.

The most logical way I've seen to invest is to use only an international index fund and a domestic bond fund. Your bond fund provides your cover for when the market goes down and the international fund is the most diversified stock index you can get.

I invest in the ASX and I don't see it as a huge problem at all. I mean if the Australian economy goes bust I'll have bigger problems that my ASX exposure.

Would you ever consider holding specific companies?
My best performer over the last year is a miner called Element 25, I'm up about 600% on that one 🙂

 

[voice_of_reason]

I'm not an expert but I do expect to retire this year with cash and property assets sufficient to provide a comfortable income. Out of interest, I read that the average person of my age retiring in 2016 had about $275,000 in Super. That's not good.

My position:
I have a small parcel of shares which I chose ($50k)
I have one remaining investment property (I sold a house and granny flat just before Xmas)
The only debt I have is the investment loan - I own my house, boat, car etc
I have a significant Super policy into which I salary sacrifice
I earn decent money but not much more than a base first grader
I've met good financial planners and some shockers. I hate AMP with a passion.

This is what I tell my kids:

Don't waste money
Start investing early then leave it alone - I have share accounts for both my kids
Work hard and do extra work to supplement income
Buying affordable houses - start small and work your way up. Too many people want multi-million dollar properties for their first homes and will never recover from the debt.
Cars are a rapidly depreciating form of transport - don't borrow big to buy one
Try to only have good debt (investment loans) as opposed to bad debt (lavish holidays and flash cars)
Getting rich is not about what you earn; it's about what you do with what you earn.
It's better to earn a little and be money wise than to earn a heap and be stupid.

Anyone can be a multi millionaire 🙂

 

[twentyforty]

What I've learned from 20+ years of investing:

Paying off your mortgage is a win-win investment. It's like compound interest without tax and you end up with an asset you can sell more or less tax free.

Unless you have insider knowledge, stay out of shares. You're at a major disadvantage over the real players.

Even with some of the generous tax claims, real estate investment is a bit of a joke. Unless you can get a property re-zoned, you're just playing around in the kids pool.

Invest in yourself. Do a course, get a degree, get your skills up. The return on investment is huge.

Have some rainy day money set aside, ideally three months of wages.

Never, ever, ever dip into your super.

I once owned all the shares in a particular company. I got the company to borrow a few hundred thousand from the bank, pay it to me as a tax free bonus, I paid out my mortgage with it the following week (gave it back to the bank lol). The company repaid the debt during the following 4 years with interest being tax deductible. All perfectly legal. The way I see it, there are only 2 ways to accumulate wealth and one of those ways is hard going. I owe my father heaps of gratitude for getting me a paper run when I was 10.