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Annual Strategy Review (progress) HELP!

Discussion in 'Investing Strategies' started by Compleks, 14th May, 2011.

  1. Compleks

    Compleks Well-Known Member

    Joined:
    18th May, 2007
    Posts:
    348
    Location:
    Melbourne
    Hi everyone!
    It has been quite a while since I posted.
    Actually, it has been a while since I did anything financial or investment related.

    At the end of 2010 I decided to review my progress and strategy. 2010 was a good year, as far as sticking to my plan goes.

    2010 I managed to contribute:
    $100 to my SuperFund weekly (BT Super for life)
    $100 to a savings account weekly (WestPac savings account)
    $400 to my netwealth account weekly

    Here's a quick breakdown of my NetWealth account at the end of 2010.
    (Performance for the year)

    total ---------------------------------- performance
    4% - Cash account - $90
    36% - CFS Geared Aus share - core - NEG 12.6%
    18% - Colonial first state property securities fund - 0.09%
    21% - Platinum international brands fund - 15.73%
    19% - Vanguard emerging markets shares index fund - 4.73%

    In total, a loss of $414 from Jan till Dec. (-1.77%)
    I have about $50,000 in my NetWealth account across these funds.

    Honestly, I don't think I've made any positive returns since I started investing. I forget when it was, but I got off to a very bad start (maybe 2008. Just before the 'financial crisis' hit, whenever that was)

    So I'm just asking for some advice.

    My income has been cut this year and I haven't saved a cent in 4 months.
    I'm back in a position to start saving again (maybe $300-$400 weekly).
    I'm also looking at a new job by the end of the year (fingers crossed) which will give me more freedom and more money (slightly).

    Sooo. What would YOU do?
    Keep contributing, despite the lack of positive returns?
    Cut my losses?

    Please advise!

    Thankyou all.
     
  2. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
    1st Jul, 2009
    Posts:
    703
    Location:
    SE Queensland
    Hi Compleks

    "total ---------------------------------- performance
    4% - Cash account - $90
    36% - CFS Geared Aus share - core - NEG 12.6%
    18% - Colonial first state property securities fund - 0.09%
    21% - Platinum international brands fund - 15.73%
    19% - Vanguard emerging markets shares index fund - 4.73%

    In total, a loss of $414 from Jan till Dec. (-1.77%)
    I have about $50,000 in my NetWealth account across these funds."


    Your Stats don't add up. Perhaps you coud put them in the format of-


    Fund- Fund Value2010- Fund%of total- dist for 2010- strategic allocation%


    As for your future allocation I can only point at a mix of
    Cash,Fixed income,Bonds,Small and Large Australian Companies,Small and large Foreign Companies, Emerging Companies and Property
    in your Risk personality.



    Johny. :)
     
    Last edited by a moderator: 14th May, 2011
  3. Compleks

    Compleks Well-Known Member

    Joined:
    18th May, 2007
    Posts:
    348
    Location:
    Melbourne
    I've tried to attach a snapshot from my NetWealth report.

    Hopefully this makes it clearer :)

    *edit.
    You may need a magnifying glass to read that, hmm...
     

    Attached Files:

  4. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
    1st Jul, 2009
    Posts:
    703
    Location:
    SE Queensland
    Thank you windows magnifier! :cool:

    Compleks, both you and I got burnt by the crash. You now have around $52,000. This is a significant amount. I know that you are younger than I, and am capable of absorbing more risk. But you might like to research your asset allocation.

    Shares go up and down, but Fixed Income mostly goes up( unless they default). I have chosen a balanced portfolio of 2/5ths in FI. I have separate funds in short term cash, 2-5 year medium terms and 10-15 year bonds. Also I have a split between Aus and foreign credit in AA government and corporate Bonds.

    I rebalance between my FI and shares when one outperforms. Meaning I move profits from Bonds to Shares when the bonds are up, and I move profits from Shares to Bonds when the shares are up.

    Using this strategy means I don't sell everything from fear, at the wrong time. I accept that my lower risk gets me lower returns (about 8%) but I am not a basket case like I was four years ago.

    Be happy that you have 50K. That's a damded sight better than most people your age( who have debt). Don't give up and never stop learning!


    Johny. :D:p:D
     
  5. Compleks

    Compleks Well-Known Member

    Joined:
    18th May, 2007
    Posts:
    348
    Location:
    Melbourne
    Thanks Johny. Gives me something to think about.
    So many options!
     
  6. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
    1st Jul, 2009
    Posts:
    703
    Location:
    SE Queensland
    Hi,

    Because everybody is different, their allocations are very individual. It can take some time before you are comfortable with your own mix. Nobody can tell you what to buy and what to sell because a). nodody can predict the future. b). nobody would tell, if they could fortell the future. c). Your circumstances are different than anyone else.

    I noticed all your Australian shares are geared. If it is 50/50 then you'd make near double on a rising market and lose twice as big with a falling market. What is your reasoning choosing this product?

    I think there would be a bit of doubling up between the platinum and the vanguard. Are you purposely choosing Asian companies over Europe/US/Canada?

    I suggest you go to Dymocks and buy 'All About Asset Allocation' by Ric Ferri. It could be the best $31.00 you could spend. The book is 300 pages, an easy read with lots of pictures. :cool: I learnt heaps from this book.

    Hope you find a good new job. :p


    Johny.
     
  7. JPM Group

    JPM Group Member

    Joined:
    7th Nov, 2010
    Posts:
    21
    Location:
    Moorabbin, Victoria
    Compleks as a financial planner I am one of the few that dislike managed funds. Have a look at the MER fees that are hidden but affect the net return to the investor. All clients have to assess there attidude to risk but by going by your portfolio you are more of the high growth investor.

    I would be looking at selecting higher dividend stocks on the market, the ASX200 has been trading 4500 -5000 for 18 months now and hence the market is a sideways pattern. High yielding stocks will generate you the yield irrespective of where the market is going. In addition, look at Silver Bullion, there has been a fantastic run in Silver, similarity traits to Gold Bullion and all this money printing in the states will drive this up. Silver recently feel quite a bit, it went from $10 to $50 in 18 months, it then fell to $32 (great buying) and now at $37. If Obama continues to release money in the system, this will further drive the price up.

    good luck with it.
     
  8. Compleks

    Compleks Well-Known Member

    Joined:
    18th May, 2007
    Posts:
    348
    Location:
    Melbourne
    Thanks again guys.

    Wish I could answer some of these questions. I have been inactive for so long. I set this up years ago and cannot for the life of me remember my reasoning for the funds I chose.
    Honestly, I think it was just a matter of actually taking the plunge and these funds came with good recommendations (I think).

    I've been sitting passively for too long now. I'm happy with the amount I have saved, but am pretty sure I'm still in negative returns overall. It has been about 4 years now I think, which is a bit disheartening/concerning.

    I was close to investing in some IndexFunds a while back. Something that covered the basic ASX200 I believe.

    I'm not sure if I should:
    1) Sell my managed funds and start over
    2) Leave my funds alone and focus new savings towards Indexed Funds
    3) Something completely different

    Cheers as always for the advice :)
     
  9. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
    1st Jul, 2009
    Posts:
    703
    Location:
    SE Queensland
    Compleks,

    You need to have a written strategy, and, a way to evaluate how you are going.

    Just imagine you are trying to fix a motorbike. Your goal is to have it operating smoothly. You attack the problem in small steps. First you check the key is in and it is switched on. Then you check the fuel tap, the spark, the valves, the carbies, the compression ect. Investing, also, needs to be planned out.

    Its seems to me, that it took you a lot of effort to start saving. And it's great that you finally did. But you have to put a plan in place, or you are going nowhere.

    Index funds are fine and dandy, if they are used in the right context. But you can easily lose money with them as well.

    You can choose to educate yourself, with an hours reading, every night. Or you could do some Tafe classes. Maybe even talk to some Financial planners ( fee per hour).

    Your financial independence is a long way off. Don't take the road that doesn't get you there. Even if it is smooth.



    Johny.
     
    Last edited by a moderator: 27th May, 2011
  10. Compleks

    Compleks Well-Known Member

    Joined:
    18th May, 2007
    Posts:
    348
    Location:
    Melbourne
    Solid advice Johnny.

    I've always saved my money, but never knew what to do with it. Investing seemed like a good idea. Took me a long time to finally take the plunge though, and as soon as I did the market crashed and I watched my money disappear along with my motivation.
    My recovery strategy was to set up a portfolio with a few diverse funds and to make regular contributions. I did that, but didn't really have an end in sight. So now I'm sitting on $50k without any direction.

    Your bike analogy makes sense.
    I'll have to sit down and think about where I want to be, then work backwards I guess?

    Cheers!