I promise...

...that if this thread doesn't result in me taking action and making changes, I will close my investEd account and leave you all in peace.

I'm a man of my word, so now that's in writing I'll have to get my act together



I'll give the short version now (or try to)


Background Info.
I have $10,000 left in a netwealth account (An online investment management platform).

I started with these three funds:
- CFS FirstChoice 452 Geared Aus share fund = $3,609
- CFS Property securities fund = $2,250
- CFS FirstChoice Colliers geared global property securities = $741
(I think these funds were all opened with $5000. Plus some contributions. So they haven't done well at all, obviously.)

I bought these two later:
- Platinum international brands fund = $1,790
- Vanguard emerging markets shares index fund = $1,917
(They have risen a whopping $300 or so.)

I've probably lost about $9,000 since 2007, I think.

Current Situation.
- I have $30,000 in my savings account.
- I don't know what to do with it.
- I am 23 and have no debt or expenses.
- I can comfortably contribute $400 to $500 a week to my investment account

My Goals.
- Not entirely sure?
- Financial security would be my primary goal
- At this stage I want to build my base wealth while I figure out what I might use it for one day
- At this stage I'm thinking of committing the next 3-5 years to saving as much as possible and contributing to my portfolio

My Plan.
This is where I'm in need of help/advice.

- Deposit $25,000 into my NetWealth account
- Re-Structure my portfolio
- Sell my current funds??? (Maybe hang onto the Platinum and Vanguard funds) I'm not sure what to do here.
- Set up a generous regular contribution plan

Proposed Portfolio Re-Structure
These are the changes I'm thinking of making.

- 5% Cash holdings
- 25% ASX 200 INDEX FUND
- 25% INTERNATIONAL INDEX FUND
- 20% EMERGING MARKETS INDEX FUND
- 25% Set aside for direct share investments

This would just be for my NetWealth account. I will be also be keeping additional cash in my savings account, aswell as contributing to my superannuation.

QUESTIONS!
- What do you think of this 'strategy'?
- Would you keep any of the funds I already have invested in?
- Can you recommend any index funds which fit my 'plan'?
- All opinions, criticism etc... are encouraged


So much for keeping it short.
Hopefully I kept your attention with my formatting

I genuinely appreciate all the help I've already received here.

 

Compleks
I can't help you with solid advice but I've also got a lazy $20K
which I'd like to double in the short term if you got any good ideas....

 

Sorry, I'm not sure if that was sarcasm.

I've managed to lose 50% of my investments over the last 2 years. I don't think I'm qualified to offer any advice at all.
That's why I'm pleading for help hear

 

Hi Compleks

Let me start of by saying, There are things happening in this world that are beyond the understanding of this person. After much research I can say, that the world will go through much change and much turmoil.

The question is, Will you let your situation paralize you with fear? Sometimes detachment is the only way forward.

It would be sad to see, that someone who has given so much to invested, giving up.

I have taken losses, but I keep stepping up.

I love indexing and asset allocation, and I think your plan is as good as any. If an old fart like me can beleive in the future, then there must be opportunity out there. Go Seek.




Johny.

 

1. First things first, drop all the international funds they are just holding you back. Australia has the one of the best performing sharemarkets and economies in the world, so why bother with the rest. you don't make money by diversifying. plus many are priced in USD and thats going down the gurgler

2. next forget managed funds, your just paying for index returns over the long run.

3. next open a commsec account, with level 4 access. And while your there get a magin loan facility added as well.


4. Then do the following:

sell 2 XJO Call options expiring in 30 days 7% above the current market level
sell 2 XJO Put options expiring in 30 days 10% below the current market level

Rinse and repeat. If you make a loss don't roll up or down your positions, just take it on the chin.

This will make you about $1,000 a month with not alot of risk.

5. If you want a bit of spice stick a small portion into the following YTC, PTR & MOL. All three have positive news flow coming that'll get you a quick 30%-40% return over the next 4-8 weeks.

 

“...you don't make money by diversifying “.
Correct !!
“sell 2 XJO Call options expiring in 30 days 7% above the current market level
sell 2 XJO Put options expiring in 30 days 10% below the current market level
Rinse and repeat. If you make a loss don't roll up or down your positions, just take it on the chin.
This will make you about $1,000 a month with not alot of risk.
5. If you want a bit of spice stick a small portion into the following YTC, PTR & MOL.
All three have positive news flow coming that'll get you a quick 30%-40% return over the next 4-8 weeks”

You must be one of the kind !! hahahahaaa...
PS – OPTIONS...the most complex and the most difficult instrument to trade !!
After all ..... enjoy it!!

 

Firstly and foremost I think the best investment you will ever make will be in yourself. This sort of investment is the one that will reap rewards for decades to come. So buy books, take course, make some cheap mistakes...

Secondly I just don't like debt going forward... I think any business or systems that have relied on debt over the last two decades will probably come undone over the next two. So I personally don't think geared investments are a good idea going forward or negatively geared investment properties.

I think your current investments strategy looks pretty reasonable, though I'm not that bullish on property, but I definitely keep a little bit of exposure.

I'm not sure what's going to happen in the world in regards to inflation or deflation so it's difficult to speculate a longer term investment strategy at this stage, but for me personally I'd be keeping more money in cash and potentially an asset like gold for the next year or two (maybe 10% cash, 5% gold or something). That said I am bit of a gold bug, but more than anything I just think it pays to truly be diversified when you are just a average sort of investor that just wants to park their money somewhere.

Also it's worth remembering that in times of deflation cash itself is a profitable investment position. Though if you trust central banks to hit their targets deflation shouldn't happen, but that's why I think the investment in both cash and gold is a good one - it's betting both ways.

 

honestly when I was at uni, studying Options and Futures I thought "seriously who the F##K would do this? it's just not worth it...." And I barely passed the subject.

but 7 years on, I love em. And enjoy learning about new strategies and working out ways to make cash. If you can learn the language of options trading and understand what can affect the value of the premium it's well worth it.

Trading the index is easier for beginners as it doesn't pay a dividend and is cash settled, so less things to worry about.

It might not be for everyone, but it's certainly made me some money over the last 18 months. If I was a fund manager my performance would be advertised on the front page of every newspaper everyday and people would be banging down my door to invest....

I stand by my view on International share funds though, do you really want a large portion of your money invested in the US, UK and Japan? And invested in USD? If you have to do it use a FX hedged fund that doesn't invest along the lines of the share of global GDP.

Chris C mentioned Gold as an investment.. be careful on this as gold is a hedged against inflation in the US not AUD. Infact even though gold has reached record highs if you bought it with AUD you wouldn't have made any cash. you need to borrow in USD and buy gold to profit from that strategy.

 

...It might not be for everyone...

I like that...

Trading as such in not for everyone. But proposing options trading to individuals who have not the slightest idea about financial markets is rather ridicules.
If you make some money trading options that’s fine...
Next time when you’ll talk about options do not forget to mention the risk involved with some strategies...which may seriously erode ones bank account.

 

Thanks for all the replies so far.

Johny_come_lately :
Thanks for the words of encouragement. I'm not going to let past experiences stop me from going forwards

Young Gun :
Thanks for the input. Your plan seems a little outside my comprehension at this stage. I struggle with simple things like managed funds, but I hope to learn more as I go.

Sim :
As usual you have been more than helpful. I will definitely take your advice seriously, as it sounds like a plan I can be comfortable with right now.

Chris C :
Cheers Chris. I have quite a library, but I find I learn best by doing. I've made mistakes and learned from them. If I make more mistakes I will learn even more. Hopefully though I can avoid the mistakes for a while this time.

Tropo :
Thanks for clarifying. I definitely don't know enough about trading options to make it my strategy yet.



Alright...

So I just bailed on the Colliers property fund. Feels good to be out of that one, even if it did cost me a bit.

I think I may keep what I have left and start contributing again.

40% - CFS FirstChoice 452 Geared Aus share fund
15% - CFS Property securities fund
15% - Platinum international brands
15% - Vanguard emerging markets shares index fund
15% - Cash (Saved for shares or another fund)


BUT...
What should I do with my $30,000 ?

I'm thinking of committing $25,000 to my NetWealth account.
Should I just split it as per the percentages above?
Do I buy all in immediately while these funds are relatively cheap?
Do I space out my contributions over time?

Should I keep $5,000 in my NetWealth cash account? I'm interested in possibly buying some shares?
(I can't really say why. I just have a desire to learn a little about the share market.)


I'm feeling good about all this. Finally I can get back on the wagon and get things happening.
I owe it all to the members here at InvestEd.

Cheers.

 

Compleks

Hard to tell which direction to take, even shares have recovered to levels where large gains are now questionable....

I like sim's suggestions but as a long term investment strategy because I don't believe that we'll see big gains in the near future (except perhaps for CFS Property securities fund which is likely to recover one day)

I'd look at damage control
What are your management fees like?
How can you reduce them?
I'd stick to local investments for now and remember that interest rates are also on the increase so I'd leave a higher % in cash

My $20K??
I'm not a fund person so I think I'll spend half of it on resource stocks and the remaining will go into a term deposit

 

Gold is an insurance policy against inflation (or the basement of a currency) over the long term. Young Gun - you come from a very short term perspective (thus being a trader)... but for most people thinking longer term is going to serve them much better.

Plus the AUD isn't as strong as everyone makes out - it definitely looks good short term because everything else looks rubbish, but if the world economy (or the Australian) hits any snags over the next couple of years rest assured the Aussie economy and the AUD won't be looking rosy as they do right now, and the RBA and Government will do exactly what every other government and central bank has done (borrow and print money).

Not holding "some" gold (and other commodities/precious metals) is very risky strategy looking forward 5 - 10 years if government and central banks keep doing what they are doing.

 

Compleks

Both geared funds and property trusts have faired badly in the GFC. Emerging markets have done well. But this day's winner is often tommorows loser. The idea is to place cash in areas that will grow. Not just follow the shinning stars. A falling market should be seen, not as a loser's game, bur opportunity to buy.

I choose index funds because they are simple and require low maintenance. That doesn't mean they need zero work. I also use index funds over ETF's because of regular installments (ETF's brokerage adds up). You can find index funds with low MER from Vanguard or CFS or choose quassi funds like RAFI (with a value tilt).

There is enough information to be found in inveEd threads, by typing "index" or "index funds" in the search box. You wil find a list of all the ETF's, and good books to read.

Dripfeed your cash into your ratio (asset allocation). Don't stop making payments in the down times. You will get the best bargains then. Rebalance every year. In ten years time, you will be wiser and richer!





Johny.

 

Thanks so much for all the replies.

I wish I could take everyone's advice, but I only have so much money and knowledge.

My plan for 2010 is this.

$100 per week into my savings account.
$100 per week into my super

$400 per week into my Netwealth account.
My Netwealth account is structured like this:
40% - CFS FirstChoice 452 Geared Aus share fund
15% - CFS Property securities fund
15% - Platinum international brands
15% - Vanguard emerging markets shares index fund
15% - Cash (Saved for shares or another fund)

Assuming the market is completely stagnant all year I should save up to $50,000 by the end of next year (in my Netwealth account).

I have $10,000 still in savings. I may buy some shares with this money. I'm undecided as of yet.


Thanks for the help.
Cheers.

 

Thanks Sim.
I couldn't have done it without your advice.

Just out of curiosity, why is it you don't have Vanguard funds listed on your site?
I just can't find any other information which is as convenient or reliable.



I didn't want to start a new thread for this. Sorry for having so many questions guys...

I have a friend who has been recommending that I use his Broker at 'Wilson HTM investment group'.
I'm just not sure if it would be worth my while. I'm still undecided about buying shares. I also don't imagine at this stage that I would be 'trading' as such. If I were to invest in shares I would probably approach with more of a buy and hold mentality anyway.
Opinions?

Lastly, if I did decide to buy shares. Should I keep everything together by investing through my NetWealth account?
Or should I open up a commsec account?
Are there really any Pro's and Con's I should consider?


Cheers

 

Great.
I've been using your site alot throughout this whole process.

Cheers.

 

cfs colliers global geared property

Compleks

Having a small stake in this sector will be well worth the gamble as they may not be paying dividends at the moment, there are five main properties .

1 australian - westfield group
4 global being - Boston properties
Simon property group
ventas inc
Vornado realty trust

With any given fund the lower the unit price the better the units you will get , the more units eventually will lead to more dividends overall in the longer term.

I have this fund alongside 17 others in a diversified managed portfolio, , so far over the past 5 years i have invested , for example out of pension money

hypothetically 100 a month , I started with 2 funds and have eventually built enough of an account to get 18 funds which will allow me to diversify my portfolio in a way that will have not only weaker unit prices which can buy more units .

Also stronger units which allows me to get the dividends whilst the others dont.

The great part about a managed fund is that you can get so many different companies without losing too much and the work is done for you .

I only pay 4% commision but can find it as being tax effective which is great as the fees are returned back to me.

Also there are franking credits for global shares


The sector is in asia , americas, uk , japan
Spread out into further sectors like industrial , retail , residential , hotels , car parks etc.

Please feel free to use this information for which ever personal use you choose but im not going to influence you by it , just keep this info in mind in case you decide that it may be an option for not short term but long term as well.