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Discussion in 'Investing Strategies' started by Ksr, 4th Sep, 2016.

  1. Ksr

    Ksr New Member

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    Melbourne
    Hello invested members,

    I was hoping if I could please get some suggestion regarding best way to invest my money.

    I recently got an equity of 45K out of my first home (living in) at 4.24%. I initially wanted to use that as a down payment for an investment property (1 Br unit) but I have yet to find the right one.

    The equity is sitting in a offset account so it's currently not doing anything at the moment. This equity is Interest Only for 5 Years.

    I was wondering if there is any suggestion that you can give me regarding the best way to invest this 45K if I choose not to buy an investment property.

    Rather than just letting the funds sit there doing nothing.

    I am researching dividend paying stocks and ETF. But still unsure. I am looking for returns of more than 4.24%.

    I look forward to your suggestions.

    KSR
     
    Last edited by a moderator: 15th Sep, 2016
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  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Are there any stocks or ETFs you've considered?

    How long do you intend to hold the investment for? Do you still plan on buying an IP with that money? How you plan to use the money will dictate the level of risk you should be taking.

    You don't want to invest your money into shares or funds only to have the market dip so that your capital is worth less than you've got now - and then you find the perfect property to buy but you no longer have enough to buy it!
     
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  3. Hodor

    Hodor Well-Known Member

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    Your time frame will dictate where you put the money. If you are after a long term investment and you won't panic with short term volatility then ETFs might be a great way to go.

    Vanguard Australian Shares (code: VAS) is the first place to look, last I looked the yield was 4.5% + 70-80% franking credits. So there is your return of above 4.24% before any capital gains/losses.

    Listed Investment Companies (LICs) are another investment instrument that might be of interest to you. AFI, ARG and MLT are the three biggest in Australia and have all been around for 50+ years.

    There can be a lot of hype around some of these products, so I'll give you two thoughs;
    - Past performance is not a guarantee of future performance, plenty of ETFs and LICs display exceptional returns over a relatively short time frame and these might be unlikely to continue. To shoot the lights out they are taking some risks
    - Minimising fees management fees will often help long term. If the management fee is above 0.5%pa there would want to be a very compelling reason for me to look at the fund
     
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  4. twisted strategies

    twisted strategies Well-Known Member

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    Ksr ,
    have you considered your brokerage ( problem in excess of 0.1% twice ( $90+ ) and potential capital gains tax liability .

    now as i understand you situation you want you cash available at short notice ( AKA a liquid investment )

    have you researched HVST ( and VERY CAREFULLY , please ) in amongst the high fee structure , is the fact they pay monthly AND DRP , which MIGHT be useful for you

    ( i hold HVST )

    to give an example of something i did ( similar ) with QFN ( but QFN probably won't suit your needs )
    i had a large (for me ) cash amount to park for just over 6 months BUT it had to go and pay a bill at the end

    so because it was at an attractive price ( AND cum div ) i invested the cash into QFN signed up for the DRP plan , and waited for it to go ex div AND then for the SP to rise ( yes i was lucky )

    so the DRP gave me xx number of shares , when i needed the cash the SP had risen enough to let me keep another xxx of shares and pay the bill in full promptly .

    in hindsight i would NEVER do that again with QFN ..... but some other ETFs might fit the recipe for you

    IF you do that the ETF must regularly trade MORE than the number you intend to sell , ( half your money back in time isn't good enough )

    by the way the QFN holding still chugs away adding some DRP shares every 6 months ( and still up 22% from my buy-in price but since the XXJ has changed marked in the meantime it is like comparing lemons with oranges noticeably but not completely different )

    please spend the EXTRA time if researching ETFs they are ALL different ( in ways that count )

    also if trying this please set a target price ( to sell )early , the best exit price might be two weeks early , but if you don't know what a good exit price is ....
     
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  5. Andreadylon

    Andreadylon Member

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    I will recommend you to rather put a long term trade in Indices or Stocks. That will give you better returns. Let us take an example of ASX 200, it started in March 2000 at 3133.3(S&P/ASX 200 - Wikipedia) and currently trading at 5470 which means over this 16 years(approx) it gave an average return of 4.66%. Also if you go through its history it gave average return of 16% in 2007. We know Australia economy is picking up with the pace, with global factors concerned the downfall is very unlikely to come. Other than this you can think of investing in Mining Stocks like Rio Tinto, BHP Billiton Ltd. or Financial Stocks like Commonwealth Bank of Australia, Westpac Banking Corporation,
    Australia and New Zealand Banking Group Limited
    where average return is quite good apart from dividend receivable. So return would be better. 2015 was a bad year for mining stocks, but they are rebounding now. So we expect mining stock to come back with a average return of 10% in coming one or two year.
     
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  6. twisted strategies

    twisted strategies Well-Known Member

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    AHA !

    the perrenial problem , i was lucky and stumbled into the market in 2011 ( actually a little earlier ) , but many folks are recent entrants and buying at least mid-way into this cycle .

    sure buying WBC as low as $20 was lucky for me , but good luck trying to get the same price this year .

    if term deposits were paying 5% per annum i would still have about 30% of my cash there ( but it isn't so heavily in the markets i am )

    poor Mr/Ms SMSF manager has the same problem the NEED to generate a 4% net return ( after taxes , fees etc. ) this year

    in the last 2 months i have bought ( first time or extra parcels )

    AIZ , QBE , CIW , HVST , DFM , CCV , LAU , DCG , KOV and GNG ( were any of those high on your shopping list ??)

    most retail investors have a day job , and simply don't have the time needed to research ( and think about tactics ) and stalk good prices .

    now what i can do ( market-wise ) is very different from the middle-aged family member/retail investor ( even if i had a partner to share the load with )

    i still love chasing that cheap share , but ETFs, LICs and REITs have their place and time also .

    PS big companies go broke as well ... Ansett , Gunns , Dick Smith , Hastie group and the list goes on and on .

    i don't see the EARNINGS in most mining stocks to improve yet , i think folks have jumped in early .. i will be looking harder at resource stocks this time NEXT year ( but i already have a comfortable holding in many such stock bought as others dumped ,and think a second sell-down is possible .,

    i cracked a winner on BPT , but suspect more weakness to come on energy stocks as well.

    i feel for the SMSF folk caught with tough decisions in uncertain times ( but still need to generate that growth )
     
  7. Tropo

    Tropo Well-Known Member

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    Invest in .......

    Tennis Balls.jpg
     
    Last edited by a moderator: 9th Nov, 2016
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  8. twisted strategies

    twisted strategies Well-Known Member

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    Tropo

    possibly a bit self orientated for that investor , but hard to argue against as a personal choice