ETF Me! Again... (fund help)

I'm back to drain you all again.

Some of you are probably pretty familiar with my situation and activity so far (or lack of activity).
I'm starting to think that at this stage in my life the best thing I can do financially is to increase my earnings and start saving. I have some money in a few funds, which have dropped by about 50% since I invested in them.
I don't think I'm going to bother investing in shares at this stage, as I don't really have the capital to make it worth while (in my opinion). At least not yet.
Although I still have my Macquarie fund. I'm currently using their cash account for the interest rate.

I'm thinking of opening a new fund or two (considering vanguard) and setting up a regular contribution plan. I want something long term and don't plan on touching the money for 5-10 years, but still making regular deposits.
Any ideas on what sort of fund would be appropriate?
(I'm thinking of a high growth fund, and possibly re balancing it down the line to generate some passive income)

I'm not sure whether to leave the other money I have invested or to withdraw it and use it to start up my new savings fund...

Thanks for any help.

 

check out netwealth.com.au they allow you to invest in virtually any fund you like and have regular contributions go into each of them. They also invest into the wholesale fund versions which offsets some of their fee's. They also have research tools to help you select a fund.

If your not sure on a mix of funds, just choose their generic growth fund which diversifies into various sectors.

You also get 1 tax statement and everything is in 1 neat place.

Or if you want to get started into shares, just buy a comsec aussie share pack.

remember investing doesn't need to be complex. I would choose a main primary Australian large company share fund, and invest regularly into it. choosing more specialized funds, you carry a larger risk of the chosen sector doesn't perform.

 

I think to decide this you need to do some calculations.
consider the following;

How much money are we talking about here: that needs to be kept in mind for the context of the next few considerations.

What will the capital gains tax be like if you sell the existing funds. (i am guessing it will be nill because you have made a loss). What will the overall effect of this tax have on your overall tax considerations for this financial year which is the year you will incur the tax.

What are the ongoing fees like on the existing fund you are in, and how does that compare to the fees in the fund you are thinking of switching to. Think in terms of the timeframe and amount you are investing.

What are the applicable entry and exit fees in switching.

What is your investment timeframe, how flexible is it. Do some rough calcs of management fees over the expected term of investment.

And also - does the existing fund, or the fund you want to change to meet your risk profile and investment goal. Hopefully you will be moving toward a more suitable fund.

 

Hmm, thanks guys.
That gives me something to think about.

I'm checking out the netwealth site now.

I always said I would leave the invested money where it was and see what happened. But if it will be better off somewhere else then I'm happy to move it.
I really don't understand the tax implication etc... but I haven't made any money so I don't think it will be a big issue.
I really need to get an accountant though.

It started off as $15,000, but is down to $7,500 or so...

Anyway, I appreciate any and all help.

 

Oh. What are your thoughts on managed funds V's Passive funds??

I know about ETF's, but are there passive funds I can invest in?
What are your thoughts on these?

 

You wont have tax to pay on a loss. Tax is paid on a profit, so if you did close these loss positions, no tax is paid.

This is why its important to dollar cost average your entry into the market with regular monthly contributions.

I'm sorry your investing experience has started with such a loss... but we all have been caught with our pants down

But things are cheap now, and the long term investor shouldn't be concerned about short term price increases or drops. When the price goes down, you buy more units with your $.

If you want to be safer, invest into a non-geared Australian share fund which invests mostly in top 200 aussie companies.

If your not confident in fund selection, choose one of those netwealth (or other brand) multi sector funds.

But I'm glad to see the recent losses have not scared you off, these will be valuable lessons you will learn, as have I!!

 

Great. Thanks again everyone.

I like the idea of using index funds for some reason.
But I also like the look of the netwealth facility.

More decisions to make I guess...

 

If you feel comfortable with index funds, go for it!

I prefer to choose a fund which has a longer term average return above the index..

You need to read the PDS and find something YOUR comfortable.. also look at the netwealth multi-sector funds.. those funds should provide with a smoother ride as they are spread across several sectors. not just 1 'index'.

 

this is true.. but most funds have minimums, and he may not be able to afford the min entry points.. going through netwealth, he can get into a selection of funds under one umbrella.

If he invests $5000, then the fee is about $45 for the year... to use the wrap account.. some of that will be offset by the savings by entering the wholesale fund version rather than the retail.

 

I've been having a look around the netwealth site, but can't find any information on their fees and charges. It's free to join, but after that I don't know what the fees are...
I can find the MERs of various funds, but nothing else.

I could stick with my CFS account and maybe change some of my investment options and then set up regular investments into 2 or 3 funds. But I don't think CFS has as many funds available to invest in. I had a look and don't think I can access any of the Vanguard options.

Any advice?
What would you do in my position?

 

Compleks, from memory is was 0.94% of your holding balance, so on $10,000 you pay $94 per year to them in fee's.

Plus remember going through them you will enter the wholesale funds versions of funds.

For example, if you enter the Platinum international share fund via the retail colonial platform, you will pay 2.45% MER FEE

However going direct to platinum you will pay 1.44% MER. With netwealth you invest DIRECT with Platinum, PLUS netwealth 0.94% so your total MER with netwealth will be 2.38% which is LESS than going via colonial.

Plus with netwealth you can invest in ALL the platinum funds, like the ASIA one which is pritty good, via colonial you can only invest in the standard international share fund..

In essance netwealth give you far more investment options, 1 simple tax statement, one place to manage everything easy to setup a regular investment plan.

 

I do like the sound of that. Simple is what I'm after at this stage.

I wouldn't really want to hold accounts with Netwealth and Colonial though... So I'm tempted to close the CFS account and put what's left in with a Netwealth account.
I'm not sure though

I guess I could leave the CFS account and forget about it. Just start fresh with Netwealth using 2 or 3 funds and a regular contribution plan. It's probably not really much of a hassle to maintain the two accounts, but a slight case of OCD says I should keep everything together

Hmmm... I'm not sure how to structure myself now. If I keep the CFS account I think I will hang onto the 452 geared Aus. Share fund, and maybe transfer the money from the other two funds into a generic growth fund??


What sort of fund allocation should I look to set up with netwealth?? I'm thinking maybe the Vanguard Australian Share Fund (I think it's the indexed one??) and another generic high growth fund (Vanguard again perhaps?).

Ahhh...
So many questions.

 

speak to netwealth, I believe you can also transfer-in existing funds to them, so you would not need to sell your current 452 holding. I'm not sure how it works as I have not done it, but I have recently begun the process of rolling over my super to netwealth from colonial. From what I could see, the cost is the same, but I get far more options to invest in - in my super..

 

That would be great if I could do that.

Do you have a SMSF? My super is with BT for life (through my westpac account). I just opened it recently and am putting $100 a week into it for now. I'm not considering changing it anytime soon. I'm not sure what other options I would need at this stage.

If I could transfer my current holding it would be good, just for managements sake and keeping everything in the one place. I'll see what I can do.

 

I found out the fee's for you.

its 0.825% PA gets cheaper the more you have invested with them

so on $10,000 you pay $82 per year..

I have noticed their colonial margin lending fee is 10.15% whereas I pay 10.5% with comsec margin lending (I do get a 25 pt discount with comsec which still is more than colonial)

their share trades are a fixed $20 per trade as well.

 

no I don't have a SMSF, but I like the netwealth as its almost as good as one.. you can buy direct shares, invest in almost anyfund etc.. only better thing a SMSF could do is buy direct property, which I'm not looking at doing.

 

Thanks mate. I did run across some of their fees before.

I don't think I'll be using any margin lending though.

I saw something briefly about a cash account aswell.
"Current Cash Rate 7.10%"

I just recently opened an account with Macquarie prime for use of their cash account which is 7.25%pa from memory. They also get discount brokerage at $20.
For the difference in interest do you think it would be advisable to put everything (CFS and Macquarie) all into Netwealth?
Is the netwealth cash account competitive enough to warrant the closing of my macquarie account???

Netwealth also allows me to invest in shares at $20. So I could feasibly manage all my investments under one convenient platform.
Sounds too good really.

 

I wouldn't worry about the cash account to much, as most of your money will be in the funds you invest, so on the few dollars it wont make much difference. For the sake of it been easy, I would have it all in one place..

I'm just looking at it myself as well, this is why I know the answers

I also like how you don't need to fill out application forms for each managed fund.. you simply invest in them online through the website..