What got you into investing in shares?

I started investing in shares from the beginning of this year (newbie here) after reading a lot of inspiring posts on PC especially members like @austing and @falcon.

My ultimate goal is to be like @austing, to be able to retire on a continuous growing passive income.

But my interim goal is to pay off my PPOR loan ASAP and at the same time, increasing my income (higher paid job, more job, investment, steal etc). Well, may be not the last bit "steal"

2 inspiring shares investment strategy for me are:
1. Value investing. I rate myself 5/10 in this area.
2. Asset allocation. I rate myself 2/10 in this area hence more learnings and actions.

Hence my stock selection is often slow and careful, with main criteria total dividend > loan interest (capital will be a bonus) and future growth potential in the share price and divided payout.

My current portfolio consists of direct stocks and LICs (ETF will be the next addition). And currently it looks like..

65% returns total dividend higher than loan interest (with potential growth potential in capital & dividend)
30% returns dividend but lower than loan interest (very much capital growth focus)
5% short or high risk stocks (aim is to reinvest the profit to reduce investment loan hence increasing return)
At the moment, overall portfolio 100% shares which returns 5.8% dividend payout and 3-5% increase in price. I invest using investment and margin loans which stands at slightly above 10% margin call.

I will keep reading, learning, investing in shares and once it's in auto-pilot mode, next year, I might get my shares portfolio reviewed by professional and if ok, start progressing into investment property #1

 

Asset allocation is a bit overrated IMO. All the modern portfolio theory etc etc.

 

LOL Prime it with less sugar. It will take slightly longer to carbonate. When you can see 'sweat' beads in the neck of the bottle its good to drink. About 4 weeks. I have made some nice stouts however prefer a Porter now or a blow your head off IPA. Happy to give some tips about home brewing (learnt from my brother he has won quite a few awards). However thats WAY OFF TOPIC. Might need a home brew thread. LIC investors and home brew it seems go hand in hand!

 

I think CatCafe sums up my own story perfectly

Purchased my first Investment property at eighteen. By twenty one I owned three. As my property portfolio grew the work I did on them increased (massively). As an investor in both shares and property I can honestly say the income from shares is true PASSIVE income.

 

Couldn't agree more. Asset allocation is almost non-existent with our strategy. Shares / LICs for income and a cash buffer for liquidity / emergencies / opportunities.

Traditional asset allocation is more capital oriented. Because the income generation from these types of portfolios is typically quite low most retirees are likely to need to draw on capital in addition to income to live off. Value of shares go down but value of bonds go up etc. Investors are fixated on the capital value of the portfolio NOT the income.

Dividend investing is an entirely different ball game. The focus is on the high level of income from the portfolio NOT volatile capital. Many will live off the income without the need to draw on capital. Capital stays intact. In this scenario one doesn't need bonds to offset falls in the value of shares etc as one is not drawing on the capital.

Oh dear another opportunity to display a Thornhill chart. This chart visually sums up our approach to investing:

 

@Hodor could you please elaborate on your view?

I think asset allocation is for the long term and better risk management. It has allowed me to look holistically in every one of my decision making process. Albeit i'm currently very slow at this but I will get better. Hopefully, I'm geared enough for the next downturn.

 

Did you read my post just above yours?

 

Jerry_O

a long and twisting ( twisted ? ) tale here ...

first i had a relative that was a former government employee who took an interest in investing , when the relative became very ill my mum took over caring/power of attorney , and my mum lacking a high school education ( there was a war on, so she went to work ) and confidence in understanding financial trickery , so on rare occasions i had to 'look over the shoulder ' and give opinions ..

in 2007 dear old mum died in her sleep , leaving the rellies interests unprotected ( from the government ) .
now i have been the black sheep of the ( extended ) family for decades , so apart from applying for the power of attorney , my life went on ( with some modifications ) like baby-sitting the rellies house and about 120 years of family's keepsakes .

the government decided to sell the house and broke the rellies heart ( literally ) the government thinks it has a windfall ..... until they start carving up the estate ....... but there is one sheep left in the family .. a cranky BLACK one .

suddenly i have more assets than the government will let me keep and retire on ( in 2020 ) ( even after the legal fees )

so i was left with some property ( mum's ) , a share portfolio ( which the Public Trustee kindly offered to sell for me ) and a fair amount of cash .

i have been ( allegedly ) immature all my life and forced maturity at 55 was a mid-life crisis i wasn't expecting .

so i started with parking the cash in various ( short term ) term deposits and at opportune moments stated buying fixed interest notes/bonds and hybrids ( predictable income ) however interests dropped , bonds/hybrids redeemed ( and the replacement offers were unacceptable .

so got pushed more an more in ASX listed securities ( notes , LICs , ETFs . REITs and shares .

now this looked like are tough task , until realized i was up against crooks , sharks , and excessively greedy people .... i have been training for this my whole life !! ( the retail folk are just busy surviving )

so here i am caught in one of those famous gaps ' too much to be poor ' and not enough to live on for the rest of my life ( should i live for a while longer )

so (to me ) the answer was obvious i needed a retirement income fund and i need in rock solid by 2020 .... dramatically reduced trust in the financial advisors .

how about i do it myself ( outside a formal super or SMSF plan ).

now a 9 year target is both a blessing and a challenge , a blessing in the need to FOCUS , and a challenge to get everything mostly right ( even when they don't go to plan )

 

Yes @austing. I do intend to invest for long term, however I'm not retiring yet.
I'm in the asset accumulation phase and I think "the falcon" has also touched on this where I agreed with his idea. One should not just solely focusing on the dividend however total return (dividend + price increase) is far more important. 2 legs is better than 1?

 

Ah yes, fair enough. @Il Falco is an excellent investor. I'll let him answer this in detail if he choses but I think you'll find that he certainly doesn't follow the traditional asset allocation approach. It more about a combination of internal compounders (tax effective growth) in combination with dividend growth investing. And he does it very well.

And if you are going to invest in internal compounders then choose them carefully. Those worth investing in are very scarce. For example BRK.B and Markel. @Il Falco has one or two others he might like to share.

 

@austing explained it better than I will, but here goes.

Basically portfolio theory looks to maximise return and minimise volatility - in capital. Which is ideal if you need to continuously sell "units" such as in super or non div paying stocks, otherwise you would need to sell lots of units in a crash and a little in a boom to maintain income - exactly what you don't want to do.

Portfolio Theory IMO adds overheads in monitoring, maintenance and associated costs (transaction and capital gains events). Academics sit down and work out how closely they can track an index (usually the stock market as it historically has the best return of major index's) with minimal volatility/negative years. Long term you tend to sacrifice performance to not see your portfolio take a dive once a decade or so

Here's a basic example
Portfolio allocation models

Dividends tend to be much more stable than price (they only fell slightly during the GFC) so if you are relying on dividends capital movements aren't really important.
LICs tend to have three advantages, they balance and diversify automatically, they smooth dividends so income is even more reliable and they are low beta - their prices tend to be more stable than the index.

This is more a reference to dividend growers (I believe), look to accumulate companies that pay a consistent dividend which is expected to rise over time. Some companies like TLS have a great yield today, however the div isn't expected to rise much over time.

 

I_Luv_Chips,

i am waiting for a ( full ) market dip before adding much in ETFs

have you thought of REITs/( listed ) property trusts ??

most are currently over-priced and they are a mixed bag ,

however 'the noise' is trying to talk the sector down , so you might be lucky ( especially if you have a wish list sorted )

in REITs my current target is CMW ( it doesn't frank , but does DRP , and pays 3 monthly ) 94c is my current MAXIMUM buying price ( and i 'nibble ' = small parcels maybe two or three times a year )

if there was a 10% drop in the sector ( extra) ABP would be in target range . ( DRPs but pays 6 monthly )

and BWP might present a 'shock moment ' opportunity before Xmas

( DYOR please )

 

Feeling a bit like a party pooper here. Perhaps AReits might be ok if you're prepared to be active with the cycle. But again as a long term investor they don't excite me all that much more than resources. And now is a higher risk time to be considering them giving they're being used as bond proxies and in potentially bubble territory.

Here is the historical performance of listed property vs industrial shares:


And a useful article on the negatives of AReits:

Welcome - Motivated Money

 

please feel encouraged to disagree ,

personally if i wasn't under pressure to park cash somewhere profitable , i would be re-reading some of the articles i have saved for further thinking .

and in general your points are rather valid .

but i am expecting a 'false-flag' panic ( so the big guys can short them down and the reduce on the relief rally )

a bit like 2011 when MGR 'caught a cold ' ( my av. SP is $1.10 on MGR ) and then recovered later


MGR MIRVAC GROUP STAPLED SECURITIES



Balance Date Dividend Type Cents per share Ccy Franked % Ex-Dividend Date Books Close Date Pay Date
30/06/2016 Final 5.200 AUD 0.00 29/06/2016 30/06/2016 30/08/2016
31/12/2015 Interim 4.700 AUD 0.00 29/12/2015 31/12/2015 29/02/2016
30/06/2015 Final 4.900 AUD 0.00 26/06/2015 30/06/2015 26/08/2015
31/12/2014 Interim 4.500 AUD 0.00 29/12/2014 31/12/2014 26/02/2015
30/06/2014 Final 4.600 AUD 0.00 26/06/2014 30/06/2014 28/08/2014
31/12/2013 Interim 4.400 AUD 0.00 23/12/2013 31/12/2013 27/02/2014
30/06/2013 Final 4.500 AUD 0.00 24/06/2013 28/06/2013 26/07/2013
31/12/2012 Interim 4.200 AUD 0.00 21/12/2012 31/12/2012 25/01/2013
30/06/2012 Final 2.400 AUD 0.00 25/06/2012 29/06/2012 27/07/2012
31/03/2012 Interim 2.000 AUD 0.00 26/03/2012 30/03/2012 27/04/2012


@ $2 not for me but at the price i paid rather sweet ... say $1.40 maximum for me , BUT i would consider buying extras ( i don't do that for every stock i hold )

so if folks have some plans/targets should a market shock occur , that might smile instead of cry ,

during the Brexit i was caught off-guard ( as much as anyone ) but still had the presence of mind to grab some HGG @ $3.56 , and some extra CDM ( dumped because of the HGG and MQG exposure )

PS i love those weird niche( speciality ) REITs , bought at the right price, of course ( and bought partly as de-facto term deposits )

 

Thanks all for your feedback. Since im still in the very early stage of the investment, my focus is not to concentrate the funds into 1 stock/LIC/ETF and not over diversified into all large, medium and small caps.

Now, I'm not gonna further comment on this as I need to learn a lot more... Cheers guys!

 

i need to learn and think more also , good luck

cheers !!