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Withstanding the pain!

Discussion in 'Money Management' started by Johny_come_lately, 2nd Jul, 2009.

  1. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Location:
    SE Queensland
    Hi everbody,
    Boy do I wish I knew about this website, before I first started investing. It is well made and well thought out.
    Anyway, I am new. I'm in my early 40's and have a disability. In late September 2008 I put all my money into a mastertrust of managed funds. Currently the All Ords is down 1100 from where I bought in.
    So far the distributions have equalled the fee's needed to buy in. As this is my only source of income+a small pension, I've had to draw on the funds.
    I understand that nobody can predict the future and it was my choice to do what I did. I live a simple life, split between friends and church. While I can read and enjoy "Ascent of Money" most investing books are too heavy.
    My funds have gone down from the moment I've had them. Yes I have a budget, Yes I am a spendthrift, No I don't have any debt or card debt. I don't drink, smoke, gamble, go out, buy clothes or own a car. But my funds have been sinking from the moment they hit the water. I don't know how I can withstand the pain. Where do I go from here?


    Johny.
     
  2. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    This too shall pass.

    Live as modestly as you can.

    Try to avoid dipping into your capital as much as possible.

    Borrow audiobooks & CDs from your local library to increase your financial literacy.

    Good luck with it.

    Cheers
    N
     
    Last edited: 3rd Jul, 2009
  3. Johny_come_lately

    Johny_come_lately Well-Known Member

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    SE Queensland
    Thanks Nigel

    I've looked at my budget, but there isn't much fat I can trim. I guess it is just a matter of how long the period of low distributions lasts. At least I won't be paying much tax this year! :) My landlord is giving me another years lease (with only a $5 increase).

    Some years ago, I learned about credit cards the hard way. I got trapped by a $7K debt and no way to service it. A (very) nice relative payed it all off. Even though so many people have been caught out by the financial crisis, I still feel shame for my underperforming funds. I know I will not be bailed out again!


    Johny
     
  4. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Retail versus Wholsale

    Could anyone tell me what the effect of having a wholsale fund against a retail fund over time is?

    Thanks, Johny
     
  5. AsxBroker

    AsxBroker Well-Known Member

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    Hi Johny,

    Wholesale managed funds usually have a higher minimum dollar investment value (anywhere from $25k to $500k depending on the fund manager) with a lower ongoing management cost. Find through most wrap services are wholesale though you get charged the wrap administration fee.

    Retail managed funds usually have a lower minimum dollar investment value (from $1,000 or $2,000 usually) though a higher ongoing management cost.

    As an example, the Advance Australian Shares Multiblend Retail is 1.95% pa ongoing Management Expense Ratio (MER) http://www.advance.com.au/resources/afm/downloads/fundinfo/fi_pds_pros_investment_1_1.pdf page 21 Minimum investment of $1,500

    The Advance Australian Shares Multiblend Wholesale is 0.92% pa ongoing Management Expense Ratio (MER) http://www.advance.com.au/resources/afm/downloads/fundinfo/fi_pds_pros_ws_investment_1_1.pdf page 21 Minimum investment of $50,000

    Cheers,

    Dan

    PS This is general information, before making an investment decision speak to your FPA registered Financial Planner.
     
  6. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Asset Allocation

    I have been reading, quite extensively, through old threads (Compleks:cool:) ect. and have not heard anybody mention asset allocation. Is there some reason?

    Johny.
     
  7. Johny_come_lately

    Johny_come_lately Well-Known Member

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    India and China

    What is the best way to get exposure to India and China? How long have Ishares been Operating?


    Thanks, Johny.
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    There are a few managed funds which invest in India and/or China. One of the better ones (in my opinion) is Platinum Asia which invests across the entire region. Not a recommendation to invest - do your own due dilligence.

    There are also more focussed funds if you prefer to target a specific country - some of the iShares ETF do that I think. I haven't researched them yet, so I can't really comment about them.
     
  9. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Platinum Asia

    Checked out Platinum. It has been very volatile, but has shot up rapidly since march. It seems to be a value fund following the msci asia. My question is this: The income for 09 is 16.5% yet the previous year was near 0%. Do funds hold their distributions when there is a economic slide?

    Johny.
     
  10. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Hey Sim

    Checked out ifa.com 's and spent 1/2 hour on their risk evaluator. The program said I was taking on way too much risk, and that I should go from growth to conservative. Dunno, but sure was flash software! You tried it?

    Johny.
     
  11. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    No, unit trusts must pay out all net income to unitholders at the end of the financial year.

    If there was no distribution, it just means that there was no net income.

    Platinum use hedging, short selling and other similar mechanisms in their funds, so they are a bit more complicated than a straight buy-and-hold type fund.
     
  12. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I haven't looked at that site, and since I'm young (< 40) I don't tend to pay much attention to theoretical risk profiles.
     
  13. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Regular Withdrawals

    Here's a Question. If you are making regular withdrawals do you:

    A) Put all your distributions into a cash manangement account and draw from that or

    B) Have an equal($) value taken off each managed fund each month.

    Also, what would the effect of being in a bull market versus a bear market have on these two directions?


    Johny.
     
  14. Johny_come_lately

    Johny_come_lately Well-Known Member

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    TAX

    Hey it's
    Tax time Again. What fun!:mad: The question is: Do I use a hole in the wall tax "agent" or pay more money for an Accountant?


    Johny.
     
  15. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Withdrawals and distributions

    On my quest to discover how best to manage my distributions, I hit the local newsagent and bought some graph paper. Three and half hours working on my calculator, saw day turned to night. I plotted 5 graphs, tested the data and came up with a formula.

    (Falling Index + distributions) - (Falling Index + distributions -withdrawals)

    is greater than

    (Falling Index) - (Falling Index - withdrawals)

    I sat back, scratched myself, and Doh............. I've just discovered "compound interest".

    The moral of this story is; that I know very little, and could sure use some help to learn more!

    Cheers, Johny.
     
  16. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Depends on how complex your circumstances are.

    If you don't have a lot of investments and don't have capital gains and such to work out, you can probably do it yourself or get a tax agent to do it for you.

    Otherwise I suggest an accountant is worth the investment - they are someone you can talk to about planning your finances and structures and such too.
     
  17. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Short selling

    How does short selling work and what is "naked" short selling?

    If a fund is Long/short, what does that mean?

    What are the risks of a L/s fund over an ordinary one?

    Can anybody short sell, or is it only brokers?



    Thanks, Johny.
     
  18. Tropo

    Tropo Well-Known Member

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  19. Johny_come_lately

    Johny_come_lately Well-Known Member

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    SE Queensland
    Update

    After much thought, a lot of reading and help from my FP, I have changed my plan. Previously, I was drawing from my shares to live on. I have now switched a proportion to cash. While I am still withdrawing 0.5% a month, this cash reserve will last about 2 years. Hopefully the GFC will have stuck its head back into its shell, by then. The hardest thing to come to terms was; realising my capital was down, and the risk needed just to get it back to its original value. That was a hard leason to learn.



    Johny.
     
  20. Jono

    Jono Member

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    Is there any chance you can increase your income by taking on some work from home opportunities?

    I don't joining some scammy MLM scheme, I mean something like starting up your own blog or something along those lines. It might work, it might not work - but the 'startup' costs are virtually non-existant.