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  1. #1
    Gnawing on Bones Beagle's Avatar
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    Default Investment Portfolio for Retirement

    Suppose you're 65 and your wife is 63 and you have recently downsized your house and have exactly $500,000 to invest to supplement your superannuation. Modest risk conservative age appropriate portfolio suggestions please.
    I'm starting this thread for ynot.

    Please suggest a portfolio predominantly based around conservative sustainable dividend income.

    My initial thoughts.

    Of the Utilities I like and presently hold MEL and GNE approx. gross yields 6.8% and 9% respectively
    REIT's I like and hold are ARG. PIE (exempt income about 5.2% yield) I also like GMT, lower yield about 4.5% from memory but also a PIE
    Retail - I like HLG but presently don't own any. Gross yield about 10%
    Retirement sector - OCA for 6% gross yield in FY19 growing strongly in the years ahead
    Transport - AIR for gross yield of approx. 10%
    Consumer staples ZEL for gross yield of about 14% looking forward to 2020 year.
    Financials - HGH for approx. 9% gross yield
    $25,000 - $50,000 in cash in a call account with HGH paying 2.5% as an emergency / medical fund

    I wouldn't own bonds as the yields are too low and would use the power companies and REIT's as a bond proxy.

    I am sure others will be happy to contribute and make suggestions to help you ynot.
    No butts, hold no mutts, (unless they're the furry variety).

  2. #2
    percy
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    Well I am now 70.Wife is 69.
    At the end of January last year I retired from selling books to school libraries. .
    In May we downsized our house.Brought a new slightly larger over 60s house.
    Share potfolio was reorganised.Objective was to hold along term portfolio to provide dividends, and once that was achieved the balance could be put into growth shares.Most Australian shares were sold.Two reason ;[a] I was finding the Australian small cap market difficult.[b] Australian dividends are not imputated.
    Dividend NZ stocks. GNE,MEL,SPK,HGH,TRA........These stocks alone provide the level of dividends I wanted.
    Other "core" NZ stocks.MCK and OCA.
    Fun NZ stocks,ALF,IKE,PGW,RBC.
    My largest NZ shareholding is not one of the above.
    My Australian stocks include a few small holdings I will not list.
    Aussie stocks.AQZ,MMI,SEQ,TTI,VHT.
    I do not hold any bonds,however have a large enough cash holding.
    Last edited by percy; 16-01-2019 at 07:29 PM.

  3. #3
    Legend minimoke's Avatar
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    Can we assume Govt Super is worth $617 a week in the hand and house is mortgage free.

    What is the couples budgeted / hoped for expenditure a week. How is their health?

    What is value of house - as I would also look at a REL.

  4. #4
    Turn and burn Maverick's Avatar
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    Well , there will be no surprises from me. Put the lot in OCA.
    "shock , horror!"I hear you all say what about diversification?
    Forget diversification,It's only 500K , regular people will put all of that into one rental house (or 1.5 x rental houses) plus living in their own freehold house and have no issues. They'll even be happy to borrow some to do it.
    Why OCA?
    Beyond everything said on that thread (which implies good growth for ages), for the purpose of retirement its gives a fair dividend return and capital growth.
    Wait, there's one more thing...here is the most important part...the share will also be inflation proof. For retirement funds that will be needed 30 years from now when plumbers cost $500/hr .Without keeping the 500k up with inflation, it will have eroded to almost worthlessness by the end.
    I see the price of a village/house representing the amalgamated sum of labour costs of the era (land, plumbers, engineers etc all combined into one new house build cost) so in other words your OCA unit (continually maintained to new condition all paid by the residents) will keep up with whatever the costs of the future might be.
    While HLG , AIR etc have good divis their assets don't` necessarily keep up with inflation for that plumbers bill 30 years from now (i.e HLG capital value growth is benign)
    Can`t go wrong with OCA. At he very minimum if the share price doesn't go up one more cent above the rate of inflation from $1.08 the current dividend alone is adequate..but lets face it, its gonna go up sh*t loads as well.

    Disc , retiring in 3 weeks.
    Last edited by Maverick; 09-01-2019 at 02:55 PM.

  5. #5
    Gnawing on Bones Beagle's Avatar
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    Hi minimoke, yes it will be when his wife hits 65.
    No butts, hold no mutts, (unless they're the furry variety).

  6. #6
    Gnawing on Bones Beagle's Avatar
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    Quote Originally Posted by Maverick View Post
    Well , there will be no surprises from me. Put the lot in OCA.
    "shock , horror!"I hear you all say what about diversification?
    Forget diversification,It's only 500K , people will put all of that into one rental house (or 1.5 x rental houses) plus living in their own freehold house and have no issues. They'll even be happy to borrow some to do it.
    Why OCA?
    Beyond everything said on that thread (which implies good growth for ages), for the purpose of retirement its gives a fair dividend return and capital growth.
    Wait, there's one more thing...here is the most important part...the share will also be inflation proof. For retirement funds that will be needed 30 years from now when plumbers cost $500/hr .Without keeping the 500k up with inflation, it will erode to almost worthlessness by the end.
    I see the price of a village/house representing the amalgamated sum of labour costs of the era (land, plumbers, engineers etc all combined into one new house build cost) so in other words your OCA unit (continually maintained to new condition all paid by the residents) will keep up with whatever the costs of the future might be.
    While HLG , AIR etc have good divis their assets don't` necessarily keep up with inflation for that plumbers bill 30 years from now (i.e HLG capital value growth is benign)
    Can`t go wrong with OCA. At he very minimum if the share price doesn't go up one more cent above the rate of inflation from $1.08 the current dividend alone is adequate..but lets face it its gonna go up sh*t loads as well.

    Disc , retiring in 3 weeks.
    LOL you can't have too many. I love your enthusiasm, I really do but ynot wants very conservative so I would think that MUST include some pretty good level of diversification.
    No butts, hold no mutts, (unless they're the furry variety).

  7. #7
    Turn and burn Maverick's Avatar
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    "Please suggest a portfolio predominantly based around conservative sustainable dividend income."
    The portfolio is "conservative sustainable dividend income". The portfolio doesn't need altering . To demonstrate the corrosion of inflation , Ynot just needs to remember what plumbers cost him in 1990 ($25/hr, now $80 + gst)then work out perhaps his idea of "conservative" akin to putting $500k (in 15 different pots) under the mattress is a certain slow train wreck.
    Then for stage 2, the fun part, he needs to guide Mrs Ynot into the idea. (she will never have a bar of it though) so instead ... just tell her she can buy new shoes every time the OCA div comes out.....twice a year forever! Welcome to the "Maverick school of charm"

    Disc . Retiring in 2.9998 weeks.
    Last edited by Maverick; 09-01-2019 at 03:49 PM.

  8. #8
    percy
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    Quote Originally Posted by minimoke View Post
    Can we assume Govt Super is worth $617 a week in the hand and house is mortgage free.

    What is the couples budgeted / hoped for expenditure a week. How is their health?

    What is value of house - as I would also look at a REL.
    Govt Super $491.52 net each a fortnight.
    No mortgage.
    Last power bill [solely electric] $104.65

  9. #9
    Legend minimoke's Avatar
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    Quote Originally Posted by percy View Post
    Govt Super $491.52 net each a fortnight.
    That's probably due to yoru focus on dividends and paying the price through extra taxes.

    Which in a "diversified portfolio should mean: cash on hand; dividend yielding shares that dont loose capital value (for cash flow purposes that can also be sold down over first few years) and shares with less dividend but more potential for growth so dividends kick in in later years and higher capital value mean long term sell down creates greater return

  10. #10
    percy
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    Quote Originally Posted by minimoke View Post
    That's probably due to yoru focus on dividends and paying the price through extra taxes.

    Which in a "diversified portfolio should mean: cash on hand; dividend yielding shares that dont loose capital value (for cash flow purposes that can also be sold down over first few years) and shares with less dividend but more potential for growth so dividends kick in in later years and higher capital value mean long term sell down creates greater return
    After following the sharemarket for 52 years I settled on the portfolio I wanted for our retirement.
    More than happy with what we have.

  11. #11
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    It looks like a very risky long term portfolio. They might live for another 40 years. Having it all invested in NZ is a risky strategy. What happens to expenses if the $NZ drops in half? You do not even have any exporters that would benefit from the fall. If China or USA sneeze, foot and mouth comes here, tourism drops,there is a big quake in Wellington or Rangi blows, fake milk and/or meat take off our economy would be very prone to tanking, taking the entire portfolio with it.The electricity companies are on super high PEs and paying high dividends by eating the future. Technological changes could threaten both the electricity companies and Z. Online shopping is already killing property companies overseas. Diversification isn't buying baked beans from three different companies

  12. #12
    Gnawing on Bones Beagle's Avatar
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    Arthur - Why don't you post what you recommend then ?
    No butts, hold no mutts, (unless they're the furry variety).

  13. #13
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    Quote Originally Posted by percy View Post
    Govt Super $491.52 net each a fortnight.
    No mortgage.
    Last power bill [solely electric] $104.65
    Plus a tax fund each year.
    All declarable dividends are taxed at 33c/$ and your super is at 30c/$.And income splitting.

    But then you may be share trader which changes things.
    Last edited by 777; 09-01-2019 at 04:10 PM.

  14. #14
    percy
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    Quote Originally Posted by 777 View Post
    Plus a tax fund each year.
    All declarable dividends are taxed at 33c/$ and your super is at 30c/$.And income splitting.

    But then you may be share trader which changes things.
    Share investor's portfolio.
    No share trading.

  15. #15
    percy
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    Quote Originally Posted by Arthur View Post
    It looks like a very risky long term portfolio. They might live for another 40 years. Having it all invested in NZ is a risky strategy. What happens to expenses if the $NZ drops in half? You do not even have any exporters that would benefit from the fall. If China or USA sneeze, foot and mouth comes here, tourism drops,there is a big quake in Wellington or Rangi blows, fake milk and/or meat take off our economy would be very prone to tanking, taking the entire portfolio with it.The electricity companies are on super high PEs and paying high dividends by eating the future. Technological changes could threaten both the electricity companies and Z. Online shopping is already killing property companies overseas. Diversification isn't buying baked beans from three different companies
    Investing in USA is dangerous should you die.A NZder trying to get shares out of probate is near impossible,and is the reason I sold US shares a number of years ago.
    My largest undisclosed shareholding is an exporter.
    I have already survived a few earthquakes,and more do not concern me.
    Yes the electricity companies will go gang busters with electric cars..

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