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  1. #41
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    Ive pondered this for a few days and come to the conclusion that it's best to spend the whole lot on a bunker and guns.

  2. #42
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    Quote Originally Posted by Zeitgeist View Post
    How actively do you want to be managing this $500k retirement nest egg?

    Assume capital losses are tolerable provided the yield is retained? What about complete loss of one of the shares?

    Hard to give any tips at this stage without an answer to those. Obviously a low appetite for managing the fund and worrying about financial performance of an individual company would lead one towards ETFs or managed funds. I'd never recommend the latter. But a dividend style ETF like the Smartshare DIV fund would give around 5.9% yield less 0.5% fees for 5.4% overall return (as an example only based on current factsheet)

    I'm not sure even Buffett would back himself to put all his entire retirement eggs in a single basket (e.g. OCA)*

    * I'm assuming Berkshire is a look-through investment
    I don't mind actively managing it but I do have doubts about my ability to get it right.
    Maintaining yield would be a priority.

  3. #43
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    Quote Originally Posted by Zeitgeist View Post
    How actively do you want to be managing this $500k retirement nest egg?

    Assume capital losses are tolerable provided the yield is retained? What about complete loss of one of the shares?

    Hard to give any tips at this stage without an answer to those. Obviously a low appetite for managing the fund and worrying about financial performance of an individual company would lead one towards ETFs or managed funds. I'd never recommend the latter. But a dividend style ETF like the Smartshare DIV fund would give around 5.9% yield less 0.5% fees for 5.4% overall return (as an example only based on current factsheet)

    I'm not sure even Buffett would back himself to put all his entire retirement eggs in a single basket (e.g. OCA)*

    * I'm assuming Berkshire is a look-through investment
    I could live with 5.4 % . Could I expect any growth in the value of the ETF ?
    Last edited by ynot; 11-01-2019 at 05:30 PM. Reason: Edit

  4. #44
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    Quote Originally Posted by ynot View Post
    I could live with 5.4 % . Could I expect any growth in the value of the ETF ?
    Yes - all ETFs rise/decline in line with their underlying instruments.

    Disclaimer: I personally do not have any money invested in these ETFs but I believe they were initially Superlife products. Superlife are my Kiwisaver providers, since gobbled up by NZX.

    I'd advise DYOR into the ETFs before proceeding - look into things like liquidity, confirm how they're priced, dividends available as cash etc. Provided that all checks out, and I'm sure it would, you could have these ETFs forming the bulk of your allocation. You can obviously split a proportion out to higher dividend payers if you back yourself to pick/manage a few.

    If you haven't already, I'd recommend setting your strategy, write it down or store it somewhere safe, and refer back to it every time you hover over the buy/sell button on any investment in future. Only in exceptional circumstances should your future self over-ride this strategy.

  5. #45
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    Some good posts in this thread.

    My left field comment is that the reliance on ‘safe’ dividend yielding stocks and/or bonds is overrated. Let me explain.

    I retired 4 yrs ago with my own mortgage-free home and some savings. I started investing in shares 5 years ago gradually investing $150k that was ‘risk free’ and surplus to my retirement needs as determined by a 5 year budget.

    My strategy was/is to invest primarily in small cap ‘growth’ potential companies using principles espoused by Jim Slater in his book The Zulu Principle. My aim was to ‘grow’ my capital and I was not greatly interested in dividends as I considered dividend yield stocks were often ‘overpriced.’ My objectives were to; stay within the NZX, beat the banks term deposit rates and beat the NZX50 average return with tax free capital gains.

    I’m not a short term ‘trader,’ as the longer term tax free aspect of capital gains is very important IMHO.

    How did I get on??? Well post #37 on the 2019 Stock Picking Comp Thread provides a hint.

  6. #46
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    Quote Originally Posted by Left field View Post
    Some good posts in this thread.

    My left field comment is that the reliance on ‘safe’ dividend yielding stocks and/or bonds is overrated. Let me explain.

    I retired 4 yrs ago with my own mortgage-free home and some savings. I started investing in shares 5 years ago gradually investing $150k that was ‘risk free’ and surplus to my retirement needs as determined by a 5 year budget.

    My strategy was/is to invest primarily in small cap ‘growth’ potential companies using principles espoused by Jim Slater in his book The Zulu Principle. My aim was to ‘grow’ my capital and I was not greatly interested in dividends as I considered dividend yield stocks were often ‘overpriced.’ My objectives were to; stay within the NZX, beat the banks term deposit rates and beat the NZX50 average return with tax free capital gains.

    I’m not a short term ‘trader,’ as the longer term tax free aspect of capital gains is very important IMHO.

    How did I get on??? Well post #37 on the 2019 Stock Picking Comp Thread provides a hint.
    I am following thia thread with some interest as it has relevance to me
    I am 60, have worked in the health service all my life. At 32 I joined the staff super scheme,National Provident Fund which although has moderate returns, has the attraction that , in addition to the employer subsidy , has an unconditional government guarantee on the capital and a guaranteed base return of 4%. After 65 i can either acccess the whole amount in cash, convert it to a life time monthly pension or take one quarter in cash and convert the rest into a pension
    I have an interest in shares although my only direct holding is in Rubicon. If interest rates return to normal then my decision will be based on do I play it safe and invest the cash in a bank for a safe return or take more risk as an active investor. Decsions..decisions.
    Last edited by Sgt Pepper; 14-01-2019 at 05:12 PM.

  7. #47
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    Quote Originally Posted by Zeitgeist View Post
    How actively do you want to be managing this $500k retirement nest egg?

    Assume capital losses are tolerable provided the yield is retained? What about complete loss of one of the shares?

    Hard to give any tips at this stage without an answer to those. Obviously a low appetite for managing the fund and worrying about financial performance of an individual company would lead one towards ETFs or managed funds. I'd never recommend the latter. But a dividend style ETF like the Smartshare DIV fund would give around 5.9% yield less 0.5% fees for 5.4% overall return (as an example only based on current factsheet)

    I'm not sure even Buffett would back himself to put all his entire retirement eggs in a single basket (e.g. OCA)*

    * I'm assuming Berkshire is a look-through investment
    5.4% is an appealing benchmark for me at this stage but as other posts are pointing out, there is more than one way to achieve income.
    Please post if you have alternative strategies to the 5.4% ETF.

  8. #48
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    What I would do with 500k:

    Before I say anything, I think its important to think that you're going to be in the market for longer than you think. Most 65 year olds today will live for another 20 or so years minimum.

    Firstly, I would insulate the fund with a ETF that tracks an index. Probably putting 30%. I would do a combination of the S&P500 through Smartshares USF and the nzx50 in FNZ. This will give the fund some stability long term. The S&P500 has averaged 9.8% over the last 90 years and the nzx50 gives exposure to the whole local market at a similar rate. I could see exposure in multiple markets being good but I don't know enough about that to comment.

    Next, I would look to another 30% into stocks that can earn me a dividend over the long term. These are companies that have a history of increasing dividends every year already. By that, I mean stocks that have a strong moat already. I like the electricity sector so I would look into something like MCY, GNE or MEL. However, my favorite pick and this is quite defensive would be IFT so it depends on risk appetite. A company with excellent returns, and increased dividends every year since their IPO. Over the years, the yield just holding it would increase. IFT isn't the only choice but would be my biggest position.

    Noteable mentions: I would have no issue with holding a combination of IFT and other shares such as these just for diversification. EBO (High PE is offputting with dividends increase YoY), or even AIA (same reason for IFT chosen). Not a fan of AIR for long term dividends due to fuel price effect and not a fan of HLG. Tastes change on a dime and retail is a fickle game..

    Next I would put 25% into growth sectors. Most likely choice would be into OCA, due to its relative potential (more room to grow than say a RYM) to the others and the PE being so cheap. From a dividend perspective, the yield is going to increase huge in just a few years. The sector will not enjoy its best gains in the next 2-3 years but likely beyond that. OCA wouldn't be my only choice, diversification is key so I would also hold SUM, ARV and RYM in combination.

    Next I'd put 10% in a speculative position, where I could see both capital gains and potential dividend growth. This is likely to be where SML and ATM play their part. This 10% is held just to keep you sharp and occupy your time. I'd even say HGH due to the price downturn would be an interesting hold. This 10% could likely be held in part just in cash when the markets are very highly valued and there is nothing really out there (like most of 2018).

    I'd keep another 5% in cash, just to go on trips (if still possible) or spoil the grandkids. Hopefully no mortgage at the point of retirement.

  9. #49
    Aspiring to be an Awesome Bear
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    Quote Originally Posted by value_investor View Post
    What I would do with 500k:

    Before I say anything, I think its important to think that you're going to be in the market for longer than you think. Most 65 year olds today will live for another 20 or so years minimum.

    Firstly, I would insulate the fund with a ETF that tracks an index. Probably putting 30%. I would do a combination of the S&P500 through Smartshares USF and the nzx50 in FNZ. This will give the fund some stability long term. The S&P500 has averaged 9.8% over the last 90 years and the nzx50 gives exposure to the whole local market at a similar rate. I could see exposure in multiple markets being good but I don't know enough about that to comment.

    Next, I would look to another 30% into stocks that can earn me a dividend over the long term. These are companies that have a history of increasing dividends every year already. By that, I mean stocks that have a strong moat already. I like the electricity sector so I would look into something like MCY, GNE or MEL. However, my favorite pick and this is quite defensive would be IFT so it depends on risk appetite. A company with excellent returns, and increased dividends every year since their IPO. Over the years, the yield just holding it would increase. IFT isn't the only choice but would be my biggest position.

    Noteable mentions: I would have no issue with holding a combination of IFT and other shares such as these just for diversification. EBO (High PE is offputting with dividends increase YoY), or even AIA (same reason for IFT chosen). Not a fan of AIR for long term dividends due to fuel price effect and not a fan of HLG. Tastes change on a dime and retail is a fickle game..

    Next I would put 25% into growth sectors. Most likely choice would be into OCA, due to its relative potential (more room to grow than say a RYM) to the others and the PE being so cheap. From a dividend perspective, the yield is going to increase huge in just a few years. The sector will not enjoy its best gains in the next 2-3 years but likely beyond that. OCA wouldn't be my only choice, diversification is key so I would also hold SUM, ARV and RYM in combination.

    Next I'd put 10% in a speculative position, where I could see both capital gains and potential dividend growth. This is likely to be where SML and ATM play their part. This 10% is held just to keep you sharp and occupy your time. I'd even say HGH due to the price downturn would be an interesting hold. This 10% could likely be held in part just in cash when the markets are very highly valued and there is nothing really out there (like most of 2018).

    I'd keep another 5% in cash, just to go on trips (if still possible) or spoil the grandkids. Hopefully no mortgage at the point of retirement.
    Sounds like a great approach to me, thanks for sharing

  10. #50
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    I think, work out the cost of your needs, and the cost of your wants. For example, you need food, and want money for petrol. Then align your investment risk levels accordingly to cater for each. Ensure that your investments are inflation protected, particularly ones covering your needs. Diversify and hold some cash. Enough cash to cover downtime if your needs had investments have a break from returns.

    As a dividend portfolio, shares can IMO be considered diversified investments in themselves, however it would be better to have a range of investments that aren't just shares, if possible.

    For the sake of the exercise, i see the following as needs based investment shares (assuming from the bounds of the question, I'm doing a share portfolio):

    Aia, pot, fph, mel, gne, cen, anz, wbc, ebo, oca

    Wants based investments (including a range of return, growth and corresponding risk):

    Atm (will eventually blossom), hlg, kmd, Briscoe, sek, mft, scl...

    It may also be a good idea to have some ETFs in there in case too many teeth fall off the brain cogs with aging, or losing interest losses focus on the investments.

    I don't know if id be comfortable retiring on such a budget. Granted the above selection probably averages a return of 3% after tax. Quite low, but may overtake a pure dividend targeting investment after some time, which might help for medical bills.

    Personally, as I'm a few decades from retirement (depending what level of riches I want to retire with), i have growth stocks in my retirement box (and some private companies). This is the current contents of the nzx part of that box:

    Aia, Atm, ebo, fph, mel, pot, sek.

    I also have a trading account for my shorter term plays. Which will likely migrate into my wants based investments. Im looking forward to the next correction to juice things up.

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