My Investment Journey- Since the Beginning

[Aaron]

But Michael Cullen assured us removing interest would mean students would be able to pay off the capital faster, and that is what they would do. Weren't you listening?

Maybe if central banks allowed a little deflation it would get them moving.

Still an interest free loan isn't as good as being paid to go to university like our current batch of politicians were back in the good old days.

While I am hijacking the thread, GTM I think Kiwisaver is good as it stands even better when it was $1,042 a year but I agree you don't know how it will be changed but you can guarantee they will be forcing people to take an annuity in a few more years. Depending on the returns from your fund manager, paying off the mortgage faster with those funds might work out better in the long term.

[born2invest]

Out of interest, what made you invest when you still had a student loan to pay ? I was always under the impression (well I have bought into the idea anyway) not to invest until debt such as students loans, credit cards etc were cleared.

Interest free so why not?

[born2invest]

Yup, I have to admit I can not understand that either. I have a relatively small student loan $20k (accumulated over the last 5 years) and have absolutely no intention of paying any of it back (other than compulsory repayments) until I go overseas (when I will just pay the whole lot off). In the mean time I have significantly increased my share portfolio over the same time frame (earned a good return) and in effect made use of the free money the government offers students.

Is there a reason you have payed back the government B2I? The 2 reasons I can think that make sense would be psychological reasons (I.e. don't like to feel in debt), or some kind of ethical one where you feel you should pay the G back if you can. From my perspective both reasons don't make financial sense though, which, correct me if I am wrong, is the general theme of the thread...

Not wanting to come across as giving you a hard time here mate, just interested in your logic there. Good luck with your investments and Merry Xmas

I originally planned to not make any additional payments and just have my salary pay off 3-4k per year and have it paid off after 8-9 years time when I'm 30/31 years old.

I therefore built up a small portfolio with my savings and planned to continue doing this.

However, the student loan always was in the back of my mind nagging away at me and felt like a weight on my shoulders. I'm the kind of person that looks to tick off things in life and the student loan was always one that just sat there not getting much progress. I therefore looked to accelerate the payments to "tick it off" so to speak and move on with one less thing to think about.

In terms of fully rational thinking, it would make sense to not make any extra payments, this is something I thought about for months whether I should or should not make extra payments but in the end decided to for the above reasons.

[born2invest]

born2invest - for what it is worth, and to show you that it takes all types to make a market, I'm currently easing out of my CCP, although I haven't sold any CLH yet and I think there is plenty left in FSA.

Taking CCP as an example, I started buying at 40 cents - although I believe the pre-bust high was something like $14! It does tend to back up the people who say you shouldn't buy and hold forever.

The reasons I'm starting to sell are

(a) I just like to sell things eventually. Selling is the hard part of investing.
(b) Debt collectors tend to blow up eventually. The numbers change incredibly quick when you've valued your ledgers on the basis of achieving one outcome, then you get a very different outcome.
(c) I believe a lot of debt collectors time has been spent collecting from people who could pay, but chose not to, knowing they'd get "a deal" by going through the process. A falling interest rate environment has helped such people.
(d) Debt collecting is way tougher when people simply can't pay, say, because they've lost their 250k mining job in the outback and are now driving a bread truck in the city because the miners aren't hiring.
(e) Debt collecting gets way tougher if we do get a period of housing prices falling, which I do see as a possibility in AU in the next 2 years.
(f) I've made my money and try not to be greedy.

I get why you're buying CCP. Everything looks ok. Balance sheet great, good track record from 2008 onwards etc.

I'm a funny dude. When things look good and everyone is happy, I worry. That is sort of where I'm at with CCP, but I don't feel it is overvalued - I just think we might get some outcomes a bit different to the 2008-2013 period, at some stage in the next year or two.

So there you go - each to their own. There is no one "right" answer when it comes to investing.

Thanks for the input.

I appreciate your thoughts but I've made the mistake before of listening to one or two people and who talked me out of investments so would prefer to keep them for the time being.

[Schrodinger]

I know I shouldn't lead the young astray but you should consider getting a margin loan.

Keep it at very conservative gearing levels 40% is a good start. KW has good advice and I would set up separate accounts so you can diversify easier.

Generally if you research enough this will benefit you in the long term.

The most difficult part is when to sell. I have placed a CAGR between 25-30% minimum to make this easier.

[born2invest]

I'm also in kiwisaver and just contribute 3% from my salary each year with employer matching. I'm with Superlife who I highly recommend for anyone in Kiwisaver.

I've been in since I began part time jobs at university.

It is more of a back up retirement savings plan and will be a nice bonus when I hit my 60's. I don't miss the $30 per week and it is accumulating quite well.

[born2invest]

I know I shouldn't lead the young astray but you should consider getting a margin loan.

Keep it at very conservative gearing levels 40% is a good start. KW has good advice and I would set up separate accounts so you can diversify easier.

Generally if you research enough this will benefit you in the long term.

The most difficult part is when to sell. I have placed a CAGR between 25-30% minimum to make this easier.

Too risky for me. I couldn't sleep at night having a margin loan.

The companies I own and look to buy are generally quite small in market cap and margin lending is only around 30-40% or they don't provide margin lending at all.

[born2invest]

By the way I am reading Ben Graham's "The Intelligent Investor" which I imagine you have read. What are you thinking about where we are in the market cycle at the mo? The more I read his book the more conservative I find myself getting, and thinking lowering my exposure to equities might be a good idea. What are your thoughts?

Yes I've read it. The points on Mr Market, margin of safety, avoid popular "trendy" stocks, avoid companies that are overly acquisitive, etc are excellent points.

In terms of the Intelligent Investor, Graham mentions to keep a portion of your portfolio in bonds even if you are quite an aggresive investor. I don't follow this advice and don't have any desire to purchase bonds. I'd rather keep my non stock "cash" in online savings accounts than bonds. I don't believe in balancing my portfolio either (i.e. keeping religiously to say 80% stocks 20% cash and balancing ever few months).

As far as the whole market goes, I don't really follow it other than comparing my returns occasionally to the NZX/ASX index to see how I'm going with my investments. If you want to look into seeing if the overall market is cheap/expensive the Shiller P/E ratio on GuruFocus is one I've looked at occasionally as articles I've read have referred to it many times. http://www.gurufocus.com/shiller-PE.php

I don't really follow the index or entire market for several reasons. Firstly is because I invest in companies not an index. I only care about how cheap/expensive the company is I'm looking to buy or currently hold. Secondly, if I spent all of my time following the index and the economy as a whole (macro economics) it would take up so much of my time I wouldn't have any left to research individual companies. Thirdly, if I constantly worried about the overall market going up or down I would buy and sell my stocks more often, which increases expenses with commission and tax.

I would caution against listening to "experts" in the media like the article you provided me. PHD students have done studies on these "experts" over a 10-20 year time frame and they are only correct in their predictions just over 50% or so of the time.

[born2invest]

The reason I started this blog was to have a place to log my thoughts without hindsight or outcome bias.

This week for some reason I've been thinking a lot about selling my Supply Network Limited (SNL) shares. The prices I bought at were around the $1.45 on average and now they are up to $2.10 or so which is a P/E of 16 which I think is pretty much full value for SNL, perhaps even a bit over.

I don't know what started the thought in my head to sell them off. Perhaps the downturn in the mining/construction/retail industries sparked me to think that less transport and bus companies would be spending on replacement parts.

However, after studying the annual reports over the past few years, I've come to the informed conclusion that I will continue to hold. The management have concluded that their growth plans have been successful and that they are aiming for 10% plus revenue growth and 10-15% plus profit growth in June 2014 financial year. The half yearly report is out over the next few weeks also which I think will be an ok result for the company.

Seems a bit silly to write my thoughts down but various books I've read have recommended to write down my thoughts at the time they occur so I can look back at them in the future without distorting the information looking back in hindsight a few months in the future.

Any comments are welcome.

[Harvey Specter]

I don't really follow the index or entire market for several reasons. Firstly is because I invest in companies not an index. I only care about how cheap/expensive the company is I'm looking to buy or currently hold.

I may have already said this but you should benchmark your performance against the index. They way you know if you are doing well, can to better, or should just buy index funds.