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Superannuation Investment Returns |
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Dr E
Champion Joined: 05 Feb 2013 Location: Australia Status: Offline Points: 28563 |
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ummm, the property was funded by debt ... investment was $50k up front in each case ... think about it ... if based on your assumptions, one results in $655k profit, and the other $370k profit, I'm happy to take the one that you've rejected ... guess the math is not so basic. There is too little data to determine which investment would be better - issues of other income, CGT, NG, actual yields and interest rates, cost like repairs and maintenance and vacancy rates for the property, dividends, imputation, etc, etc. Probably similar outcomes in the end, but generally property would prevail over a long term, simply due to the ability to leverage, and also, since as soon as you have equity and sufficient cashflow, you obviously add to the portfolio ... I'm not purporting that one or the other is a "better" investment, but one is passive, and one is a full time job ... the key with both is being in for the long term.
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Whale
Champion Joined: 01 Jun 2009 Location: St Kilda Beach Status: Offline Points: 38719 |
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Shares can be funded by debt as well, and if the debt was as much as the debt of the house the proportional closing balance would nearly $3 million.
Property is not all smooth sailing, the example you give is of a scenario in which there are no problems, no bad tenants who ruin the property, no expensive repairs, no extended period of unrented property, agents fees are about 6% and 1 month rent for each new tenant. I doubt that the share investment method is a full time occupation, charts can be studied st night, shares bought the next day if suitable and an automatic stop put in place, at most 2 hours a day in my opinion. Anyway as you say it is not about what is better it is about diversification and if someone wants a share portfolio this seems a low risk, profitable way to do it |
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Rosscoe
Champion Joined: 02 Apr 2007 Location: Brisbane Status: Offline Points: 6124 |
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I don’t play the long term game with shares! I trade when the times are great (like now - under bull market conditions).However when the tide turns my gains are thrown into cash! I spend approximately 2 hours each day doing my homework that has provided me with an exceptional standard of living! I have been trading over a lengthy period now. Following Macro & Micro fundamentals & events globally is extremely important in my game .... Property is passive however you still need to be astute in where to buy. Syd & Melb have had a tremendous run but eventually like shares the market will turn. Not all property markets are the same, far from it particularly in Australia at present! Property is an investment you can’t dispose of quickly & in a negative environment this is a detriment which could also leave you hung out to dry! Property costs money ..... plenty of it & the ongoings can be quite substantial! There are pros & cons with both types of investments. Also leveraging in shares is a possibility if you’re confident enough! |
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Mr Prospector
Champion Joined: 08 Dec 2008 Status: Offline Points: 2025 |
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I wouldn't have minded getting a few of the original Berkshire Hathaway stocks .
Google says the original IPO price was $19USD and current price is $280,440.00 USD . By my calculations thats about 1,400,000 % capital gain .
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Dr E
Champion Joined: 05 Feb 2013 Location: Australia Status: Offline Points: 28563 |
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As Rosscoe points out, leveraging shares is a real test of will ... margin lending will only normally match your capital investment (50% LVR), so yes, in basic terms, you would double your return $370k becomes $740k ... however, if things go wrong, then you need to meet the call ... which usually means compromising your strategy, and liquidating shares that you would otherwise have held ... so again, without all of the variables, the answer is a "pineapple". Likewise, there are variables with property, but those costs you mention are all tax deductible, and can mostly be mitigated by researching and acquiring the right asset. "only" 2 hours a day, 5 days a week over 10 years = 2.5 years of full time work, say $205,000 on the average wage ... granted, most keen share traders also find it a recreational pastime as well. True diversification would mean having equal amounts invested in both shares and property (and some in cash, art, wine and thoroughbreeds of course!) I prefer the passive route ... save my study time for doing the racing form ... I reckon my ROI on the punt is lagging a little behind the other two "investment" options though ... just experiencing the back end of "bear" run ... it's lasted a few decades, I'm confident it will turn soon! |
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Rosscoe
Champion Joined: 02 Apr 2007 Location: Brisbane Status: Offline Points: 6124 |
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6100-6200 points within reach in the next week with low volumes. What a year! Predictions coming to fruition, some outstanding companies mentioned to follow including WTC that have blown the lights out! A2M the pin-up by a country mile, Costa Group & Senex outstanding and another beauty in Clean TEH Holdings Ltd. Next year looking great, commodities the place to be! Oil/Energy looking sensational,,,, other Resources looking brilliant! My watch for the next year is Lynas (LYC) which I already hold! Up around 300%, love the technicals ..... Could be the pin-up with the rare earth prices going north! China closing down mines, this company is doing a complete revolution & turnaround from the beginning of this year, price of shares then around 5c & the company facing a liquidation possibility - now currently about 22c.Debt under control .... Watch! Could be a screamer, stop-losses required however! That’s it for me, deciding to retire from this thread ..... Happy investing! Also watch Cryptomania, the market that will blow all others to smithereens! Next years target 6500-6700 points on the XJO,,,, go the ‘Bull’ with a mid-cycle correction in and around 2019. Watch the US indices closely, the tell tale sign of a forthcoming correction will be built around their state of play .... Also watch the VIX Index Chart - if it starts to rapidly climb, bolt for the hills! Over & out. 🤑🤑🤑🤑🤑🤑🤑👍👌 |
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Current Stable - Soul Star & Adivinar + Lady Vega
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Rosscoe
Champion Joined: 02 Apr 2007 Location: Brisbane Status: Offline Points: 6124 |
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Just one update before signing off.
For clarification :- Lynas with their 1 for 10 share consolidation [as of Dec 11] are worth now more than the prices mentioned above. So in real terms LYC has gone from about 50c in early 2017 to around $2.20 at present. See below:- http://www.asx.com.au/asxpdf/20171204/pdf/43pwhjlysyk84c.pdf |
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Current Stable - Soul Star & Adivinar + Lady Vega
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Isaac soloman
Champion Joined: 13 Oct 2015 Status: Offline Points: 6085 |
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Get used to mental discomfort if you want to beat the market
Investing can be uncomfortable. Unless you're the sort of person who enjoys (financial) roller coasters, the seemingly endless jumps and dives can be stressful. And that's when they're actually happening. In between, owning shares can feel like watching a horror movie with that ominous music playing in the background … you know the fright is coming, you're just not sure when. Which is why there's a booming market for those who promise you "certainty" or that you'll "make money in up and down markets". There's no such thing as either certainty or a cast-iron promise in finance, of course, but we're hardwired to want such things, so there's money to be made in selling them. I'm going to suggest to you a better way. One that is more, well, honest, but also one that has delivered for investors time and time again. If you can't beat the market, just buy an index fund or ETF and go fishing.There are three outcomes when you invest: you either beat the market, you match the market, or the market beats you. As I've written before, there's no excuse for letting the market beat you in the long term – if you're not cut out to be a stock-picking investor, you can simply buy an exchange-traded fund (ETF), which offers you the market return (less a tiny clip in fees). So, over time, the worst any of us should be doing is matching the market's return. And that's precisely what many of us should do. However, let's say you're the sort of person who wants to beat the market. You like the challenge, you have the time and the interest, and you reckon you can do it. Here's the uncomfortable truth: not only is the market a roller coaster ride, you need to – deliberately – add some more mental discomfort. You see, if you do what everyone else does, you'll get what everyone else gets. That is, the market return. Which is perfectly fine, as I say. But let's say you want to beat it. The only way you can do that – by definition – is to take a different view. Make a different call. Zig when the market zags. If everyone thinks Woolies is worth $25 a share, and you think it's worth $25 per share, you'll get the market's return. You have to believe Woolies is worth more than $25 a share – and be right – to beat the market, as those shares keep climbing past $25. As people say "sell", and tell you you're mad for holding. Or take another example. Back in 2013, Cochlear shares traded for $80. Then, it announced a recall and a lost a contract in China. Some investors decided to sell, figuring the company was now worth materially less. Others believed it was just a short-term problem. The shares subsequently hit $55, for a 30 per cent fall in less than six months. So who was right? Well, the shares now trade at $181 a piece. The "price" of that five-year, 125 per cent gain was holding your nerve for two years as the price fell then slowly recovered. Then you had to continue to back your judgment as they continued to rise from there. That is, you had to endure both seeing your position cut by almost one-third, as well as the market at large telling you that you were obviously wrong. Foolish takeawayInvesting to beat the market is hard, because of the combination of skills and mental toughness you need to stay strong when the times require it. If that feels too hard, buy an ETF and happily go fishing or shopping. But if you're going to try your hand at beating the market, get used to holding unpopular opinions – it's the only way to earn superior returns. New report: The "blue chips" of tomorrow aren't the blue chips of yesterday. If you want to look forward rather than backward, we've released our three best ideas for 2017. Click here to learn more. |
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Mr Prospector
Champion Joined: 08 Dec 2008 Status: Offline Points: 2025 |
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Is it about beating the market or just investing in good value , be it shares / property / horseflesh , or whatever takes your fancy ? I would add a disclaimer that I've said before , I'm no investment guru and get plenty wrong at times .
There are only two basic revenue streams from an investment , capital gain (realised when you sell) and business income . Both of these can be measured to some degree outside of the human factor (Numpty CEO's) . TPM had a price correction a little while ago and the P/E was hovering just above 10 . That's an amazing price for a growing tech company and with their story behind them . I thought that was great value . They may still go lower given that they are building infrastructure at some cost and the revenue % will more than likely drop , but if they take a slice of Telstra business then $20-$30 / share in the future is feasible IMHO . I bought some Metcash at a P/E of about 11 with a turnaround story behind them and they have a little bit more growth in them before I sell . There is value out there but hard to find . It's really finding the good solid growth companies as opposed to Woolies/BHP/ Westfarmers who are a revenue investment and not a capital gain type. When you get a big correction like the GFC , its time to get excited as the P/E of your Woolies ,BHP etc.. are at discount prices and have great capital growth . In reply to Rosscoe and market warnings , the spread of bonds and interest rates are a red flag to an impending correction apparently . I hope you keep posting your market assessments they are appreciated .
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Rosscoe
Champion Joined: 02 Apr 2007 Location: Brisbane Status: Offline Points: 6124 |
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An interesting article, the financial press should take a step back and enjoy sucking on their lollipops!!
https://www.tradinggame.com.au/tis-season-idiot/ |
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Current Stable - Soul Star & Adivinar + Lady Vega
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max manewer
Champion Joined: 31 Jan 2010 Status: Offline Points: 32947 |
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I'm thinking investment "gurus" are not dissimilar to racing tipsters, if they were any good, they'd keep the advice to themselves. I see the price of copper has spiked high, which is regarded as a reliable indicator of boom conditions, so I guess it is a case of how long the upswing lasts.
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Rosscoe
Champion Joined: 02 Apr 2007 Location: Brisbane Status: Offline Points: 6124 |
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So very true max, I was kind enough to dish out a few companies to follow over the last year on the XKO (ASX300) with spectacular results however I was also very tight-lipped to others that also blew the lights out. Two of them outperforming the pinup stock A2M. I used to tip on races here years back with profitable results but keep these to myself & close friends. Still very profitable & only a hobby! Being a chartist and having all sorts of information at my fingertips makes my decision making easy. However, these sorts of Bull Market conditions don’t last forever and one has to be prepared for the cycle reversal to take shelter (cash) when the time arrives. Another interesting article follows (I happen to be in this camp in 2018) The % target might be a little stretched however:- https://www.investopedia.com/news/2018-may-be-another-record-stocks/ |
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Current Stable - Soul Star & Adivinar + Lady Vega
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Whale
Champion Joined: 01 Jun 2009 Location: St Kilda Beach Status: Offline Points: 38719 |
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Cracks in the $2.5 trillion superannuation systemDo people have any idea of the risks lurking in their superannuation savings? The issue has surfaced again, after The Australian Financial Review's Sally Patten last week revealed accusations that many super funds are masking the riskiness of their investment strategy. Super funds have huge leeway in deciding whether they should classify particular investments as being riskier "growth" assets, or more stable "defensive" assets Riskier assets typically generate higher returns than safer investments. This means that by disguising the levels of risk they're taking, super fund managers can appear to be heroes, because they're delivering stronger investment returns while appearing to take relatively little risk. Indeed, industry insiders say there have been instances where risky mezzanine debt (which pays a high rate of interest because it ranks behind bank debt in terms of repayment) and investments in highly geared infrastructure projects, such as airports and toll roads, have been classified as "defensive" assets by super funds. It means that an investor in a balanced super fund is unable to properly gauge the risks being taken with their investment. Someone investing in a balanced fund (which, depending on the research firm, is usually defined as between 60 and 80 per cent of growth assets), could have more than 90 per cent of their super savings invested in riskier assets, without them having the faintest idea of how much risk is being taken. Read more: http://www.afr.com/opinion/columnists/cracks-in-the-25-trillion-superannuation-system-20180110-h0gfqg#ixzz54IPoYJWO Follow us: @FinancialReview on Twitter | financialreview on Facebook The under-reporting of risk by super funds, however, isn't the only
wrinkle for the country's $2.5 trillion super system. There's also the
issue of the potential losses from highly-geared investment properties,
particularly now that Sydney property prices are coming under pressure. |
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Mr Prospector
Champion Joined: 08 Dec 2008 Status: Offline Points: 2025 |
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It seems to me that the fees any fund managers charge would be closely linked to risk . If the fees are linked to performance and returns then there would be a natural preference to go for higher return investments and hence higher fees to them . The system rewards the fund managers into high risk .As the article says everything is fine until a correction and hence heavier losses . It would have been easier for them in the last 12 months due to the growth in the markets across the sectors and as a consequence may now encourage them into more risky investments looking for cash with higher returns. |
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Carioca
Champion Joined: 13 Nov 2015 Status: Offline Points: 21820 |
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Can't believe A2 milk still going absolute bonkers , up 29-7% today, ..$11-30, grrr! |
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Baghdad Bob
Champion Joined: 10 Feb 2010 Location: Victoria Status: Offline Points: 13672 |
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Do not know about others but the latest ALP policy of doing away with refunding excess franking credits is another nail in the coffin for self funded retirees.Save all your working life to support your own retirement and cop in the neck by politicians, who waltz off into their retirement on a fully indexed pension for life.
Once again the ALP is preaching the politics of envy.
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oneonesit
Champion Joined: 06 Aug 2012 Status: Offline Points: 37157 |
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Refer ALP Election Promises
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acacia alba
Champion Joined: 31 Oct 2010 Location: Hunter Valley Status: Online Points: 41445 |
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The grey nomads will flatten him next election.
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animals before people.
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Baghdad Bob
Champion Joined: 10 Feb 2010 Location: Victoria Status: Offline Points: 13672 |
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I see in this morning's press the ALP's chief protector of pensioners, Jenny Maclklin, the member for Jaga Jaga,will retire on a fully indexed pension of at least $200,00 pa for life,yet she is backing the ALP's plan to scarp refunds of excess franking credits for 1.1 Australians, including many pensioners, plus 200,000 SMSFs.
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Whale
Champion Joined: 01 Jun 2009 Location: St Kilda Beach Status: Offline Points: 38719 |
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oneonesit
Champion Joined: 06 Aug 2012 Status: Offline Points: 37157 |
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Refer ALP Election Promises
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