Ive had 10yrs investing experience
starting small with managed funds - the more I learnt
the more I tried to beat the market - picking stocks, picking funds
selling and buying
I started off with the usual suspects - colonial first state, BT, MLC - a mix of all these, then sold some - tried in the US market on tech stocks, Apple stocks in 2000 for 14 dollars - wish I held them - lost some on speculative stocks, tried applying fundamental analysis using what I learnt from peter span seminars - did OK, went with navrainvest and enjoyed the income
even though Ive had some big winners if I look at overall returns its probably a lot less than the index
Tax inefficiencies are huge with buying and selling
And Im someone who does a lot of research in property and shares
ie im not your average mum and dad investor
I now fully advocate indexes - with returns determined by your asset allocation, and trying to capture alpha with small co and value tilts.
A small amount to emerging markets - all reduces volatility yet increases overall return
After more and more research, and assessment of risk
Ive finally re done my whole portfolio
Its something Im comfortable with
where I will not be likely to sell
and rebalance on a regular basis
Basically a growth portfolio
Low fees
Indexed
The 9 funds ive invested in are
The core equity trusts have a 50/30/20 tilt of large/value/small funds
Ive tilted it more toward value and core with the individual funds
DFA Aus Core Equity Trust
DFA Aus Value Trust
DFA Aus Small Company Trust
DFA Global Core Equity Trust
DFA Global Value Trust
DFA Global Small Company Trust
DFA Emerging Markets Trust
Vanguard Property Indx
Vanguard - Int Property
Heavily into DFA with a value and small company tilt
http://www.dfaau.com/media/pdf/distr...ns_summary.pdf
Index returns will beat most investors if you hold forever
Let the miracle of compound investing work - as Einstein once put it
Im expecting about 14-15% return long term, with 4.1% yield
With a much lower volatility than - just australian shares, or individual stock portfolio that I was holding before
The beauty of a diversified portfolio is when one sector is down, another is up - cancelling each other - reducing volatility - but not reducing overall return
The fact that it is a tried and tested method with plenty of research behind it gives me peace of mind
I am highly unlikely to sell in the near future
DFA have some of the best non geared long term returns on aust shares around. Their international funds are down due to $A appreciating as they are not hedged.
Its so clear to me now that by looking for higher returns you take on higher risk and volatility. Im just trying to maximise my return for the level of risk im willing to accept.
Im at peace with all my set and forget investments now.
I hold a second portfolio - holding LICs/ ETFs - and will probably move it into this portfolio too once my LOC is setup
People may be tempted to invest a large amount in colonial first state geared - however it is obvious that gearing magnifies risk and in a down market you may get wiped out.
Use a compound calculator like that below
to model your returns - key is time in the market without selling**
Once you sell you take a huge hit
Compound Savings Calculator
I hope this can help others as its taken a lot of reading and failed experiences to get his far
Its late - sorry if my ramblings dont make sense
dkmc
