Hey - Would love to hear some feedback on my current investments

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Not quite sure what you're trying to say here?

Sorry to but in guys, but just have a question regarding my original post.

I've read that these capital protected loans are not fully invested? and that a large portion of the amount is held in a secure account so that the lender (Macquarie) doesn't risk losing it all, anyone know anything of this?

Now if that is the case, what would you recommend i do? I currently have a $140k loan, capitally protected as mentioned that to my knowledge is down around 12-15% over the past 12 months. It is only protected at maturity (5 years) So just as some round figures:

140k loan at around 11% or so (with put protection fee) to prepay for next year cost around $17.5k

$17.5k x 4 years interest = around 70k (+ my first years interest in arrears of around 14k) so im up against 85-90k in interest alone.

with my tax rebate from the investment at a guess i think it came to around $30k over the 5 years... SO in saying all of that, im about $50k out of pocket, meaning this investment will have to return a minimum of around 8%p.a or so, just to break even in the long run. Let alone the -12 to 15% im already down will alter that figure.

As mentioned earlier, if a large portion of this loan isnt even invested, and then again.. even if it is! Given the current markets and opportunities around, do you think i am worthwhile arranging a meeting with my FA and going over some of these figures and seeing if it is actually worthwhile staying in this investment?

If that made any sense to anyone, id love to hear a few opinions. Thanks

Crusher,

I'm in a similar situation to you in that I took up 100k via the Macquarie November Fusion Fund. I had just cashed out my investment in my previous Macquarie Fusion Fund and took some nice winnings at the time.

However the market decided to tank very shortly after I took out the new fusion fund investment. I allocated 50k into the Premium China fund and 50k into the Australian Share fund. Unfortunately at this point of time my investment is down around %30. That being said the investment is for the period of 5 years so I'm confident the investment will be in positive territory by then!

Personally I'm expecting the investment to be back at level pegging in around 18 months time.

Now in relation to cashing out of the fund, I spoke to my adviser about this just last week after having the same thoughts that you're having right now. The adviser mentioned that the fund cannot be exited if the investment is in the negative. So I suspect you'd be in the same boat and not be able to cash out either. Obviously you should contact your adviser and ask them to be sure.

In relation to investing further funds, I am thinking of investing around 10k directly into the market over the next few months. I'm planning on starting with a portfolio of 10 stocks, with around $1000 invested into each stock. The stocks will be blue chip value stocks spread over a number of industry sectors including commodities, banking, industrials, etc. Once I've established the initial portfolio I'll see how its tracking and then possibly add a margin lending facility to that, with a gearing level of around %60.

Cheers,
Kris

Kris, I think your fund is different to the OP one. The Fusion fund is not a normal managed fund, the OP can exit at anytime. But I would suggest he sticks to his orginal investment plan, and rides out the bad times.

When the going gets tough, the tough get going.. markets never go up in a straight line!

Yes you could be right on that, although I can't imagine they'd be too keen on anyone exiting a %100 capital protected investment when the investment is in the negative. Will be interesting to hear more to see what happens.

In regards to riding out the bad times, I'd have to agree with that, and I'm going to do the same. At the moment there appear to be a number of value stocks around the place so I'm going to do some good research then do some value buying

Cheers,
Kris

looks like the market is starting to come to a boil, so getting out now may be the worst time to do so

Thanks for the input guys, after reading that with a level head, i guess i was getting a little to over my head.

I have 4 years left of the fusion fund and a large portion of it is invested within the chinese industrial sector which im sure has more to come?

I was aware that if the investment is in negative when i want to exit i would pay the difference, me being so oblivious to the markets and how they work (only starting investing when everything was going great) thought the investment would never hit the red territory! Haha, hows that for a reality check? Not to mention my bright idea of buying rams home loan shares at $1.18

I think its best i leave my investment decisions to the professionals. I will arrange a meeting with my FA later in the year after tax time etc and see where we stand.

Thanks again, its great to have a place to discuss these matters.

Jacque, its this comment I'm not agreeing with.

Your suggesting FP advice is somehow geared to make sure the FP profits from it most to the disadvantage of the client. This is simply not a fair comment to make.

You are in the property game and collect money from people you assist to buy a direct property. You wont go to these people and say "Hay I think its better to invest into the cromwell unlisted direct property trust because you will save on all the government stamp duties and agent costs to get in and out. You also will have the opportunity to better diversify your money via entering this unlisted fund across several properties. And if you need to partially sell down units you can unlike when buying a house"

You will most likely make comments like you did above saying "Hay property is great, but your financial planner wont recommend it cause he wont make money by doing so"

Do you sit down and do a detailed review of a clients financial situation to establish if getting a IP is the best for him? Do you look at their overall portfolio to make sure they have proper diversification in property, shares and other asset classes? Do you review a clients insurance needs and manage their risk to match their profile? Do you review their situation every 6 months to see if further value can be added to their portfolio? Do you set goals for the client to reach? No you don't. A financial planner offers all these things, and in return expects a fee.

A financial planner can actually recommend a direct property holding if their dealer group allows it. They can charge you a planning fee to reflect the fact they wont collect a trailing commission. They could actually sell you finance, and collect trailing commission from the finance by buying the house.

My point is both of you offer a service and charge for it. Just the charging method is different, and services offered are different. To suggest a FP is doing something wrong by charging for their service is not appropriate.

Hi crc

I think we misunderstand each other. At no time did I state or suggest, in your words, that FP "advice is geared to make sure the FP profits from it most to the disadvantage of the client" I believe that you've misconstrued my meaning here.

I simply stated my opinion on why I believe why most FP's don't usually recommend direct property investments as part of an overall portfolio. This has been my experience with them and I know it's been several others as well.
I'm certainly not against people using FP's- please don't misassume here- the good ones are very effective in getting clients to manage and invest their money wisely across a diversified range of investments that are personally structured for their particular situation. A professionally qualified and effective FP should be not only acting in your best interests, but should be someone who understands all the current legislation, regulations and changes in tax, super, deductions, pensions, salary sacrificing etc etc as it's a real minefield out there when it comes to rule changing! Up to date technical knowledge is a must, as I'm sure you'd agree. And I'm 100% with you on goal setting for clients- good financial planning is as much about structure as it is about maximizing investments.
In fact, for beginners or those who wish to know more about how to select an effective FP ASIC put out some great reading material here - some might find it useful.
Just like any advisory service, consumers need to understand how their FP is going to be paid- whether it be by the commissions on the financial products they sell, by the hour for the time spent with the client and on their portfolio, or as a percentage of the assets they're looking after or a combination of all or some of these. Personally, I'd be wary of only engaging those FP's who make money off the commissions of financial products only- but that's my opinion and I'm entitled to it

As for your assumptions on what comments I'm likely to make to my clients ...."Hay(sic) property is great, but your financial planner wont recommend it cause he wont make money by doing so" again you're misinterpreting me. Just as I won't and don't go and recommend any other type of investment (listed trusts, shares or otherwise), as you've correctly pointed out, I'm not a financial advisor and am not professionally qualified to provide advice of a financial nature, so you certainly won't hear me making comments like this. My clients come to me ready to purchase property, with a brief, and my aim is to locate and secure what it is they're looking for. I can certainly assist with recommendations of suburbs within their budget or parameters of criteria, but that's it.

Where we do concur is that both services (and fee types) offered by FP's and BA's are different. At least we can agree on something

Let's not get all hot and bothered (and perhaps personal) about FP's here. After all, I'm friends with quite a few myself!!!