Ive finally rejigged my portfolio to indexing

In reply to Voigtstr - What do you mean by "wiped out" - On this forum I have seen people post about gearing into - a geared fund, or using LOE to fund shares then margin loan - all Im saying is its quite easy to lose your entire captial - with a 10-15% market drop - thats magnified.
Yes you can make money long term - but there will be huge volatility
Many wouldnt be able to stomach a 40% drop - and end up selling - Yes its not logical but the longer you invest the more you realise about emotions and how it affects your investing.

The comment was not directed at CFS specifically, just that internal gearing magnifies risk and people should not be just looking at 36% return or whatever it was - as the market did 28% (or whatever it was) and if you geared you would have achieved the same or better result

Id rather a diversified portfolio conservatively geared with less volatility - to achieve the same result - or actually a better result once you take into account emotional factors - someone selling as it drops - hoping it will drop lower so that they can pick it up at an even lower price

Again it depends on your risk tolerence - i thought Id be able to hang on long term, and ride things out - but my track record has said no.

MJK - with rebalancing - i dont actually sell - I put more money in so no CGT events. I havent worked out how often yet - probably 3x / yr - or when I have spare money available

austini - my 2nd portfolio consists of ARG,STW, SLF and CTN
no international exposure
I like CTN for small cap exposure - small amount allocated as it is more risky

SLF - is the property index
STW - aust index
ARG - old LIC with good historical returns
AFI - I used to hold this too

I do like the income component growing in argo or AFI
I like both portfolios and know the DFA portfolio has slightly higher fee, but not by much. I have deliberately tilted the DFA portfolio to australian shares to capture a higher dividend yield - of approx 4.1% on the portfolio

LIC dividend yield is about 3.5% atm

Active funds have MERS 1-2% alone, without advisor or wrap

Also my LIC portfolio is in an environment where I can negatively gear
DFA is in a discretionary trust
There are different tax implications to my strategy that I will not go into

Hi dkmc,

Thanks for your reply.

The one thing that is appealing to me about how you have structured your indexing approach and use of wrap is its minimal administration and auto rebalancing etc.

Regardless of implementation I'm a huge fan of passive investing using index funds and/or similar beasts such as LICs. Not only does it require next to no effort to invest this way but the returns are often superior to most active managers or stock pickers (with much less tax to pay). Plus it is one of the safest ways to invest with the risk of the funds going bust almost non-existent. Safe with excellent returns and minimal effort - ah what a way to go.

I used to frequent Aus.invest where Travis Morien (a planner) raved about DFA and indexing in general. He is one FP I had a lot of respect for. There was some great discussion there. Shame about all the spam etc.

Do you mind me asking which wrap platform you are using?

Cheers - Gordon

austini - macquarie wrap with a big discount

I have SLF and STW (amongst others), as well as HHV and Australian Ethical. If I wasn't such a dabbler I would be fine with just SLF and STW, nice and simple, and low fees - though unfortunately there is no exchange traded international index fund or ethical index fund.

Check out ishares.com.au by Barclays. Just what you're after.

THANKS! yes this is new and I didn't know about it.. now to wait for it to pop up as an acceptable security in St George Margin lending - or maybe even ask them.

I am hopeful it will be on the November list as an alternative to AGF and INES.

Thanks for that Glebe.

This will provide a great altenative to Vanguard who I think from memory charge higher fees.

http://www.ishares.com.au/publish/co...ss_9_10_07.pdf

Cheers - Gordon