# Beginners First Portfolio (lend me your thoughts!)



## Y.T. (15 October 2009)

Hi all!

Been cruising these forums for a bit and have finally decided to take action (instead of saying "i wish i did this...")

I have decided to use a portfolio service (Mentor Portfolio Service) which has fairly low fees from my understand (no adviser remuneration, just cost of management).

I have chosen the following funds and weightings:
1. 10% - Colonial Firststate Wholesale Property Securities
2. 15% - Walter Scott Global Equity Fund
3. 17% - Fidelity India Fund
4. 17% - Platinum Asia Fund
5. 20% - All Star IAM Australian Share Fund
6. 21% - Fidelity Australian Equities Fund

* Rebalancing every 6 months with regular investment plan.

Is this too diversified or are the funds chosen no good in other peoples opinions?

Any input would be greatly appreciated!

Thanking all of you in advance!

*I understand that all advice is general in nature and not tailored to my specific situation or circumstances.*


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## snowking (16 October 2009)

I have actually been looking at the Platinum Asia fund and was just wondering what your opinions of it were? Have you been it a long time?


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## Muschu (16 October 2009)

Y.T. said:


> Hi all!
> 
> Been cruising these forums for a bit and have finally decided to take action (instead of saying "i wish i did this...")
> 
> ...


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## skc (17 October 2009)

Y.T. said:


> Hi all!
> 
> Been cruising these forums for a bit and have finally decided to take action (instead of saying "i wish i did this...")
> 
> ...




A few things for you to think about:

- What exactly does the portfolio service do? Keeping 6 funds is hardly rocket science.. is it something you can't do yourself?

- Most funds these days don't charge entry fee, or you can get away with them with certain on-line brokers.

- Have you considered some weighting in emerging economies (South America, Eastern/central Europe, SE Asia, South Africa etc) other than India?

- Re-balancing every 6 months sound too frequent given this portfolio of funds represents a more macro strategy. e.g. India may outpace rest of the world by 2% each year for the next 15 years, so why give up compounding profit with re-balancing? Re-balancing should be done only if you see the prospects of each region differently from the time you have invested.

I have no opinion about the specific funds - they are not something that I am familiar with - other than to say that check their credit worthiness.


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## Julia (17 October 2009)

Why are you planning to use managed funds, rather than buy your own shares directly?

I doubt you'll receive too much feedback on managed funds on this forum.
Might be wrong, but most members seem to invest directly.

What has been the five year performance of the funds you're looking at?


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## Awesomandy (18 October 2009)

My first questions when I read it were why, and what are you trying to achieve? While this would be out of the scope of the thread, I think it would be a good idea to consider your investments in light of your goals and objectives, if you have not done so already. 

Usually, funds have diversification built-in to them already, so having more than a few funds may not have a positive effect on the potential return. In a very general sense, diversification is used to reduce unsystematic risks, but the risks do not reduce proportionally (in terms of finance theory anyway). The law of diminishing returns applies, and after a while, adding in extra stocks/funds won't reduce any more risks materially. 

Another thing is, you should also look at the tax impacts of these investments. With direct shares, you have full control of when capital gains are realised, however, with managed funds, you don't get that choice. This may have a substantial impact of your after-tax returns.

And with managed funds, I don't pay too much attention to the performance ladder boards, but keep an eye out for those that have prolonged periods of below-par performances.


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## Sean K (18 October 2009)

If I was a passive investor with no idea of the funds I was investing in then I would not commit more than 5% per fund. 

If I had some understanding of the funds, what they invested in, and their performance, I might commit 10%.

If I knew every stock the fund invested in, and they were in a region that I knew was going to outperform others, and management had a track record, I might go 20%. 

On a general note, starting with managed funds is a good way to get into the market. Especially if you want exposure to overseas markets. In the long run, if you have the time, developing your own portfolio is the way to go.


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## Riddick (18 October 2009)

Why wouldn't you just buy shares directly?
you get more control, you get to do your own research, you get the buzz. Managed funds not my thing, but they seem to take the control away. remove the opportunity at massive gains and a lot less fun.

just my opinion.


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## craigj (19 October 2009)

with the rising aussie dollar wouldnt investing in overseas funds eat away profits at the moment

maybe increase or switch the portfolio weighting according to the aussie dollar ?

just the thoughts from a novice

interested in others thoughts


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## lukeaye (19 October 2009)

If you have little or no experience, then a managed fund is a great way to get started. 
Why? because you have no control over your portfolio. This is a good thing because when you start trading you will encounter all sorts of emotional problems, and having no control is the best way to counter that.

However, it is not a fast track to riches. Dont expect to double your money in 6 months. You will rarely outperform the market. Generally you will only do as well as the market does. So if the market moves up 40% in a year there is a good chance you will make around 40% on your capital. 

The next point is, how much money are you looking to invest? the less money you have to put in, the less worthwhile a fund will be. For example;

If you invest 10,000 and get 4,000 back in a year, it isnt a great deal of money, and as you can see, your not going to get rich any time soon. 

If on the other hand you have say 500,000 and you make the same 40% return, that is $200,000! Now im sure you will agree that is alot more satisfying. You also have very minmal work and effort requried to acheive it. 

My opinion is, if you have a greater amount of money, like the amount i mention above, then the returns can be more then enough.

If however, you are like me, and dont have such a large capital base, there is just no way that managed funds are worth it. Not gloating, but i would on average make about 6% per week, on my portfolio, but it requires a lot of work.

So until you learn the ins and outs of trading (a few years), you are probably safest putting your money into some managed funds anyway.


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## Mr J (20 October 2009)

lukeaye said:


> Not gloating, but i would on average make about 6% per week, on my portfolio, but it requires a lot of work.




There's about 2000% pa? And people ripped into me for stating that 1000% was possible for a good, fast trader .



> If you have little or no experience, then a managed fund is a great way to get started.
> Why? because you have no control over your portfolio. This is a good thing because when you start trading you will encounter all sorts of emotional problems, and having no control is the best way to counter that.




In my opinion, being exposed to emotional stress is healthy in the long run. To get himself accustomed, he can start small and contribute more as he's comfortable. Not being in control is not a counter, as I'm sure late last year many were quite emotional. It doesn't sound like he wants to be hands on though.


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## lukeaye (20 October 2009)

Mr J said:


> There's about 2000% pa? And people ripped into me for stating that 1000% was possible for a good, fast trader .
> 
> 
> 
> In my opinion, being exposed to emotional stress is healthy in the long run. To get himself accustomed, he can start small and contribute more as he's comfortable. Not being in control is not a counter, as I'm sure late last year many were quite emotional. It doesn't sound like he wants to be hands on though.




Well i am using CFD's and i have a small account, so for the last 2 months with my 10,000 CFD account ive made 6% a week. so my account balance is about $16,000 now. I will likely have some drawdowns in the future, but that is what i am returning at the moment. Beleive it or not, dont really care. 

Its not healthy if your blowing money? The reason you would get emotionally unstable is if you practiced poor trading methods? So i don't understand how it is healthy? Pretty irresponsible statement. People who are emotionally unstable should not be going anywhere money. The way you get over that is good money managment, and confidence in your systems, and i doubt he has any of that.

So if you would like to blow your money, and have many sleepless nights, follow mr J's advice.


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## skc (20 October 2009)

lukeaye said:


> Well i am using CFD's and i have a small account, so for the last 2 months with my 10,000 CFD account ive made 6% a week. so my account balance is about $16,000 now. I will likely have some drawdowns in the future, but that is what i am returning at the moment. Beleive it or not, dont really care.
> 
> Its not healthy if your blowing money? The reason you would get emotionally unstable is if you practiced poor trading methods? So i don't understand how it is healthy? Pretty irresponsible statement. People who are emotionally unstable should not be going anywhere money. The way you get over that is good money managment, and confidence in your systems, and i doubt he has any of that.
> 
> So if you would like to blow your money, and have many sleepless nights, follow mr J's advice.




Well done on your trading so far...

I think J is just saying that you need to be out of your comfort zone every now and then in order to grow and get accustom to the pressure.


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## Mr J (20 October 2009)

Luke, I don't doubt that you have achieved 6% so far, but achieving it going forward is another matter. My comment wasn't really refering to you, it was a poke at a thread a few months back.



> Its not healthy if your blowing money?




I suggested to start small, and build up the tolerance. Crawl, walk, run. Investing in funds isn't going to lessen the rollercoaster, so the same applies there.


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## lukeaye (20 October 2009)

Mr J said:


> Luke, I don't doubt that you have achieved 6% so far, but achieving it going forward is another matter. My comment wasn't really refering to you, it was a poke at a thread a few months back.
> 
> 
> 
> I suggested to start small, and build up the tolerance. Crawl, walk, run. Investing in funds isn't going to lessen the rollercoaster, so the same applies there.




Anyway, debating my returns is not really the issue. 
If i was you, i wouldnt look to trade my own methods and money yet. Give yourself the opputunity of making some money through managed funds, whilst learning the art of trading. Thats my advice. Otherwise you could end up blowing a fair bit of money like i did, in my first year of trading.

Good luck, it is a long, hard, painful road.


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## damien275x (8 December 2009)

90% of the posts i read on here are about how people have lost money
So in all honesty, why do you do it at all?
Might as well not do it at all and just be more frugal with the money you earn. :S


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## Julia (8 December 2009)

damien275x said:


> 90% of the posts i read on here are about how people have lost money



What do you mean?  The posts on this thread?  The whole forum?
If the latter, I can't imagine why you have formed such an impression.

However, going by your previous post in another thread where you want to just buy something and forget it, then probably you will be consigning your funds to just such a loss as you are suggesting.

Why do you expect making money to be so foolproof and easy?

You might indeed be best to stick the funds in the bank, and just accept that your capital will be eroded by inflation.

Successful investing or trading requires a declared interest, application and a willingness to keep learning.

Up to you, sunshine.


> So in all honesty, why do you do it at all?



Why do it?  Because many of us make very decent money from the market.



> Might as well not do it at all and just be more frugal with the money you earn. :S



Sure.  That's a valid option.  Maybe not everyone wants to be frugal.
Your choice.


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## Kryzz (9 December 2009)

damien275x said:


> 90% of the posts i read on here are about how people have lost money
> So in all honesty, why do you do it at all?
> Might as well not do it at all and just be more frugal with the money you earn. :S




Seems you did not heed the advice given to you in the thread you started at the beginning of the year. 

https://www.aussiestockforums.com/forums/showthread.php?t=13972

Also, if you're reading 90% of the posts as how people have lost money, perhaps you should look at the other 10% and learn a thing or 2 from those ones


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## condog (14 December 2009)

If your a complete novice and do not have the knowledge, interest, time or desire to invest directly in the shares then the managed funds will suffice. Otherwise you will find if you actively invest in the shares these funds hold and only choose the best ones you will undoubtably do better....

For the overseas shares a fund can save a lot of hassell, but if you go that path choose a broker that refunds the entire up front fee back to you and  conly keeps the trailing commission....eg: comsec or others...

In terms of the currency valuation....most analaysts are now saying the aud is 20% over valued..... if thats the case an aud slide will boost overseas earnings to you.....so from a counter cyclical perspective for a fairly conservative OS fund invester now is possible a reasonable time to be making part of a purchase...

Happy trails omigo


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