# Achieving a sufficient retirement income portfolio



## divs4ever (22 July 2021)

Achieving a sufficient retirement income portfolio
					

Retirees require a reliable income stream to replace the wages they received when they were working and should focus on the dollar income generated over time rather than the headline yield percentage.




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 a major priority for me  , right for the start of my investing adventure ( well i was 55  , no super  , but a useful amount of money  , i suppose i could have opted for a mid-life crisis )


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## qldfrog (22 July 2021)

Interested, i just retired at 54 and in similar situation so keen on learning from your experience.


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## divs4ever (22 July 2021)

gee that was 2011 ( actually late  2010 )

 a lot of what i was thinking  has become irrevlevant , companies failed , sold or merged , you had hybrids and bonds that were genuine alternatives if you were seasrching for yield    and although the market was sliding  , there was still basic economic theory  and solid value metrics in play 

 BUT let's  give it a shot and maybe one or two members   can find a useful edge to fight the coming chaos 

 so ..
 we go back to 2010  , and i had just lost two relatives ( about 4 years apart but the estate paperwork   was .. just gone  , i have every reason to believe it existed  and was 'secure' at  some lawyer's office  ( the only will found was written 8 years before i was born  , despite evidence two later ones were written .  but i was the only blood relative that could be found   so ended up with the two estates )

 so the first lesson is  if you plan to make a will  , please find a PROPER custodian of it ( and tell the intended heirs where you left it  )

 but let's have a stab at the investing journey 

one of the estates  containing a holding of four shares   WOW , CSR , QAN and APE  which was very nice  that $value if sold would have bought  a nice mid-range car  and maybe some other trinkets ( but i don't drive and rarely even wear a watch  )  .. oh and enough cash  to have bought  a fair  suburban house  ( at the time ) and the family home 

 now before that i lived a flexible ( semi-nomadic ) lifestyle   and carried no debt apart from weekly/monthly bills   , you could claim it was a hippie lifestyle without the drugs LOL

 so  any here i am  , with a bundle of shares  , a wad of cash ( seemed huge to me at time time )  what to do 

 so i took a DEEP breath  , and decided  i may as well  try to create  a retirement income fund  , reasoning the Aged Pension system  as i knew it then  could not ( wouldn't be allowed to ) last forever  ..that is the rest of my life 

  so first off i decided to keep the inherited shares ( i have messed with that since  , but while i knew nothing  , i left them there as something to learn from  )

so i had ( i thought 10 years to create a fund  anfd then retire ) , with no experience at it ,

  like all novices  ( seem ) to do  i dabbled  with a few companies  and relatively small amounts of cash  , while i was starting to form a strategy .

 given the target  i desire  what should i invest in  looking for returns up to 30 years in the future 

 so i first looked at the ASX sectors and at that time the ASX was dominated by banks  .. .. what do i do there ( but remembering i MUST look ahead )
now even back then the official mantra was 'too big to fail ' but hold on i needed to GROW the portfolio ( but not blow in up  leaving  me back hoping for a pension )  so i looked at the major banks and saw big banks  .. that had become so big bthere was no sensible place to grow into ( before facing regulator problems  ) ( i still cringe at the thought of how history has proven me correct there )
.. so i need some banks but ones that MIGHT grow sensibly  , so that WASN'T the big 4  ..  so what about the second tier ones and the minor players  they DID have room to grow  before regulator red-tape  ..  burt one of my picks HAD TO BE successful at being ambitious  ,  so the obvious first pick was MQG ( my ONLY successful prediction in ten years  , nearly everything else has been luck or instinct  )  but while i was buying MQG is smallish parcels  as it slid and slid ( down to $20 ) in 2011  ,  i couldn't risk it all on a high risk bank  , so bought small holdings  in all the smaller banks ( even AMP which has a banking arm  , as does SUN  )  i was buying other stuff as well as the market slid in 2011  ,  but the MQG holding was accumulating  and THEN while looking for stabilty in income  i spotteg MQCPA ( MQG preference shares  ) paying 11%  per year interest PLUS franking credits   ..sadly MQG decided to redeem those later but it was nice while lasted  ( especially if you bought the preference shares below the $100 face value )  so while i was moving out on the risk curve with stocks  , i also  bought various corporate bonds and hybrids  , for regular cash coming in  to boost the portfolio    now while i was working irregular jobs at the time , i was doing a LOT of research  and over-working the calculator  , but ALSO looking  at things at a work-site and travelling there ( how many offices/shops for rent , how many sales offers  , how much new construction etc etc  
 including a rough assessment of businesses i past regularly   for example  i was in an area with several different RFG franchises  , and decided  most of the franchises   relied on a 'fad ' , coffee mornings , hot bread , etc etc etc  and RFG would need to create different franchises to sell to dreaming  franchise retailers  .. so avoided RFG which was rather popular at the time 

 lets call this part one  , and give you some time to see if anything helps so far  ( ask questions i didn't plan this diatribe in advance )


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## qldfrog (22 July 2021)

thanks for part 1; as i was working, I had hardly time-> tried to start system trading but was too busy to invest not the money but the time in research..so income coming but TD style returns...was still beating inflation..., I liked TD at 7% via suncorp, MQCPA as well etc
Really liked and enjoyed hybrids at the time, sadly for banks, I went BEN SUN so not flashy at all, and lost on SANTOS while missing plenty of great opportunities
Overall, not great years for me, you did well


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## divs4ever (22 July 2021)

my internet was  too unreliable  , i might get an hour's notice of a new job any day of the week , in 2011 we had the 'Goodna floods' remember  , i was out doing some  jobs during that but not regularly ,
 a trading plan was never a sensible option for me then 

find  a strategy  setting up screens to find which stocks to research deeper  , guess a price and put an order in the market   , and check at the end of the trading day if any orders got hit   ( almost as bad as the 1920's for me  .. make a decision well in advance  give the broker the order and contact them later  to see what happened )

 but that was probably a GOOD thing 

 am still not set up for  what you would call 'trading ' and that works for me  , even now , MOST of the time i have the order in weeks before it is hit BUT i might reduce the price ( or increase ) time i think it wise 

 so far with SUN i have tried ( unsuccessfully ) a channel trading plan  buy when under $10 , sell half of any recent buys at say over $14 and participate in the DRP

 this works better on QBE ( with different price targets ) and not well at all with BPT ( which just seems to trend up )

 the OTHER thing i did with the banks was  buy some bank focused ETFs ( VAS and QFN in 2011 and MVB later ) the logic is if the banks are much the same  but too big to let fail  , let the market do the guesswork , i can put the research effort elsewhere ( those combine ETF holdings are still less the the MQG holding  and i have sold 66% of the MQG holding to boot  .. it went mostly into BHP )


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## divs4ever (22 July 2021)

so OK 

 the original plan was to create an income fund for my retirement  to be ready to go  on January 1st 2020  ( with no previous experience .. just street-smarts ) ...... AND roughly double the asset value in the same 10 years  ( normally a piece of cake when official inflation is 5% )

 how could this simple scheme go wrong 

 i had a starter pack of a few shares  , a heap of inherited paperwork  including some epic times in the history of shares ( like TAA share certificates , MIM certificates etc etc ) more money than i had ever seen close up ( that was when i swiched banks after CBA finally pushed me too far AND i took it physically in cash  .. i bet they thought i couldn't carry it all by myself in one  go  )

 anyway back to the serious stuff 

 what could go wrong  , i knew what i wanted to achieve  , i knew i could afford to wipe out  , no ability to rebuild  back  high enough ( at this stage i had no plans to sell the family home  and that asset is ignored during this adventure )

 so i had to climb out on the risk curve , but not suicidally so  ( that's at least 4 buddies just fainted .. at the idea of me being cautious  .. LOL )

 had two trading accounts set up cash in a friendly  bank  all i needed to do  was research and learn , right ???

WRONG !!

 what i should have done   was grab my freshly issued Medicare card ( i let the old one expire in 1993 ) and go down the doctors for a FULL medical checkup  ( so  i had a solid time frame  to work on )

 in July 2016 i finally went to the doctors  , then for a couple of tests  ,  applied for sickness benefits ( no cash only extra paperwork ) and off for more tests     the first echo-cardiogram  disturbed the technician  deeply  so he sent me STRAIGHT back to the doctor , the doctor sent me back  for a second set of tests , so the same technicician steered me straight to the local hospital  , the hospital  did an MRI , the registrar come STRAIGHT  back  and told be i had an appointment with a cardiologist  the next next morning 'be there early you're the first in line '  

 so next morning  the cardiologist opened with his best bed-side manner  .. 'take these pills or you are dead by Xmas ' ... 

 so after several more sets of tests  the medicos  decided i should have a stent ( angioplasty )  booked me in for that  , all was cruising until  the cardiologist  got to the target artery and  did NOT like what he saw  , took extensive  photography of it  , and backed out  , prompltly referring me to the senior (research ) professor  and tagged it urgent  that was December 2016  and Centre-link were still processing my claim for the sickness benefits and the medicare card was screamimg for mercy  ,  in the last week of December Centre-link  required i go to an independent  consultant  for assessment ,  the doctor looked at  the available records  , a copy of the angiogram summary  , coughed and choked a little  , stood up shook my hand and said you will be hearing Centre-link soon  , you should be happy  .

 six days later i look in the bank account  see i nice boost  i was on a full disability pension  AND back-paid to July 2016  .. i had been retired ( and the heart proceedure was still to come...... in March !!! )

 so here i was RETIRED (by decree ) basically 3 years early ,  six months of learning/ research time left in total disarray 

 so yeah .. get that check up FIRST

  so back to what is was doing early ( instead of visiting doctors )  so how do you pick your shares  ,   CBA suggested i buy share-packs ( i can't imagine why Hayne was upset with them )

 nah , i wanted to learn  , and tinker  so  i studied a bit more discovered the Commsec screening tool  , started understanding about all these parameters  , and started applying the screening tool to find likely investments ( but not stopping other areas of learning )

 so i worked out a short list  of likely candidates  and then looked at what sectors were they in  and what would that sector look like in 10 years ( yeah i know most of the sectors look like raw sewerage now  , but i saw i  financial collapse coming  not a total collapse of government IQ )

 so shares like BHP were bought later in the adventure .. as they slid below $20 ,  
penny dreadfuls like   WAX ( 70c ) BFG ( about 69c ) PME ( 16.5c )   ( many others are no longer listed for various reasons ) were mixed in with other attractive  shares 

 initial shares CSR , APE and WOW were added to when the share price dropped 

 but you try to make the best decisions you can at the time , right 

 i liked to cover sectors that i thought had a solid future  ( either by picking shares or by using an ETFs to  cover  a whole sub index ( like SLF .. has since been sold  i discovered i had already bought the best bits at good prices )

 will be back with more later 

 ( and check to see if any questions )


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## Value Collector (22 July 2021)

divs4ever said:


> so OK
> 
> the original plan was to create an income fund for my retirement  to be ready to go  on January 1st 2020  ( with no previous experience .. just street-smarts ) ...... AND roughly double the asset value in the same 10 years  ( normally a piece of cake when official inflation is 5% )
> 
> ...



Did you consider a passive strategy of just accumulating a whole of market type ETF?

I have my super 100% of my super split between the Australian asx300 (50%) and the global index (50%)

I am “retired”from the work force, but I am only 39 so I plan on just letting my super sitting in those investments till I am 65 then I will begin a draw down pension on it. I add $25k per year to my super, so it should be a nice little nest egg by the time I am 65.

The rest of my capital is in shares, a little bit of direct realestate including my home, some unlisted property, some peer to peer lending and some cash.

I would have no issue with converting my shares I owned to a whole of market type index if I found I was underperforming the market.

when it comes to managing income, I have an account I call my “wage savings” account, where 50% of my after tax earnings from all sources drops into, from there I pay my self a weekly wage, so income can fluctuate but the weekly wage is steady.

I couldn’t imagine trying to get a retirement income from term deposits, you have to be in equites in my opinion, dividends will fluctuate, but you can set your self up so that it balances its self out.


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## divs4ever (22 July 2021)

i bought VAS early in the piece ( and still have them DRPing away )

 but they were bought as 'insurance' against my bad selections  ,  a little later i bought VHY ( and still have them DRPing away ) so i could get a better growth via div. return , and they have done that nicely 

 VAS   has had better  share price growth  , while VHY  has given me more shares in the DRP from a smaller number of shares ( they should be equal next  quarter , i reckon .. that is number of shares )  VAS had a big head start .

 now 'accumulating'  i thought of that  for about 5 minutes  and because of my age i realized i  needed to FORCE growth  ( there was no guarantee i would pick shares even half as well as i have   so the good picks might have needed to go 5 bagger just to cover the duds )

 even the best 'under-perform' SOMETIMES , the trick is to win when everything is going your way , and try and limit the damage when it isn't ( and more importantly  not dump good stocks  having a bad spell )

 i am not against   buy and hold , but i suggest WATCH as well  sometimesa pivotal movement is lurking there for you 

 for example i bought extra APE @ $2.63 in March 2020  currently APE is probably my largest holding DESPITE recovering that investment cash in  June 2020 ( actually it was double that recent investment  , but the holding was  uncomfortably overweight , it was just sensible to trim it   )

 i would rather NOT be so heavily in equitities but as one fund manager put it .. it's TINA ( There Is No Alternative)  and i had plenty of fun   with BB  hybrids and bonds up to 2016  , so i AM willing  to climb out on the risk curve  when there is a suitable reward out there , sadly the risk now outweighs the reward much of the time 

what very few people can guess ( predict ) is real inflation over the next 10 years  , that could benign or truly  terrible 

 in 1975 i bought a block of land and the interest on the mortgage ( with 20% deposit ) was 17.5% p.a.  , can you imagine if those rates came back to the Australian markets 

 so i suggest you learn as much as you can and watch so you can make quick educated decisions ( if you need to )

 good luck


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## divs4ever (22 July 2021)

at the  beginning of this month share holdings looked like this 

 by $ value

1. APE ( at some cash risk )

2. PME ( 'free-carried )

3. MQG. ( 'free-carried )

4. WES ( at full cash risk )

5. BHP ( some profit taken )

6. JHG ( full cash risk )

CASH

7..CMW ( at full cash risk )

8. API ( full cash risk )

9. CDM ( full cash risk )

10. LNK ( full cash risk

with BFG ( at full cash risk ) close behind ,


DYOR

TAKE CARE

 since then cash has gone  down  , i have been buying MOSTLY gold-producers 

  i hold more than 200 stocks ( including ETFs , LICs , and REITs  , no mananged funds yet , but you never know  )

 CAMG is the only hybrid  held currently  ( hydrids/bonds were about 20% of the holdings in 2015 )


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