# How much of your savings are you comfortable investing?



## Somestockguy (25 July 2021)

As a relative newcomer to the markets, I was initially very cautious investing even a small amount into shares but now after six months watching it climb I'm kicking myself for not placing more in. I'm just investing in safe ETF's for the time being and have good cash sitting in a mortgage offset only making 2%. For the more experienced investors, do you feel safe putting all your money into stocks? Should I be doing this with the ETF's?


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## divs4ever (25 July 2021)

Somestockguy said:


> As a relative newcomer to the markets, I was initially very cautious investing even a small amount into shares but now after six months watching it climb I'm kicking myself for not placing more in. I'm just investing in safe ETF's for the time being and have good cash sitting in a mortgage offset only making 2%. For the more experienced investors, do you feel safe putting all your money into stocks? Should I be doing this with the ETF's?



 so if you started investing THIS year  and not 2020   , i think the cautious approach was correct for you 

 there is a concept in investing called FOMO ( Fear Of Missing Out ) and that can be a nasty trap for a novice 

 now  a novice in 2020  is probably doing so well that they feel bullet-proof  and in the next correction ( whenever it comes ) that will be a savage lesson as well  , ( they MIGHT wish they had taken SOME money off the table OR kept back some cash for a cash reserve )

  all investing carries risk  , the federal government  has a bank deposit guarantee plan  , just in case a bank fails 

 now a bank failure risk might be low  but in 2008  even our Federal Government saw the risk and acted

 **  do you feel safe putting all your money into stocks? **  

 me personally ??  ABSOLUTELY NOT  , but stocks are the cleanest shirt  in the charity donation bag  ( currently ) and to clarify  i do have some cash in reserve  , in case a genuine opportunity arrives  be it a share , bond , or any other asset class 

 **  should you be doing  this ?? **   this is not what i would be doing  , but you really need to be talking to an accountant or tax accountant about this  ( it might be perfect FOR YOU )

 one positive point is .. most ETFs all highly liquid ( check your is ) so if you really need to,  you can sell them very quickly close to their NTA  ( Net Tangible Asset value )

 cheers !

( asking questions is a good thing for a novice , don't let harsh answers stop you from that )


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## tech/a (25 July 2021)

If I know how to apply appropriate risk management while continuing to trade ETF’s 
I could trade 70% of my surplus savings whilst limiting risk to 10,15 or 20% or whatever I’m comfortable with.

which is not advice but what I could do.


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## Somestockguy (25 July 2021)

A little more about my personal situation, I won't need the money for a long time and ideally would just like to see it grow and live on it one day once large enough. Would be great to have a passive income coming in

Thanks again for your help


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## Warr87 (25 July 2021)

A general rule when it comes to whether to pay off a debt, or invest my money, is which one would yield me more? but i don't have a mortgage, so my personal circumstances are very different. if you are doing something more passive like investing in ETFs, averaging in, then smaller amount may be ideal. if i had a mortgage i have no idea how i would split it up. i have been learning (and continue to learn) how to actively trade my money which I believe would yield me a greater % than capital returns on a house. for your own personal circumstances, perhaps think about the amount you could put away and still sleep at night without wondering what the market is doing. this is a good rule to follow in any case, but one for you to ponder a bit harder. @tech/a also uses his own risk tolerance, i.e. 15% drawdown. another consideration to take onboard when investing (to determine your tolerance). most people over-estimate their tolerance though, i.e. you think you can handle 30% drawdown but you start wanting to get out and stop at 20%. investing in the stock market carries risk, even in an index ETF.

if you want to do a little research you could look into using an ETF strategy using ratios: i.e., depending on market performance change the ratio of a bond ETF and your index ETF. ive seen examples on the US market and it has done pretty well for what is a low involvement strategy. I myself trade a monthly (trade once a month) with 10 different stocks. a mixture of an All Ords ETF, bonds ETF, global equities ETF, could provide you with enough diversity and investment opportunities but it may not necessarily give you a big yield. if you want to get 20% returns then understand you have to put in more risk, and likely more research into active trading.

i know its hard, and i have to hold back myself, but the whole FOMO can be terrible. don't think about 'what if i had only put in twice the money', that is a fallacy. you don't have a crystal ball. what if it went the other way? what if you put in a bunch of money right before the market crashed?

your circumstances are unique to you, so figuring out what you are comfortable with (which should be an amount that wont put you or your house at risk) is up to you. from there you can figure out what to do with the money.

there are no clear answers from this, but it should (hopefully) at least provide you with something to think about. asking the right questions is important place to begin.


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## tech/a (25 July 2021)

Warr87 
There is a clear answer and it’s based on knowledge of how to 
protect capital along with trade and risk management.


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## Allan11 (25 July 2021)

What time of your life you are at is the important factor. if you are 2.5 years away from finishing work, no mortgage and have around what you need to retire early (58years) and that will last for the coming years then low risk could be better. how much growth do you miss out on verse how much you could loose in a market adjustment and how many years would it take to get that back?


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## Allan11 (25 July 2021)

What time of your life you are at is the important factor. if you are 2.5 years away from finishing work, no mortgage and have around what you need to retire early (58years) and that will last for the coming years then low risk could be better. how much growth do you miss out on verse how much you could loose in a market adjustment and how many years would it take to get that back?


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## divs4ever (25 July 2021)

yes important enough to earn two likes


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## tech/a (25 July 2021)

Allan11 said:


> What time of your life you are at is the important factor. if you are 2.5 years away from finishing work, no mortgage and have around what you need to retire early (58years) and that will last for the coming years then low risk could be better. how much growth do you miss out on verse how much you could loose in a market adjustment and how many years would it take to get that back?




Sorry I don’t agree.



tech/a said:


> Warr87
> There is a clear answer and it’s based on knowledge of how to
> protect capital along with trade and risk management.




Relevant from the first penny invested to the last!


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## divs4ever (25 July 2021)

as a person in similar circumstances to what Allan11 describes  in late 2010 ( and unskilled in the investment markets )  very similar considerations went through my mind ,

 lower risk does not always equal lower gains ( or a smaller  risk  , you  can still lose 100% , but you MIGHT be less likely lose it all .)

 all that wisdom is sheer luxury  , when you are a novice entering a volatile market  ,  all that jargon , all those ratios  , and a frenzy of price moves 

 i kept hearing that Sovereign Bonds were risk-free  and then the Greek and Cyprus crises  hit , i guess those bonds weren't so safe after all 

 and money in the bank was 'as safe as houses' .. and then Cyprus froze bank accounts , bail-ins , limited withdrawals  and force-merged banks , so   as safe as Japanese nuclear plants it seems .

 now sure if you are a sophisticated  trader  with complex analytics programs on your computer  , not such a problem  , but when the newbie doesn't know the difference between a death-cross and a rising star all sorts of financial difficulties can happen 

 poor Mr/Ms novice has to learn all this QUICKLY ( and get it mostly right  to survive )


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## noirua (25 July 2021)

These days I aim to keep between 50% and 70% in cash.  Not always succeeding because if share prices go up the cash percentage is lower. Back in 1987 I over did it and smashed my life up when mining stocks crashed. One position saw a 66% fall in one day and 90% in three weeks (Endeavor Resources now St Barbara Limited, fell eventually from 36c to 1c. In 1994 rose from 2c to $2.80 and then crashed back down again ) - my story is here somewhere on ASF. I fully understand why some people take their own lives and why one man in the states in 1999 murdered 12 people at stockbroking firms.
Some companies go from brilliant to bust as in the case of OneSteel Limited.  Can 62% grade iron ore now over US200 a tonne fall back to US$42 per tonne, YES, it has already done it.  Can gold go to US$5,000 per tonne in one year - YES. Can gold go to US$500 in one year, YES.
If we understand this it is not a case of being frightened to death it is just an early reality check.


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## divs4ever (25 July 2021)

i remember One Steel ( later ARI ) well  it confirmed my faith in rescuing that investment cash whenever sensible ( whether near a top or not ) i lost  the last bit  as ARI but that could have been much worse  had i held  the full holding  with diamond hands  ( i got a scratch not an amputation )

 i am retired   so try ( not very successfully ) to keep cash ( not bonds/term deposits etc. ) between 10% and 20%  

 but yes even in my 10 years in the market  i have seen some jaw-dropping moves  , i was brought up with Depression era parents ( both were teens at the start of WW2  )  so debt/credit was only  used when absolutely necessary  ( they even paid the home off more than 5 years early )  and  i resist  borrowing as well .

 i have no idea where we go next ,  we are that far lost


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## Somestockguy (26 July 2021)

Thanks for your answers everyone, much appreciated

At the moment I'm struggling to see how Vanguard ETF's etc could really lose as bad as people have experienced with volatile mining stocks etc. Looking at past history the dips have been small and short with only steady growth trending ever upwards. Not to sound optimistic but I just can't see the risk associated with these. Am I missing something?

Once again, many thanks


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## Somestockguy (26 July 2021)

I feel if we don't invest our money will definitely be worth less but if we do invest wisely we will at least preserve with inflation. Doing nothing and parking cash is a pretty bad investment that's pretty much guaranteed to be bad I'm finding

After playing this cash game out of pure fear of losing money, I've lost thousands upon thousands of potential gains in the market at instead made 2% on my mortgage through offsetting. I'm working my ass off to save it and it's not working for me, I still will have to work really hard until the government pay me a pension and I can quit in 30 years. I don't want to live like this

A great friend of mine started me off on this share investing, she retired early at 55 after selling an investment home and parked a million dollars in to ETF's. Has been living on the rise and dividends for 8 years now. That's what I aspire to do


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## qldfrog (26 July 2021)

Somestockguy said:


> Thanks for your answers everyone, much appreciated
> 
> At the moment I'm struggling to see how Vanguard ETF's etc could really lose as bad as people have experienced with volatile mining stocks etc. Looking at past history the dips have been small and short with only steady growth trending ever upwards. Not to sound optimistic but I just can't see the risk associated with these. Am I missing something?
> 
> Once again, many thanks



Consider inflation.if you had. Invested 10k in a vanguard etf for the asx in 2007,where would you be now,after dividends..and tax......get that figure then realise what money was worth then.
Probably double or nearly so if you have less than 20k..you lost....
Just saying..do not know the figure, but i highly suspect it may not be that glossy,even in  a booming market....and this is not something i would bet on carrying on for 15y,
You have also options like bonds..gov.. including CPI protection.
Would probably have beaten the market if taken in 2007..but they are quite dear now...
There iss no easy answer and 2020 was only great if you invested after the covid crash .not so great if you invested before..
A bit of diversification would help in my opinion.
Some here jake a killing on fmg or fake honey, banks,etc, they did not diversify much and were winners, others who did same on dog stocks with less success...you will not hear from them,and they may drive an uber to make ends meet.are you a gambler a slow grinder?


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## qldfrog (26 July 2021)

Lastly,you mentioned you will not need that money for a long time..can i buy your crystal ball?


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## Somestockguy (26 July 2021)

Well I've had a couple years living expenses cash sitting for 6 years now as a safety from when I quit my job and decided to start "taking it easy" and then started a business where I now mostly work hard. Have been adding to this over time as well as spending it (bought a new home so that's where most of it went. It's come back again now though since). So far we haven't "needed" to use it apart from wasteful things like renovations etc. I've since found that it's not going to be my ticket out of work though unfortunately, safe as it may seem.

Looking at the crash in 2008 (which was a shocker!) It took 5 years to come back to the previous level and start making a good return. Which must have felt like a lifetime for those invested. I know I would have gone through a rollercoaster of emotions and possibly even sold to take a loss of depending on whether I thought it would come back or not but yes I see why people state long term for all investments. It can be a bloodbath if one was to retire right on the crash etc so understanding the risks a bit better now. My friend who got me into this also said they were a bit afraid it seems too good to be true and said "how long can this go on for?"

Thanks for pointing that out, I hadn't looked that far back (only the five year graphic in my platform) and this information really is helpful for a noob like myself


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## divs4ever (26 July 2021)

Somestockguy said:


> Thanks for your answers everyone, much appreciated
> 
> At the moment I'm struggling to see how Vanguard ETF's etc could really lose as bad as people have experienced with volatile mining stocks etc. Looking at past history the dips have been small and short with only steady growth trending ever upwards. Not to sound optimistic but I just can't see the risk associated with these. Am I missing something?
> 
> Once again, many thanks



 ETFs ( i hold VAS and VHY since 2011 )  are mostly a basket of shares  mostly selected by computer and a market algorithm (  a S&P index or another mathematical formula ) BUT each share in that basket is partly influenced by retail investor activity in the underlying share  and an ETF ( unlike a LIC which normally moves slower ) moves reflecting the current value of that basket of shares offers a buying price that drops almost as quick as the market in general  .. now IF you are a contrarian , buying in a crash , or savage dip that is a GOOD thing  , however a scared passive investor will not enjoy that some move  , especially those that restrict any buying to , say . the end of the month ( rather than a market move )

 now not all ETFs hold a basket of physical shares ( or bonds ) a few are comprising almost completely of derivatives  like took inverse VIX ones , or an oil or other commodity ETF ( you don't think  , say Blackrock or IShares is going to store millions of tonnes of wheats or barrels of oil do you  , these ETFs rely on very few staff , but a lot of computer activity ( most share and bond certificates are electronic now ) 

 an index ETF goes down with the current value of the shares in the basket BUT it also relies on the market price to quickly redeem units for departing unit holders  ... what happens if sellers ( folks wanting to redeem ) vastly outnumber buyers  you end up the same as any other historic crash  all willing ( and desperate ) sellers and hardly a buyer to be found   so the ETF can't sell ( because most do not have cash reserves ,  like a LIC might have )  and few want to buy  so it has to freeze trading  until there are both buyers and sellers 

 BUT this will be very similar to the ordinary share market at that moment .  remember if you are a heavily leverage investor  , you will need money NOW , to honour margin calls ( and other nervous lenders )

 now if you the ETF holder  have no outstanding debt ( so you are not FORCED to sell  ) your only extra risk is the ETF ceases operation  and redeems all units at the current market values (  when they can sell the underlying shares ) , how big or small that risk is, time will tell 

 i guess the only way we will find out for certain is if we have a 1920's style market crash .


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## tech/a (26 July 2021)

Can I just point out

It only takes ONE greatly timed and well funded investement to be life changing.

AFTERPAY 
Gold from $250 an ounce
short oil 
Long DJIA or DAX 
Housing an number of times.
AUD when it went to $1.10 from 50c 
many stocks move 300-1000%

Yes you have to be in the right place at the right time 
with enough capital to make a difference but it happens

OH and on early retirement. BORING AS BATSHITE  I too work for
myself and although I could have retired 15 years ago am glad I have the challenge of business
particularly in theses times to sharpen my whits!

Ive said this before 
you’ll make more money from LUCK than anything else.
look for on coming TRAINS load up and hop on .

(1) Most people can see opportunity 
(2) Few know what to do when they see it.
(3) Very few DO ANYTHING 

So get good at (1) (2) (3)

The more I put myself in front of PERCEIVED opportunity the luckier I get.

see my previous posts on investment management and RISK evaluation.


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## divs4ever (26 July 2021)

i am already retired  , so in the face of opportunity i tend NOT to back up the truck  , but still may buy a comfortable amount  , recognizing  i may need some cash at a later date ( and the disability pension  is only about $1,800 a month )

 i am probably a little more cautious now than previous to  2016 , but  am still  buying small parcels as i see a fair deal 

 cheers


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## Allan11 (26 July 2021)

tech/a said:


> Can I just point out
> 
> It only takes ONE greatly timed and well funded investement to be life changing.
> 
> ...




not sure if the "early retirement. BORING AS BATSHITE" was in response to the post? 
When i refer to early retirement i only mean from work not from life. Everyone has a different view on life and most of the older people i have spoken to in the past 6 months whilst getting an idea of how much people live on, what sort of life they are having in retirement from work etc and the over whelming  opinion is don't wait until you are too old to enjoy life, money, travel etc. 

For me a nice 45ft Yacht sailing the Atlantic from the USA to Europe, Norway, and back down then across to the Carribean for 6 months a year until i am in the mid 60s and still have enough to have a good life back in Aus seems like a good way to spend the last 20 years of active life. 

Everyone is different but i don't factor "luck" into any money decisions any more..


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## divs4ever (26 July 2021)

Allan11 said:


> Everyone is different but i don't factor "luck" into any money decisions any more..




 i DO , especially  when well in front on an investment  , such a philosophy   worked well for me in OTE ( which became ISX ) i averaged down the price to 1.4c ( a new share  ) took some profit on the way until i exited @ $1   , using the perception it LOOKED LIKE morphing into a neo-bank  ( i seemed to have got that wrong but the timing was excellent  )

 i am retired whether i want to be or not   without the pension the medical bills would be horrible 

but i had a LOT of fun in the last 60 years  , i can't grumble too much ( they haven't even tried to addict me to opiates yet )

 but please feel encouraged to enjoy your retirement 

 cheers


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## Value Collector (26 July 2021)

Somestockguy said:


> As a relative newcomer to the markets, I was initially very cautious investing even a small amount into shares but now after six months watching it climb I'm kicking myself for not placing more in. I'm just investing in safe ETF's for the time being and have good cash sitting in a mortgage offset only making 2%. For the more experienced investors, do you feel safe putting all your money into stocks? Should I be doing this with the ETF's?



It all comes down to your personality and how emotionally stable you are.

If you look at owning shares as owning a part of a business, and you focus on buying into lots of different good businesses over time, and won’t get upset by the ups and downs in the market, I would say you could probably be 90% in shares.

but if you are likely to let greed and fear over take you, and end up buying in of selling out because of fear of loss or fear of missing out then I would say a smaller allocation probably better, and you should instead put you money into super where you can’t let your fear damage your portfolio.


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## tech/a (26 July 2021)

Allan11 said:


> not sure if the "early retirement. BORING AS BATSHITE" was in response to the post?
> When i refer to early retirement i only mean from work not from life. Everyone has a different view on life and most of the older people i have spoken to in the past 6 months whilst getting an idea of how much people live on, what sort of life they are having in retirement from work etc and the over whelming  opinion is don't wait until you are too old to enjoy life, money, travel etc.
> 
> For me a nice 45ft Yacht sailing the Atlantic from the USA to Europe, Norway, and back down then across to the Carribean for 6 months a year until i am in the mid 60s and still have enough to have a good life back in Aus seems like a good way to spend the last 20 years of active life.
> ...




*Like your thinking.*

We have done and wish to do a lot of travel around this globe. Unfortunately we dont have friends who are able to partake in the same passion. I expect to be active well into my 80s. Still getting thrown around buy guys 1/2 my age (and pretty hard) in martial arts.

I dont factor in luck either but right place right time has served me very well in a great number of areas.


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## bux2000 (26 July 2021)

tech/a said:


> I dont factor in luck either but right place right time has served me very well in a great number of areas.




You are so right  .....Luck is what you make it and timing is everything.

bux


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## divs4ever (26 July 2021)

qldfrog said:


> Lastly,you mentioned you will not need that money for a long time..can i buy your crystal ball?




 are we going into a bidding war for it  ??

 my crystal ball needs replacing also


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## Somestockguy (26 July 2021)

Value Collector said:


> It all comes down to your personality and how emotionally stable you are.
> 
> If you look at owning shares as owning a part of a business, and you focus on buying into lots of different good businesses over time, and won’t get upset by the ups and downs in the market, I would say you could probably be 90% in shares.
> 
> but if you are likely to let greed and fear over take you, and end up buying in of selling out because of fear of loss or fear of missing out then I would say a smaller allocation probably better, and you should instead put you money into super where you can’t let your fear damage your portfolio.



This resonates with me and really is a great answer. Thanks so much for chiming in. 

Best regards


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## divs4ever (26 July 2021)

Somestockguy said:


> This resonates with me and really is a great answer. Thanks so much for chiming in.
> 
> Best regards



 i would tweak  Value Collector's thoughts   , and suggest start to worry early  ,  say , that stock rose 200% or 300%  ,  wonder if taking SOME profit  and let the rest of the holding  find it's destiny , is a good idea 

 ( i always worry when it seems so easy  , and all is going so well  , that does NOT mean panic-sell , but a hint of caution will reduce the chance of a loss but also your potential profit )

 cheers 

 ALWAYS do what is best for YOU


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## monkton (26 July 2021)

Somestockguy said:


> This resonates with me and really is a great answer. Thanks so much for chiming in.
> 
> Best regards



Expanding on what @Value Collector said, as you've been buying the index then you are a part owner of 300 companies or 200 depending which index etf you have. If one or more of those goes broke it will be less than a 'blip' & will be replaced all without you having to be concerned with the decision making process.


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## bux2000 (26 July 2021)

divs4ever said:


> my crystal ball needs replacing also




I'm still looking for me marbles........  

bux


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## Belli (26 July 2021)

Somestockguy said:


> Looking at the crash in 2008 (which was a shocker!) It took 5 years to come back to the previous level and start making a good return. Which must have felt like a lifetime for those invested.




It was a bloody great time.  So many bargains to be had!  I wish I had more cash to buy both personally and in the SMSF.  Those buys are now churning out a goodly amount of income.  Have you ever crunched the numbers based on the accumulation index? You may be surprised.

I don't trade only buy.  Last sale was swapping STW (ASX 200) for VAS (ASX 300) shortly after it listed.


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## tech/a (27 July 2021)

Belli said:


> It was a bloody great time.  So many bargains to be had!  I wish I had more cash to buy both personally and in the SMSF.  Those buys are now churning out a goodly amount of income.  Have you ever crunched the numbers based on the accumulation index? You may be surprised.
> 
> I don't trade only buy.  Last sale was swapping STW (ASX 200) for VAS (ASX 300) shortly after it listed.



Belli 

A few questions---I hope you dont mind?

Do you ever sell even a losing stock or dont you have any?
Is your universe of stocks limited to say the ASX 300?
Are dividend stock important to you.
Do you ever add to well performing stocks?
How many do you hold?
Its a good long term retirement strategy if you can start early enough to make a difference.

There are some great posts here with some good diverse opinions.

One long term idea I heard years ago was wait to have 100% increase then sell back your original investment amount and hold indefinitely.


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## DaveTrade (17 September 2021)

Somestockguy said:


> For the more experienced investors, do you feel safe putting all your money into stocks? Should I be doing this with the ETF's?



Hello Somestockguy, to be honest, you seem like you may have a bit to learn about identifying and managing the risk to which you may be exposing yourself, so it may be prudent to minimize your investment while you get yourself up to speed on aspects of risk and how to manage it. With investing and trading, on-the-job training can be very expensive.

Just looking out for you, stay safe.


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## Belli (18 September 2021)

tech/a said:


> Belli
> 
> A few questions---I hope you dont mind?
> 
> ...




Apologies for not responding sooner @tech/a.  Until now I didn't know you had asked for some information and only now saw your post.

I haven't tracked the price of my personal holdings for about ten years.  I'm only interested in the dividends/distributions they spin off.  The super fund is of course tracked as per the legislative requirements applicable to it.

My holdings consist only of LICs which are the 'older school' ones such as ARG, MIR, WHF, and the like as well as two  ETF's (VAS & VGS). The split is approximately 60 Oz/40% International.

I add when I have surplus cash and try to keep the split around that.

I can only tell you what the SMSF has done really and using the FY 2019 year as a base (and only using rough as guts figures) it went down 5% in FY 2020 and increased by 32% in FY 2021.  Under the present arrangements of the reduced mandatory asset-based pension payment I am applying 2.5% of the asset value.  The income from my personal holdings is generally about 35% of total income (if the pension payment was 5%) so it's obviously higher at present.

Keep in mind though I have a very simple and quiet lifestyle which would not necessarily suit others.  I have more than enough in the way of material possessions.  I cannot envisage replacing those.  I keep sufficient funds on hand to cover 12 months of expenditure plus a buffer just in case and because I can.  However, as I view the SMSF as nothing but a big bucket of money, if I really needed say $100k or more, I'd use it but I honestly cannot think of what would occur for me to need that amount.

Hope that answers your question and I apologise for not responding sooner.


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## tech/a (18 September 2021)

Understood.
Your at a place of financial freedom 
as you define it by the looks.


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