# Personal investment advice needed please



## PFWM2B (23 July 2014)

OK, so here's a bit personal & financial background
Age: 30 
Cash at bank: $90k 
Funds invested in stock marker : $22k
Annual income : $90k ( pre tax)
Debt: $0 ( have a couple of credit cards but pay off full balance every month)
property : None 

I have been slowly saving some money and placed them into term deposit over the years. Until last year I realized the interest rate is so low that I'd better off do something else. I have also been thinking about buying my first property in Sydney but with the limited cash, I can probably only manage to pay 20% deposit + stamp duty for 1 bedroom unit in the suburb I'm interested. And that's how I came to think about investing my cash into the stock market & etc. Since April this year, I've opened an account with Interactive brokers & started "investing" in the US stock market. I've gradually added cash to about $22000 AUD and as I type the post, the realized + unrealized P/L is about 10%. I'm sure there's some better way to invest the rest of my cash. Recently I've been looking at the options of investing in ETFs but couldn't make up the mind which one to choose. I guess my target is to gradually increase my cash by saving + investing and hopefully in 2 - 3 years' time, I'll be able to have the sufficient funds for my first property. 

Any recommendation is welcome. Thank you for your time reading the post.


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## Value Collector (23 July 2014)

PFWM2B said:


> OK, so here's a bit personal & financial background
> Age: 30
> Cash at bank: $90k
> Funds invested in stock marker : $22k
> ...




I am not a qualifies adviser, So can't give you advice.

But have you looked into just steadily allocating funds into an index fund.

If you your job is secure, I can't really see anything wrong with buying a modest house and focusing on paying it off for a few years.

But when it comes to the market, what sort of returns are your after, CFDs etc are very risky if you don't know what your doing. Unless you have the willingness to dedicate a few years to learning how the market works I would suggest sticking to index funds.


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## tech/a (23 July 2014)

My opinion.

Id either search out someone who I can follow---like Radge.
OR
Learn how to trade myself and set my $$s to work.


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## Joe Blow (23 July 2014)

PFWM2B said:


> OK, so here's a bit personal & financial background
> Age: 30
> Cash at bank: $90k
> Funds invested in stock marker : $22k
> ...




It is illegal for anyone here to provide you with personal financial advice. The only people who can provide you with this service are licensed financial advisers.

If you are interested in obtaining licensed financial advice, please review the following link from ASIC's consumer website: https://www.moneysmart.gov.au/investing/financial-advice


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## PFWM2B (23 July 2014)

Joe Blow said:


> It is illegal for anyone here to provide you with personal financial advice. The only people who can provide you with this service are licensed financial advisers.
> 
> If you are interested in obtaining licensed financial advice, please review the following link from ASIC's consumer website: https://www.moneysmart.gov.au/investing/financial-advice




Thanks Joe for the due diligence. I'll evaluate the pros & cons of all recommendations. I guess I'm just trying to be an open mind and see what are the alternatives out there.


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## PFWM2B (23 July 2014)

Value Collector said:


> I am not a qualifies adviser, So can't give you advice.
> 
> But have you looked into just steadily allocating funds into an index fund.
> 
> ...




Thank you.  Index fund is my top option at the moment. I've been with the current employer for 1.5 year but I wouldn't say I feel 100% secured coz I'm just not busy enough most of times hence less revenue generated for the company. So I'd say I don't want to rush into property market just yet. Also, my BF is doing part time study at the moment so I'd like to wait for him to settle down and discuss the possibility of getting a unit/ house together


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## Value Collector (23 July 2014)

PFWM2B said:


> Thank you.  Index fund is my top option at the moment. I've been with the current employer for 1.5 year but I wouldn't say I feel 100% secured coz I'm just not busy enough most of times hence less revenue generated for the company. So I'd say I don't want to rush into property market just yet. Also, my BF is doing part time study at the moment so I'd like to wait for him to settle down and discuss the possibility of getting a unit/ house together




Yep, So a low cost index fund will be a good way to save until you are feeling secure enough in your job and your partner is working, then you might feel comfortable to make the leap into a property.


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## Ryan C (23 July 2014)

Hi,

disclaimer - this isnt advice because im not qualified so please see a financial adviser regarding your situation.

if i was in you, id first sit down, work out what exactly I want to achieve and when and spend some time educating myself.  Id suggest the book motivated money as a starter because i wish i came across it before i invested.

if you want to save regularly and like ETFs, take a look at low cost managed fund like ones offered by vanguard because you can make regular contributions as long as your funds are over $5k.  compare if the managed funds cost works out better than buying ETFs depending if you just want to park a sum of money or build it up with more contributions over time.

good luck

ps - my keyboard is broken so sorry about the punctuation


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## Julia (23 July 2014)

Value Collector said:


> Yep, So a low cost index fund will be a good way to save until you are feeling secure enough in your job and your partner is working, then you might feel comfortable to make the leap into a property.



Bearing in mind that we can't offer advice, etc., I agree with VC here.
And thanks for your politely worded initial post.  It might seem a bit old fashioned, but good manners will take you a long way.  All the best.


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## minwa (24 July 2014)

PFWM2B said:


> as I type the post, the realized + unrealized P/L is about 10%. I'm sure there's some better way to invest the rest of my cash.




4 months returning 10% is good. You're not going to find much other "better way" to invest your cash, if you can maintain that return, on average.


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## PFWM2B (24 July 2014)

minwa said:


> 4 months returning 10% is good. You're not going to find much other "better way" to invest your cash, if you can maintain that return, on average.




Trouble is as a newbie, I often don't know what I'm doing ... And to trade in the US stock market, it means I often have to sleep a little later every night which has already been complained by my partner many times. I'm trying to get into an investment strategy that can also provide a high quality lifestyle even if the return rate may not be very impressive.  

I'm doing my research at the moment and thinking about dividing the cash into portions for investment. Say 70% into index funds while 30% directly invested into  US stock market. Out of that 70%, perhaps 40% into managed funds such as Australian shares and 30% buying ETFs such as international shares & Australian Property. Monthly savings can then be added onto my position with the managed funds. But with the current US stock market position, I'm a little hesitant of putting most of my money into share market index funds, so the portion still needs some adjustment and I'm also waiting for a small dip for entry.


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## PFWM2B (24 July 2014)

Sorry about picking your all brains but I think I'm missing something here. Can someone please point out to  me if my below assumption is incorrect?
Reading the info on Vanguard website about the produce - Vanguard ® Index Australian Property Securities Fund 
so let's take last year's performance for example, the website says the after tax & management fee return is about 7.83% Does this return rate apply to the dividends only or does it include the unit price increase as well for the product?
If I had used $10000 to purchase this fund one year ago @ $0.6747 / unit and sell it for $0.7436/ unit today, without re-investing my quarterly dividend, the annual return comes at about 18%??? 

Initial investment $10000 
purchase price - 0.6747 
units purchased -  14821.4
Yearly dividend - 10000*7.83% = $783
sale price - $0.7436
Total sale - 0.7436* 14821.4 units = $11021.19 

Total return % - 18% 

If every year performs like this, I'm liking it..... And looking at the past 5 years' performance, it's quite impressive. This is way better than the investment property return in Sydney at the moment if I did my calculation correct.


Thanks again for putting up with my calculation in the post


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## Junior (24 July 2014)

That after tax return probably includes distributions, make sure you carefully check what period of time it is based on.

The 5 year return for most listed securities looks pretty impressive as this has been a period of recovery from very low prices following the GFC.  Have a look at 10 year returns as well, to see the bigger picture.


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## PFWM2B (24 July 2014)

Junior said:


> That after tax return probably includes distributions, make sure you carefully check what period of time it is based on.
> 
> The 5 year return for most listed securities looks pretty impressive as this has been a period of recovery from very low prices following the GFC.  Have a look at 10 year returns as well, to see the bigger picture.




Thanks for the reminder. I almost forgot about the GFC recovery might make numbers look much better in the early stage.  Looking at 10 years' yield, property index may not be the wisest choice but again, numbers are all history.


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## DeepState (24 July 2014)

Please see below accumulation indices for A-REIT and ASX 200 vs Sydney residential house price index:




You have a three year horizon as previously stated. This chart shows you that a rolling year year return from Syd resi properties is not well approximated by A-REIT or ASX 200. The figures are not annualized.




Be aware that A-REIT has basically no exposure to Sydney Resi in it.  It is dominated by Retail, Industrial and Office type investments. Some come with development risk and/or a totally focused in offshore markets. All of these are quite a different market to Syd Resi.  Just because it has property on the label doesn't make it the kind of property you are talking about.


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## PFWM2B (24 July 2014)

DeepState said:


> Please see below accumulation indices for A-REIT and ASX 200 vs Sydney residential house price index:
> 
> View attachment 58796
> 
> ...




Thank you RY. Is there any fund that invests in the Sydney Residential property market?


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## DeepState (24 July 2014)

PFWM2B said:


> Thank you RY. Is there any fund that invests in the Sydney Residential property market?




I do not know of a publicly available, regulated, fund which invests in Sydney real-estate in either listed or unlisted vehicles.  There is, however, the possibility of an underground fund that might be launching soon subject to legal advice on how not to comply with the law....


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## Ryan C (24 July 2014)

PFWM2B said:


> If every year performs like this, I'm liking it..... And looking at the past 5 years' performance, it's quite impressive. This is way better than the investment property return in Sydney at the moment if I did my calculation correct.
> D




Just thought I'd chime in with past performance is not a good indicator of future performance.  Just keep this in mind when looking at your various options.


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## Porper (24 July 2014)

DeepState said:


> There is, however, the possibility of an underground fund that might be launching soon subject to legal advice on how not to comply with the law....




Very good!!


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