Beginner trying to research

[ParrDev]

Hi, I'm a newbie so hope I'm in the right place. I have a good property portfolio but want to spread my risk into the stock market. I have dabbled a small amount in shares in the past and come out about even so hoping to do some research and become more profitable in the future. I have traded a few options about 10 years ago and hoping to do this again as I get more time (I'm will be reducing my building workload over the next two years) but for now just wanted to invest some money in something that wont take as much time. I'll spread my investment but one thing I'm looking at is LIC's and WAM. Now for my question. Their documented performance does not match what is on the asx share price. ie they say the 1 month performance as at 30th April 2018 is 0.9%. Yet at 30th March they were $2.50 and 30th April they were $2.38. Even with the 7.5c dividend it should be a negative performance. I have found this a bit while trying to learn and I'm just wondering if I'm missing something. Any help would be appreciated. Thanks in Advance.

 

[systematic]

Hi, I'm a newbie so hope I'm in the right place.

...absolutely in the right place...welcome!

I have a good property portfolio but want to spread my risk into the stock market.

but for now just wanted to invest some money in something that wont take as much time.

Based on the above, I have to recommend what I most usually do to newbies who are in your position.

You've already made a common mistake. Don't feel bad, we all do! I'm sure it's the same with property investment!

You want to move some money into the stock market. Great! You want to invest some money in something that won't take much time. Great! You already know a good bit of what you want to achieve, which is awesome.

To go from there...to asking about an individual stock, LIC or mutual fund, is where the mistake is made. It's making a leap, or an assumption that this is the next logical question. It's not.

The next logical question is, 'okay - so how do I invest some money in the stock market...fairly passively...to achieve the goal of diversifying where I'm most concentrated, and most expert at, being property?'

You're not trying to achieve much more than that (at least at this stage...it can change later on), and so you simply need a well diversified, simple stock fund that you can throw that money into. At least going by what you said.

These days, you don't even have to go working out whether you want to buy international, which countries or whatever. I usually end up pointing out that something like a Vanguard fund can do the lot - sometimes in just one fund. For example, the Vanguard High Growth Index Fund (available as a wholesale fund, 500k min, or as a retail fund, or as an ETF). It's 90% equities (10% bonds) and you get equities everywhere (Australian, International, International Hedged, International Small Companies & Emerging markets)

I don't work for Vanguard(!) but this type of thing is where I would steer someone with the goals you have mentioned. Plus...it's a start. You can always get more granular as you go along.

 

[tech/a]

Nice Systematic.

 

[ParrDev]

Hi Systematic,
Thanks for the reply. However maybe created more questions.
From the reading I have done I thought LIC's were similar to EFT in that you have "experts" selecting (or managing) a portfolio of shares. My reason for selecting LIC's over EFT was because I thought EFT's followed an index but LIC's are more actively managed and more diversified and attempt to beat the index. LIC's also trade at a premium or discount. I haven't checked yet but it may be possible to enter at a discount?. Would like to know the advantages of EFT's over LIC's. Your thoughts would be greatly appreciated.
I suppose my main thing would be performance (equal to risk) and as with my initial question, like LIC's, I have the same problem trying to check the performance of EFT's. Vanguard website have a growth EFT under large cap stocks (1 yr- 15.69%) and the ticket is VUG. But if I search on ASX website there is no VUG. There is a diversified growth index fund but there is little info as it only started in Nov 17. Identifier VDGR.
I was also interested in WAM because it has been paying over 6% dividends.
If I look at Vanguard Australian Shares High Yield fund it has average annual total returns of 1yr-0%, 3yr-1.63 and 5yr - 4.49%. (and again I cant find the code VHY on the asx website) But from the figures I can find WAM is performing much better so why wouldn't I choose WAM over one of Vanguards EFT's.
Also searched for Vanguard on the asx website and with a code of vau it says it is not yet listed. Is the asx website a good source of info or misleading?
Suppose I'm used to property where the agent list the property address and you go to google maps and there is generally only one property with that address??
I've read a lot of the post on this site and they are great info and I appreciate the help.

Cheers

Adam

 

[systematic]

Adam these are great questions and I'm sure someone will chime in.
I only buy individual stocks and haven't looked at the nitty-gritty aspects of EFT's, LIC's and managed funds for a very long time...so someone else who is currently fresh in that arena will hopefully answer some of your questions.

 

[Darc Knight]

Not all Vanguard products are EFTs, so not on ASX.
A lot of other Index funds are.

 

[luutzu]

Hi Systematic,
Thanks for the reply. However maybe created more questions.
From the reading I have done I thought LIC's were similar to EFT in that you have "experts" selecting (or managing) a portfolio of shares. My reason for selecting LIC's over EFT was because I thought EFT's followed an index but LIC's are more actively managed and more diversified and attempt to beat the index. LIC's also trade at a premium or discount. I haven't checked yet but it may be possible to enter at a discount?. Would like to know the advantages of EFT's over LIC's. Your thoughts would be greatly appreciated.
I suppose my main thing would be performance (equal to risk) and as with my initial question, like LIC's, I have the same problem trying to check the performance of EFT's. Vanguard website have a growth EFT under large cap stocks (1 yr- 15.69%) and the ticket is VUG. But if I search on ASX website there is no VUG. There is a diversified growth index fund but there is little info as it only started in Nov 17. Identifier VDGR.
I was also interested in WAM because it has been paying over 6% dividends.
If I look at Vanguard Australian Shares High Yield fund it has average annual total returns of 1yr-0%, 3yr-1.63 and 5yr - 4.49%. (and again I cant find the code VHY on the asx website) But from the figures I can find WAM is performing much better so why wouldn't I choose WAM over one of Vanguards EFT's.
Also searched for Vanguard on the asx website and with a code of vau it says it is not yet listed. Is the asx website a good source of info or misleading?
Suppose I'm used to property where the agent list the property address and you go to google maps and there is generally only one property with that address??
I've read a lot of the post on this site and they are great info and I appreciate the help.

Cheers

Adam

Buffett was quoted as saying that for him to really know the value of any packaged investment - such as those mortgaged back securities; or listed companies backed investment corps... he'd need to know the value of all those on the list.

So unless an investor managed to somehow have a proper sense of what's on those LICs holdings, how much are they really worth, can they really pay x% dividends... me personally I'd stay away from them.

Not saying they're good or bad, just that it's hard to know. And if I could manage to know enough about each of the holdings, probably make more sense to buy those individual stocks and cut out the middleman.

 

[ParrDev]

Thanks Guy's,
I did start by obtaining a list of companies held by a LIC and was planning to start my analysis on the individual companies just thought it might be less work to just look at the LIC but I think one of my main rules will be only stick to up trending stocks. I was surprised to see how many stocks the LIC was holding that were in a long term down trend. So yes I might take the advice and do the extra work and just stick to the individual stocks. Maybe start with the list of stocks a good LIC or EFT is holding.
Thanks
Adam

 

[noirua]

Keep on trying...