Decision to make: property or rebalance?

[ProtonEnergy]

Hi everyone I have a decision to make. I only started investing recently and I jumped into the market with unlucky timing about 4-5months ago. My portfolio is ETFs approx 35% US large/small cap / 35% europe and asia / 30% US aggregate bonds. I live overseas and get paid in a currency pegged to the USD. My long-term plan is to create a balance of equities + property investments. I decided to get a share portfolio rolling first and then shift gears and save for the deposit on an investment property. I'm in saving mode right now for the IP. With the recent correction though, in hindsight it turns out this was probably an unlucky wrong decision, I'm down 10% but now have an opportunity to purchase at much reduced prices.

I understand that a share portfolio works most effectively in the long run if rebalancing is conducted. If I decide to put all my savings towards the property side right now and I do not take advantage of the lower prices following the correction, my long term gains on the portfolio will likely suffer. However this will delay my ability to save for a deposit on a property (looking in the 350-450k range). The aussie dollar is down also so any forex into AUD is pretty sweet at present.

What do people recommend? Shift focus back to the share portfolio and rebalance as required, or continue to save as quickly as possible for an IP?

 

[Value Collector]

Hi everyone I have a decision to make. I only started investing recently and I jumped into the market with unlucky timing about 4-5months ago. My portfolio is ETFs approx 35% US large/small cap / 35% europe and asia / 30% US aggregate bonds. I live overseas and get paid in a currency pegged to the USD. My long-term plan is to create a balance of equities + property investments. I decided to get a share portfolio rolling first and then shift gears and save for the deposit on an investment property. I'm in saving mode right now for the IP. With the recent correction though, in hindsight it turns out this was probably an unlucky wrong decision, I'm down 10% but now have an opportunity to purchase at much reduced prices.

I understand that a share portfolio works most effectively in the long run if rebalancing is conducted. If I decide to put all my savings towards the property side right now and I do not take advantage of the lower prices following the correction, my long term gains on the portfolio will likely suffer. However this will delay my ability to save for a deposit on a property (looking in the 350-450k range). The aussie dollar is down also so any forex into AUD is pretty sweet at present.

What do people recommend? Shift focus back to the share portfolio and rebalance as required, or continue to save as quickly as possible for an IP?

if I were in your situation I would put a set amount each month into the share portfolio and a set amount each month into the property portfolio, I wouldn't rebalance, The two will grow at different rates, but I would just let that happen.

Don't worry about market flucuations just steadily put your money into the market, if you do this you should actually want the share market to go down, you will get more stock then.

 

[sydboy007]

A portfolio of global ETFs should serve you well.

If you don't want the risk fo shares, thik about how you se the AUD and USD over the next year or two. ie do you think the AUD is going to be still buying 71c US, mayber more or less? I've been buying the USD ETF to take advantage of the eventual weakening of the AUD without the risk of shares.

What is your risk profile? How are you feeling seeing you portfolio drop in value? How has you view of the market changes since you started investing. Try to keep the emotional out and focus on fundamentals / market momentum.

As VC has said allocation money over the long term, investing in the dips and peaks will server you well over the long term. It's hard to time things well. Sometimes we do, sometimes not. Missing the big gains can be just as costly as holding through the big drops.

I found a way to help me limit the emotional roller coaster of investing is to keep a journal and write down why I make each investment. That way I can ask myself if that reason is still valid. If not, then I can look at why my reasoning has changed and then take action as required.

If only it was so simple to follow Mr Buffets sage advise of buying when others are fearful and selling when others are greedy, but it's far too easy to get caught up in the stampede.

 

[sptrawler]

Big decision, we all have to make it, is property going to out perform shares?

Will the savings in rent, outweigh the dividends from shares?

Will the capital gains in property be better than shares?

Will the capital gain in an investment property, minus the CG offset, be better than the lower interest loan on a PPR and no capital gain?

Will salary sacrificing into super at 15% tax as opposed to paying your marginal tax rate beat them all?

I don't know.

You have a career, make a plan to suit your circumstances, aspirations and personality, and try to stick to it. That is what is important, there isn't a right or wrong, only something you can live with when things get shaky.

You have to be able to sleep at night.