My AustSuper ASX300 'low cost averaging' trading adventure

[So_Cynical]

I have just registered and having a look at the platform. I can see no provision for stop losses or for buy stop orders - entry appears to be by limit or market orders only. Is this your understanding?

thx

Yep...they don't have stop loss orders etc, so you will have to manage your positions/trades manually, which for me is no big deal thou it may not suit some....AustSuper say they don't want account holders to "trade" or try and "time the market".

I suppose at some point in time they may introduce conditional orders same as they may include Hybrids and LIC's and perhaps the All Ords constituents....i would reckon its just a matter of time.

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I'm lost, where do the 500k-600k of stocks on top of the 250k come from ?

My personal portfolio currently at 24 stocks, a mix of open positions and part free carry positions, some with multiple entry's to build the free carry component and yield...current PA growth of around 12%

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If you were at age pension age, and had your assets in an allocated pension you wouldn't be paying tax.

I know at one stage complying annuities meant the value of same were not taken into account when being assessed for a government pension but I thought that had changed. Not sure.

I'd be interested to know what attracts you to the term annuity? Maybe the 'set and forget' aspect?

One of the conditions of getting a MM2H visa is having a source of off shore (non Malaysian) monthly income of 10,000.00 Malaysian Ringgits = (3,108.00 Australian Dollars) in the form of annuity's or pensions..some sort of provable fixed type income.

I was planning on using my super money to at least part fill this requirement...an allocated pension or annuity's would do the trick.

 

[So_Cynical]

I am surprised you would risk the share market for a hopeful 6% dividend as opposed to guaranteed bank interest of 6% for term deposits.

Because i want to retire in 7 to 10 years and 6% interest wont cut it...i need at least double that, and we are talking about expected returns in 7 to 10 years time based on current returns..at the moment my portfolio has grown by 11% PA (Dec 10 > Dec 11) and that's with the market doing badly...overall im averaging better than that.

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I'm also a bit confused here.

SC, if you have approaching $500K-$600K of stocks outside of Super, isn't any gain here going to attract tax at your marginal rate?

Given that your main focus seems to be on providing for your retirement (and good on you for this), I'm a bit puzzled about why you wouldn't have the lot in Super, with tax at just 15% in the accumulation phase.

If you have $250,000 plus around $600,000, it would be extremely tax effective to put it all into a SMSF, the running of which would also be cost effective at around $850K.

Even if the $500K - $600K and/or the $250K is aspirational at this stage, I'm finding it hard to understand why you wouldn't have any assets inside Super.

Agree...and that's why ive decided to double my salary sacrifice and in all probability will add to it every year until im maxed out at 25K....im hesitant to sell stocks and throw a lump sum in because i will lose so much investment flexibility.

Within 2 or 3 years i can see that ill have to put all of my disposable income into super...but would only feel comfortable doing that if my personal portfolio was in tact, i spent to much of my life poor and struggling to just give up control of that money.

 

[village idiot]

Originally Posted by village idiot
I'm lost, where do the 500k-600k of stocks on top of the 250k come from ?

My personal portfolio currently at 24 stocks, a mix of open positions and part free carry positions, some with multiple entry's to build the free carry component and yield...current PA growth of around 12%

ok, thanks, i understand

got to agree with Julia, not sure why you would keep the bulk of your resources outside super, when for contributions up to the 25k/50k pa concessional cap you can get an instant 15% return / bonus (at 30% tax rate) for transferring funds into a lower tax environment where because of that it compounds up at a higher rate, and then becomes tax free when you retire.

edit; post crossed with yours

 

[skc]

So_C.. how old are you? (Apologies in advance for the personal nature of this question and please feel free not to answer).

To me you've always come across as reasonably young (i.e. not close to the usual retirement age) and I've always thought your goal to retire in 10 years is to retire well before that usual retirement age...

 

[Julia]

So_C.. how old are you? (Apologies in advance for the personal nature of this question and please feel free not to answer).

To me you've always come across as reasonably young (i.e. not close to the usual retirement age) and I've always thought your goal to retire in 10 years is to retire well before that usual retirement age...

I've had the same impression
We might both be wrong, perhaps.

 

[Julia]

Agree...and that's why ive decided to double my salary sacrifice and in all probability will add to it every year until im maxed out at 25K....im hesitant to sell stocks and throw a lump sum in because i will lose so much investment flexibility.

Within 2 or 3 years i can see that ill have to put all of my disposable income into super...but would only feel comfortable doing that if my personal portfolio was in tact, i spent to much of my life poor and struggling to just give up control of that money.

This is what I don't get. If you set up a SMSF you have considerably more control than you have at present, don't you?

I completely agree with not giving anyone else control of your money. This is part of why I'm surprised at your feeling OK about putting $250K into an annuity.

They can be useful. I have a very small one (just $25,000). Now wish I'd put more into it as it's a lifetime annuity. By the time I can reasonably expect to die, it will have paid me around $60,000 for my $25,000 investment.

It's totally your business, of course, but I just can't understand why you wouldn't have a SMSF which gives you total control over all your investments in a tax advantaged vehicle, rather than putting up with the restrictions of the public superfund you are apparently using now.

 

[So_Cynical]

So_C.. how old are you? (Apologies in advance for the personal nature of this question and please feel free not to answer).

To me you've always come across as reasonably young (i.e. not close to the usual retirement age) and I've always thought your goal to retire in 10 years is to retire well before that usual retirement age...

I want to retire young, late 50's so that would make me late 40's now.

It's totally your business, of course, but I just can't understand why you wouldn't have a SMSF which gives you total control over all your investments in a tax advantaged vehicle, rather than putting up with the restrictions of the public superfund you are apparently using now.

Its becoming more and more obvious the further down the super road i travel...that im destined for a SMFS.

 

[Bill M]

So_Cynical, what is your plan of action with GFF? You must be very happy with the 33% jump today? It was only a matter of time when an offer like that was forthcoming, the company was so cheap and an overseas buyer sees the value, good luck mate, hope you make few $$$.

 

[So_Cynical]

So_Cynical, what is your plan of action with GFF? You must be very happy with the 33% jump today? It was only a matter of time when an offer like that was forthcoming, the company was so cheap and an overseas buyer sees the value, good luck mate, hope you make few $$$.

Answered you in the GFF thread.

Ill update this thread as soon as i can get outa my GFF position with my dollars in tact...i should say i added IMF to my super portfolio a couple of months ago at $1.35.

i had IMF SLX and BPT short listed and totally went the wrong way

 

[So_Cynical]

i had IMF SLX and BPT short listed and totally went the wrong way

4 months later and i finally get the chance to take a BPT trade with my super fund, in today at today's low of $0.88 and again very hopeful of getting the chance to complete super trade #1. what a pain in the ass it is to still be stuck in all these trades....this certainly hasn't gone as well as i hoped it would.

I also should add that i decided not to increase my salary sacrifice...as i plan (reasonably sure) on buying some Filipino real estate on terms so will need the money to pay it off over 3 > 5 years...just waiting for the dollar and the stock market to go up again.

 

[So_Cynical]

I unexpectedly completed super trade #1 today I placed a sell order for about 70% of my ABC stock at $3.21 and was surprised to see it get taken out today..so a profit of about 3.6% on the trade and another 6.2% in dividends and franking credits for holding 13 months.

I just really needed to get the win and move on, i now hold 1400 ABC shares at an average price of $2.79 as a long term hold that should be able to bring in a gross dividend yield of very close to 7% looking to re-enter if the SP drops below that level.

A screen shot below of where my AustSuper portfolio is ATM (+7K in the cash account) GFF what a bummer, the irony is that one of the main reasons i brought GFF was because i wanted something safe and low risk. A stock that wasn't speculative, a stock that was an established company with a long history in a very safe industry.

I can only hope next year makes up for this years woeful performance.
~

 

[Julia]

Thanks for putting up your results, SC.
How do you think you'd be feeling about your system if you were using larger amounts and having to generate an income you could live off? i.e. no salary or other income to back up your investing/trading.

Would you then significantly change what you're doing in order to generate a consistent profit?
What would you do differently?

(Not meaning to be intrusive or put you on the spot: just genuinely interested .)

 

[CanOz]

Amazing one would have anything for returns in this chop....good effort SC.

Been 100% fixed interest for the last 11 months in my Super...over 3.9% return.

CanOz

 

[So_Cynical]

Thanks for putting up your results, SC.
How do you think you'd be feeling about your system if you were using larger amounts and having to generate an income you could live off? i.e. no salary or other income to back up your investing/trading.

Would you then significantly change what you're doing in order to generate a consistent profit?
What would you do differently?

(Not meaning to be intrusive or put you on the spot: just genuinely interested .)

Good question Julia..made me think in a direction that i haven't really considered.

My first thought was that i would almost have to have a large chunk of my super in a TD or similar, something ultra safe and paying interest every month or quarter but then i think...well i know i can make good money, significantly more than a TD by following the trading/investment strategy that i use with my non super money.

That was and still is the whole idea with this thread and my super fund, its just that it hasn't worked as well as i hoped it would and i have to put that down to shocking timing, coupled with poor (over conservative) stock selection and position sizing for reward not risk.

I've also found that with my other portfolio that just having over 20 stocks seems to produce opportunities to profit, there seems to be a takeover every 6 months or so, and a special dividend and or divestment or the Gold/Oil/Gas/US dollar spikes up...unexpected things happen and because i have a diverse and somewhat large portfolio that seems to turn into profits.

Adding stocks to my Super portfolio will help, i am now 15 months into this and 3 stocks has become 5 and will soon grow to 6 due to today's exit...long term plans take time.

 

[Julia]

Thanks for the response, SC.
What I guess I was trying to get at is: would you place a higher priority on capital preservation than you seem to at present?

You can cope with some substantial losses if you have a separate source of income, but if you didn't have such a separate income, wouldn't you need to reconsider risk?

 

[So_Cynical]

I think i do consider risk but just go about it in a different way...i take calculated risks because i am chasing higher returns so have to put my capital "at risk" the statistics from my non super trading/investment activities prove that my strategy is profitable...its the only weapon i have at my disposal.

Capital preservation means either no risk (TD,s etc) or stop losses which i see as micro non capital preservation, death by a 1000 cuts...i like to think of what im doing as a business and in a business would accepting consistent small losses be acceptable? would an ice cream salesman with 10 ice creams lose money selling 7 ice creams in the hope of getting back the losses on selling the other 3?

Id rather (feel more comfortable) selling all the ice creams for a profit...or at-least trying to.

 

[herzy]

Interesting read - thanks SC! I'm also in IMF and quite like this company. Very low P/E, but seems to be improving every year! Happy to hold for awhile, and a nice 10c dividend announced today.

Hope all goes well with the retirement plans. Whereabouts are you in Malaysia?

 

[So_Cynical]

Interesting read - thanks SC! I'm also in IMF and quite like this company. Very low P/E, but seems to be improving every year! Happy to hold for awhile, and a nice 10c dividend announced today.

Hope all goes well with the retirement plans. Whereabouts are you in Malaysia?

I'm not in Malaysia yet...and mite not have enough money to make it there anyway

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On the subject of IMF my sell order got hit today (thanks to the divi ann) so im out for a 8.18% profit on the trade with 1200 shares remaining as a long term, dividend yielding hold...and what a nice dividend it is, 10 CPS Fully Franked, close to a 10% gross yield for me....what a great stock.

Amazing that in just 1 week ive been able to conclude 2 trades that have alluded me for almost 13 months. this week with this weak market...totally unexpected.

Anyway 13K in the transaction account now as my TOL order didn't get executed ($3.81)

 

[Huskar]

I think i do consider risk but just go about it in a different way...i take calculated risks because i am chasing higher returns so have to put my capital "at risk" the statistics from my non super trading/investment activities prove that my strategy is profitable...its the only weapon i have at my disposal.

Capital preservation means either no risk (TD,s etc) or stop losses which i see as micro non capital preservation, death by a 1000 cuts...i like to think of what im doing as a business and in a business would accepting consistent small losses be acceptable? would an ice cream salesman with 10 ice creams lose money selling 7 ice creams in the hope of getting back the losses on selling the other 3?

Id rather (feel more comfortable) selling all the ice creams for a profit...or at-least trying to.

There is more than one way to skin a cat...

A business often loss-leads on sales to gain market share/brand awareness etc.

And some very interesting strategies in the market consist of taking lots of small losses in anticipation of one outsized win.

For example structuring a position that will win a bit if the price rises, lose a little if the price stays the same, and win big if the price declines.

Or being both hyperconservative and hyperaggresive at the same time.

But such a strategy requires some counter-intuitive thinking and skepticism of the bell curve.

 

[So_Cynical]

I purchased 850 CPU shares today at $7.45 and seriously considered taking a profit on my BPT holding..but i reckon oil could run a little so ill hold off for a few days and see what happens.