My strategy/plan going forward

[divs4ever]

since you are investing ( some of your cash ) outside super , one assumption you are making MIGHT not be accurate depending on market trends IF the market is mostly trending down those buys are likely to buy more shares/units each time you part with your brokerage ( i had that concern when i was starting out , and the brokerage was AT LEAST $19.95 per trade back then way cheaper now , lucky you )

BUT say i was buying MQG ( or VAS ) in that trend down what i could have done ( but didn't ..yes it was a newbie error ) was buy a set dollar value each transaction which as time wore on i could have bought larger parcels which neutralized the impact of brokerage on later buys because i was buying each time the stock dropped 10% ( or more ) from the last buying price .

so yes the tax man is seeing all the same claims for brokerage costs , but your holding is growing faster to offset this and the larger amount of franking credits ( if any ) are lowering your tax liability also,

also the more frequent buying ( if you choose ) gives you flexibility to push new money into a different product that has now become attractive

now another monkey-wrench in investing is your chosen holding MIGHT go broke ( or just wind up ) be taken-over ( leaving you sitting at home with a pile of cash ) OR take an unattractive path and push you into selling ( ETFs included )


now IF the markets are rallying strongly and there are no attractive prices , having a savings account ( that pays you interest ) or a term deposit ( for a short time ) might be a convenient parking spot for a month or several cash injection , usual not ideal ... but if there is nothing worth buying .. some return is better than full-on inflation ( and paying too much )

yes minimizing brokerage is a good thing UNLESS you are making a good deal by buying( or selling ) at the time

in which case that $5 will be chicken feed on the savings or profits ( if you are saving or making $100 or more )

find yourself a trusty pocket calculator to sit near your trading/research desk , sometimes you have a crazy idea but the math turns out to be compelling ( but always triple-check the math ) , probably a small note book as well

these are turbulent times , work out plans and strategies for sure , but maintain some flexibility to snatch up an opportunity if one appears , it could make you in just one move

 

[divs4ever]

now i am not expecting you to time the market like a pro

but in the last six months if you bought ( your index fund ) in say mid December and early March , you can see your investment dollar went further

, when starting out 'good enough' really is 'good enough ' went compounded over 30 years and seeing that 5% ( or more ) dip , might have had you reaching for that ready cash ( since the market was reaching new record highs before each dip )

but in time you will get better and better at judging 'a fair price ' ( to buy or sell at )

 

[RbNEO]

Is your super balance over 100K?
"but isn't one index fund diverse on its own" yes within its country but not in relation to the world.

Not over 100k.

 

[RbNEO]

since you are investing ( some of your cash ) outside super , one assumption you are making MIGHT not be accurate depending on market trends IF the market is mostly trending down those buys are likely to buy more shares/units each time you part with your brokerage ( i had that concern when i was starting out , and the brokerage was AT LEAST $19.95 per trade back then way cheaper now , lucky you )

BUT say i was buying MQG ( or VAS ) in that trend down what i could have done ( but didn't ..yes it was a newbie error ) was buy a set dollar value each transaction which as time wore on i could have bought larger parcels which neutralized the impact of brokerage on later buys because i was buying each time the stock dropped 10% ( or more ) from the last buying price .

so yes the tax man is seeing all the same claims for brokerage costs , but your holding is growing faster to offset this and the larger amount of franking credits ( if any ) are lowering your tax liability also,

also the more frequent buying ( if you choose ) gives you flexibility to push new money into a different product that has now become attractive

now another monkey-wrench in investing is your chosen holding MIGHT go broke ( or just wind up ) be taken-over ( leaving you sitting at home with a pile of cash ) OR take an unattractive path and push you into selling ( ETFs included )


now IF the markets are rallying strongly and there are no attractive prices , having a savings account ( that pays you interest ) or a term deposit ( for a short time ) might be a convenient parking spot for a month or several cash injection , usual not ideal ... but if there is nothing worth buying .. some return is better than full-on inflation ( and paying too much )

yes minimizing brokerage is a good thing UNLESS you are making a good deal by buying( or selling ) at the time

in which case that $5 will be chicken feed on the savings or profits ( if you are saving or making $100 or more )

find yourself a trusty pocket calculator to sit near your trading/research desk , sometimes you have a crazy idea but the math turns out to be compelling ( but always triple-check the math ) , probably a small note book as well

these are turbulent times , work out plans and strategies for sure , but maintain some flexibility to snatch up an opportunity if one appears , it could make you in just one move

Ah right, thanks for that info. Because my initial investment is small of $500 per month, even though I would technically make money (hypothetically in the future) that's what made me think it was better to invest quarterly, but now I think even if I have $5,000 to invest per month even though that's a good sum of money, investing monthly I will always pay more in broker fees. The only thing I can think of is if I find a good opportunity and want to snatch it up then don't care about brokers fees but etf's aren't so volatile.

 

[rolly1]

Not over 100k.

Ok you will have to stick with your industry fund then.

 

[RbNEO]

now i am not expecting you to time the market like a pro

but in the last six months if you bought ( your index fund ) in say mid December and early March , you can see your investment dollar went further

, when starting out 'good enough' really is 'good enough ' went compounded over 30 years and seeing that 5% ( or more ) dip , might have had you reaching for that ready cash ( since the market was reaching new record highs before each dip )

but in time you will get better and better at judging 'a fair price ' ( to buy or sell at )

Yeah, I've already gotten started I don't want to get into analysis paralysis mode. I can always make adjustments along the way.

 

[RbNEO]

Ok you will have to stick with your industry fund then.

To confirm, all my investments I make should be within super? (I'm not sure if you are referring to choiceplus or just my regular balanced super where they choose my investments)

This takes out the flexibility component as well.

 

[rolly1]

To confirm, all my investments I make should be within super? (I'm not sure if you are referring to choiceplus or just my regular balanced super where they choose my investments)

This takes out the flexibility component as well.

I was going to suggest another option, but if your super is under 100k then the fees don't make sense.
Maybe something to think about as your super grows and you want cheaper brokerage and full control over weightings then you can look at Stake SMSF. $3 brokerage on trades up to 30k. $990 yearly fee and they do all the compliance **** you just do the investing. A couple of extra hundred $ in the first year for initial setup.

 

[RbNEO]

I was going to suggest another option, but if your super is under 100k then the fees don't make sense.
Maybe something to think about as your super grows and you want cheaper brokerage and full control over weightings then you can look at Stake SMSF. $3 brokerage on trades up to 30k. $990 yearly fee and they do all the compliance **** you just do the investing. A couple of extra hundred $ in the first year for initial setup.

SMSF is going to be the goal down the line once I have more money. Though I thought it would make more sense now to invest now to take the advantages of compounding, as getting to 100k is going to take me many years.

 

[RbNEO]

I just noticed there are investment frequency calculators that are handy, though at this stage they recommend investing once every 7-8 months

 

[divs4ever]

SMSF is going to be the goal down the line once I have more money. Though I thought it would make more sense now to invest now to take the advantages of compounding, as getting to 100k is going to take me many years.

so you have discovered compounding ... that is a nice early discovery

SOMETIMES compounding works your way very nicely indeed for you especially in markets trending down when your dollar ( or DRP entitlement ) buys more

IF participating in the DRP ( when offered ) 3 monthly ( and even better monthly ) compound very nicely indeed

IF participating in a DRP keep an eye out for those that give you a discount , not common these days but a few still do

BTW $500 is still important if that is all you can comfortably set aside , look for a saver's account that pays you a few percent ( per year ) interest on daily balances and park the cash there until there is a good target , save brokerage ( when not trading ) and a dollar or two in interest at the end of the year

 

[RbNEO]

so you have discovered compounding ... that is a nice early discovery

SOMETIMES compounding works your way very nicely indeed for you especially in markets trending down when your dollar ( or DRP entitlement ) buys more

IF participating in the DRP ( when offered ) 3 monthly ( and even better monthly ) compound very nicely indeed

IF participating in a DRP keep an eye out for those that give you a discount , not common these days but a few still do

BTW $500 is still important if that is all you can comfortably set aside , look for a saver's account that pays you a few percent ( per year ) interest on daily balances and park the cash there until there is a good target , save brokerage ( when not trading ) and a dollar or two in interest at the end of the year

Yep, known about compounding for a while but for some reason I didn't open a high interest savings account earlier, not sure why when I knew about it. I feel a bit silly for that lol. Currently it's earning 5.5% per annum.

DRP is something I'll need to look into a bit more, I keep coming across new things which is sort of paralysing my strategy but will just keep going and adjust as I go. I've been crunching some numbers and I realised the principle is simple. The more you invest and the more frequently you invest, the more money you make regardless of broker fees. So this is what my investment strategy roughly looks like so far:

- Invest $1,500 every 3-4 months as opposed to monthly (as from what I have researched, even over the long-term I don't lose that much in compounding, I just need to figure out if I lose more potential money in that compounding effect versus saving money on broker fees, seems to be almost negligible at first glance)

- Invest that amount in Super strictly for now across 1-2 etf's and the rest in stocks

- Invest in international stocks with an outside broker like IBKR

- Salary sacrifice for my super so I am contributing a bit extra and add a bit more money for my retirement (will do this once my salary increases)

Broker fees will roughly be $6,840 over 38 years assuming I invest quarterly at $15 per trade across 3 different investments ($45 broker fee in total)

 

[qldfrog]

Yep, known about compounding for a while but for some reason I didn't open a high interest savings account earlier, not sure why when I knew about it. I feel a bit silly for that lol. Currently it's earning 5.5% per annum.

DRP is something I'll need to look into a bit more, I keep coming across new things which is sort of paralysing my strategy but will just keep going and adjust as I go. I've been crunching some numbers and I realised the principle is simple. The more you invest and the more frequently you invest, the more money you make regardless of broker fees. So this is what my investment strategy roughly looks like so far:

- Invest $1,500 every 3-4 months as opposed to monthly (as from what I have researched, even over the long-term I don't lose that much in compounding, I just need to figure out if I lose more potential money in that compounding effect versus saving money on broker fees, seems to be almost negligible at first glance)

- Invest that amount in Super strictly for now across 1-2 etf's and the rest in stocks

- Invest in international stocks with an outside broker like IBKR

- Salary sacrifice for my super so I am contributing a bit extra and add a bit more money for my retirement (will do this once my salary increases)

Broker fees will roughly be $6,840 over 38 years assuming I invest quarterly at $15 per trade across 3 different investments ($45 broker fee in total)

Discard even looking at broker fees, this is hardly relevant
I started at $50 a trade in the 2000s, currently paying $10 and on saxo $3.3....
Even $10 on a $10k trade is 0.1% so whether you sneeze or not before pressing on buy or sell button will have more impact
Same things with DRP, if no discount, you might prefer your dividends to be paid and you then reinvest as you want.
My 1c...

 

[divs4ever]

Yep, known about compounding for a while but for some reason I didn't open a high interest savings account earlier, not sure why when I knew about it.

in my case , back in 2011 to 2017 i was dabbling in the corporate debt and bank hybrid markets when you can get 10% plus ( per year )( and most paid three monthly interest to boot ) SOMETIMES with franking , the term deposit or saver's account couldn't match that

however that was then , those tier 1 bank hybrids were replaced by 'new tier 1 hybrids '
( aka junk debt ) and laughably slashed the rates while upping the risk , so by 2017 i had let them redeem/mature and watch with amusement as the debt i no longer touch is bundled into ETFs

my nice little 'member's-owned bank ' has a bonus saver's account that pays a smattering of interest ( without account-keeping fees ) and that is good enough for temporary cash parking ( until i buy something )

i see cash as a stepping stone to another asset ( except my coin/note collection which is a hobby )

 

[Bellcose]

DRP is something I'll need to look into a bit more, I keep coming across new things which is sort of paralysing my strategy but will just keep going and adjust as I go. I've been crunching some numbers and I realised the principle is simple. The more you invest and the more frequently you invest, the more money you make regardless of broker fees.

The major fault with ETFs is that they are listed. It's behavioral psychology. If it's listed you will probably look and look again and look then wonder if.... should I get a bit this or some more of that, shift funds here, move funds there.

The original concept of index investing was to invest a set amount in a given period irrespective of market conditions or political considerations. If the market went down by 30% no matter. Your money purchased more units. If it went up by 30%, you purchased fewer units. Rinse and repeat.

Quite a number of investors declare, Yeah that is what I'm going to do. Few actually do it.

Up to you which stance you adopt. The Don't look, don't touch group of investors generally do well over time but it isn't at all easy.

 

[qldfrog]

The major fault with ETFs is that they are listed. It's behavioral psychology. If it's listed you will probably look and look again and look then wonder if.... should I get a bit this or some more of that, shift funds here, move funds there.

The original concept of index investing was to invest a set amount in a given period irrespective of market conditions or political considerations. If the market went down by 30% no matter. Your money purchased more units. If it went up by 30%, you purchased fewer units. Rinse and repeat.

Quite a number of investors declare, Yeah that is what I'm going to do. Few actually do it.

Up to you which stance you adopt. The Don't look, don't touch group of investors generally do well over time but it isn't at all easy.

And much easier to do once you have a bit of a gain buffer from purchase price after an initial rise.
It should not matter, should not make a difference but psychology is factual..

 

[RbNEO]

The major fault with ETFs is that they are listed. It's behavioral psychology. If it's listed you will probably look and look again and look then wonder if.... should I get a bit this or some more of that, shift funds here, move funds there.

The original concept of index investing was to invest a set amount in a given period irrespective of market conditions or political considerations. If the market went down by 30% no matter. Your money purchased more units. If it went up by 30%, you purchased fewer units. Rinse and repeat.

Quite a number of investors declare, Yeah that is what I'm going to do. Few actually do it.

Up to you which stance you adopt. The Don't look, don't touch group of investors generally do well over time but it isn't at all easy.

Yeah that was my plan, keep investing regardless of market conditions. If it goes down, great, I just got shares for cheaper. I don't think I'm too emotional in investing (will see with time I guess), I think the key is to not watch these investments like a hawk everyday otherwise it will drive you bonkers lol.