Shares or Property?

[Julia]

Not really, time along the bottom is Jan every 5 years, But the chart wriggles a lot between those points, I actually think its a monthly chart.

Even if it missed the exact peak of 6800 I can't see how this changes anything, If she was following the strategy I would suggest to her she would have been steadily allocating for years before and continue years after, the peak and crash wouldn't affect the long term results.

Did you suggest such a strategy? I haven't read the whole thread. It rather lost me amongst farms and real estate and claims of 80% gain p.a. yet loss of capital.

As a simple trend follower, I find the omission of a period where considerable profit was made, then the opportunity to hold on to that profit by exiting when the downtrend of the GFC became clear, thus providing additional capital to re-enter with more shares and ergo greater dividend and franking income, when the uptrend resumed, is pretty meaningful. That's all I was attempting to point out.

So personally I'm not keen on regular allocation of funds irrespective of what the market is doing, but completely respect that others will take a different approach.

Sorry if I've derailed your thread.

 

[McLovin]

That's a good example of how a chart can be a bit misleading. Because it goes from January to January every five years, it omits the peak during the latter part of 2007 where the All Ords went to 6800 before beginning the great fall of the GFC.

I'm a little bit confused what you mean by this, Julia? The fall associated with the GFC seems pretty apparent in the chart.

 

[qldfrog]

so basically even in real dollars after 7 years.
Just to put things in perspective.
PS: I am invested in the market but also know not to believe too much in the
"time in the market is the key", and I will not forget the 20+years of stagnation of the Japanese market
Just DYOR.

 

[Julia]

I'm a little bit confused what you mean by this, Julia? The fall associated with the GFC seems pretty apparent in the chart.

OK.

 

[McLovin]

so basically even in real dollars after 7 years.
Just to put things in perspective.
PS: I am invested in the market but also know not to believe too much in the
"time in the market is the key", and I will not forget the 20+years of stagnation of the Japanese market
Just DYOR.

I think to really put it in perspective you've got to look at the preceeding 5 years where it more than doubled from ~19,000 to a peak around ~42,000. Above average returns are really just returns borrowed from the future etc.

 

[Value Collector]

Did you suggest such a strategy? I haven't read the whole thread. It rather lost me amongst farms and real estate and claims of 80% gain p.a. yet loss of capital.

As a simple trend follower, I find the omission of a period where considerable profit was made, then the opportunity to hold on to that profit by exiting when the downtrend of the GFC became clear, thus providing additional capital to re-enter with more shares and ergo greater dividend and franking income, when the uptrend resumed, is pretty meaningful. That's all I was attempting to point out.

So personally I'm not keen on regular allocation of funds irrespective of what the market is doing, but completely respect that others will take a different approach.

.

Yeah, i suggested that rather than gambling on forex market, she should just put her money into an index and then make regular contributions,

Yep, I understand your trend following approach, but for those that are less sophisticated I think the regular contributions have value, a set an forget index fund approach is a pretty good way for non professionals to get a market average return without having to watch the market.

Sorry if I've derailed your thread

Lol, its not my thread

 

[qldfrog]

Your point is taken and in a way forced onto "unsophisticated" investors via super (which is allocated to the market on a monthly basis).

While being part of the market distortion in Australia, I would agree it could be a good long term value as a whole if it was more diversified (ex Australia and ex shares/real estate or associated),
and as long as these people are not paying 5% interest (or much more) after tax dollars for a roof on their head at the same time..
Not the place for this: I know, so back to the thread:

I would also like to add that a spread entry (dollar averaging) or exit when you need to withdraw is in many way a good thing for risk mitigation and this is easy to implement in shares, much harder in property until such a tool is created.
In France (not aware of the situation elsewhere), a tool exists which allow people (mostly older) to sell their home to a buyer against a life pension amount.
A bit like a reversed morgage but with unlimited potential return (aka until you die) So property in that case can be withdrawn smoothly.
But usually property being not liquid means you have one off events and so increase the risk of a bad timing in a cycle (but you can be a winner).

 

[Value Collector]

But usually property being not liquid means you have one off events and so increase the risk of a bad timing in a cycle (but you can be a winner).

You can get access to property via a managed fund which owns a basket of listed and unlisted property trusts.

I know some wealth management firms, allow you to basically put together your own fund from a range of indexes and other funds.

eg, you can allocate your funds so x% goes to asx index x% international indexes and x% Australian property trusts.

If you had it set up that earnings were compounded and you steadily contributed say 15% of your wage, I think you will do well over time.

 

[Value Collector]

An Interesting Automated strategy for the defensive investor, suggested by Ben Graham, was to be 50% cash and 50% stock index.

When ever the market moved and made the difference shift by 5%, he suggested rebalancing.

So that way as the market rises, you are steadily selling off stocks at every 5% interval on the way up, increasing your cash holding, and as the market falls you can rebuy at every 5% interval on the way down.

Your monthly contributions could just be divided 50/50 each way.

 

[shezian]

An Interesting Automated strategy for the defensive investor, suggested by Ben Graham, was to be 50% cash and 50% stock index.

When ever the market moved and made the difference shift by 5%, he suggested rebalancing.

So that way as the market rises, you are steadily selling off stocks at every 5% interval on the way up, increasing your cash holding, and as the market falls you can rebuy at every 5% interval on the way down.

Your monthly contributions could just be divided 50/50 each way.

Thanks for all the information is very helpful. But how does one invest in the index?

Sue

 

[darkhorse70]

Oh yea Value collector I was going to say you owned me haha, my post didnt go through so I wasnt bothered re typing it.

 

[qldfrog]

You can get access to property via a managed fund which owns a basket of listed and unlisted property trusts.

I know some wealth management firms, allow you to basically put together your own fund from a range of indexes and other funds.

eg, you can allocate your funds so x% goes to asx index x% international indexes and x% Australian property trusts.

If you had it set up that earnings were compounded and you steadily contributed say 15% of your wage, I think you will do well over time.

Agree but REITs and funds are mostly office/industrial centric and do not have the same attraction to the average aussie of an IP as a unit/house in a suburb they can drive past;
i do own some REIT, etc but I believe when we ask Shares or Property, Property means the brick and mortar your neighbours just invested in; I would also go and say it probably does not even include industrial properties
(Yet with MUCH higher return than residential)

 

[qldfrog]

An Interesting Automated strategy for the defensive investor, suggested by Ben Graham, was to be 50% cash and 50% stock index.

When ever the market moved and made the difference shift by 5%, he suggested rebalancing.

So that way as the market rises, you are steadily selling off stocks at every 5% interval on the way up, increasing your cash holding, and as the market falls you can rebuy at every 5% interval on the way down.

Your monthly contributions could just be divided 50/50 each way.

Has anyone work on this and tried to see how this would fare in let's say the last 20 years?
alternatively anyone knowing how i could get interest rate on deposit or a similar index in AB I would be interested trialing this .

 

[DeepState]

Has anyone work on this and tried to see how this would fare in let's say the last 20 years?
alternatively anyone knowing how i could get interest rate on deposit or a similar index in AB I would be interested trialing this .

Table F4

 

[Value Collector]

Thanks for all the information is very helpful. But how does one invest in the index?

Sue

Pretty much any one offering managed funds will offer an option to invest i to an index, you could go through any of the major banks that offer managed funds, just look for a low cost one, one that charges less than 1% management fee is best.

 

[Value Collector]

Has anyone work on this and tried to see how this would fare in let's say the last 20 years?
alternatively anyone knowing how i could get interest rate on deposit or a similar index in AB I would be interested trialing this .

I have never done the figures myself, but I remember reading that it slightly out performed just purchasing the index, the extra return was caused by the rebalancing. Ben graham himself also suggested that letting the cash portion drop to 25% when things got really cheap eg gfc! and letting it rise to 75% when things get really expensive! this would create even large profits! however it opens up the door for mistakes! and if you actually have the skill to value markets you probably wouldn't be using this method to begin with.

 

[burglar]

... But how does one invest in the index? ...

Here is one link:
choice.com.au ...

Vanguard is the company everyone raves about!

 

[Julia]

Pretty much any one offering managed funds will offer an option to invest i to an index, you could go through any of the major banks that offer managed funds, just look for a low cost one, one that charges less than 1% management fee is best.

Is that 1% on FUM? If so, say a person has $500,000 to invest, the managed fund hauls in $5000 p.a. just to put the money into an index fund. Why on earth would anyone pay that when they could invest directly?

Reminds me of a conversation I had quite recently with a financial planner for a full service stockbroker. He happily related stories about his clients who were quite prepared to pay full service brokerage fees (viz over $100 per transaction minimum) just to not have the responsibility themselves. He went on to describe with pride that they move clients in and out of companies regularly "depending on what our research department advises."
Translation: the more transactions we can perform the greater our capacity to milk the client.

Even more happily, he described how the same clients would pay a % of FUM for 'general management of the p/f as well.

 

[DeepState]

Is that 1% on FUM? If so, say a person has $500,000 to invest, the managed fund hauls in $5000 p.a. just to put the money into an index fund. Why on earth would anyone pay that when they could invest directly?.....

....into an ETF which does the same thing.

Australian equities ASX 200 index. Management fee 0.29%pa.

http://www.spdrs.com.au/etf/fund/fund_detail_STW.html

 

[qldfrog]

Table F4

A bit embarrassing but I am a bit lost here:
what do you mean I do not know/could not find in any Amibroker meaning for F54 in that context.
Or did I miss a displayed table in a thread?
It will seem a very dumb question when i have the answer but ..
And thanks Value Collector for the rough idea on return of such a system.