Diversifying Investments - Any Suggestions?

kiriakoz on 04/04/2024 - 23:05

I've recently paid off my home loan. I'm already in a good habit of paying my mortgage and want to put a similar amount towards other investment opportunities. The problem is, I don't know what to invest in.

I know a little bit about share investment, but not as much as I should as I've been pretty tunnel visioned towards paying off my home loan first (for better or worse), so am not sure where to start.

Other random thoughts I've had with regards to investment:

  • Precious metals
  • Art
  • Memorabilia

I think the problem isn't finding information, it's probably information overload.

In terms of risk of investment, I'm keen to diversify. Happy for some higher risk investment as long as it's coupled with low risk investment too.

Thoughts?

Financial

Comments

  • Muzeeb on 04/04/2024 - 23:07
    +7

    @rektrading

    • Drakesy on 04/04/2024 - 23:10
      +5

      Yeah what ever did happen to him, if he rode the bitcoin wave he might've done pretty well.
      Memecoins however…

      • netjock on 05/04/2024 - 13:34
        +1

        The YOLOed into being poor.

        Asset rich, cash poor.

        On paper they have their bitcoin but with margin loan at like 6%+ it is pretty bad

  • jv on 04/04/2024 - 23:10
    -3

    Teslas

    • kiriakoz on 04/04/2024 - 23:13
      +1

      All my chickens are coming home to roost.

  • pinchies on 04/04/2024 - 23:27
    -2

    Investing in NVIDIA aaand AMD :-P

    • Antikythera on 06/04/2024 - 21:03

      I'm long on AMD, bought in at around $90, but am hesitating to buy more at the current price. Actually Intel is looking cheap to me at the moment.

  • dust on 04/04/2024 - 23:31
    +8

    DCA into VDHG or DHHF or do the unpopular (but what has been a very effective investment strategy in Australia) thing and buy an investment property.

    • Ozbar Gain on 05/04/2024 - 00:04
      +1

      Plus one for vdhg. Set and forget. Do not try to further diversify

      • EightImmortals on 05/04/2024 - 10:18

        vdhg? Is that a Vanguard portfolio?

        • kiriakoz on 05/04/2024 - 10:20

          Vanguard Diversified High Growth Index ETF

          I didn’t know, I googled it.

    • No ONE on 06/04/2024 - 12:27
      -2

      Pretty shit performance to be honest. 4.3% p.a. Since 2017.
      Go A200 + VGS.

    • WhyAmICommenting on 06/04/2024 - 20:33

      DHHF is my pick, seems to be better tax wise than VDHG if you are the only or highest earner (of a couple)

      • ninnypoop on 07/04/2024 - 08:46

        Cab you explain please?

        • SBOB on 07/04/2024 - 10:20
          +1

          theres a difference on the underlying assets in VHDG vs DHHF meaning CGT events in the fund are different
          good reading here
          https://passiveinvestingaustralia.com/dhhf-and-other-vdhg-al…

          (though theres also other differences like tax drag etc also, which are covered in the above link)

          really, either would be good choices. I currently hold both, but my regular weekly buys in the last FY have been DHHF

        • WhyAmICommenting on 07/04/2024 - 10:29
          +1

          Ripped from Reddit:

          “Tax inefficiencies of vdhg, as discussed earlier in the thread.

          Primarily vdhg being a etf of pooled managed funds and AUD distributions from FX gains being immediately taxable at your marginal rate. Both are material and best to be avoided if you have the choice”

  • FiDad on 04/04/2024 - 23:35
    +13

    VGS & VAS or DHHF

    • DingoBilly on 05/04/2024 - 10:37

      I'd echo this and suggest VGS/VAS is a much better way to invest than VDHG with less downside.

      • drprox on 06/04/2024 - 19:51

        Incorrect given VDHG has a bond component, it reduces the risk. Can't go too wrong with any of them though.

    • Zondor on 06/04/2024 - 18:47

      Looking at the graph for VGS it goes up alot more than the rest which bounce around.

      • SBOB on 06/04/2024 - 19:47

        VGS has a lower dividend % compared to say VAS. Would be one factor

      • drprox on 06/04/2024 - 19:51

        this has been driven by recent Nasdaq performance

  • Benoffie on 05/04/2024 - 04:56
    +3

    I can tell you that memorabilia is hit n miss, you only have to look at auction houses to see that.

    Art is a gamble based on taste cycles and whims of knobs tbh. One year someone can be all the rage and 12 months later their stuff wont sell. Art is long term. You should buy what you like at prices you're happy to never get back.

  • SBOB on 05/04/2024 - 06:44
    +3

    Regular buys of vhdg or dhff. Under $1k buys per day are brokerage free on CMC Market

    You get diversification without having to diy between different markets.

    Your other 'thought' ideas are much more speculative, and would be closer to investing in lucky guesses

  • SmiTTy on 05/04/2024 - 07:39

    Other random investments..gold, pink diamonds, numismatics, lego!!

    • kiriakoz on 05/04/2024 - 08:52

      That’s fair. I’ll cop that.

      • SmiTTy on 05/04/2024 - 19:00

        Not paying u out, just some other investment options if u didn't want to go mainstream index/stock market

        Not suggesting these are good (or bad) investments… they're obviously not as common but dyor.

        Good luck

  • samyall on 05/04/2024 - 08:09
    +1

    Get a Vangard Personal Investor Account and set up regular buys of their Index ETFs.

  • 6079 Smith on 05/04/2024 - 09:06
    -1

    Just throw money into something like Stockspot and pick your level of risk

  • dtc on 05/04/2024 - 09:46
    +2

    https://passiveinvestingaustralia.com/the-australian-version… is all you need for share investment

    • arescarti42 on 06/04/2024 - 19:20
      +1

      Just seconding this website.

      It is really all you need to make sensible, easy investments in shares.

  • rambutann on 05/04/2024 - 10:18

    Historical license plates.

    • Antikythera on 06/04/2024 - 21:14
      +2

      Much safer than art. No need for security or insurance. If they get stolen just go to VicRoads and replace them.

    • kiriakoz on 06/04/2024 - 21:59

      I might look into this one. Sounds like a good one.

  • Drpepper666 on 05/04/2024 - 10:27
    +4

    Superannuation.

  • Daniel Plainview on 05/04/2024 - 10:39
    +5

    OP,

    I can concur that info overload is a challenge - thats why I'd say don't try and do the perfect thing, rather just something thats 'good'. I would draw your info from this site:
    https://passiveinvestingaustralia.com/

    Reason? Its written by a regular investor, isn't pushing products on commissions, is Aussie focused, easy to understand and the guy actively posts to assist folks on Whirlpool.

    Diversification is excellent as a risk mitigation strategy. As you have your home paid off I' say your main risk is exposure to the AUD's performance and real estate. So I'd try and invest in equities that are foreign based (can still be listed on ASX just non-AU).

    Precious metals, art, memorabilia? Thats very niche stuff - PM not so much but seems a tad complex when you don't need that.

    Based on what you have said I would go with a diverse foreign focused ETF - VGS or BGBL specifically. I'm not advocating DHHF or VDHG as you already have a lot of your net worth tied up in AUD assets (your home). Open an account with Stake, start regularly buying.

    A good general approach like this can be altered a tad later if you like - but at present you sound like you have 'paralysis by analysis' which I've had myself - getting in the game will be a lot better for you and no, don't try and 'time' the market - experts can't so you have no chance, just buy and trust the plan you have. Which is to say you should ONLY invest if you are happy to leave in place for a minimum of 5yrs.

    Thats why I'd say read the entire Pass Investing site from front to back - make notes and know your investing profile FIRST. Cheers.

    • Chandler on 05/04/2024 - 13:59

      thats why I'd say don't try and do the perfect thing, rather just something thats 'good'.

      Don't let perfect be the enemy of good.

      Do something good enough now, rather than trying to do something perfect - and as a result either not do anything or do something later than you could have done. Especially relevant with respect to investing: time in the market is key, because the arrow only goes up if you look over a long-enough timespan (generally). If you wait, you'll probably miss the low point of the wave.

      This is also partly why others here have also mentioned DCA: dollar cost averaging. It's about not bothering to try and "time the market" to buy at a particular low spot, because you will generally miss it and end up buying higher than you could have if you didn't wait. Sometimes you might buy before it hits the bottom, and thus make an (initial) loss. But on average, you'll generally be better off just buying rather than trying to time.

      #notfinancialadvise

  • Cluster on 05/04/2024 - 11:05
    +3

    Art….

    Masterworks is all over Youtube, sponsoring finfluencers.

    Here's a good video showing some of the problems with Masterworks. They're not a scam by any means, but the rosy advertising and outlook isn't all quite as it seems.

    https://www.youtube.com/watch?v=6ojOkPmm8lw

    Basically it's a very illiquid market controlled by a handful of people, and you may need to wait a long time to sell your piece. Also auction houses take a very hefty commission (25% is not unusual).

    Precious metals…

    I've been involved in the market casually for about 20 years. I like silver and gold. Shiney, nice, and generally appreciates in value. I say generally, as silver can be an absolutely miserable investment. I sold a stack of it in 2011 for AUD42/oz. Only now, 13 years later, is the price approaching (but not exceeding) what I sold it for. Think about the returns just keeping it in a bank, or stock market ETF with reinvested dividends. And then consider how much inflation has eaten over 13 years.

    Gold isbetter, and certainly recently it's rising rapidly in price, but there's no reason why it can't be below AUD3000/oz again, or lower.

    • freefall101 on 05/04/2024 - 12:14

      The thing that scares me with gold is this chart - https://www.longtermtrends.net/gold-vs-real-yields/

      20 years of being closely tied to treasury yields only to suddenly decouple in the post covid world. Now that's due to inflation and it doesn't make gold a good or bad investment, just an unpredictable one IMO (and I don't like risk).

  • iforgotmysocks on 05/04/2024 - 11:12

    Magic beans

  • donga100 on 05/04/2024 - 12:07
    +1

    What are your goals for investing? Are you saving for something in particular or just for retirement/financial security?

    If you are happy with not being able to spend the investment money in the near future I would say that making voluntary superannuation contributions is a no-brainer in terms of guaranteed return as you instantly get a tax credit by only paying 15% on contributions rather than whatever income tax rate you are paying. The downside is that you can't access this money until retirement or some extreme medical/financial emergency.

    I would recommend seeing your accountant to discuss best investments for you. ETFs are often structured to better suit different types of investor by having more/less dividend paying shares. Dividend paying shares are expected to have less capital growth in exchange for paying regular income. This makes them good for people who are under the income tax threshold as even if they are automatically reinvesting the dividends they will end up paying less tax on the same ROI. However, if you are already in a high income tax bracket you would be better suited holding non dividend paying shares as the CGT will be less (especially if held over 1yr) than the income tax or company tax (in the case of franked dividends) paid on the dividends. An appointment with your accountant before you start investing will pay for itself many times over in the long run.

    • kiriakoz on 05/04/2024 - 19:44
      +1

      I read this earlier and forgot to reply as I was on the clock. I am definitely keen to invest for my retirement in part so this is good advice.

      I don’t have an accountant (I’ve typically done my own taxes) but this might be a good reason to get one. I do have some accountant mates so will start there.

  • AustriaBargain on 05/04/2024 - 12:16
    +2

    If gold coins could be bought at the same price as gold weight value, I'd buy some gold coins. And play with them every night like a gold obsessed pirate.

    • Cluster on 05/04/2024 - 12:46
      +2

      Spreads for gold (buy vs sell price) are usually very small for bullion coins like 1oz Australia kangaroos. Go to a dedicated bullion dealer and avoid coins that attract GST (US eagles, South African Kruggerands, sovereigns, etc). And never buy collectable gold coins as they carry a massive numismatic mark up.

      • kiriakoz on 05/04/2024 - 13:06

        That makes sense. Does that include the Perth mint bullion bars? Not that I was going to go for it but I did see them with curiosity.

        • Cluster on 05/04/2024 - 14:53
          +1

          Bullion bars are a good way to buy gold. They usually have low markup, unless you buy something like PAMP bars.

          Be aware that there are a lot of counterfeit bars being sold online. Some of them are really convincing in appearance. A safe way to buy them is from a bullion dealer.

          Fake versus real Perth Mint bar comparison:
          https://www.youtube.com/watch?v=KH7oOH04f-8

          • kiriakoz on 05/04/2024 - 17:20

            @Cluster: Thank you for your reply. I was going to buy directly from Perth Mint only if at all, but I'll be even more vigilant now.

  • ihbh on 05/04/2024 - 13:16

    I think the problem isn't finding information, it's probably information overload.

    No, it's poor information.

    FYI. Investments generate an income. If you're relying on a capital gain to make money off it, then it's called speculation (precious metals, art, memorabilia).

  • netjock on 05/04/2024 - 13:37
    +1

    Illiquid assets you have quoted.

    You also need to know when to get out.

    Do you trust the custodians. I was involved in some lending against art work and collectables the problem is valuation vs actual sale is two whole different things and professional valuers are very hard to take to court and win a decent settlement.

    They talk about how these alternative investments are uncorrelated and return more. Problem is would you get involved in a illiquid asset for say 3% higher returns over 10 years but it is either impossible to exit or get a good exit? It is like you pay 15% tax on super but it is locked away for 30 years.

    If you are going to go for these assets you might as well look at private credit and private equity.

    • kiriakoz on 05/04/2024 - 19:47

      I only listed those as examples that I didn’t want to be restricted in my thinking. I’m not wedded to any particular idea. I am willing to take some calculated risks but prefer to diversify.

      I’m not the kind of person to stick everything on red at the casino, or bitcoin or nft’s or anything… I’m an ozbargainer so I don’t want to lose the lot.

  • JIMB0 on 05/04/2024 - 15:28
    +2

    Eneloops and a high yield car. Both can give great returns.

  • brad1-8tsi on 06/04/2024 - 09:01

    Physical precious metals - from my experience you buy at retail and sell at about 20% below retail so you need the market to gain 20% before you break even. While you wait for that there are no dividends. Maybe I'm doing it wrong…

    Art - massive fees by dealers, auctioneers, etc. I buy art for the pleasure it gives me, not the potential monetary gain. I was working in the same "art campus" as Black Douglas recently and asked if I could buy one of his works. He laughed because I was working there as a skilled labourer and he thought I was not well off. lol

    Memorabilia - I've done OK with some model cars, watches, automotive collectables, etc but that was more a fluke and being a hoarder.

    I wasn't happy with my portfolio's diversification (36 investments but taking in a small part of the total share market). I started culling 2 years ago and buying VDHG which will never give amazing returns but is reasonably stable and massively diversified (including diversifying into some "stinkers"). I also bought IVV (growth and exposure to the big 8) and A200 (Income) and VESG (to fool myself that I'm green). I'm down to 31 and aiming for 26 by June 2025.

    • Cluster on 06/04/2024 - 09:47
      +1

      The spreads should be much smaller for precious metals, depending on what you're buying and where.

      Right now on citygoldbullion.com.au:

      1oz Perth Mint gold bar Sell: $3640 Buy: $3497

      Premiums climb for smaller coins, small silver, and you really should avoid anything that's not 999 gold or silver as it attracts GST.

    • kiriakoz on 06/04/2024 - 11:42

      Re: memorabilia, I had the same thing with football (soccer) memorabilia and did well during lockdown when everyone was bored. I agree luck was a factor but that’s why I added it to the list in case there were other opportunities that I hadn’t considered.

  • cnrmlj on 06/04/2024 - 13:10
    +6

    Consider paying the full non concessional amount into a super account each financial year. $27,500 this year and increasing to $30,000 next year. My wife and I have both been doing this for the past few years. In hindsight wish we started many years before.

    We bought an investment property a couple of years ago for our surplus cash flow. We will have an asset and some additional non superannuation income in retirement from that.

    Suggest seeing a financial planner rather than an accountant. Accountants generally look backwards whereas a financial planner will help you with your goals and strategies to meet them.

    • kiriakoz on 06/04/2024 - 14:50

      That makes sense too, financial planner bit especially.

    • May4th on 06/04/2024 - 16:26
      +4

      in my experience financial planners are poor value for money at best and will rip you off/risk losses at worst with bad advice. their advice tends to be generic unless you are a high networth individual, and in many cases, even if you are a high networth individual. most of the advice regarding structure and long term investment plan could be gained through self education, and it's a very high yield investment to educate yourself because their cost will be significant, and ongoing (they will receive trail commission from your investment/charge yearly management fees)

      • cnrmlj on 06/04/2024 - 16:44

        Each to their own. Financial planners certainly aren't for everyone.

        Unfortunately, there have been (and still are) some bad people in the industry. It's a lot better than it has ever been though post Royal Commission.

        Trail commission generally don't exist anymore on investment products. The planner will charge you an ongoing fee if you retain their services to monitor and review your portfolio.

        I have found value from a financial planner in the past in helping me with goals and strategies but don't have an ongoing one.

        • May4th on 07/04/2024 - 09:00

          depends on what investment they recommend. you will find many of them will have broker licenses or internally refer to colleagues that will help to set up an investment loan for an investment property where they will get ongoing commission on the loan, as well as the standard IP/TPD/life insurance they most definitely will get trailing commission or a share of it if they outsource, for the lifetime of the policy/loan. the biggest kicker is the ones who provide ongoing management will charge a % of total assets which could be a significant amount when you have accumulated more assets later in life with minimal input from them, it's the gravy train that keeps on going.

          if you are not financially cluey and don't have the energy or time to self educate an initial consultation and planning only may be helpful, but like I mentioned the advice is usually fairly generic in nature and you are unlikely to receive higher level advice from initial plan / one off consults only

      • Daniel Plainview on 07/04/2024 - 09:44

        Financial planners have their time & place for SOME folks situations - I do not believe the OP needs nor wants one - honestly the OP seems to want a artisan, niche approach to their investments citing art, memorabilia as their investment choices. Not saying it can't be done but kind of making something more difficult than it needs to be - but risk vs returns, sure go for it.

        OP states they're aware they're taking on too much info - and yet again, seem to be looking for a difficult solution to a normal problem - i.e vast majority of primary wealth tied up in home - wanting to diversify asset base.

        I'd be following the KISS rule - keep it simple stupid. If you go deciding on very complex assets before you know your own risk profile and are doing the low hanging fruit stuff like maxing out concessional super contributions, having a PROPER super approach (fund manager & assets selected) - then you're really just pissing into the wind.

    • cashless on 06/04/2024 - 19:01
      +1

      the full non concessional amount

      I think you meant to say concessional

      • cnrmlj on 06/04/2024 - 19:11

        Good pickup.

        • cashless on 06/04/2024 - 19:23
          +3

          Paying full concessional super contributions every year ( no matter your age) is an absolute no-brainer from the investment point of view. 15% investment tax, but then growth & being able to draw it down tax-free during retirement.
          Not everyone can afford to salary sacrifice up to $30k p.a. But if you can it’s a winning formula

          • Daniel Plainview on 07/04/2024 - 09:50

            @cashless: Generally true barring some rare circumstances. But there's little good shovelling more $$$ into your super if you've a crappy super fund &/or investment selections.

            Folks need to check how their super manager is doing & if their investment selections via them are the correct fit for the period of time that they anticipate having the funds in place. Moving to a SMSF if you have the abilities & willingness to do the minor extra work with one is well worth it once you have the funds to justify.

            Such things only require review every year or so - and will make a huge difference over the duration of your investments. Oh and don't be someone who chops & changes your investments - better off putting extra time into a sound & logic based approach & sticking with it unless a major variable changes.

  • Asti on 06/04/2024 - 15:12

    A200 (30%) and BGBL(70%)

    It's the same as VAS and VGS with lower MER

    • tsk2 on 06/04/2024 - 18:51

      makes me cry how low the MER vs ethical options are…at best it's about 10x more expensive.

    • Daniel Plainview on 07/04/2024 - 09:52

      They're similar - but not the same. e.g Betashares don't engage in 'security lending' which Vanguard does to generate extra returns, VAS is ASX300 vs A200 is ASX200.

      That said, I concur in so much as the expected returns from them would be much of a muchness

      • Asti on 07/04/2024 - 11:32
        +1

        I was unaware that Vanguard did this. Thanks for bringing it up. It was very enlightening! Having read up on it, I'd rather lower fee-lower return and risk. I guess its something I didn't realise I was signing up for in advance. It does makes vanguard more competitive though, I agree.

        In the end, you aren't going wrong with either. (I have both)

  • tsk2 on 06/04/2024 - 18:53
    +1

    @kiriakoz read https://passiveinvestingaustralia.com and listen to rational reminder.

    • arescarti42 on 06/04/2024 - 19:21

      Great website, and rational reminder is a great podcast.

    • kiriakoz on 06/04/2024 - 23:07

      I just subscribed to the podcast. Is it worth going back and listening to past episodes or is this the case where you just want the most up to date information?

      • tsk2 on 07/04/2024 - 06:59
        +1

        I think they’re worthwhile. They are Canadian but a lot of the core concepts are applicable to AU - include non financial stuff. The website PIA will give you a lot of really good information that will put you ahead of the majority of people when it comes to successful investing.

        • Daniel Plainview on 07/04/2024 - 09:59
          +3

          Agree, Canada is very similar to Australian in a bunch of ways e.g their domestic share market is heavily concentrated in a few sectors.

          Ben Felix's YT channel is very good: https://www.youtube.com/@BenFelixCSI

          I regularly recommend this specific video he did as I think it applies to all investors & is often the root of many big mistakes we make i.e incorrectly evaluating good results on the basis of the result alone instead of the actual plan:
          https://youtu.be/I8gH5bR3clg?si=hz1wv2JHI3b-1q_M

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