National Conference 3 August 2015 Dr Doug Turek Managing Director

Transcription

1 Investor and investment self-diagnosis National Conference 3 August 2015 Dr Doug Turek Managing Director

2 About this presentation About Doug Turek This is general information not advice I don t know you and by law I can t give you advice until I do and only in writing and not via a lectern Please do your own research, or speak to a licensed financial advisor, before making any investment decisions Please respect our of this presentation MD Professional Wealth -Independently owned wealth advisory and money management firm Passionate about financial literacy via (ABC, Eureka, AIA, Wealth benchmarks) Former industry consultant with The Boston Consulting Group Australian by birth despite accent - 1 -

3 Two ways to measure your absolute $ wealth - 2 -

4 Example if exclude home - 3 -

5 Investment Wealth = nil when investments could payout mortgage Your caravan moment Same Net Worth (includes home) Investment Wealth - 4 -

6 Your relative wealth - 5 -

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8 So how much is enough? example living off 6% of assets $1m balance depleted if draw $60k real annually (for 60/40 equity/bond portfolio) $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $ Suggests you can live off 6% of your starting assets if enjoy average returns and average inflation Suggests 16x expenses is lump sum needed - 7 -

9 (Un)fortunately you won t retire through average times Actual retirements from if drew out 6% of initial investment capital and maintained its real purchasing power Professional Wealth Projection of $1m retirement balance invested earning actual year-year returns before 1.5% pa taxes/fee, not averages, for 60/40 Australian equity/bond portfolio for retirements beginning in 1875 and every 2 nd and 5 th year thereafter. Initial 6% drawdown adjusted by actual inflation for subsequent years.

10 How much is enough for 90% chance funding to age 90 retirement 4.5 5% drawdown (22x capital needed) more realistic starting target adjust spending up (or down 10% of time) after 5-10 years Adjust... Spend ½% less if Conservative investor and -1.5% if in cash/bonds only Spend ¼% more if tolerate 80% chance of money running out at 90 Spend 1% more at 60 if spend 20% less from 70 and 20% less from 80 More/less for more/less in super and fees incurred (1.5% pa tax & costs) - 9 -

11 Have you Made Work Optional? Investment worth * prudent spending % > retirement spending target $ pa Spending target * multiple of expenses needed < Investment Worth $ or What can I spend now in retirement? if above n/a Prudent draw down limit % X Investment Wealth $ = $ pa

12 About your asset allocation

13 How much equity volatility can you emotionally tolerate? (this not your equity mix! but perhaps a cap)

14 There is room for multiple beliefs investing and yes investing involves too many men also

15 About your investment style

16 There are three types of investors in Australia determined firstly by need for assistance DIY Do it yourself No Assistance? Some DFY Do For You 35% 40% DWY Do With You Advised Yes 25% Not here today!

17 DWY (Do With You) Investors believe There is a Return on Advice because Aren t expert (enough) Aren t disciplined enough Don t have the time Don t have the interest Family conflict Don t have the capacity / need a backup plan Believe cost is offset by a better return, lower risk, less tax, less mistakes and/or they believe in Gurus

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19 How do you believe you should invest in Australian shares? Through a portfolio of shares you or your broker pick? Focus on dividend rich imputation stocks especially? Target growth stocks too? Value? Sector? Small companies? or get others to do for you? Using a listed investment company (LIC) eg. AFIC or an unlisted fund (eg. Perpetual, Fidelity, Colonial, ) or buy everything! (eg unlisted or listed ETF index fund) Do both? Complement - Believe in core-satellite approach? Free yourself to speculate? Tilt? Duplicate - back up plan?

20 Do you believe in targeting income or total return? Both had 20% total return in

21 Do you believe CBA and Telstra are prone for a pullback? Presented at May 2015 ASA conference just before correction

22 Do you believe a local index represents your needs? now? 48% was 33% five years ago 20% 20% 12% Financials Defensives Resources Cyclicals Banks, other financials and AREITs Consumer staples, health care, telco, utilities Energy, Materials Industrials, consumer discretionary, IT

23 Australia The World Financials 2.9% 4.3% 6.2% 10.6% 43.1% 0.5% 12.0% 4.1% 4.8% 9.9% 21.0% 8.5% Materials Consumer Staples Energy Industrials Health Care 27.2% 8.8% 10.4% 10.7% 9.5% Consumer Discretionary Telecommunications Utilities Information Technology As at 30 September 2010 Others Source: ishares Australia and All Country World Index funds

24 Do you believe in investing in International Equities? Believe can meet your needs investing solely in Australian shares; or Pays to have an allocation to International shares If have international shares, you then need to decide if you believe in Direct shares Via Comsec, ETRADE, full service broker Must belief you will escape estate tax, easy to return money In index funds (unlisted funds or listed ETFs) In broader market MSCI International? and Emerging markets (not in the above)? or by picking countries (eg. US not Europe) Actively managed funds? Example Magellan, Platinum Currency hedging?

25 Over last 5 years offshore assets outperformed International shares (hedged or unhedged) 14% pa International and local REITs 17 and 14% pa Global infrastructure 14% Australian shares 8%

26 Do you believe in direct property investing? now? here or Sydney? 8x in Sydney & Melbourne Source: AFR April

27 Do you believe in listed property instead? again? now?

28 Do you believe in bonds? Australian inflation linked bonds 9% pa Australian nominal bonds 7% pa Cash 4%

29 now? 3% Bond yields never this low and prices so high Some countries charge to buy their bonds

30 Do you believe they care about you earning a fair return?

31 Do you believe in high yield debt and higher risk income securities? Australian inflation linked bonds Australian nominal fixed-interest bonds Australian cash Australian hybrid securities Unhedged A$ hedged International shares Australian shares 1 May June

32 Do you worry about inflation? Longevity of $1m portfolio funding $60k inflation adjusted income for actual retirements since retirement

33 Do you need to invest in alternatives? Gold and other precious metals Other hard commodities and oil Soft commodities (eg. agriculture) Infrastructure Private equity Hedge funds Art and other collectables Derivatives for income, downside protection

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36 Dr Douglas Turek Managing Director Professional Wealth Pty Ltd AFSL No /350 Collins Street GPO Box 4975 Melbourne VIC 3001 Australia p e dturek@professionalwealth.com.au w