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My wife is 69 and I am 72. We are semi-retired, have our own company, and earn a reasonable income.
We are planning to invest $600k from our SMSF into the equities markets, with the objective of doubling the value of that investment over a period of 10-12 years.
We would also like to generate a net income return of 4% – after allowing for inflation – from a part our investment, although this is very much a secondary objective, aimed largely at helping out with our grandchildren’s school fees.
Having little knowledge of the markets ourselves, it would seem sensible to us to place the majority of our money with one or more professional fund managers, each of whom we would want to see demonstrate superior returns over a period of say, 15 years, and who also offers a competitive fee structure.
As a consequence of leaving the day-to-day management of our portfolio to such managers – who we understand have access to teams of researchers, and a much deeper knowledge of the markets than ourselves – we would like to be able to rely wholly on their decisions and therefore adopt a largely “set-and-forget” approach in terms of our own involvement.
Our limited research has thrown up some areas which have general appeal and which may also contain opportunities consistent with our objectives. These include: international equities generally, and the US in particular, large infrastructure projects, and the top 10-20 Australian stocks.
In summary:
A: I think an expectation of doubling your money over a 10 to 12 year period, plus an income stream of approximately 4% pa, is a challenging, though not unreasonable objective.
Markets never move in one direction in a straight line, and starting points become pretty critical. However, on the mathematics (and ignoring the impact of tax):
On these numbers, I would be thinking about 15 years – which is in the ballpark with your assumption. So, I think your objective is on the whole realistic.
I think that given you want “a set and forget” approach, a portfolio that pays a regular income, low fees and probably a portfolio of major stocks, I would be considering a couple of the major LICs (listed investment companies) such as Argo (ARG) or AFIC (AFI), and/or one of the major indexed funds (such as Vanguard Australian Shares ETF (VAS) or inheres MSCI Australia (IOZ))
Hope this helps
