Thursday 27 August 2015

Buying straw hats in Winter

The stock market was down nicely on Monday and early Tuesday, so I decided to take the opportunity to 'top up' my holdings in IHD (iShares S&P ASX High Dividend ETF) and RDV (Russell High Dividend Australian Shares ETF), buying about $6,000 worth of each using my Comsec margin loan account.

I didn't get around to placing my order until mid-afternoon, by which time prices were already recovering. As I intend to hold onto my geared share portfolios for at least 10-15 years until I retire (and probably longer, although I'll probably pay off any remaining margin loan amounts when I retire as the tax benefits of negative gearing will be negligble if the current 'tax free' status of superannuation pension income remains in place) it makes sense to add to my stock portfolio when 'the market' panics and shares are 'on sale'.

Of course the downside of such market volatility is that my superannuation balance has gone down by about $35,000 over the past couple of months. But as I'll still be in 'accumulation phase' for the next 10-15 years it pays to remain sanguine about such market volatility. I was tempted to move the $40,000 cash we have sitting in our SMSF into our Vanguard High Growth Index Fund investment, but decided to stick with out current $5,000 per month transfers to 'dollar cost average' the ongoing investments.

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