Saturday 25 August 2007

SMSF Investment

I finally sent off the paperwork to invest some of our retirement account funds into the Vanguard LifeStages High-Growth Fund last Friday. Although eSuperFund had said I should send a cheque with the application form (for them to endorse and forward to Vanguard) I didn't want to have to request a cheque from ANZ (the SMSF bank account doesn't have a cheque book). The Vanguard application has an option to make the initial contribution via BPay, so I ticked that box and hope that I can just transfer the initial $180,000 investment once they email me an account number.

I ultimately decided to make the initial contribution amount $180K rather than the entire $330K we have available to invest after Moomin commented that he would dollar cost average (DCA) into the investment given the current market volatility. Since I really have no idea if the Australian and International stock markets will rebound to new all-time highs over the next few months or drop lower by another 5-10% or more it makes sense to DCA. By investing the remaining $150 of our current SMSF cash balance into Vanguard at the rate of $10K each week via BPay I'll avoid the risk of having invested at too high a price if the markets continue to drop, but by the same token have missed the chance of getting fully invested at the bottom of the correction. Somehow using DCA to achieve an truly "average" buy-in price seems in keeping with our decision to invest in an Index Fund to ensure we get typical market returns. I don't think my ability to time the market is any better than my ability to pick individual winner stocks.

Copyright Enough Wealth 2007


1 comment:

mOOm said...

Don't blame me if the market just shoots up from here! but I'm guessing this is going to look like 1998 with us having gone through the August low, but another low coming in October. But that is all just guessing.