There are many reason for making an investment, but probably one of the least rational is because it is 'cool' or 'fun' (imho). Doesn't stop me doing it though! So, don't take this as any sort of recommendation, just a 'fun' little investment option I found out about today and thought I'd share.
Spaceship Voyager is an app for your phone that lets you invest in an Australian Index Fund (ASX200) option, or alternatively in a some-what managed Fund (Spaceship Universe) that invests in 100 global companies that have been selected as less prone to disruption (i.e. investments such as Alphabet, rather than Encyclopaedia Brittanica). One thing I do like is that there is no minimum investment amount (investment and automatic savings plan are via direct debit from the bank account you link to) and no fee on the first $5000 you invest. I chose to invest $100 initially, with a monthly addition of $100. So, after four years or so I should reach the $5000 threshold to start paying a fee of 0.10% (for the Universe Fund) on my balance over $5000. If I'd invested in the Australian Index Fund option the fee for amounts over $5000 would have been even lower (0.05%).
They say they invest directly in the companies in the fund, rather than via an ETF, so I have absolutely no idea how this would be possible given the lack of any fees on the first $5000 of each account balance, and the likely small size of this Fund (it only launched in April 2018 as far as I can tell). But I wish them all the best (especially as they now have some of my money!).
On the downside, the PDS states that the parent company doesn't guarantee withdrawals, so if the whole scheme goes 'belly up' you're likely to loose your investment. But I suppose that's the case with many investments - if you want a government guarantee to get your money back you have to invest in a bank savings account.
Anyhow, the Fund/App is a cool idea, the colour scheme is great (purple!), and the theme (space) appeals to me. I did get a referral link when I signed up, but since I can only send it direct to my friends (I've sent it to DS1 in case he is interested), I can't spam it here. But if you really want to get an extra $20 for opening an account before the end of August, and plan on opening an account with them, I suppose you can email me or drop a comment on this article and I'll send you the link/referral code.
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Showing posts with label Alternative investments. Show all posts
Showing posts with label Alternative investments. Show all posts
Friday, 10 August 2018
Thursday, 19 July 2018
Earn a bonus $75 on your savings at RateSetter
I started using RateSetter back in March, and I've been saving $100 (automatically transferred from one of my bank accounts) every month and investing it at around 9%pa using the 5-year lending option. While such peer-to-peer lending is obviously much more risky than investing your money in a bank savings account, the higher interest rate is (hopefully) commensurate with higher risk. Also, if you invest in 5-year lending, only some* of your investment will be locked up for the full five years.
At the moment, RateSetter is offering a $75 bonus^ if you join RateSetter using this referral link and invest $2000 or more in the 3-year Income or 5-year Income lending market before 16 September 2018. So, if you were thinking about saving some funds in a RateSetter lending account, get in quick for the chance of a bonus $75!
Last Matched Rates on RateSetter:
1 MONTH 5.0% at 14:36
1 YEAR 4.0% at 14:31
3 YEAR INCOME 7.4% at 13:19
5 YEAR INCOME 9.0% at 15:06
GREEN LOAN 6.5% at 14:25
* Investing in 5-year loans, you get a monthly repayment of interest and capital into your holding account (which I reinvest each month), so the initial investment isn't locked away for the entire loan period.
^ You will get a $75 bonus and so will I. Full disclosure ;)
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Tuesday, 14 September 2010
Portfolio Update
An updated snapshot of my specific stock and mutual fund investments is shown below. The current situation is far from ideal - with an extremely high loan:value ratio (LVR) of almost 100% (pre-GFC I had been maintaining the overall LVR around 65% by buying additional investments as the value of my portfolio increased. That strategy was based on expected long-term ROI of 10%+ and occasional bear market dips of 10%-25%). Unfortunately I had to sell off some of the more liquid stocks to avoid margin calls in early 2009, and so the portfolio hasn't gained as much during the stock market rebound as it lost on the way down.
Also, the portfolio now includes a large amount of illiquid holdings such as ING Private Equity, the Ord Minnett Hedge Funds (now mostly invested in bonds and fixed interest), and the Macquarie 'Select Opportunities' Fund (also now mostly invested in cash, with current NAV about 15% below the capital protected amount that should be paid out in 2014). Altogether around $162,000 of the $500,000 invested has limited upside potential, while I'm stuck paying about 8%+ interest on the investment loan balance! As these investments reach the maturity dates I'll cash them out and be able to reinvest the funds (or, more likely, reduce the outstanding loan balances).
The portfolio no longer includes my 'investments' in managed agribusiness funds (Timbercorp Pine Forest, Rewards Teak and Rewards Sandlewood projects) which all went out of business.
Overall, my worst investments have been in 'managed' funds, with 'tax effective' agribusiness schemes performing the worst (~100% loss), ING private equity losing around 50% of it's value since launch/rights issue (although it may recover a bit), Macquarie equinox down about 15% (but should pay out the capital protected amount on the 30 May 2014), and the Ord Minnett 'Hedge' Funds currently frozen until maturity (OMIP 220 matures 30 Jun 2015, OMIP 320 matures 30 Dec 2016, and OMIP SL matures 30 Jun 2017) - but at least they locked in some profit via the 'rising guarantee' mechanism prior to the GFC.
Lessons learned?
1. Gearing (or investing using 'other peoples money') is great when things work out as expected, but the downside risk can be extremely painful. Unfortunately, with margin loans you can be forced to liquidate investments at the worst possibly time - IE. selling out at the bottom, rather than being able to invest when the market is down. In hindsight, I should have avoided borrowing more against the rising value of my portfolio as the bull market matured, and should have taken profits and paid off loans when the market had done well and upside potential was less obvious (eg. in 2007)
2. So-called 'expert' managers are better at protecting their fees than they are at managing portfolio risk. If you can't pick the best stock investments yourself, what makes you think you're an expert at picking the best managers? Most under perform the market, after taking fees into account. And some are real shonks (but can write a great looking prospectus).
3. The 'fine print' is often so voluminous and incomprehensible that you don't really understand the risks involved. For example, I had expected hedge funds would have returns uncorrelated with the stock market, and would be able to make profits during a severe bear market by shorting stocks and indexes. In reality, hedge funds tracked the market down, and ended up being frozen due to the capital guarantee requirements. I had also expected the risks in agribusiness investments were mainly crop yields and lower than expected prices when the timber matured (and the exorbitant up-front management fees and investment advisor commissions). In reality, it turned out that when the management company went broke, the investors ended up 'owning' trees on land that had the leases terminated - so immature trees had to be sold off at fire-sale prices by the management company liquidator, rather than being able to be retained by the investors until maturity.
4. Be very wary of tax considerations affecting your decision making. I decided not to sell off some of my portfolio in 2007 due to potential capital gains tax liability (and the potential impact of the extra 'income' on family tax benefits). Instead I tried to be 'smart' and protect my portfolio from a possible bear market by buying Index put options in March 2007. Eventually those options expired (Dec 2007) just before the market crashed, and my lack of experience trading options meant I didn't have put options in place during 2008.
5. In theory, investing in a dozen high-risk, high-return investments should work out OK, as sufficient diversification will reduce the overall risk. In reality, the risk-premium was insufficient and the diversification proved to be illusory (the investments negative returns turned out to be highly correlated during a global recession).
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Also, the portfolio now includes a large amount of illiquid holdings such as ING Private Equity, the Ord Minnett Hedge Funds (now mostly invested in bonds and fixed interest), and the Macquarie 'Select Opportunities' Fund (also now mostly invested in cash, with current NAV about 15% below the capital protected amount that should be paid out in 2014). Altogether around $162,000 of the $500,000 invested has limited upside potential, while I'm stuck paying about 8%+ interest on the investment loan balance! As these investments reach the maturity dates I'll cash them out and be able to reinvest the funds (or, more likely, reduce the outstanding loan balances).
The portfolio no longer includes my 'investments' in managed agribusiness funds (Timbercorp Pine Forest, Rewards Teak and Rewards Sandlewood projects) which all went out of business.
Overall, my worst investments have been in 'managed' funds, with 'tax effective' agribusiness schemes performing the worst (~100% loss), ING private equity losing around 50% of it's value since launch/rights issue (although it may recover a bit), Macquarie equinox down about 15% (but should pay out the capital protected amount on the 30 May 2014), and the Ord Minnett 'Hedge' Funds currently frozen until maturity (OMIP 220 matures 30 Jun 2015, OMIP 320 matures 30 Dec 2016, and OMIP SL matures 30 Jun 2017) - but at least they locked in some profit via the 'rising guarantee' mechanism prior to the GFC.
Lessons learned?
1. Gearing (or investing using 'other peoples money') is great when things work out as expected, but the downside risk can be extremely painful. Unfortunately, with margin loans you can be forced to liquidate investments at the worst possibly time - IE. selling out at the bottom, rather than being able to invest when the market is down. In hindsight, I should have avoided borrowing more against the rising value of my portfolio as the bull market matured, and should have taken profits and paid off loans when the market had done well and upside potential was less obvious (eg. in 2007)
2. So-called 'expert' managers are better at protecting their fees than they are at managing portfolio risk. If you can't pick the best stock investments yourself, what makes you think you're an expert at picking the best managers? Most under perform the market, after taking fees into account. And some are real shonks (but can write a great looking prospectus).
3. The 'fine print' is often so voluminous and incomprehensible that you don't really understand the risks involved. For example, I had expected hedge funds would have returns uncorrelated with the stock market, and would be able to make profits during a severe bear market by shorting stocks and indexes. In reality, hedge funds tracked the market down, and ended up being frozen due to the capital guarantee requirements. I had also expected the risks in agribusiness investments were mainly crop yields and lower than expected prices when the timber matured (and the exorbitant up-front management fees and investment advisor commissions). In reality, it turned out that when the management company went broke, the investors ended up 'owning' trees on land that had the leases terminated - so immature trees had to be sold off at fire-sale prices by the management company liquidator, rather than being able to be retained by the investors until maturity.
4. Be very wary of tax considerations affecting your decision making. I decided not to sell off some of my portfolio in 2007 due to potential capital gains tax liability (and the potential impact of the extra 'income' on family tax benefits). Instead I tried to be 'smart' and protect my portfolio from a possible bear market by buying Index put options in March 2007. Eventually those options expired (Dec 2007) just before the market crashed, and my lack of experience trading options meant I didn't have put options in place during 2008.
5. In theory, investing in a dozen high-risk, high-return investments should work out OK, as sufficient diversification will reduce the overall risk. In reality, the risk-premium was insufficient and the diversification proved to be illusory (the investments negative returns turned out to be highly correlated during a global recession).
Subscribe to Enough Wealth. Copyright 2006-2010
Sunday, 13 June 2010
The allure of gold
Although I don't think Gold is likely to be a good investment at current prices (I bought a few ounces several years ago when the price was around $500 and ounce, so it now appears a bit pricey at almost $1500 an ounce) I just bought a dozen of the new 2010 0.5 g "Mini Roo" 99.99% gold coins from the Perth Mint. I had a couple of gift cards that were due to expire in a few months, and I was at a loss of what to use them for. I had previously used a similar gift card to 'donate' money to myself via Paypal, which allowed me to "cash in" the cards for almost face value, but the latest cards didn't work for making donations. I'd also used such cards in the past for buying petrol and groceries, but the two main supermarkets chains (Woolworths and Cols) no longer accept these cards, nor do the related petrol chains.
So buying gold coins seemed a reasonable use for the cards. I could have bought a single half ounce bullion bar, but I decided to buy the Mini Roo coins even though the value of the gold in these coins is only about half what I'd get buying a gold bullion to the same value. Mint condition legal tender gold coins are always priced at about twice the value of the gold content, and at a much higher multiple of their face value as 'legal tender' (the 0.5 g gold coins I bought cost $49,95 each, contain gold worth around $34 at the current spot price, and have a face value of only $2!).
I decided to buy the mini roo coins as they are cute (only 11.6 mm in diameter and 0.7 mm thick) and I can give them to DS1 and DS2 and Christmas gifts (I'm sure the boys will like having some real "pirate treasure" gold coins - although I'll have to make sure they don't lose them!). I'll probably also add some of them to my stash of end-of-the-world emergency supplies. The coins are easily recognisable as being solid gold and government issued, so they should be easier to trade than bullion bars in a post-apocalypse scenario. Most likely they'll just sit around and eventually for part of the family fortune. In the long term gold may at least keep it's current value, so it's probably no worse than having cash in the bank and paying taxes on the interest.
So buying gold coins seemed a reasonable use for the cards. I could have bought a single half ounce bullion bar, but I decided to buy the Mini Roo coins even though the value of the gold in these coins is only about half what I'd get buying a gold bullion to the same value. Mint condition legal tender gold coins are always priced at about twice the value of the gold content, and at a much higher multiple of their face value as 'legal tender' (the 0.5 g gold coins I bought cost $49,95 each, contain gold worth around $34 at the current spot price, and have a face value of only $2!).
I decided to buy the mini roo coins as they are cute (only 11.6 mm in diameter and 0.7 mm thick) and I can give them to DS1 and DS2 and Christmas gifts (I'm sure the boys will like having some real "pirate treasure" gold coins - although I'll have to make sure they don't lose them!). I'll probably also add some of them to my stash of end-of-the-world emergency supplies. The coins are easily recognisable as being solid gold and government issued, so they should be easier to trade than bullion bars in a post-apocalypse scenario. Most likely they'll just sit around and eventually for part of the family fortune. In the long term gold may at least keep it's current value, so it's probably no worse than having cash in the bank and paying taxes on the interest.
Subscribe to Enough Wealth. Copyright 2006-2010
Sunday, 25 October 2009
Timber! Fizz!
I haven't received any notification as yet from the Timbercorp liquidator KordaMentha regarding the sale of the Timber assets to Australian Bluegum Plantations on 30 Sep for approx. $345m. From the KordaMentha press release it appears that about $198m of the sale proceeds (due to settle on 2 Nov) will be available to the woodlot investors. As Timbercorp's forestry assets included 92,000 hectares of eucalyptus plantations, and each woodlot represented 1 hectare of forest, I estimate around $2,150 is available for distribution per woodlot. However, the earlier woodlots (such as mine) should receive a higher proportion of the sale proceeds as the standing timber was more mature (due for harvest in 2011), and the later woodlots had many more years of maintenance payments due before they would reach maturity. It will be interesting to see what distribution formula (and costs) are used to calculate the final payout figures. Earlier correspondence from KordaMentha had indicated that growers who hadn't paid the last annual maintenance and rent invoice would not be entitled to proceeds from sale of forestry assets, so that may boost the amount paid to the paid-up investors.
I've already written off my initial $11,500 investment in three Timbercorp woodlots, so any sale proceeds will be a pleasant surprise. The $200 contribution towards legal costs I paid to Clarendon Lawyers on 24/8 is probably money down the drain. And I think the annual timber insurance premium I recently paid was non-refundable.
As the initial investment and annual fees were tax deductible, I expect any pay-out will be taxable income. Due to the recent slashing of the amount that can be salary sacrificed into superannuation, my current marginal tax rate is probably the same, or higher, than when I made my investment into Timbercorp. So, no net income tax saving, and probably a negative ROI on the amount invested!
* * * * * *
I sold my main tranche of Coca-Cola Hellenic Bottling company shares several years ago, but somehow wound up with an odd lot of 60 shares (probably from a dividend reinvestment plan allocation). CHB has now been removed from the ASX, and I just sent in the paperwork to have my remaining CHB shares pooled and sold-off on the Athens stock exchange in November. The brokerage fee (0.55%) is good value, but unfortunately the market price could be depressed by CHB purchasing their own shares during the share sale period. Apparently CHB can buy up to 20% of the recent average daily volume each day, and although the maximum price is regulated (no more than highest normal market trades in CHB) there is no minimum stipulated. There is also a special recapitalisation dividend of around $3 per share that I might be paid (depending on timing of the share sale and the recapitalisation being finalised), although I expect the CHB share price would drop by a similar amount as soon as they trade ex-entitlement. I'll probably end up being sent a cheque for around A$1,200.
I've already written off my initial $11,500 investment in three Timbercorp woodlots, so any sale proceeds will be a pleasant surprise. The $200 contribution towards legal costs I paid to Clarendon Lawyers on 24/8 is probably money down the drain. And I think the annual timber insurance premium I recently paid was non-refundable.
As the initial investment and annual fees were tax deductible, I expect any pay-out will be taxable income. Due to the recent slashing of the amount that can be salary sacrificed into superannuation, my current marginal tax rate is probably the same, or higher, than when I made my investment into Timbercorp. So, no net income tax saving, and probably a negative ROI on the amount invested!
* * * * * *
I sold my main tranche of Coca-Cola Hellenic Bottling company shares several years ago, but somehow wound up with an odd lot of 60 shares (probably from a dividend reinvestment plan allocation). CHB has now been removed from the ASX, and I just sent in the paperwork to have my remaining CHB shares pooled and sold-off on the Athens stock exchange in November. The brokerage fee (0.55%) is good value, but unfortunately the market price could be depressed by CHB purchasing their own shares during the share sale period. Apparently CHB can buy up to 20% of the recent average daily volume each day, and although the maximum price is regulated (no more than highest normal market trades in CHB) there is no minimum stipulated. There is also a special recapitalisation dividend of around $3 per share that I might be paid (depending on timing of the share sale and the recapitalisation being finalised), although I expect the CHB share price would drop by a similar amount as soon as they trade ex-entitlement. I'll probably end up being sent a cheque for around A$1,200.
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