Dividend Update – 2016 Q2

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15 Responses

  1. A positive trend in the dividend income and a plan to use the excess cash. Job well done

  2. Thanks for the 2nd update. You sound like me, wanting to research everything first and loving graphs 🙂 Looking good. Since you have bought more bonds now is there an allocation you are targeting? What is the yield on your portfolio? I’ve got WBC too and have been a bit disappointed lately but holding on. Any ideas on where you might invest in property?

    • tom says:

      Yes – researching everything is something that I have to control. I can find myself researching for days to find the best (or best value for money) item even when it will only cost a very small amount. I am also a very visual person. As for allocation, I will do a post on that in the not too distant future. I have a target asset allocation in mind and (pending investment property) am getting closer to being in line with it at the moment. For the property I am torn between a higher rental return of an apartment, and the potential larger capital gains of a house (and more specifically the land that comes with it). Leaning to house at the moment. As for where, I am probably going to stick to the Warren Buffett approach of buy what you know (or in this case where), although it will be in a different suburb to my house – I want at least some semblance of diversification!

      • Look forward to that post. Yep understand it is the land that appreciates, not the building. We rented out our house before we moved in and my only tip would be to look for a place with a low maintenance garden, as tenants don’t look after it and it cost us a lot of money and time to fix it. Or pay for at least quarterly garden maintenance for weeding and pruning etc (tenants should do the lawns anyway). Strata on our unit is about 10% of the rent so that builds the case for house too. Good luck with the hunting!

  3. Hey Tom, thanks for the update, and it was a nice one 🙂

    Before I type what I’m about to say, I wouldn’t describe myself as a bear, mostly an optimistic realist.

    Be careful with buying property (particularly apartments) at this time. I don’t know what city you’re from, but nearly all our cities aren’t looking great on the supply / demand sector. Over the next couple of years there are a lot of apartments that will be coming on the market, but not enough demand for them all.

    Also, the recent APRA changes for a need for increased deposit for investment property means that when these apartments come up for settlement, the expected (usually Asian) buyer will need to stump up an extra 10% ($50k+) to settle. A lot of buyers won’t have $50k+ sitting around, so they’ll have to quickly sell at a loss or get money from somewhere. If this is happening around the same time to lots of apartments then prices may decrease quite significantly. You can then imagine a knock on effect – if you can get a 3 bed apartment in Melbourne CBD for $1m, maybe that 3 bed house listed for $1.1M will need to drop down to get a sale..etc

    Of course it may not occur, or as badly as a worse case scenario. But keep it in mind when researching. Both Barefoot and RogerMontgomery have referenced this issue in recent times.

    Good luck with what you decide to do 🙂

    Tristan

    (P.S. If apartments do have a bad spell, then the banks will be at risk of this too. Bank shares aren’t really diversifying from property, it’s intensifying it in my opinion.)

    • tom says:

      … … you are yet another person saying the same thing. We are defiantly keeping our eyes open. We have changed the goal from “in 2016” to “investigate in 2016 and buy when appropriate”.

      Thanks for the details commend however. I have read it a few times now, and has caused multiple conversations (along with other input too).

      • I think there is very little chance of more-than-inflation growth over the next couple of years, but a decent chance of reductions. The only thing I’d say about jumping in soon, is if you want to negatively gear as much as possible, then it may be worth thinking about doing it before the election, because if Labor win and grandfather negative gearing then you might be stuck having to buy one of these oversupplied apartments 🙂

        Tristan

        • tom says:

          We are aiming to positively gear any property we buy. At worst very small negative gearing for a few years. The main thing I want is for the renters to pay my mortgage. If I have to top it up a little initially that’s ok, but if I get a little left over then WIN! Time frame I am looking is 10 to 20 years of ownership, so other than possibly changing the “when to buy” a few years of “average” performance is not the end of the world. Although, like I said I am now reconsidering timing.

  4. Jef says:

    Hey Tom,

    Nice stuff there! Although it’s trending up it’s quite consistent :), which is more encouraging.
    I feel like you have enough graphs, sometimes less is more 😉 haha
    Looking forward to continuing to follow & watch you increase your dividends!

    What’s your end game anyway? If you didn’t mind me asking & did you happen to add me to LinkedIn? Another Tom from Adelaide added me ha

    • tom says:

      End game… interesting thought. I think the end game is generically described as “financial Independence” – specifically covering all bills with passive income. I used to call this retirement, but my partner didn’t like the idea of me sitting on the couch all day. I have to explain that when I said retirement I was talking about being free to do other things (like start a business, volunteer more etc).

      And no, it wasn’t me, I don’t really do the whole linked in thing…

      • Jef says:

        Fair comment, have you thought much about what you’d do then? For me I’m keen to travel / working in social enterprise / really ramp up the blog / website & generally give back.. Having said that I’m not going to wait until a day it’s important for me to live life on my terms as much as I can now 🙂

        Okay cool, fair enough, was a coincidence that it was a Tom from Australia then, probably not that surprising ha

        • tom says:

          Some thoughts. One thing I would like to do is build a product of some sort. Both to have an income stream that separated time input to income output, and also to have something that I am proud of. Most of my day-job doesn’t have any “things” that are produced, or not in the same way.

          • jefmiles says:

            Awesome! Great to hear Tom, look forward to seeing this product & couldn’t agree more with you on preparing something or multiple things to generate income streams 🙂

  5. itpaysdividends says:

    As a guy who spends most of his day in Excel, I don’t think you can ever have too many graphs haha. Solid quarter! Nice to see you moving a bit more out of bonds towards equities to move the overall cash flow up a bit!

    • tom says:

      Thanks for reading – and yes, doing more venturing out. Part of the reason for larger interest is that we have part of a house deposit for an investment property and have not found one yet. The other part (being fixed) is not having allocated more towards shares. Hopefully over the next 6 months this should be fixed. I will do a asset distribution post at some stage now that I have all the graphs (mmm graphs). And I agree – the more time I spend in Excel the more amazing things I find you can do in it. My most recent find is the “Goal Seek” option. I think it is the ultimate in “what if” planning 🙂

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