Good Strategy? Opinions and advice please.

LePrince

Hi,

I have an account with degiro and an account with rabodirect.
My aim is to generate dividends in the short term and also have some more long term safe(ish) investments. Here is the plan:

Degiro (15k):
2/3 in PowerShares QQQ
1/3 in Vodafone

Rabo (40k):
1/4 in BlackRock GIF North America Eq Index A2
1/4 in Henderson Horizon Fund
1/2 in Robeco All Strategy Euro Bonds DH EUR


Questions:
- Does it look like a good strategy? (in terms of proportion, amount, nature of investment, ..)
- In the case of rabo is it better to invest in the index they represent instead of the managed fund? (ex: MSCI North America NR EUR instead of BlackRock GIF)
- Is the timing for buying good? Is there some sort of upcoming deadline that I should wait for before buying (dividends payout, announcement, ...)

topper_harley2

LePrince wrote: »

Hi,

I have an account with degiro and an account with rabodirect.
My aim is to generate dividends in the short term and also have some more long term safe(ish) investments. Here is the plan:

Degiro (15k):
2/3 in PowerShares QQQ
1/3 in Vodafone

Rabo (40k):
1/4 in BlackRock GIF North America Eq Index A2
1/4 in Henderson Horizon Fund
1/2 in Robeco All Strategy Euro Bonds DH EUR


Questions:
- Does it look like a good strategy? (in terms of proportion, amount, nature of investment, ..)
- In the case of rabo is it better to invest in the index they represent instead of the managed fund? (ex: MSCI North America NR EUR instead of BlackRock GIF)
- Is the timing for buying good? Is there some sort of upcoming deadline that I should wait for before buying (dividends payout, announcement, ...)

Why are you using Rabo of you have Degiro account? Entry and exit fee of 0.75% and AMC of .45% up to 1.5% depending on funds. You can buy ETFs from Degiro for much less. I don't see advantage of Rabo?

Trying to be timing for buying is usually a fools game.

LePrince

topper_harley2 wrote: »

Why are you using Rabo of you have Degiro account? Entry and exit fee of 0.75% and AMC of .45% up to 1.5% depending on funds. You can buy ETFs from Degiro for much less. I don't see advantage of Rabo?

Trying to be timing for buying is usually a fools game.

My reasons were a mix of:
- i don't know much about investments
- rabo funds seem to make sense in terms of diversity and results
- rabo is a safe bank
- i don't know much about degiro
- it's not easy for me to transfer funds to degiro

I wouldn't mind going 100% with degiro if I knew what I was doing and I was sure it is safe.

loves_to_walk

LePrince wrote: »

My reasons were a mix of:
- i don't know much about investments
- rabo funds seem to make sense in terms of diversity and results
- rabo is a safe bank
- i don't know much about degiro
- it's not easy for me to transfer funds to degiro

I wouldn't mind going 100% with degiro if I knew what I was doing and I was sure it is safe.

rabbo is only facilitating the purchase of those funds , rabbo will not prevent them from going under

you only use the likes of rabbo if you are limited in terms of the contribution you can make on a monthly basis to a long term investment fund , you would never use the likes of rabbo for trading in and out of stocks , what rabbo offers is no more diverse than numerous etf,s which can be bought through any broker

i do like the merrion fund which is available through rabbo however

Sabre Man

You are better off investing in ETFs with DeGiro than paying Rabo's fund charges. ETF charges are a lot lower (QQQ is 0.2% but many are lower) and there's no entry or exit fee.

I personally hold shares in QQQ and think its a good ETF. I also own VEUR for exposure to European shares.

Why did you pick Vodafone by the way?

What is your investment horizon?

gordongekko

its not the fund going under thats the concern. Its degiro going under that appears to be the ops concern.

LePrince

Sabre Man wrote: »

You are better off investing in ETFs with DeGiro than paying Rabo's fund charges. ETF charges are a lot lower (QQQ is 0.2% but many are lower) and there's no entry or exit fee.

I personally hold shares in QQQ and think its a good ETF. I also own VEUR for exposure to European shares.

Why did you pick Vodafone by the way?

What is your investment horizon?

- If I can find the equivalent ETFs then why not but what are they?
- I picked Vodafone because it is the only share I know with a high dividend.
- I don't intend to buy & sell on a regular basis. I'd like to have a portfolio that earns me regular dividends and leave the investment up and running. Most of my assets are in deposit accounts but I in addition I also wanted to have government bonds that earns me a little more than deposit interests but with relative safety. QQQ looks like a winner to me also but its dividends don't seem good. Then maybe higher risk with high dividends.

gordongekko is correct: it is degiro going under that I'd be worried about.

eeepaulo

I'm also a little concerned about my money being covered.

This article relates to uk cover. It is a few months old, the telegraph also suggests they are covered by Dutch regulator as well, I assume this would apply here.

http://www.thisismoney.co.uk/money/diyinvesting/article-3118235/DeGiro-offers-chance-buy-sell-shares-just-1-75.html

The broker is listed on the Financial Conduct Authority register and is legally allowed to trade in the UK, but its home regulator is the Dutch Autoriteit Financiële Markten. It is using a European Union rule that allows it to passport in its services to the UK.
This doesn’t make it any less safe, but because it is passporting into the UK there are different protections. The platform doesn’t fall under the investing side of the Financial Services Compensation Scheme or the Financial Ombudsman Service.
Usually up to £50,000 of investments would be protected by the FSCS if a UK platform went bust. Instead DeGiro segregates its own money and client funds in separate legal entities, and up to €20,000 is protected from failure.
If you had any complaints about the service you would have to go to the Dutch regulator, rather than the UK Financial Ombudsman Service.

If anyone knows more I would be interested to hear.

loves_to_walk

LePrince wrote: »

- If I can find the equivalent ETFs then why not but what are they?
- I picked Vodafone because it is the only share I know with a high dividend.
- I don't intend to buy & sell on a regular basis. I'd like to have a portfolio that earns me regular dividends and leave the investment up and running. Most of my assets are in deposit accounts but I in addition I also wanted to have government bonds that earns me a little more than deposit interests but with relative safety. QQQ looks like a winner to me also but its dividends don't seem good. Then maybe higher risk with high dividends.

gordongekko is correct: it is degiro going under that I'd be worried about.

vodafone is a good buy , the stock is cheap but more importantly , delivered very possitive quaterly earnings and outlook today , its a conservative investment

hsbc pays a 6% dividend , the stock is where it was ten years ago , very dependent on china but its one of the biggest banks in the world , i think its a good long term buy but its hard to know where the bottom is

volkswagon are currently paying a 5% dividend , stock price is where it was five years ago

Sabre Man

QQQ's dividend is indeed low (0.92%) at the moment but it consists of many fast growing stocks, like Amazon, Facebook, Google, Apple etc. QQQ has more than doubled in 4 years. My question is how much longer it can go on. If there is a correction/recession I will buy more as the shares should hopefully rise quickly afterwards.

topper_harley2

Do you not think QQQ is very tech heavy, it has 13% in Apple alone! Its obviously set up like that for a reason, just wondering if the OP knows that and is happy with same e.g. vs IWDA which has only 2% Apple.

gordongekko

topper_harley2 wrote: »

Do you not think QQQ is very tech heavy, it has 13% in Apple alone! Its obviously set up like that for a reason, just wondering if the OP knows that and is happy with same e.g. vs IWDA which has only 2% Apple.

thats because it tracks the nasdaq. So apple is probably around 13% of the nasdaq.

Sabre Man

QQQ has performed very well over 1, 3 and 5 years. Here are more details:
http://etfdb.com/etf/QQQ/

LePrince

topper_harley2 wrote: »

Do you not think QQQ is very tech heavy, it has 13% in Apple alone! Its obviously set up like that for a reason, just wondering if the OP knows that and is happy with same e.g. vs IWDA which has only 2% Apple.

I did not know that Apple weighed 13%
I do have a lot of confidence in technology based investment but it is true that it seems a lot.

- In comparison, Rabodirect managed fund "BlackRock GIF North America Eq Index A2" has 4% of Apple and yields 20% / year! You guys still think it is not a good idea because of the fees?

- Where can I see the weight of each company that form QQQ?

- Is there an ETF that would be composed more or less of what is in "Robeco All Strategy Euro Bonds DH EUR" from rabo? It looks very safe (risk:3 - 3.89% return), I might consider moving my deposit money to this kind of investment. But I need advice.

topper_harley2

gordongekko wrote: »

thats because it tracks the nasdaq. So apple is probably around 13% of the nasdaq.

Yeah I get that. Seems like alot though....

LePrince wrote: »

I did not know that Apple weighed 13%
I do have a lot of confidence in technology based investment but it is true that it seems a lot.

The above is why I wondered.

topper_harley2

LePrince wrote: »

- In comparison, Rabodirect managed fund "BlackRock GIF North America Eq Index A2" has 4% of Apple and yields 20% / year! You guys still think it is not a good idea because of the fees?

- Where can I see the weight of each company that form QQQ?

- Is there an ETF that would be composed more or less of what is in "Robeco All Strategy Euro Bonds DH EUR" from rabo? It looks very safe (risk:3 - 3.89% return), I might consider moving my deposit money to this kind of investment. But I need advice.

I think you need to stop believing Rabo's website guff! That fund returned 20% in year X or Y but what will it return in year Z? Nobody can tell..... PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE!!! Have you heard of reversion to the mean? If not, look it up. It basically means funds outperforming the average will eventually revert back to average. Funds cannot go on providing 20% growth indefinitely, its just not possible!

"Robeco All Strategy Euro Bonds DH EUR" 3 - 3.89%. This is not guaranteed!

Top 25 holdings are shown here: http://portfolios.morningstar.com/fund/holdings?t=QQQ. Most are tech stocks, which as GordonGecko pointed our correctly that this is because it tracks the NASDAQ index. This is fine as long as you know this and are happy with such an overweight tech fund. Wouldn't be for me personally.
Seems bit mad to me that you are going to invest E10K into QQQ without even knowing where the fund factsheet resides and what the top holdings are?!

LePrince

topper_harley2 wrote: »

I think you need to stop believing Rabo's website guff! That fund returned 20% in year X or Y but what will it return in year Z? Nobody can tell..... PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE!!! Have you heard of reversion to the mean? If not, look it up. It basically means funds outperforming the average will eventually revert back to average. Funds cannot go on providing 20% growth indefinitely, its just not possible!

"Robeco All Strategy Euro Bonds DH EUR" 3 - 3.89%. This is not guaranteed!

Top 25 holdings are shown here: xxx. Most are tech stocks, which as GordonGecko pointed our correctly that this is because it tracks the NASDAQ index. This is fine as long as you know this and are happy with such an overweight tech fund. Wouldn't be for me personally.
Seems bit mad to me that you are going to invest E10K into QQQ without even knowing where the fund factsheet resides and what the top holdings are?!

Thanks for the insight and info!

I am a total newbie and the reason I am here is that deposits rates are so very low and very highly taxed (in effect the government is forcing us to gamble our money on the stock exchange).
Also I won't have much room for experimentation so your advice is very valuable to me.

I put a figure of 10K against QQQ because I opened up the chart in yahoo finance and so an upward trajectory and given the caliber of the companies that constitutes the fund (alphabet, facebook), it can only go up in the future.
In theory, I'd be prepared to put more than 10k.

The only concern I have it is its low dividend. I would need to invest in other shares (as per mentioned before: vodafone,volkswagen,garmin,hsbc) in order to get dividends.

I understand your statement per "past perf is not a garantee for future perf" but this is going to be true for everything and I don't know what to buy.

topper_harley2

LePrince wrote: »

Thanks for the insight and info!

I am a total newbie and the reason I am here is that deposits rates are so very low and very highly taxed (in effect the government is forcing us to gamble our money on the stock exchange).
Also I won't have much room for experimentation so your advice is very valuable to me.

I put a figure of 10K against QQQ because I opened up the chart in yahoo finance and so an upward trajectory and given the caliber of the companies that constitutes the fund (alphabet, facebook), it can only go up in the future.
In theory, I'd be prepared to put more than 10k.

The only concern I have it is its low dividend. I would need to invest in other shares (as per mentioned before: vodafone,volkswagen,garmin,hsbc) in order to get dividends.

I understand your statement per "past perf is not a garantee for future perf" but this is going to be true for everything and I don't know what to buy.

Alphabet and Facebook can only go up?! Tell that to Worldcom and Enron shareholders! Since you mentioned VW, don't forget that it has dropped 50% since start of year. Never think "good" companies can only go up.

I think you should step back and read a bit more before buying. Random Walk Down Wall Street and The Little Book of Common Sense Investing would be good to start with.

Nody

LePrince wrote: »

Thanks for the insight and info!

I am a total newbie and the reason I am here is that deposits rates are so very low and very highly taxed (in effect the government is forcing us to gamble our money on the stock exchange).
Also I won't have much room for experimentation so your advice is very valuable to me.

First of all no one is forcing you to do anything so stop with that excuse right away or trying to tell you that you are being hard done by; no one owes you ANYTHING for the money you invest so admit the truth that you want to make more money and you're willing to gamble on it. Why do I say gamble? Because you admit yourself you're a total newbie and you're randomly throwing money at funds without knowing even the basics of them which is about as good as picking random lotto ticket numbers. I'll give you a hint, the stock markets have been going up for several years in a row now which means any fund which owns stocks are basically going to show positive growth and make people think they are stock geniuses because their value increase when in reality they had zero to do with the value increase or picking the right funds. Look at this graph of the last 20 years and tell me what you think is the likely direction for it to continue...



So you are now randomly throwing a lot of money at funds without any clue of what's in them, how they operate or anything else and the only one responsible for this is YOU. No one forces you to invest, no one forces you to buy on the stock market and no one is going to give a damn when you lose 30% of that money in an upcoming crash because it is all YOUR responsibility. Would you give a random stranger down the street 10k EUR because he told you he had a great idea and 10% profit for the last 5 years? No? Then why are you doing it because they happen to call it a fund instead?

Is this clear enough? YOU are responsible for YOUR investments; not anyone else and it is YOUR job to read up on it rather than rely on a random message board to vet something that will easily lose you 30%+ of your investment. Are you ok with that? Are you ok with the value of your funds dropping down by over 10.000 EUR (and very possibly significantly more)? That your shares will be worth less then when you bought them?

I understand your statement per "past perf is not a garantee for future perf" but this is going to be true for everything and I don't know what to buy.

Then you don't buy anything until YOU do understand it or you might as well start playing the lotto instead for all the good your "investment" will do you.

LePrince

Nody wrote: »

First of all no one is forcing you to do anything so stop with that excuse right away or trying to tell you that you are being hard done by; no one owes you ANYTHING for the money you invest so admit the truth that you want to make more money and you're willing to gamble on it.

My AIB deposit earned me 0.5% which is then taxed a disgraceful 41%, of course this is enticement for moving your money out of deposits and gamble it away in investments!

At a minimum I don't want my purchasing power to shrink, and of course it'd be great if I could build wealth! Why exactly are you investing yourself?
If I was a gambler I wouldn't leave most of my assets in deposit accounts as per stated now would I?

Nody wrote: »

Why do I say gamble? Because you admit yourself you're a total newbie and you're randomly throwing money at funds without knowing even the basics of them which is about as good as picking random lotto ticket numbers.

I did admit I am a total newbie (I hope you have nothing against noobs), this is precisely why I am asking questions and was interested in managed funds, trackers and advice from you guys.
Are you suggesting that well known trackers have as much chance to return positive results as lotto tickets?
I am not throwing money randomly, I am laying out the basis for a discussion by giving orders of magnitude so I know if I am totally off (which apparently I am according to you) or if I am not.

Nody wrote: »

I'll give you a hint, the stock markets have been going up for several years in a row now which means any fund which owns stocks are basically going to show positive growth and make people think they are stock geniuses because their value increase when in reality they had zero to do with the value increase or picking the right funds. Look at this graph of the last 20 years and tell me what you think is the likely direction for it to continue...

Yes so a fund indexed on S&P looks like a good long term investment (noob view point).

Nody wrote: »

So you are now randomly throwing a lot of money at funds without any clue of what's in them, how they operate or anything else and the only one responsible for this is YOU. No one forces you to invest, no one forces you to buy on the stock market and no one is going to give a damn when you lose 30% of that money in an upcoming crash because it is all YOUR responsibility. Would you give a random stranger down the street 10k EUR because he told you he had a great idea and 10% profit for the last 5 years? No? Then why are you doing it because they happen to call it a fund instead?

Is this clear enough? YOU are responsible for YOUR investments; not anyone else and it is YOUR job to read up on it rather than rely on a random message board to vet something that will easily lose you 30%+ of your investment. Are you ok with that? Are you ok with the value of your funds dropping down by over 10.000 EUR (and very possibly significantly more)? That your shares will be worth less then when you bought them?

Then you don't buy anything until YOU do understand it or you might as well start playing the lotto instead for all the good your "investment" will do you.

Indeed I wouldn't be happy losing 30% of my investments.

ixus

Market can only go up?
Shares are good value because they are at the same price 5/10 years ago?
Not prepared to lose 30%?
Don't know weightings of an indices biggest stocks?

My head hurts.

Currency exposure probably not being taken into account here either i.e. Nasdaq up but eurodollar down.

Don't think original poster should rush into anything.
Don't he/she should plough all money in at once.
Don't think should touch individual stocks.

VW could go to zero. Extreme scenario but it is a risk. State intervention diluting shareholder value.

Frogdog

OP, start educating yourself.

As mentioned above by a previous poster, start with some books - they gave you two good suggestions to read. Another one I'd recommend, if you're interested in investing long term into index funds (you mentioned the S&P 500 and a government bond fund already) is The Millionaire Teacher by Andrew Hallam. It seems that you'd be interested in something like that. It's also very easy to read and a great starting point for beginners.

Nody

LePrince wrote: »

My AIB deposit earned me 0.5% which is then taxed a disgraceful 41%, of course this is enticement for moving your money out of deposits and gamble it away in investments!

The thing is it does not matter what interest you'll earn because money on the bank will at best keep track with inflation (usually noticeably less) so don't take the current interest as some kind of reason to invest in stock. Either you want a better return than inflation (over time) which means you need to gamble (stocks is always a gamble; information only reduces the overall risk) and decide how much risk you are comfortable with.

At a minimum I don't want my purchasing power to shrink, and of course it'd be great if I could build wealth! Why exactly are you investing yourself?

Pension; I have no faith in the state providing me an acceptable pension (or the pension insurance companies once the 40s generation have fully retired and demand their full due) which puts my time line in the 30+ years view.

If I was a gambler I wouldn't leave most of my assets in deposit accounts as per stated now would I?

You can put down 1 eur in shares; that's still a gamble only with less financial risk at the end of the day.

I did admit I am a total newbie (I hope you have nothing against noobs), this is precisely why I am asking questions and was interested in managed funds, trackers and advice from you guys.

The only advice we can give you is to read up on the options out there to get an idea what you are comfortable with doing. There are a ton of books written on things such as value investment strategies, small investor strategies and esp. the chance vs. skill (in general it's chance that drives which funds go well rather than skill as shown by their over time performance being average to index at best). Until you do understand the differences of these, and the inherent risks, you are really only putting money on a number and spinning the wheel hoping for the best.

Are you suggesting that well known trackers have as much chance to return positive results as lotto tickets?

Over time trackers will beat pretty much every portfolio and fund (there are exceptions but very few and far between) and should be bought at the cheapest possible management fee out there (an index fund is fully computer managed so no excuse to pay significant for that).

Now here's the trick question, when's the best time to buy an index fond? When the stock market has gone up for 4 straight years and is closing in on it's peak or waiting a year or two for the expected crash? For your return over time the answer is intellectually easy as a buy low, sell high answer but no one knows when the peak is coming. People spoke about the crash to come in 2015, exchanges went up. Now the peak is suppose to come in 2016 instead but no one actually knows. So do you take the risk and buy an index fund now with the risk that it may drop 30% (or more) or do you wait and see but earn the pitiful 0.5% instead? Once again only you can answer that and only once you understand the financial impact the decision will have.

I am not throwing money randomly, I am laying out the basis for a discussion by giving orders of magnitude so I know if I am totally off (which apparently I am according to you) or if I am not.

You are talking to people on the internet who you do not know; we could all trying to nudge you for our own interest (reinforce our belief we are right by making you buy the same stuff, trying to sell you shares we're looking at getting rid off etc.). You are totally off because you do not have the knowledge to judge what you are being told is relevant advise (and that includes what I'm stating btw).

That is why you are gambling; you are trying to enter a game (and shares is very much a game; logic rarely holds a candle to the emotions and rumors going around and driving shares up and down) as a new player without knowing the rules going up against veterans with legions of people reading up on this stuff and trying to win (remember the golden rule; for every winner in a transaction there's a loser, if you don' know you're the winner you are the loser). You think you are taking a logical step and in a sense you are (you're trying to diversify) but you're in practice gambling because you are so far behind on knowing the rules and the impact it will have and here's the scary part; you will NEVER be on equal footing with the rest of the players. They have super computers with direct fiber connection sitting in the basement of the stock exchange doing trades in miliseconds on information you'll only get 15 min later; they have contacts into the companies (it's actually legal for the companies to invite firms to present their result as long as they don't share new information however they can for example stress certain parts of the presentation to drive home a message and you'll never be the wiser except that the guys there will make a killing before you even know it) and they hire the best mathematicians to try to calculate out trends spanning decades before you can spot them. In short you will never be as good as them; you will never know as much as them and you will never be able to play a fair game with them so don't try.

Yes so a fund indexed on S&P looks like a good long term investment (noob view point).

Among the easiest and best long (10+ years) investments on historical data, however what would happen if the big earthquake hit California? Or a new 911 with biological agents? Or the power plan in France went into meltdown? Historical performance gives you limited indication to future performance; it simply tells you what has already happened based on previous facts but does not say the future will be the same.

Indeed I wouldn't be happy losing 30% of my investments.

No one is happy to lose 30%; it's a question if you can afford to lose 30% or not. If not then shares are not for you; if you can't take to lose at least 30% of your investment shares is not recommended unless you're willing to look very long term (10+ years) and accept the risk is still there but reduced by going index funds and be ready that when you need the cash the funds will still sell at a loss (i.e. you need to be able to wait 5+ years to be relatively safe in an index fund to sell it at purchase price; can you lock away the money for 5+ years?).

If I take my own small portfolio at the moment with approx. 20 shares, 4 funds I'm in the red on 5 shares (in reality it should be 7 but I sold of some at a loss to cover the profit on other shares that I was not expecting to recover any time soon). Now my portfolio is still about 10 percentage units above the S&P500 this year and very black overall but I make no illusions about that's down to me having unique insight (I do have some things working for me such as I can invest in very small companies funds never can because buying into a 50MM company as a fund is not worth the return compared to investing in a 50 billion company). This is why I'm asking you if you can handle a loss or not because when the crash comes (and it always comes) I expect my portfolio will drop by at least 30% in value. Now over the next 20+ years I expect that loss to be regained and the value to increase well beyond it again but if I did not have those type of investment timelines it would not be feasible and there is always the risk I'll end up making a loss over time anyway but that's were risk vs. reward comes (I see the reward being high enough to justify the risk over the time period).