Pakenham & Warragul
All enquiries & appointments (03) 9067 6999
We offer an investor, who has a large enough portfolio (personally held or via superannuation), the ability to hold direct equities and have recommendations on stock selection made by professional analysts. Portfolio implementation and ongoing service and reviews are provided by Insight Wealth Partners in conjunction with the analytical research.
Why do we say “large enough portfolio”? When buying shares directly you need to consider buying “marketable parcels”. The analyst is also going to have stronger conviction on some shares than others. Therefore we may recommend you allocate more funds to one stock than another in your portfolio. Then ideally you should have a minimum of 10 to 12 stocks to have a diversified share portfolio. Australian shares should be one asset in your wider portfolio as diversification between asset classes further reduces risk.
So a portfolio has to be large enough to hold, say, 10 stocks as a minimum. The stocks must be in marketable parcels, let’s call $6000 a minimum marketable parcel with more preferred stocks in your portfolio in larger parcels. Finally the portfolio must be big enough to hold other asset classes such as Fixed Interest, International equities, cash and listed property.
Our strategy is to invest in businesses that will increase profit, and therefore shareholder value over the long term. Therefore we recommend that you hold shares as a long term investment. We do not guess short term market movements and do not do short term trades, considering these very high risk strategies that involve a lot of guesswork. Therefore portfolio transactions are kept to a minimum.
Controlling when to dispose of an asset and directly receiving your dividends and associated imputation credits gives direct equity holders some advantages in managing their tax liability but in our experience the greatest tangible benefit investors gain from owning their own shares is more involvement in their portfolio. All changes your adviser wishes to make must be authorised by you. This should lead to greater interest meaning greater knowledge develops. More knowledge generally results in greater confidence, less fear and better decisions. This allows direct equity holders a higher likelihood of being able to resist the urge to sell a whole portfolio as a result of panic during market downturns.
Prospective clients often ask “which gives a better return, owning your own shares or a managed share fund?” The truthful answer is “no one knows”. We base our recommendation to include direct equities in your portfolio on your desired level of interest, involvement and control.