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Real returns through active management of your money

A plethora of money managers can put together a portfolio of stocks from the ASX 200, tell you everything is splendid and safe and that you don’t have to worry.

Then you are charged fees, both up front and ongoing. Soon after, you’re forgotten.

Twelve months pass and you find there has been very little active management of your money, but very attentive and regular deduction of fees.

I have found my busiest times are when I have to jump on the phones all day, be available and communicate with my clients because the market is falling. The average investor and adviser are either hiding under their desk or have gone to lunch and decided not to return until tomorrow.

Funnily enough, I find everyone is a genius and available as the market rises. But for real returns, you need something different.

Your portfolio may well have plenty of ANZ, Telstra and BHP, all paying great dividends and in all likelihood providing excellent returns over the next few years.

Were you paying attention when BHP did their latest share buy back? And perhaps you bought plenty more Telstra last year during crisis number 4, when they were paying 15% fully franked over a 13 month period…. yes, 20% grossed up.

Many didn’t, as their adviser told them to hide in cash and even sell their quality equity holdings at the bottom of the market.

Since then these stocks have rallied 10 to 30% and paid over 7% of fully franked dividends – equivalent to several years return on a cash investment, in a little over 6 months.

The resource sector has underperformed dramatically over the last 12 months. However if you had only 2% of your portfolio (20K exposure of a million dollar portfolio) in one of the great emerging shale gas stocks, you would have enjoyed a significant return as they then rose between 200 and 500% over recent months.

Depending on which one you were in, this more than made up for the short term under performance in some of our big names.

We have just been through the toughest five years that even the oldest and most pessimistic broker I can find (aged 83) can remember.

The next five years will be better than the last five and with the ASX 200 yielding over 5% fully franked with the index at 4,000, once we muddle through this crisis (Euro zone or no Euro zone) equities will prove to be the best performing asset class over the longer term. As always.

Just make sure you have plenty of help from advisers that are interested in you, paying close attention to what you want and need. If you haven’t heard from your adviser for a while please give me a call, to chat with me and my team of professionals, each with more than 20 years experience.

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