Question: I have Ausdrill ASL (Paid $3.55), Grange Resources GRR ($0.36), Regis Resources RRL ($4.47), and Troy Resources RY ($1.485) in my SMSF in pension mode. I’m also wanting to get as much income as possible from my stocks. The stocks have gone down a lot and my broker recommended that I hold them. I have lost confidence in his advice. Have they gone down to far to sell off?
Answer (By Paul Rickard): I don’t know how big a proportion of your portfolio these stocks represent, nor your investment objectives. I know that you are in pension mode.
Legally, I can’t provide you with personal advice. That said, let me offer you the following comments:
a) None of those stocks (with the possible exception of Ausdrill) would be in my SMSF portfolio – particularly if I was in pension phase. I don’t like (for investment purposes) gold stocks or second tier iron ore producers;
b) According to FN Arena, broker sentiment (scale -1.0 most negative to +1.0 most positive) and consensus target prices are:
– ASL -0.2; $0.91
– GRR 0.0; $0.14
– TRY +1.0 (one broker only); $1.10
– RRL 0.1; $1.81
c) In reflecting on whether to keep a stock or not, what you paid for that stock is not relevant. I know it is hard to disregard – however in pension mode, you have no capital gains impacts to consider; and
d) If the same broker suggested you buy these stocks – then yes, I would probably sack him/her. If on the other hand, they are just advising you on the portfolio going forward, then they might be doing you a favour.
Question 2: I have 12 grandchildren, aged from two to 12 in three separate families. I don’t want the expense of setting up trusts for each of the three families, but I do want to buy them a long-term share that will help fund their tertiary studies. Any suggestions?
Answer (By Paul Rickard): If you are looking for suggestions around how to do it, you might like to review a couple of articles [1] we published on this (see links attached [2]). Insurance bonds may also be a good alternative.
Please let me know if you need any further help in regard to the shares.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.