Hi Travelbug,
I reckon anyone who recommends individual investments should be ignored, myself included! At the end of the day, no-one knows what the future market will do, and my crystal ball is as equally broken as everyone else's!
However, happy to describe my current position, and my logic for it:
Total in the market: $772,000
Margin loan: $460,000
Annual dividends: just under $40,000, including $9,500 of franking credits and about $2,000 of tax deferred income.
My current allocation is:
Direct Australian shares. Mostly ASX50 stocks and REITS, 50%. Basically, each time I bought a stock, I bought the largest cap stock that I didn't already own. My individual stocks are ANZ, BHP, CBA, CPU, CSL, DXS, GOZ, GPT, MQG, MTS, NAB, ORG, QBE, RIO, SGP, SOL, TLS, WBC, WDC, WES, WOW, WPL
Australian managed investments (managed funds, ETFs, LICs). 23%. All currently in LICs. I used to use ETFs, but from what I can see, the track record of the LICs in Australia is better, the cost of management lower, and the dividends slightly more tax efficient (for me). At the time I was buying into them, the LIC's were also trading well below the value of the stocks they hold. However, they are tracking closer to asset value now.
International shares. I hold these through ETFs, 9% in US shares (IVV and VTS) and 17% in rest of world (VEU).
I'm not really hoping to beat the market, but rather to keep a diversified exposure to it. The 40k/year pre tax is also probably enough for me to live off, if I were able to pay off the margin debt and quit work. However, I'm still 30, and mostly enjoying my job, so still accumulating for now.
Best of luck with whatever you choose to do. Just if you do go down the stock path, try not to obsess about the daily change - many days see my stock values rise or fall by in excess of $10,000 in a single day. I'd be better off if I just ignored that and watched the dividends collect / reinvest.
