@Red_Gold - I have an allocation of 40/40/20 Aussie/International/Bonds. I intend to retire with a cash buffer of 50k as well.
I invest only in VAS, VGS & VAF outside of super. I split my super into the right combination of international and Aussie indexes available to me. I want to hold all my bonds and cash outside of Super.
I'm not a fan of relying on dividends.
Thanks for your reply. Couple of questions: what are your reasons for not taking the dividend route? What is your plan for withdrawing funds in retirement prior to accessing super? Will you live off cash reserve, then sell bonds to replenish it and sell stocks in turn to re balance your portfolio?
I think focusing on dividends:-
1. Requires too much work. If you choose to pick individual stocks you have to research the stocks.
2. Will suffer from pushing you towards buying assets that may under perform. If you buy individual stocks those stocks may under perform. If you pick an ETF the ETF may under perform.
3. Mightn't work going forward. Dividends have worked great due to tax benefits. If those benefits go (which is already being talked about) then the advantage may disapear.
Basically I think the best option is to just stick to the average because the average will beat 95% of investors.
My draw down strategy is to use firstly cash which includes dividends and interest, then sell bonds and then sell stocks. I don't intend to re-balance but would consider it if I have a tonne of bonds/cash and the market has crashed. So I will probably end up 100% stocks at some point. If stocks do increase significantly I will also probably sell off some stocks to get cash/bonds but again I have no real plan for this.
I also think my cash reserves are listed above at too high a level for me personally and I'm going to go for 20k not 50k. The reason being is that I will have 6 months wages when I quit due to long service leave. I think 6 months wages plus 20k should last me 2 years without drawing down on my portfolio.