Case Study: Self-Directed Investor, Retired

As the range of clients and investors incorporating XTBs into their portfolios continues to grow, we talk to some key clients about XTBs and why they find them beneficial in their portfolios.

Frank Gardiner, Retired – Victoria

“XTBs make perfect sense to me. They are a great way to access corporate bonds without having to open new accounts or buy in large amounts.” 

About Frank

“Since 1994 I have been focused on shares, but increasingly I think the impact of high frequency traders has left retail investors behind. I have made some good money in shares through buying and holding for the long term, increasing the size of my portfolio 10 fold over time. My objective now is to protect what I have made, I feel very bearish about the markets in the near future. I want to avoid risk in my portfolio as much as possible now I’m retired”.

“In my view when you retire you shouldn’t have shares you should be protecting what you have made. Investors should remember that your franking credits may or may not be there in the future.”


What attracted you to XTBs?

“Until recently I was invested 100% in shares. However I knew I wanted to protect what I’d made and fixed income was the way to do this.

I started researching bonds on YouTube and came across the range of XTB videos which gave me a clear explanation of how bonds work. Once I felt comfortable I started buying Australian Government Bonds (AGBs) on ASX and then I added corporate bonds with XTBs. I’m now 70% invested in AGBs and 30% corporate bonds, via a total of 10 bonds”.

What stood out to you about XTBs vs other fixed income solutions?

“My approach now is to be 100% in bonds. I hold some cash in a Cash Management Account and when my coupon payments have built up sufficiently I’ll use this cash to buy some more XTBs”.

“I want to be the banker now, rather than the shareholder. It’s a much safer way to invest – I don’t have to worry about share price volatility anymore.”

Lots of investors are really just gambling, bonds are far safer. You are a real investor when you are buying bonds”.

How did you approach selecting your XTBs?

“I am of the view that there will be a pull-back in share and property markets so I’m looking to protect what I’ve earned via shares.

I picked companies for my XTBs which I think will survive a recession. For example:

  • Telstra, I like as I think people will always need to make phone calls
  • Ausnet similarly, people will always need power
  • Vicinity, I feel they have solid land holdings and diversified business. I am very familiar with their Chadstone shopping centre.

I think Telstra have a lot of work to do on this business, but as a bond holder this doesn’t overly worry me. If I were holding their shares it would. But, by being on the debt side I’m only concerned with whether they will pay their coupons and return the face value at maturity. I feel confident that they will.”

How easy was it to purchase them?

“I previously used Commsec for trading shares, so I also used them for XTBs. It’s just like buying a share, very easy.”

What has been your experience of holding them so far?

“To date I’ve had a 12% capital return in 3 months (across my corporate and government bonds). But this is not a focus for me. My main reason for investing in bonds was to ensure that I got paid back and earned an income whilst I held the bonds. That’s why I focused on government bonds and top ASX companies with my XTBs.

Any additional returns will be a nice added bonus, but I intend to hold to maturity, so for me it’s all about the return of face value and the known income payments. As I receive interest over time through coupons I’m intending to reinvest this money into more bonds.”

Finally, any last comments

“XTBs make perfect sense to me. They are a great way to access corporate bonds without having to open new accounts or buy in large amounts. Not having additional paperwork was a major draw card for me. And the transparency of being able to see the bid and offer prices on my mobile phone gave me great comfort. It’s really no different to buying a share.”

Find out more about how to buy and sell XTBs

The views expressed in this case study are not necessarily the views of XTB.  The information in this article is general in nature. It should not be the sole source of information. It does not take into account the investment objectives or circumstances of any particular investor. You should consider, with or without advice from a professional adviser, whether an investment is appropriate to your circumstances. Australian Corporate Bond Company Limited is the Securities Manager of XTBs and will earn fees in connection with an investment in XTBs.

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