There is a saying ‘horses for courses’. Different people have...

There is a saying ‘horses for courses’.

Different people have different needs when it comes to investing.

Some people need to work their money ‘hard’ to achieve their goals….whether that be having an adequate income to live off in retirement (maybe they couldn’t afford to add any/much to their super during their working life, or they had to leave work earlier than they planned, due to health reasons or redundancy….or maybe they’re young and you’ve saving madly for a house deposit (whilst the price of housing keeps rising).

Other people may have been fortunate in life (good education/job, sale of a successful business, large inheritance or diligent and consistent investing from an early age for example). These people, in retirement, may not need to work their money as hard, but also appreciate safety through diversification, a consistent and reliable income and minimal hassles when it comes to record keeping and taxation.

It’s this latter group of people who are the likely holders of stocks like AFIC, who can pretty much sit back, relax, and enjoy a consistent flow of dividends year to year, with minimal paperwork and uber simple tax obligations. This simplicity regarding record keeping and taxation obligations also makes LICs like AFIC great for estate planning purposes, where one partner manages the finances and the other takes little or no interest, but needs to come to grips with things when their loved one is no longer around. Just visit one of the annual shareholder’s information meetings or AGM and you’ll quickly get an idea of the shareholder demographics.

So I don’t really think there’s a ‘one size fits all’ answer as to whether LICs or ETFs are the way to go. It depends on individual circumstances.