Author Topic: Aussie investor case study  (Read 462 times)

Sydneyinvest

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Aussie investor case study
« on: September 02, 2017, 04:04:07 AM »
Hi,

I had posted a question in the investment thread but seems more info would be helpful so, thought I would do a case study.

Mid 30s, partnered but all our money is separate. These are just my numbers. Pumping double cash into the mortgage ATM - likely have paid off in 7 ish years. Would like option to RE in about 15 years.

Job 1 = $4000 pm
Job 2 =$3600 pm * this is just until the end of the year - will then go back to about $6k per month.

Expenses
Mortgage repayments = 1200
Extra mortgage payments = 1200
Investments into Vanguard High growth =1000
Groceries = 400
Opal = 180
Union fees income protection etc = 80
Eating out = 250
Travel = 400
Christmas/gift fund = 200
Phone = 35 (this is for 2 phones on BYO plans - one work, one life)
Internet = 30
Netflix, Apple Music = 24

I have done optimising etc and all irregular yearly expenses such as rates, water, insurances, professional memberships etc workout to be $600 per month

Assets
House equity approx 100000
Vanguard fund 20000
Other shares - 26000 (all on DRP and take up SPPs when offered - Argo, tgg, gfl and rig)
Cash in offset -50000
Super - 120000

Liabilities
Mortgage - 190000 at 4%

So, questions are;
1. With putting 1k a month in is it worth swapping across to etf to save the 0.9 or stick with the managed fund - would be worried about capital gains etc on the vanguard?
2. Is there better ways of building share portfolio outside of super (will likely increase super to salary sac contributions when mortgage is done)?

Thanks!

Melody

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Re: Aussie investor case study
« Reply #1 on: November 12, 2017, 04:59:03 PM »
You will soon be earning $10k a month (i assume you mean after tax?) I think that puts you at about 160 before tax? On that wage i would look to maximise super contributions ($25k per year including employer contribution means you contribute circa $10k pre tax which works out to be about $500 a month reduction in taxable income.) There are ways you can combine this with "living on equity" property strategy to bridge the gap between ER and age 65 when you can access your super...
On $10k a month you could smash that $190k mortgage within 3 years easily if you wanted to... so this is largely a decision about weighing up forgone capital gains in the share market against the 4% interest rate on your property. If your job is secure the index fund makes more sense.... however be very careful about selling the funds you already have in order to lower your fee... you probably have a large latent capital gain on them and if you release this gain, you need to pay tax and will have less $$$ to reinvest. The reduction in asset base due to paying tax will likely have a more negative effect than the higher fee. If you are with VAS once your holdings hit a certain $$ amount you go to a more competitive wholesale rate anyway... so could be an argument to accelerate getting there quicker (and not keep doubling down on the mortgage until that target is reached). Either way you seem to be doing well. Good job.

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