Author Topic: Australian Investing Thread  (Read 789265 times)

dungoofed

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Re: Australian Investing Thread
« Reply #1500 on: November 21, 2015, 11:10:32 PM »

hodgeyhodgey

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Re: Australian Investing Thread
« Reply #1501 on: November 23, 2015, 01:41:41 AM »
Its up to you. Personally I wouldn't purchase a LIC if it was trading at above market value. I would then just put it all into VAS.
I agree (think steveo means NAV/NTA, not market value), the past few months AFI has been 7% premium to NAV. It's a substantial premium. Just be aware you are paying 7% more than the underlying asset backing. And the dividend is being diluted by 7% (e.g. 0.3-0.4% less, maybe that's small but not negligible we often squabble about much smaller fee differentials). ARG has been even worse, up to 10% over NAV lately.

As Marty mentioned, AFI and ARG both have solid long-term reputations, so you could ignore this entry level issue and take the long view. Personally though I would prefer the index ETF over a LIC trading at premium. If you are patient to wait for those times when they are at discounts then obviously much more attractive in that case, but it doesn't come up so often lately.

The current premium is the reason for my indecision. I know I can wait it out and hope to buy at a discount, but I feel that I will be trying to 'time the market' more than anything which really goes against the principle of passive investing.
Completely your call to decide. If you're intent is passive investment, yes market timing is not really consistent with that. Perhaps consider the split approach over the long term. e.g At times when LIC's are at >0% premium to NTA (or maybe 2% or some other tolerance you might be willing to accept), buy VAS. Otherwise, buy the LIC.

That seems like a fair approach, I guess there will always be other opportunities to purchase LICs when they're trading at a discount.

On that note though, thoughts on VAS or VHY? Any preference?

steveo

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Re: Australian Investing Thread
« Reply #1502 on: November 23, 2015, 04:42:07 AM »
Any thoughts on the etf option vs the index option. I just checked the index vs etf option and on 500k the index option is about $850 extra in costs per year. That is a lot of money but does anyone know how much easier the index option is over the etf. Its definitely much more diversified.

The home loan is getting close to being paid off so I'm about to start saving into non-super investment options.

Any feedback on this question. Does the managed fund option have certain advantages over the ETF ?

steveo

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Re: Australian Investing Thread
« Reply #1503 on: November 23, 2015, 04:43:00 AM »
On that note though, thoughts on VAS or VHY? Any preference?

I prefer VAS simply because there are lower fees.

dungoofed

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Re: Australian Investing Thread
« Reply #1504 on: November 23, 2015, 01:50:32 PM »
Any thoughts on the etf option vs the index option. I just checked the index vs etf option and on 500k the index option is about $850 extra in costs per year. That is a lot of money but does anyone know how much easier the index option is over the etf. Its definitely much more diversified.

The home loan is getting close to being paid off so I'm about to start saving into non-super investment options.

Any feedback on this question. Does the managed fund option have certain advantages over the ETF ?

Hi Steveo - I think the managed fund is better for people doing more regular contributions, of smaller amounts, as there is no brokerage. If you were paying brokerage on every trade you'd be going backwards.

Check out here:

http://forum.mrmoneymustache.com/investor-alley/etf-of-index-mutual-fund-help-me-decide-%28aus%29/

(you replied in this thread too! lol)

Lots of good advice, in particular from qwerty. And I seem to recall the question coming up in this very thread before too heh. Maybe it's time we put together that Bogleheads Wiki page for Australia... ;)

The only things I'd add to that thread are 1) you're looking to invest using taxable accounts. I'm not sure how things like distributions are handled with the Vanguard fund - maybe someone else could comment; and 2) one thing I can't comment on is how does Vanguard handle reducing its fees on the ETF vs the fund. We've seen Vanguard has a commitment to passing on savings to customers arising from economies of scale, but I haven't seen how this plays out with their managed funds. Further on down the track Vanguard funds may indeed have a lower MER than the ETFs. Having said that, if you're investing any decent amount of money (>$5000 at a time), and are in it for the long term, then I'd take the lower fee now and go with the ETFs.

dungoofed

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Re: Australian Investing Thread
« Reply #1505 on: November 23, 2015, 02:09:04 PM »
On that note though, thoughts on VAS or VHY? Any preference?

I prefer VAS simply because there are lower fees.

Same. Anything beyond that requires you to take a view of the market.

If you're purchasing in a taxable account, VHY tends to yield more (triggering taxable events), but also has a higher level of franking. If you're in a low tax bracket then this may not matter too much.

VAS should give you greater capital gains in the long run.

People have pointed out that VHY may be overvalued at the moment when compared to VAS, due to the hunt for yield in the current low rate environment. Retirees looking for income-yielding investments are taking on more risk in order to have a steady income stream to fund their lifestyle.

steveo

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Re: Australian Investing Thread
« Reply #1506 on: November 23, 2015, 02:43:07 PM »
Any thoughts on the etf option vs the index option. I just checked the index vs etf option and on 500k the index option is about $850 extra in costs per year. That is a lot of money but does anyone know how much easier the index option is over the etf. Its definitely much more diversified.

The home loan is getting close to being paid off so I'm about to start saving into non-super investment options.

Any feedback on this question. Does the managed fund option have certain advantages over the ETF ?

Hi Steveo - I think the managed fund is better for people doing more regular contributions, of smaller amounts, as there is no brokerage. If you were paying brokerage on every trade you'd be going backwards.

Check out here:

http://forum.mrmoneymustache.com/investor-alley/etf-of-index-mutual-fund-help-me-decide-%28aus%29/

(you replied in this thread too! lol)

Lots of good advice, in particular from qwerty. And I seem to recall the question coming up in this very thread before too heh. Maybe it's time we put together that Bogleheads Wiki page for Australia... ;)

The only things I'd add to that thread are 1) you're looking to invest using taxable accounts. I'm not sure how things like distributions are handled with the Vanguard fund - maybe someone else could comment; and 2) one thing I can't comment on is how does Vanguard handle reducing its fees on the ETF vs the fund. We've seen Vanguard has a commitment to passing on savings to customers arising from economies of scale, but I haven't seen how this plays out with their managed funds. Further on down the track Vanguard funds may indeed have a lower MER than the ETFs. Having said that, if you're investing any decent amount of money (>$5000 at a time), and are in it for the long term, then I'd take the lower fee now and go with the ETFs.

Thanks for the comments. I'm struggling with this question right now.

I basically like the ease of regular investing into the managed fund but I would rather get the lower fee within the wholesale fund. I also like the diversification and asset allocation which I don't have to think about it. With regards to the ETF's I like the lower fees.

If I choose to invest in the ETF option I would probably buy once per year. If I go with the managed fund I would invest regularly after having enough to invest into the wholesale option.

I suppose they are both good choices.

dungoofed

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Re: Australian Investing Thread
« Reply #1507 on: November 23, 2015, 03:02:34 PM »
I don't think you'd need to limit it to once a year for the ETF route in order for the savings to make sense. If you invest in clips of $5000 then the fee is negligible. But up to you.

Sparkie

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Re: Australian Investing Thread
« Reply #1508 on: November 23, 2015, 05:17:01 PM »
Im using a wholesale fund becaue I don't trust myself to rebalance appropriately using etf's. I can bsb in amounts willy nilly. I think I'm right in saying the tax implications are easier to keep track of. Vanguard just gives me a printed summary for my tax return and I copy it in. CGT calculations on every drp and top up are done for me (I hope!). 

Assuming I'm correct with my assumptions, its worth a little bit extra in fees to have it all done.

steveo

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Re: Australian Investing Thread
« Reply #1509 on: November 23, 2015, 07:14:50 PM »
Thanks for those points above. It is a tough decision. One minute I lean towards the ETFs and the other towards the fund.

povertystrickenbastard

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Re: Australian Investing Thread
« Reply #1510 on: November 24, 2015, 01:20:26 PM »
I use my margin loan, that way I only need to put in $1500 to buy a $5000 lot of ETF shares and I pay money off the loan each fortnight as I get paid to keep my LVR heading south.  The interest is tax deductible and covered by the distribution payments.  It is definitely a riskier approach, which I don't mind.  It would take way too long between purchases for me to wait until I had $5K of my own money to invest.

FFA

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Re: Australian Investing Thread
« Reply #1511 on: November 25, 2015, 04:10:14 AM »
interesting excerpt from glenn stevens speech yday entitled "The long run " ... perhaps worth considering when deciding on your SWR assumption

Quote
In a low interest rate world, the problems of providing retirement incomes will become ever more prominent. The very low level of yields on fixed income assets means that it is very expensive today to purchase a secure stream of future income, which is what someone who is retiring is usually seeking. And there are more of such people, living longer.

The retiree can of course respond to this by holding more of her portfolio in dividend-paying stocks – accepting more risk. She may hope for a dividend stream that is fairly stable from year to year but that tends to grow over time. It certainly seems that many Australian listed corporates feel the pressure from shareholders to deliver that, even some whose earnings are inherently volatile.

Can the corporate sector realistically promise growing dividends over a long period? Not without being prepared to take the risk on investment in new products, processes and markets. How much of that risk an older shareholder base will allow boards and managements of listed entities to take is an important question.

Overall, in a world where a higher proportion of the population wants to be retired and living (even if only in part) off the return on their savings, those returns are likely, all other things equal, to be lower. Part and parcel of the same adjustment may be higher real wages for the smaller proportion of the population that is working. These changes, driven by demographics, may require some adjustment to our collective thinking about what is ‘normal’, not just for rates of return on assets but also for returns to labour.

misterhorsey

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Re: Australian Investing Thread
« Reply #1512 on: November 25, 2015, 03:15:46 PM »
Thanks for those points above. It is a tough decision. One minute I lean towards the ETFs and the other towards the fund.

I had the same decision to make this time last year and I went with the Fund over ETFs.  It's been good, but I've been meaning to share some of my experiences back to the forum.  I'll type them over the next few days.


dungoofed

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Re: Australian Investing Thread
« Reply #1513 on: November 25, 2015, 04:13:22 PM »
interesting excerpt from glenn stevens speech yday entitled "The long run " ... perhaps worth considering when deciding on your SWR assumption

Quote
In a low interest rate world, the problems of providing retirement incomes will become ever more prominent. The very low level of yields on fixed income assets means that it is very expensive today to purchase a secure stream of future income, which is what someone who is retiring is usually seeking. And there are more of such people, living longer.

The retiree can of course respond to this by holding more of her portfolio in dividend-paying stocks – accepting more risk. She may hope for a dividend stream that is fairly stable from year to year but that tends to grow over time. It certainly seems that many Australian listed corporates feel the pressure from shareholders to deliver that, even some whose earnings are inherently volatile.

Can the corporate sector realistically promise growing dividends over a long period? Not without being prepared to take the risk on investment in new products, processes and markets. How much of that risk an older shareholder base will allow boards and managements of listed entities to take is an important question.

Overall, in a world where a higher proportion of the population wants to be retired and living (even if only in part) off the return on their savings, those returns are likely, all other things equal, to be lower. Part and parcel of the same adjustment may be higher real wages for the smaller proportion of the population that is working. These changes, driven by demographics, may require some adjustment to our collective thinking about what is ‘normal’, not just for rates of return on assets but also for returns to labour.

Not sure that I agree with the conclusion. If that were the end of the story I'd agree, but the story doesn't end there. With pensioners pulling out of fixed income products, the price of those products drop and they become a relative bargain again.

steveo

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Re: Australian Investing Thread
« Reply #1514 on: November 25, 2015, 09:10:04 PM »
Thanks for those points above. It is a tough decision. One minute I lean towards the ETFs and the other towards the fund.

I had the same decision to make this time last year and I went with the Fund over ETFs.  It's been good, but I've been meaning to share some of my experiences back to the forum.  I'll type them over the next few days.

I'll be waiting for this. Its extremely relevant to me right now.

FFA

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Re: Australian Investing Thread
« Reply #1515 on: November 25, 2015, 09:55:58 PM »
i'm doing the etf's, but if I had my time over i'd probably take the wholesale fund (assuming you have the 100k minimum threshold). the fee difference is negligible and I think the hands-off top ups via direct debit would promote consistency and discipline. I find hands on execution involves ongoing temptation to stray from plan :)

povertystrickenbastard

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Re: Australian Investing Thread
« Reply #1516 on: November 27, 2015, 02:47:10 PM »
Just reading about SGH (Slater & Gordon) which is down 90% since June.  When you see that and also what's happening with BHP and WOW it's a sharp reminder to me of why I don't try to pick individual stocks.

marty998

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Re: Australian Investing Thread
« Reply #1517 on: November 27, 2015, 03:46:58 PM »
SGH was dodgy from the get go.

They paid too much for the acquisition of their UK business and their accounting treatment of revenue was very difficult for a lay person to understand. It involved some creative estimates of WIP (work in progress) on client files.

I'm sure they're a great bunch of lawyers but it's patently obvious running a private partnership is vastly different to running a listed company.


cakie

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Re: Australian Investing Thread
« Reply #1518 on: November 27, 2015, 06:04:41 PM »
Thanks for those points above. It is a tough decision. One minute I lean towards the ETFs and the other towards the fund.

I had the same decision to make this time last year and I went with the Fund over ETFs.  It's been good, but I've been meaning to share some of my experiences back to the forum.  I'll type them over the next few days.

I picked ETFs, but then I am happy with my AA and I know we will stick with it. We have been buying $5k of an ETF every month so far, but we had expected originally to only invest once a quarter (unexpected extra salary).

The big downside at the moment is that we won't have properly balance portfolio (all ETFs within +/-5% of target allocation) until we have about $50k invested. Our original $6k purchase was properly balanced though, because we had our first month brokerage free (Westpac). We bought in $1k lots! :)

FFA

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Re: Australian Investing Thread
« Reply #1519 on: November 27, 2015, 06:37:11 PM »
Just reading about SGH (Slater & Gordon) which is down 90% since June.  When you see that and also what's happening with BHP and WOW it's a sharp reminder to me of why I don't try to pick individual stocks.

overall I agree, but just for a moment to take the other perspective ....

- SGH I'm pretty certain I would have no exposure if I was only a direct investor. However thanks to my VAS and IOZ, I have a taken very small piece of that 90% fall.

- BHP, the company itself has been publicly warning the good times are over for at least a few years. I reckon one of the key strategies of nearly all active managers to beat the ASX index in recent years is to be underweight BHP and other resource sector. Perhaps there might be a good chance you take more of a hit as an index investor.

- WOW, perhaps a bit more tricky case, due to the company's strong track record and reputation. Again the warning signs have been there for a while, so plenty of opportunity to get out it early if spotted and ( an even bigger IF ) you had the discipline. But I think many more would fall for this value trap and buy more as it falls.

Now having said all that, I'm far from perfect... I was questioning my WOW and had posted some months earlier asking for views. Decided then to hang on and watch it fall further, before finally pulled the tigger on my WOW holding recently. BHP I'm also guilty of buying a cheeky (unplanned) parcel because it looked cheap and the enticing yield....... So yes as I said in the beginning, overall I do agree the index is probably a safer way :)

TB_J

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Re: Australian Investing Thread
« Reply #1520 on: November 29, 2015, 09:36:03 PM »
Adding more to the VAS stash today on some nice volatility. Bid filled easily at $66.26

dungoofed

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Re: Australian Investing Thread
« Reply #1521 on: December 01, 2015, 05:10:09 AM »
I think 2015 will go down as the year ETFs came of age in Australia. Admittedly not too much of interest for your average buy-and-hold investor but more competition in this space is always a good thing. About 15 new ETFs this year already, and the following planned from Vanguard:

https://www.vanguardinvestments.com.au/au/portal/articles/insights/pressroom/Vanguard-to-offer-international-fixed-and-regional-equity-ETFs.jsp

Vanguard International Fixed Interest Index (Hedged) Index ETF: VIF
Vanguard International Credit Securities Index (Hedged) ETF: VCF
Vanguard FTSE Europe Shares ETF: VEQ
Vanguard FTSE Asia ex Japan Shares Index ETF: VAE

Also of interest was the Vanguard Outstanding ETF Securities Announcement that you should have access to if you hold any Vanguard ETFs. My takeaways are:

1) Australians prefer to chase yield of VAF over the safety of VGB.
2) High yield stocks are possibly overbought
3) Australians like their international unhedged (VGS vs VGAS. I'd wager this is due to recency bias and chasing returns from a strong USD)

Some fair contrarian plays in there but nothing high-conviction.

TB_J

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Re: Australian Investing Thread
« Reply #1522 on: December 02, 2015, 08:46:30 PM »
I think 2015 will go down as the year ETFs came of age in Australia. Admittedly not too much of interest for your average buy-and-hold investor but more competition in this space is always a good thing. About 15 new ETFs this year already, and the following planned from Vanguard:

https://www.vanguardinvestments.com.au/au/portal/articles/insights/pressroom/Vanguard-to-offer-international-fixed-and-regional-equity-ETFs.jsp

Vanguard International Fixed Interest Index (Hedged) Index ETF: VIF
Vanguard International Credit Securities Index (Hedged) ETF: VCF
Vanguard FTSE Europe Shares ETF: VEQ
Vanguard FTSE Asia ex Japan Shares Index ETF: VAE

Also of interest was the Vanguard Outstanding ETF Securities Announcement that you should have access to if you hold any Vanguard ETFs. My takeaways are:

1) Australians prefer to chase yield of VAF over the safety of VGB.
2) High yield stocks are possibly overbought
3) Australians like their international unhedged (VGS vs VGAS. I'd wager this is due to recency bias and chasing returns from a strong USD)

Some fair contrarian plays in there but nothing high-conviction.

Interesting new funds there.

Is anyone here rolling with a simple 50/50 VAS-VGS strategy? & Does anyone use the FTSE Emerging Markets ETF? Expense ratio is 0.48% ...seems very steep!

AustralianMustachio

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Re: Australian Investing Thread
« Reply #1523 on: December 08, 2015, 05:24:54 AM »
Westpac has a new online investment loan (margin loan) at what seems like a very low rate - 4.7% if prepaid. Even the variable rate seems a good 1.5% lower than any competitor I can find. Would appreciate anyone's thoughts on this - am I missing something here? Or are they just doing it because they hope then you will stay on as an online customer, thus attracting more online broking business?

http://www.westpac.com.au/personal-banking/investments/loans/investment-loan/#s3

You link the loan to an online brokerage account with them and can get up to $1000 free brokerage for the first two months, which is also a great deal.

The downside is the list of approved securities is much smaller than other margin loans, but pretty much every vanguard ETF is on the list. I'm not a big fan of leverage but am considering using it on a very small portion. Probably about 10-15% LVR max.

Considering you can get ETFs or LICs of the ASX yielding around 4-4.5% fully franked at the moment, it would be more than paying for itself from the beginning. If the market goes up, which I tend to think it might from where it is right now, you get geared exposure to that capital growth. Of course if it crashes, you get geared exposure to that too. Considering the current levels of the ASX, I'm tempted. Someone please point out any catches here!
« Last Edit: December 08, 2015, 05:27:01 AM by AustralianMustachio »

Northern gal

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Re: Australian Investing Thread
« Reply #1524 on: December 08, 2015, 02:48:17 PM »
interesting excerpt from glenn stevens speech yday entitled "The long run " ... perhaps worth considering when deciding on your SWR assumption

Quote
In a low interest rate world, the problems of providing retirement incomes will become ever more prominent. The very low level of yields on fixed income assets means that it is very expensive today to purchase a secure stream of future income, which is what someone who is retiring is usually seeking. And there are more of such people, living longer.

The retiree can of course respond to this by holding more of her portfolio in dividend-paying stocks – accepting more risk. She may hope for a dividend stream that is fairly stable from year to year but that tends to grow over time. It certainly seems that many Australian listed corporates feel the pressure from shareholders to deliver that, even some whose earnings are inherently volatile.

Can the corporate sector realistically promise growing dividends over a long period? Not without being prepared to take the risk on investment in new products, processes and markets. How much of that risk an older shareholder base will allow boards and managements of listed entities to take is an important question.

Overall, in a world where a higher proportion of the population wants to be retired and living (even if only in part) off the return on their savings, those returns are likely, all other things equal, to be lower. Part and parcel of the same adjustment may be higher real wages for the smaller proportion of the population that is working. These changes, driven by demographics, may require some adjustment to our collective thinking about what is ‘normal’, not just for rates of return on assets but also for returns to labour.

Food for thought. Thanks for sharing! I would have never bothered to actually read what Stevens said other than skim read for hints of future rate cuts.
« Last Edit: December 08, 2015, 02:52:59 PM by Norgirl »

dungoofed

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Re: Australian Investing Thread
« Reply #1525 on: December 08, 2015, 02:52:22 PM »
Is anyone here rolling with a simple 50/50 VAS-VGS strategy? & Does anyone use the FTSE Emerging Markets ETF? Expense ratio is 0.48% ...seems very steep!

I spread my equity holdings primarily across VAS, VGS and VGE. VGE is expensive but it is fairly uncorrelated with the other two.

In other news, was wondering whether anyone knows if the Vanguard offerings in Australia are shielded from the court case taking place in the US?

physiostudent

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Re: Australian Investing Thread
« Reply #1526 on: December 08, 2015, 05:17:46 PM »
I'm currently a 19 year old university student living in Melbourne. I have around AUS$10k lying around and was wondering if anybody could point me in the right direction in terms of beginning to invest.

Also, do I leave my student HECS debt alone or should I pay it off ASAP?

Any help would be appreciated.
« Last Edit: December 08, 2015, 05:36:54 PM by physiostudent »

englyn

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Re: Australian Investing Thread
« Reply #1527 on: December 08, 2015, 08:49:21 PM »
Welcome, physiostudent! as a good solid intro, you could do much worse than reading Scott Pape's website The Barefoot Investor. Bear in mind that the ETF versions of his favourites AFIC and Argo are trading above NTA at the moment - ie they're selling for more than their underlying assets are worth - they're good buys when they're trading near NTA. Vanguard funds are what's usually recommended around here but may require more of your attention.
Also, traditional wisdom has it that if you may need the money in the next 5 years, an investment may not be the way to go.

BattlaP

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Re: Australian Investing Thread
« Reply #1528 on: December 08, 2015, 09:16:11 PM »
Westpac has a new online investment loan (margin loan) at what seems like a very low rate - 4.7% if prepaid. Even the variable rate seems a good 1.5% lower than any competitor I can find. Would appreciate anyone's thoughts on this - am I missing something here? Or are they just doing it because they hope then you will stay on as an online customer, thus attracting more online broking business?

http://www.westpac.com.au/personal-banking/investments/loans/investment-loan/#s3

You link the loan to an online brokerage account with them and can get up to $1000 free brokerage for the first two months, which is also a great deal.

The downside is the list of approved securities is much smaller than other margin loans, but pretty much every vanguard ETF is on the list. I'm not a big fan of leverage but am considering using it on a very small portion. Probably about 10-15% LVR max.

Considering you can get ETFs or LICs of the ASX yielding around 4-4.5% fully franked at the moment, it would be more than paying for itself from the beginning. If the market goes up, which I tend to think it might from where it is right now, you get geared exposure to that capital growth. Of course if it crashes, you get geared exposure to that too. Considering the current levels of the ASX, I'm tempted. Someone please point out any catches here!

I'd be interested in a close reading of this offer too, I've got a lot of cash sitting around at the moment and at these rates I may be willing to dip my toe into leveraging.

micase

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Re: Australian Investing Thread
« Reply #1529 on: December 08, 2015, 09:50:17 PM »
I'm currently a 19 year old university student living in Melbourne. I have around AUS$10k lying around and was wondering if anybody could point me in the right direction in terms of beginning to invest.

Also, do I leave my student HECS debt alone or should I pay it off ASAP?

Any help would be appreciated.

As it is indexed towards inflation only, your HECS debt will be one of the lowest rated loans you will ever have.  I am in a situation where I could pay off my HECS debt completely but would rather collect the interest on that money and pay it off slowly through contributions from my wage.

As for investing the 10k you have, I would simply leave it in a high interest savings account.  The world is your oyster and if I was you I wouldn't want to have my money tied up in shares with the risk that you might need it for something like and overseas trip and find you have to sell at a loss.  Like what englyn said, if there is a chance you will need that money in the coming years then avoid any risky investments.

chasingthegoodlife

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Re: Australian Investing Thread
« Reply #1530 on: December 09, 2015, 04:45:55 AM »
TB_J - I am also doing a simple VAS/VGS split but more heavily weighted to VAS, around 70/30 . Have briefly considered adding the emerging markets ETF also but will do a bit more research into it first. I want to keep things as simple as possible.

Physio-Student - I am 32 and still paying HECS on my bachelors and masters. My thought process initially was this: You will never be able to get credit on these terms again. You have borrowed money with no interest aside from CPI adjustment, and if you lose your job or take time off for travel etc your repayments are helpfully suspended without penalty until you are earning a decent salary again. So I thought I was better off letting HECs run and building up some cash reserves with a high interest rate savings acct (rates were good back then). Then when I got a mortgage I did the sums and confirmed I was better off putting any spare cash towards the higher interest housing loan instead.

Of course, if it bothers you, feel free to pay it off right away. You may be motivated to pay more than if you were saving towards some non-specific goal. Just make sure you take advantage of any early repayment or pay up front discounts.

Micase has a good point about not tying any money up in shares if you think you might need it in the next few years (housing deposit?). But if you are interested in investing it can be nice to have a 'finger in the pie' and be able to watch your portfolio growing with the market. Maybe you could consider investing half the money in the sharemarket and keeping the other half in something more liquid such as a term deposit or high interest savings account.

Good luck!


Rustycage

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Re: Australian Investing Thread
« Reply #1531 on: December 10, 2015, 10:31:41 PM »
In terms of Emerging Markets ETFs, I do believe that the Vanguard option is cheaper than the comparable product of competitors.

I'm quite chuffed to see that Vanguard are now offering international fixed interest securities ETFs! (govt and corporate)

I find it quite funny given I sent Vanguard an email around 3 months ago making a suggestion that something similar should be introduced, and the response was "we have new products coming online soon but nothing like you have suggested". But that's pretty much what I suggested hehe (not taking credit at all here)

povertystrickenbastard

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Re: Australian Investing Thread
« Reply #1532 on: December 11, 2015, 03:07:56 PM »
This is getting depressing. What day does the Santa Rally start?

chasingthegoodlife

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Re: Australian Investing Thread
« Reply #1533 on: December 11, 2015, 09:47:44 PM »
Breathe, stop checking your brokerage account and think long-term? 

povertystrickenbastard

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Re: Australian Investing Thread
« Reply #1534 on: December 12, 2015, 12:51:58 AM »
Breathe, stop checking your brokerage account and think long-term? 

I can't help it mate.  I even check my super account every day haha.  I can ride it out ok, just like to whine about it while I'm doing it :)

FFA

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Re: Australian Investing Thread
« Reply #1535 on: December 12, 2015, 04:31:17 AM »
Santa's in no rush this time....... and it's unlikely to be Monday either since s&p was down 2% on Friday night. Maybe after fed lift off (??) If Yellen can borrow some of Bernanke's old scriptbook which seemed quite effective at igniting the market   [ just my guess, highly likely to be wrong !]


DrowsyBee

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Re: Australian Investing Thread
« Reply #1537 on: December 13, 2015, 05:05:06 PM »
Between the US Federal Reserve meeting this week and the MYEFO announcement tomorrow, is anyone else expecting this week to be a bit of a bloodbath?

FFA

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Re: Australian Investing Thread
« Reply #1538 on: December 13, 2015, 05:53:25 PM »
yes I expect a choppy week, whether "bloodbath" or buying opportunity" is in the eye of the beholder :)

misterhorsey

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Re: Australian Investing Thread
« Reply #1539 on: December 13, 2015, 07:15:04 PM »
http://beta.smh.com.au/money/david-potts-final-fling-last-words-on-super-sharemarket-mortgages-and-tax-20151210-glk52j.html

David Potts summarised what I really struggle to get my head around.

It's hard to beat the returns of from paying off a mortgage on a PPR, when taking into account the tax treatment.

But what to do when you have no mortgage and house prices seem rather expensive.  Surely buying into an overpriced asset would undermine any extra returns from this strategy?  (It's also affected by your life stage as well I guess.  I'm almost 40)

Television

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Re: Australian Investing Thread
« Reply #1540 on: December 14, 2015, 04:39:30 AM »
http://beta.smh.com.au/money/david-potts-final-fling-last-words-on-super-sharemarket-mortgages-and-tax-20151210-glk52j.html

David Potts summarised what I really struggle to get my head around.

It's hard to beat the returns of from paying off a mortgage on a PPR, when taking into account the tax treatment.

But what to do when you have no mortgage and house prices seem rather expensive.  Surely buying into an overpriced asset would undermine any extra returns from this strategy?  (It's also affected by your life stage as well I guess.  I'm almost 40)

He did seem to recommend an offset account... able to go to town at any time.

This_Is_My_Username

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« Reply #1541 on: December 15, 2015, 06:22:15 PM »
Is Tax-Loss Harvesting workable in Australia for non-super investments?

Is it worthwhile?

Does anyone have experience with this?  How did it go for you?

bigchrisb

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Re: .
« Reply #1542 on: December 15, 2015, 06:47:36 PM »
Is Tax-Loss Harvesting workable in Australia for non-super investments?

Is it worthwhile?

Does anyone have experience with this?  How did it go for you?

Yes, it is workable.  Main things to consider:
- Read up on the ATO's wash sale rules.  These are there to prevent tax loss harvesting purely for a tax gain.  They basically mean you can't sell and repurchase the same security and claim a tax loss.  You can however, sell and buy a similar security.  For example, selling VAS and re-buying VAS would be a wash sale.  Selling VAS and buying STW (similar underlying exposure) would not.
- Capital losses can only be offset against capital gains.   If you carry forward a capital loss, you don't get any interest or indexation, so the value of the carried loss diminishes over time.

Its worked well for me, but I've had some significant known capital gains coming up.  If I didn't have the known capital gains, I'm not sure if I'd do it anyway and bank the loss.

marty998

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Re: Australian Investing Thread
« Reply #1543 on: December 16, 2015, 01:12:20 AM »
Dammit missed the bounce today.

On Tuesday was umming and ahhing about buying $7,000 worth of VAS. Bloody hell should know that whenever it is a 52 week low of thereabouts is always a good time to buy.

Talked myself out of it by thinking BHP, Banks, WPL and WOW still have further to fall.

Ahh well, the rest of the portfolio obviously went up today, but it would have been nice to time that purchase.

Will keep sitting on the sidelines until early new year. I'm happy to just keep paying down margin loan debt for now.

happy

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Re: Australian Investing Thread
« Reply #1544 on: December 16, 2015, 04:33:57 AM »
Haha me too, I saw the big dip ? at close Friday, and was planning on acting early this week for my inaugural purchase of VAS, but got distracted….obviously not committed enough yet to play with market timing ;)
Journalling at Happy Aussie Downshifter

Ozlady

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Re: Australian Investing Thread
« Reply #1545 on: December 16, 2015, 01:55:58 PM »
One word (actually 2 words): Put options!

bigchrisb

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Re: Australian Investing Thread
« Reply #1546 on: December 16, 2015, 03:43:50 PM »
One word (actually 2 words): Put options!

Options novice question - how does one actually go about buying an option?  I suspect I need to get them enabled on my trading accounts first? (etrade and nabtrade)

This_Is_My_Username

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« Reply #1547 on: December 16, 2015, 07:30:53 PM »
I think the idea is to sell a put option , with a strike price being equivalent to the ASX200 at, say, 4900.

Then, if the counterparty does not exercise the option, you receive the sale price to keep.

if the counterparty does exercise the option, you receive VAS (or similar) at a good price because the index is below 4900.  BUT, you will be buying the index at a price of 4900, when the index is at 4800 or 4600 or 4200.

bigchrisb

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Re: Australian Investing Thread
« Reply #1548 on: December 16, 2015, 07:45:53 PM »
Concur on the theory.  Its the execution that I've struggled with - I can't find quotes for puts on my standard broker logins?
How do you convert the put when the time comes too - do you send the cash though a bpay like a rights issue, or do you need to activley do something to claim the option before it expires?

deborah

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Re: Australian Investing Thread
« Reply #1549 on: December 16, 2015, 08:25:57 PM »
The ASX has a number of tutorials, including about these.