Author Topic: Australian Investing Thread  (Read 617277 times)

Primm

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Re: Australian Investing Thread
« Reply #2100 on: July 26, 2016, 03:20:24 AM »
I was just watching an episode of Selling Houses Australia from 2011-12 and the host was talking about locking in interest rates if they're <8% (the Reserve rate was 7.8% at the time according to the show) because "rates are as low as they will get, they will only go up from here".

Just as well nobody here listens to the experts!

But that leads to my question, who here is locking in at current rates because sub-5% is pretty much as low as they will go? I'm seriously considering it.

Eucalyptus

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Re: Australian Investing Thread
« Reply #2101 on: July 26, 2016, 04:28:33 AM »
I was just watching an episode of Selling Houses Australia from 2011-12 and the host was talking about locking in interest rates if they're <8% (the Reserve rate was 7.8% at the time according to the show) because "rates are as low as they will get, they will only go up from here".

Just as well nobody here listens to the experts!

But that leads to my question, who here is locking in at current rates because sub-5% is pretty much as low as they will go? I'm seriously considering it.

What's the best rate you can get locking in at the moment?

I look at some of the fixed rates from overseas and go WOW. Way, way below 4%...

marty998

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Re: Australian Investing Thread
« Reply #2102 on: July 26, 2016, 05:16:56 AM »
NAB is offering 3 yr fixed at 3.79% for owner occupiers I think.

I locked in one of my investment loans 5yrs at 4.89%  Thought that was a great deal :(    It runs out in September 2019.

Every time I think it has bottomed it goes and plumbs new depths. Imagine the Sydney property market with 2% rates... medians will be $2million.

Eucalyptus

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Re: Australian Investing Thread
« Reply #2103 on: July 26, 2016, 05:19:48 AM »
NAB is offering 3 yr fixed at 3.79% for owner occupiers I think.

I locked in one of my investment loans 5yrs at 4.89%  Thought that was a great deal :(    It runs out in September 2019.

Every time I think it has bottomed it goes and plumbs new depths. Imagine the Sydney property market with 2% rates... medians will be $2million.

Wow, I think the cheapest variable I've seen (not that I've looked super hard) is 3.74%.

When they are locking in that low for three years, it makes you think; do they expect things to go lower in the future, thus, they are trying to lock you in at a higher rate than what you are going to get soon? All speculation of course ;-)

BattlaP

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Re: Australian Investing Thread
« Reply #2104 on: July 26, 2016, 05:33:56 AM »
I was just watching an episode of Selling Houses Australia from 2011-12 and the host was talking about locking in interest rates if they're <8% (the Reserve rate was 7.8% at the time according to the show) because "rates are as low as they will get, they will only go up from here".

Just as well nobody here listens to the experts!

But that leads to my question, who here is locking in at current rates because sub-5% is pretty much as low as they will go? I'm seriously considering it.

This post is either unintentionally hilarious, or a mighty good jape.

Primm

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Re: Australian Investing Thread
« Reply #2105 on: July 26, 2016, 04:34:28 PM »
I was just watching an episode of Selling Houses Australia from 2011-12 and the host was talking about locking in interest rates if they're <8% (the Reserve rate was 7.8% at the time according to the show) because "rates are as low as they will get, they will only go up from here".

Just as well nobody here listens to the experts!

But that leads to my question, who here is locking in at current rates because sub-5% is pretty much as low as they will go? I'm seriously considering it.

This post is either unintentionally hilarious, or a mighty good jape.

??? I'm not sure why. Yes, I had to google jape, but no. The 5 year fixed rates are around the 4.7% mark at the moment.

I don't know if you're old enough to remember the 17%+ nominal rates of the late 80s (real rates around 8%), but when you've lived through that, despite the fact that 5% may be a little above variable at the moment, the idea of locking down a real rate of around 3% for the next 5 years seems pretty attractive.

andrewjohnporter

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Re: Australian Investing Thread
« Reply #2106 on: July 26, 2016, 07:41:54 PM »
Thanks for the feedback everyone on the long post!

@terrier56  -I was thinking that same, split the investments, build up enough to last between 45 (fingers crossed) and 60 in investments and enough in a Super to take over after.

When you say 500k in Super I imagine you mean it will be valued at 500k when you are 60, not when you are 48?

Good question @oysters, I would also like to know this.

englyn

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Re: Australian Investing Thread
« Reply #2107 on: July 26, 2016, 07:48:00 PM »
Dividends across the market as a whole tend to be quite stable even in times of volatility.
Hi Marty, do you have a good reference for this? I've been curious about this for a while and not found any solid info.

BattlaP

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Re: Australian Investing Thread
« Reply #2108 on: July 26, 2016, 10:21:00 PM »
I was just watching an episode of Selling Houses Australia from 2011-12 and the host was talking about locking in interest rates if they're <8% (the Reserve rate was 7.8% at the time according to the show) because "rates are as low as they will get, they will only go up from here".

Just as well nobody here listens to the experts!

But that leads to my question, who here is locking in at current rates because sub-5% is pretty much as low as they will go? I'm seriously considering it.

This post is either unintentionally hilarious, or a mighty good jape.

??? I'm not sure why. Yes, I had to google jape, but no. The 5 year fixed rates are around the 4.7% mark at the moment.

I don't know if you're old enough to remember the 17%+ nominal rates of the late 80s (real rates around 8%), but when you've lived through that, despite the fact that 5% may be a little above variable at the moment, the idea of locking down a real rate of around 3% for the next 5 years seems pretty attractive.

I was laughing because you scoffed at the silly people in the past that thought they could predict the future, and then in literally the next sentence you did the exact same thing. Of course rates can only drop so far so I understand what you're saying (although negative rates are currently a thing in some countries) but the way you said it was just funny.

Trevor Reznik

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Re: Australian Investing Thread
« Reply #2109 on: July 27, 2016, 05:18:25 PM »
Just to add to the rates discussion it's looking like another rate cut in early August.

FFA

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Re: Australian Investing Thread
« Reply #2110 on: July 27, 2016, 08:55:13 PM »
to close out the earlier discussion re: VAS dividend paid in July. I just called Vanguard to ask and he said they've had many queries. It was a timing impact where some distribution was brought forward from Q4 into Q3 (i.e. April payment was higher and July lower). They say over the financial year the total distribution is similar 2014/15 vs 15/16. So it's not the bank shares paying in early July as I had postulated, those dividends will be includes in the next Q1 distribution (paid Oct) both last financial year and this time also.

Also to clarify the dividend is added into the NAV on ex div date (offsetting the share price fall). However the dividend is included in the distribution in the same period as when the payment occurs, i.e. Paid in July will be in the Q1 distribution paid in Oct.

marty998

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Re: Australian Investing Thread
« Reply #2111 on: July 28, 2016, 02:30:43 AM »
to close out the earlier discussion re: VAS dividend paid in July. I just called Vanguard to ask and he said they've had many queries. It was a timing impact where some distribution was brought forward from Q4 into Q3 (i.e. April payment was higher and July lower). They say over the financial year the total distribution is similar 2014/15 vs 15/16. So it's not the bank shares paying in early July as I had postulated, those dividends will be includes in the next Q1 distribution (paid Oct) both last financial year and this time also.

Also to clarify the dividend is added into the NAV on ex div date (offsetting the share price fall). However the dividend is included in the distribution in the same period as when the payment occurs, i.e. Paid in July will be in the Q1 distribution paid in Oct.

Makes sense, thanks FFA

Dividends across the market as a whole tend to be quite stable even in times of volatility.
Hi Marty, do you have a good reference for this? I've been curious about this for a while and not found any solid info.

I don't... only going off what happened in 08/09... Bank dividends dropped a little I believe then snapped back very quickly. BHP dividend kept rising all the way through. TLS was steady at 14c through the GFC too (memory is really hazy lol)

Given the top 10 make up half the market, their dividends were going to be a significant chunk of the average punters income portfolio.

However, there was quite a problem with Property Trusts, and Infrastructure Funds. The ones that didn't fall over like Transurban, were able to carry on their merry way.

englyn

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Re: Australian Investing Thread
« Reply #2112 on: July 28, 2016, 02:58:11 AM »
Hah, I found my own resource this time. Must've not googled the right things before.

http://www.asx.com.au/education/investor-update-newsletter/201602-dividends-what-to-expect-in-2016.htm

The first graph is very educational!

andrewjohnporter

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Re: Australian Investing Thread
« Reply #2113 on: July 28, 2016, 10:57:20 AM »
Can someone tell me the difference in the ways to invest in Vanguard funds:

 - Retail managed funds (min $5k)
 - Wholesale managed funds (min $50k)
 - Exchange traded funds

Is it that the top two you can invest directly with Vanguard (base don the amount you have to invest) while with ETFs you have to go through a broker? Could anyone supply a link to a guide on selecting the best (cheapest) broker?

Cheers,

Porter


chasingthegoodlife

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Re: Australian Investing Thread
« Reply #2114 on: July 28, 2016, 02:53:35 PM »
Porter, yes you are right that the first two options are purchased directly from vanguard and the ETF is purchased through a broker, the same way you buy any other shares.

Lots of discussion around the start of this thread about the pros and cons of each. Eg The retail managed fund has higher ongoing investment management costs than the other two, there are some slight differences in complexity of reporting at tax time, etc. Lots of great info if you have time to read through the thread.

Re: online brokers, I think one of the cheapest is CMC Markets but I have not used them. I'm sure others will have some useful input on this? 

Eucalyptus

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Re: Australian Investing Thread
« Reply #2115 on: July 28, 2016, 06:37:57 PM »
Porter, yes you are right that the first two options are purchased directly from vanguard and the ETF is purchased through a broker, the same way you buy any other shares.

Lots of discussion around the start of this thread about the pros and cons of each. Eg The retail managed fund has higher ongoing investment management costs than the other two, there are some slight differences in complexity of reporting at tax time, etc. Lots of great info if you have time to read through the thread.

Re: online brokers, I think one of the cheapest is CMC Markets but I have not used them. I'm sure others will have some useful input on this?

At least a few months ago CMC markets was the cheapest available in Aus from what I could tell. I set it up-pretty good, but haven't made a trade on it yet (holding off cash reserves for a house deposit over the next 12months or so).

andrewjohnporter

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Re: Australian Investing Thread
« Reply #2116 on: July 30, 2016, 11:48:20 AM »
Thanks for that. I'll take a look at CMC.

I'm only up to page 4 of this forum so far so will get cracking!

It looks like the Vanguard LifeStrategy 100% equity fund isn't available in Australia yet, just the Vanguard LifeStrategy® High Growth Fund which appears to be about 90/10 split (although if you've got under $100k the charges are pretty high)

What's the very basic advice for starting off a portfolio in Australia (I'm guessing that I'll come across more on this while reading through the rest of the thread). I would image, if its not just to get a LifeStrategy fund then it's something like starting off with the one of the below two options:
   
Vanguard International Shares Index Fund (VGS) 0.18%)
Vanguard Australian Shares Index Fund (VAS) (0.15%)

or

Vanguard All-World ex-US Shares Index ETF (VEU) (0.13%)
Vanguard US Total Market Shares Index ETF (VTS (0.05%)

and then over time add some exposure to small caps, emerging markets, etc

Cheers again - I've got a few hours ahead of me today to catch up now!

« Last Edit: July 31, 2016, 09:01:08 AM by andrewjohnporter »

SydFin

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Re: Australian Investing Thread
« Reply #2117 on: August 01, 2016, 04:14:05 AM »
Hi all

I almost read every of the 42 pages, it takes longer than I realise! I'm looking for some advice, so I'll tell you a bit about myself...

I became interested in FIRE about a 1.5 years ago...soon after I had a health scare (all good now) and am now even more interested in FI!

Recently I’ve been going over the calculations and keep going backwards and forwards, I was wondering if anyone had any suggestions.

My situation, basically I’ve accumulated a few investment properties, and invested in Vanguard about a year ago (using equity in IP (Investment property) loans). I rent in Sydney. No kids or spouse. Properties valued just over a year ago.

a) Vanguard High Growth Index Fund: 340k (yes, I now realise that was silly because of fees)
b) IP1: Valued 400k, capital gain 240k
c) IP2: Valued 440k, capital gain 0 (would be a loss counting expenses)
f)  IP3: Valued 600k, gain 288 (I could live in this one)
g) Super 220k
h) Cash = 80k
i) Income: lowish-mid 100k
j) Carried fwd losses 25k
k) Loan over properties: 1,066,000 (total property value 1,440,000)
l) Car 7k

Capital gains from Real estate if I sold as per values above = 528k (240k+288k)...(I'd pay about 92k tax if I sold them all in the same year with no other income).
Total surplus if I sold all properties: (1,440,000 - 1,066,000) = 374k

Basically, I could:
a) Retire in say a year
b) sell all property, pay 92k tax (with 92k cash I have by then)
c) Be debt free with 714k in Vanguard (340k currently + 374k properties less loan).
d) Be free to do work that I liked/be healthier, less stressed/work only some months/pursue my hobbies and interests more etc

I could alternatively keep the 600k rental property (currently producing 19k/yr net from agent each year). This is a rental property I could live in in Sydney (near the city). I currently rent myself and my tenant pays me more than I pay in rent.

I'm (a young) 43 year old, my job is just a job and I want to do something different and also want to take the slower road. I've recently started eating better/exercising more, enjoying life more (after health scare) and don't see the point of working any more, as I am happy with having fewer 'thing' these days. I have reduced my expenses a lot, and love the simple life, as opposed to the $25 cocktails life.

I wouldn't sell all properties in one year because of the capital gains, there would also be selling expenses, but I've put conservative prices, and I would sell my car. Spending a year in say Vietnam or Bali after I retire would be an option, in order to ease into it...

This is a rather long post so sorry! I understand that this is an investment thread, not a how should I sort out my finances thread, but thoughts would be appreciated, especially about incurring (some) capital gains on investment properties in order to be debt free with cash spare to invest in say VAS, VGS, VGE, wherever that takes me. I think I'll also get professional advice, but also think that forums are often just as good as the experts.

Also, I realise I could do all the above except keep working and sell a property a year for 3 years then retire with say $1m in vanguard. But I have the FIRE bug now and wonder if that extra time doing a job I'm not passionate about would be worth it.

Also, I could live in IP3, find a more satisfying job and sell IP1 and IP2 to significantly reduce my debt whilst still having a PPOR...this kind of appeals but I am left with only 340k in vanguard, still have debt/I haven't retired.

OK, time to stop writing now. Thanks in advance for any advice!

 

steveo

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Re: Australian Investing Thread
« Reply #2118 on: August 01, 2016, 04:38:43 AM »
SydFin - you sound in a good spot to me. Personally I would sell the investment properties. Do it however it makes sense to you. I would seriously consider leaving your money in the Vanguard fund. Maybe you could convert it into a wholesale fund.

I invest in VGS, VAU & VAF however that is only because I don't have a lump sum and I invest whenever I get about $10k saved up. I like the whole fund option. Just buy it and do nothing.

I think in Australia you wouldn't go wrong with a low cost Super fund and a Vanguard all in one fund that matches your investment profile. The only issue I can see is where are you going to live ? Is renting okay ? Would your expenses be about 4% of your portfolio ? Would you still work a little ?
« Last Edit: August 01, 2016, 04:40:56 AM by steveo »

SydFin

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Re: Australian Investing Thread
« Reply #2119 on: August 01, 2016, 04:59:44 AM »
Hi steveo, thanks for the quick reply, I appreciate it! Its kind of gratifying to see that I'm not insane for at least thinking about this.

I am in wholesale at the moment but the 'High Growth Index Fund' (0.37% fees)...the least I should do is change to cheaper collection of wholesale funds I guess.

Is renting okay ? - Yep, I currently rent but would have to find a cheaper place though.
Would your expenses be about 4% of your portfolio? - Well, they'd have to be...which isn't a great answer. I don't have many expenses, and have just acquired a taste for lentils...
Would you still work a little ? - Hmm, I'd have a side hobby, but whether that would produce income I'm not sure. I could work for 3mths say/yr in contracting (as that's my field) if I needed to.

« Last Edit: August 01, 2016, 05:04:26 AM by SydFin »

happy

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Re: Australian Investing Thread
« Reply #2120 on: August 01, 2016, 05:46:30 AM »
If you want to retire, then you need cash flow to live on and properties in Sydney don't yield well , although capital gain is often good.  If you sell all properties  and have a stash of $714k, you need to be able to live on <28k/yr including rent.  Thats doable but pretty mustachian long term, particularly living in Sydney unless you share a rental. I suspect the plan to keep working for 3 years and sell a property every year is more realistic, but it really comes down to your expenses, and your desire/ability to maintain your current expense profile longterm and you appetite for risk.
If you have itchy feet now, have you thought about taking a mini retirement instead? 80k cash should keep you  for 2-3years. Also you should consider if will you be able to get another job if you take time out in your industry.
Journalling at Happy Aussie Downshifter

SydFin

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Re: Australian Investing Thread
« Reply #2121 on: August 01, 2016, 06:26:01 AM »
Thanks happy, I wouldn't be confined to Sydney, although I suspect that living on 28k/yr including rent would perhaps be not quite what I'm looking for wherever I am, so I would maybe start looking for work after a while (which then isn't really early retirement I guess...), but also my interest may possibly lead to work/income, which I'd love...but I'm scared to pursue that (at the moment at least).

The mini-retirement idea is a great idea also, I'm pretty sure I could get a year away from work, we're all contractors so it's kind of fluid, people come and go. Work likes me so they would probably accept that, even if they didn't love it.

Actually, just by the two responses here and me writing responses has helped me clarify things (or see reality maybe)...I don't think I want to retire and live on 28k a year...I think I more want to follow my interest, that I've been too scared in the past to do (partially because I may be sacked if work found out!...although people dispute this)...but I think I should pursue my interest in conjunction with reducing expenses/organising my finances better so it's not the end of the world if things don't work out...

Wow, MMM has become a self-help forum! I'm quite chuffed, I've been thinking about this for ages and it's amazing the difference discussing it with impartial, interested, knowledgeable people can make...after just two responses!:) I think already this has helped me with having a goal to work towards, along the lines of what I've just said.

So, thanks heaps, it's really appreciated!

[Edit]: I said this before but it's also reassuring to get support/affirmation of my reasoning/investment ideas, it's good to know that it's not just a hair-brained idea that only makes sense in my mind.
« Last Edit: August 01, 2016, 06:39:55 AM by SydFin »

steveo

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Re: Australian Investing Thread
« Reply #2122 on: August 01, 2016, 06:49:21 AM »
Hi steveo, thanks for the quick reply, I appreciate it! Its kind of gratifying to see that I'm not insane for at least thinking about this.

I am in wholesale at the moment but the 'High Growth Index Fund' (0.37% fees)...the least I should do is change to cheaper collection of wholesale funds I guess.

Is renting okay ? - Yep, I currently rent but would have to find a cheaper place though.
Would your expenses be about 4% of your portfolio? - Well, they'd have to be...which isn't a great answer. I don't have many expenses, and have just acquired a taste for lentils...
Would you still work a little ? - Hmm, I'd have a side hobby, but whether that would produce income I'm not sure. I could work for 3mths say/yr in contracting (as that's my field) if I needed to.

I don't think that fee is really too high. It gives you an all in one solution. There is no rebalancing. It's easy. The wholesale option is cheaper and if you could switch to that I'd go for it.

FFA

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Re: Australian Investing Thread
« Reply #2123 on: August 01, 2016, 06:56:26 AM »
Hi SydFin,
I wouldn't say the Vanguard high growth is a silly choice. You can do slightly better on fees but it is a convenient single fund option that will automatically rebalance. Also gives you those smaller exposures like emerging markets, REIT's etc. If you don't care much for those then it's easier to go for VAS/VGS/VAF and cut the fees down, especially if you're more hands-on and keen to be a bit involved in managing it. Low fees are important but it's more of an issue if you're paying 1+%.
I also have three IP's and want to gradually offload (at least two of them) but am taking my time doing so. In my case they are debt free and I'm already FIRE'd. Also the way the share market and interest rates are now, I'm not sure where I'd put the cash if I sold ! However in your situation I can see it would be desireable to lower your borrowings, especially before you go and quit your day job.
In my case, I've ended up drifting back into part-time consulting work not that long after FIRE'ing. I quite like it, much more balanced going to office 2 days a week and stress-free in the knowledge you don't really need to be there.
Regarding withdrawal rate assumptions, personally I would choose 3-3.5% the way interest rates and share markets are right now. 4% is still probably an okay number provided you have flexibility and it won't be the end of the world if things go pear shaped to head back to work for a stint.... All the best !

happy

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Re: Australian Investing Thread
« Reply #2124 on: August 01, 2016, 07:20:20 AM »
Regarding withdrawal rate assumptions, personally I would choose 3-3.5% the way interest rates and share markets are right now. 4% is still probably an okay number provided you have flexibility and it won't be the end of the world if things go pear shaped to head back to work for a stint.... All the best !
Just in case its not completely obvious, I worked out 28k on a 4%WR, 3-3.5% would be less, getting down towards low 20s. And FFA has a good point about WRs.

Journalling at Happy Aussie Downshifter

SydFin

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Re: Australian Investing Thread
« Reply #2125 on: August 01, 2016, 02:16:56 PM »
Thanks for the feedback re Vanguard and the encouragement, including words of wisdom! I think I'll spend the next year reducing my expenses and outgoings (maybe sell the slight loss property and the one with lowest gains) and move into a cheaper place to live also, as well as making a start on this interest/hobby that I've been too worried about to start. I think doing the above whilst still working will give me both income and motivation to make this interest work for me, as well as a sense of freedom that it'll be OK regardless of what happens.

Ozstache

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Re: Australian Investing Thread
« Reply #2126 on: August 01, 2016, 03:32:10 PM »
Would your expenses be about 4% of your portfolio? - Well, they'd have to be...which isn't a great answer. I don't have many expenses, and have just acquired a taste for lentils...
This statement raises my eyebrows, particularly as < $28K pa draw down to cover expenses that you are not really sure of that include living and renting in Australia's most expensive city. My suggestion is that you start tracking your expenses and prove to yourself that you can live on < $28K pa in Sydney for at least a year or two before you hand in your job resignation.

faramund

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Re: Australian Investing Thread
« Reply #2127 on: August 01, 2016, 03:35:33 PM »
Thanks for the feedback re Vanguard and the encouragement, including words of wisdom! I think I'll spend the next year reducing my expenses and outgoings (maybe sell the slight loss property and the one with lowest gains) and move into a cheaper place to live also, as well as making a start on this interest/hobby that I've been too worried about to start. I think doing the above whilst still working will give me both income and motivation to make this interest work for me, as well as a sense of freedom that it'll be OK regardless of what happens.

Also, on selling your IPs, can't you wait until you're not working? Then wouldn't you be selling when you would be in a lower income tax bracket - and so the capital gains tax would be much less? Also, that would let you keep accumulating capital gains until then. (I've seen some studies that seem to say that real estate and shares have about the same annual return - so all things being equal - it seems like you're better off to wait)

deborah

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Re: Australian Investing Thread
« Reply #2128 on: August 01, 2016, 03:48:18 PM »
Thanks for the feedback re Vanguard and the encouragement, including words of wisdom! I think I'll spend the next year reducing my expenses and outgoings (maybe sell the slight loss property and the one with lowest gains) and move into a cheaper place to live also, as well as making a start on this interest/hobby that I've been too worried about to start. I think doing the above whilst still working will give me both income and motivation to make this interest work for me, as well as a sense of freedom that it'll be OK regardless of what happens.

Also, on selling your IPs, can't you wait until you're not working? Then wouldn't you be selling when you would be in a lower income tax bracket - and so the capital gains tax would be much less? Also, that would let you keep accumulating capital gains until then. (I've seen some studies that seem to say that real estate and shares have about the same annual return - so all things being equal - it seems like you're better off to wait)
Although, if one of the IPs has no capital gains, I'd be selling it now. It has no tax down side and releases that money for other things.



SydFin

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Re: Australian Investing Thread
« Reply #2129 on: August 01, 2016, 04:34:48 PM »
All good points. Living off 28k would be a stretch for me I think, which is why I referred to doing some work. However as I said before, I wouldn't be tied to Sydney.

Also, yes selling the low/no gain property now would make sense and leave the other two to (separate) years when my income is less/I've retired...this would also increase my stash as I'd have (hopefully) more gain by then and less tax to pay as I wouldn't be working.

I guess this has encouraged me to take some action now (saving more/reducing expenses) in order to smooth the transition to FIRE (or close to it) in a year or two. It seems much more realistic now, and at very least is a goal to work towards.

One thing maybe overlooked is that I'd also have Super of 221k (on top of the 714k(+) stash) that would be growing away for me.
« Last Edit: August 01, 2016, 05:30:00 PM by SydFin »

happy

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Re: Australian Investing Thread
« Reply #2130 on: August 01, 2016, 06:22:53 PM »
sorry, didn't pull that out of your post. That makes it a little better, but the most important thing is that you start to track your expenses NOW. All the calculations are useless if you don't really know what you spend.
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Re: Australian Investing Thread
« Reply #2131 on: August 01, 2016, 06:46:51 PM »
One thing maybe overlooked is that I'd also have Super of 221k (on top of the 714k(+) stash) that would be growing away for me.
Something to think about is that you are at least 17 years away from preservation age, so your growing (but otherwise inaccessible) Super balance will only serve to taunt you if you run out of non-super money in the early years of FIRE.

pistolpete

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Re: Australian Investing Thread
« Reply #2132 on: August 01, 2016, 07:29:09 PM »
Outstanding thread ppl i myself have read every page and im very impressed with the knowledge and feedback given on helping ppl acheive FI!

I have a query in relation to long term investment

Im currently invested in Vanguard retail managed fund (international share fund mer.90% for first 50k then tapered down once you hit 100k).

In addition i also hold argo investments as my vas component (15k) and some WAM capital for small and mod cap exposure in additon to a couple other blue chips with employee share schemes.

I hope to hit 100k in a year or 2 and then sell and reopen the same fund in wholesale fund with.18% mer.

However im thinking of going 50k aust shares.18% mer and 50k inter share fund .18% mer also.

Im worried about overlapping however as my argo shares are basically the same as the vanguard aust share fund!!!

Would a lifestrategy growth fund be better or ??? I prefer at least 40% of my portfolio to be Australian shares due to the franking credits!

Has anyone else had any similar issues like this?

Hopefully someone can suggest a few opinions to help me out!

englyn

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Re: Australian Investing Thread
« Reply #2133 on: August 01, 2016, 08:22:28 PM »
sorry, didn't pull that out of your post. That makes it a little better, but the most important thing is that you start to track your expenses NOW. All the calculations are useless if you don't really know what you spend.
I work out my spending quarterly by going back through a spreadsheet export of my bank statement and categorising each transaction. You could do that for the last year and get the answer straight away.

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Re: Australian Investing Thread
« Reply #2134 on: August 01, 2016, 08:49:16 PM »
Quote
I work out my spending quarterly by going back through a spreadsheet export of my bank statement and categorising each transaction. You could do that for the last year and get the answer straight away.

Yes, expenses are key to all this...I find it hard to reduce spending whilst still working though. I guess I could go back over my bank balance/credit card statements and find what I'm spending money on (and get an idea what I'd be happy to reduce/stop if I stopped working).

Grogounet

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Re: Australian Investing Thread
« Reply #2135 on: August 01, 2016, 09:05:42 PM »
To get an idea of what you spend: Check this out:
Pocketbook

While it's not 100% great and you have to trust the developers not to use your bank details, it gives you almost automated monthly, weekly, annual reports and easy to set up https://getpocketbook.com/signin

Eucalyptus

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Re: Australian Investing Thread
« Reply #2136 on: August 01, 2016, 09:14:17 PM »
I have pocketbook. Its good as a post-spend summary tool and can help you ID areas you spend on. However, after a few months, I find it doesn't work too well for me (particulary as there is a banking delay of a couple of days before spending appears in pocketbook, at least for me with my bank), so I've switched over to Goodbudget. This is a proper pre- and post- spending tool. You plan in advance and allocate money to things, and every time you spend you put it in and allocate it to the appropriate line item (envelope). Works brilliantly, I think this is a great way to go if you really want to be moustachian. Yes, its a little more work, you have to sit down and plan your envelopes (this took me about two nights, and a couple of tweaks over the first fortnight). And it takes work to maintain-every transaction you have to enter (if you can't schedule it accurately in advance, eg, your direct debits)!!! But its really not that hard...the app is great and makes it very fast and easy, and its worth it, as you always get instant feedback on how your line item is sitting for that period.

Using pocketbook for a couple of months first might help you ID the areas you spend on if you have no idea. Commbank has a similar functionality now in that they can autoID transactions, etc, and put them in a category (and you can train it). Similar to Pocketbook in many ways. Your bank might have a similar tool, or might not.

YNAB is similar to Goodbudget, but I haven't tried it. Both of these allow you to input bank transactions yourself, eg, as .csv files. However, personally I'm going to avoid that. Why? Well I think one of the most powerful things about these tools is that you are made very aware of your spending habits as they happen, by being forced to vigiliently record. If you wait say a couple of weeks or more and input the csv and get it to auto allocate or whatever, its not in-the-moment enough for you to change your spending behaviour.

Grogounet

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Re: Australian Investing Thread
« Reply #2137 on: August 01, 2016, 09:33:16 PM »
Good one, I've just been to check it out, does this work for Aussies too?

Eucalyptus

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Re: Australian Investing Thread
« Reply #2138 on: August 01, 2016, 09:37:52 PM »
Good one, I've just been to check it out, does this work for Aussies too?

I'm in Adelaide.
Pocketbook works, connects up to Commbank. Probably works with lots of other banks, I don't know.

Goodbudget works. I haven't connected it to commbank, not sure if you can directly (as in like a permanent link) but to be honest I prefer not to for the aforementioned reasons.

I'm sure YNAB works for Aussies too.

Mint is similar to Pocketbook in that its a kind of post-spending analysis tool. But I hear that Mint doesn't work with Aussie banks, at least that was the deal late last year when I signed up for Pocketbook which did. Maybe it does now, but I've moved on in what I want from my budgeting tools.

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Re: Australian Investing Thread
« Reply #2139 on: August 01, 2016, 09:44:19 PM »
Ok, I ve just been there and now I remember. I tried it a few months back and Goodbudget didn't work out for me.
The main reason is that you have to import manually your accounts.

With Pocketbook, sure I cant budget but I literally spend maybe 5 or 10 mins per month to track my spending and adjust if necessary

Eucalyptus

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Re: Australian Investing Thread
« Reply #2140 on: August 01, 2016, 09:45:25 PM »
Ok, I ve just been there and now I remember. I tried it a few months back and Goodbudget didn't work out for me.
The main reason is that you have to import manually your accounts.

With Pocketbook, sure I cant budget but I literally spend maybe 5 or 10 mins per month to track my spending and adjust if necessary

Fair enough. Different things work for different people :-)

FFA

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Re: Australian Investing Thread
« Reply #2141 on: August 01, 2016, 10:09:20 PM »
Outstanding thread ppl i myself have read every page and im very impressed with the knowledge and feedback given on helping ppl acheive FI!

I have a query in relation to long term investment

Im currently invested in Vanguard retail managed fund (international share fund mer.90% for first 50k then tapered down once you hit 100k).

In addition i also hold argo investments as my vas component (15k) and some WAM capital for small and mod cap exposure in additon to a couple other blue chips with employee share schemes.

I hope to hit 100k in a year or 2 and then sell and reopen the same fund in wholesale fund with.18% mer.

However im thinking of going 50k aust shares.18% mer and 50k inter share fund .18% mer also.

Im worried about overlapping however as my argo shares are basically the same as the vanguard aust share fund!!!

Would a lifestrategy growth fund be better or ??? I prefer at least 40% of my portfolio to be Australian shares due to the franking credits!

Has anyone else had any similar issues like this?

Hopefully someone can suggest a few opinions to help me out!

one is not better than the other, just depending on your preference/situation. If you want a simple, set and forget, hands-off fund then the single fund options are ideal. MER is higher, maybe double, but off a low base and so long as you are below 0.5% it's still in the low category. The other benefit is you will get some of those other smaller exposures (emerging mkts, REITs, etc) thrown in.

However if you are more hands on, MER sensitive, want to adjust the ratios (e.g. more Oz shares for franking), then the DIY solution might be better suited. Here you have another choice whether to use the wholesale fund or trade ETF's. This again comes down to practical issues. Prefer to trade online and track portfolio in online broker. Or prefer to go via a managed fund style and make contributions via EFT / BPay. The MER is slightly better for ETF's but the difference is negligible at this level.

Regarding traditional LIC's, e.g. ARG/AFI, I would consider them VAS/STW substitutes. So decide your allocation to Australian shares and then include both in the same bucket. You might treat the small cap as a subcategory, e.g. something like 10% of your Australian equity exposure held in WAM (or not more than 20% I'd suggest).

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Re: Australian Investing Thread
« Reply #2142 on: August 01, 2016, 11:05:31 PM »
Cheers to the prompt response! Yes i understand you view argo as a vas substitute as do I, the only minor prob i see is when it trades at a premium to nta as it seems to do!
As it doesnt make sense to buy more parcels at a premium, instead i will pump into either the wholesale growth fund or if i go with the 2 individual wholesale funds, international shares and australian share funds whilst leaving the reit, emerging markets etc etc on the table!

Very unsure and if i see and advisor im certain they will try and flog off their own products!

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Re: Australian Investing Thread
« Reply #2143 on: August 02, 2016, 12:11:56 AM »

Pocketbook works, connects up to Commbank. Probably works with lots of other banks, I don't know.


Can confirm works with Ubank. Pretty sure it works across most Australian banks. Just make sure you code correctly when you shuffle money around otherwise it gets weird. Say putting $5k into a high interest account, unless you put it as 'transferring money' it thinks you've spent that money from one account and made income in another.

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Re: Australian Investing Thread
« Reply #2144 on: August 02, 2016, 01:57:27 AM »
Reporting season is underway.

Fairfax is preempting it's own results by announcing another billion in write downs... at what point does a regular annual write down of impairments become just another above the line expense???

RIO reports this week, profit will be all over the place thanks to volatile Iron Ore prices.

RBA cut the cash rate today to a record low of 1.50%. CBA is passing on only 13bps to home loan and business customers. On the flip side, CBA is raising 1,2 and 3 yr term deposit rates.
« Last Edit: August 03, 2016, 02:46:16 AM by marty998 »

FFA

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Re: Australian Investing Thread
« Reply #2145 on: August 02, 2016, 06:01:04 PM »
I hope they don't pass through fully to online/bonus savers either, or even better raise them like term deposits !! When I came back to oz early last year I think ing was still paying 4.5% if I recall correctly. they are down to 3% (before yesterday's announcement). adding to the misery they are stopping their 2% cash back from 30 sept.... tough environment for savers these days, good for those with home loans though !

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Re: Australian Investing Thread
« Reply #2146 on: August 02, 2016, 06:10:34 PM »
I hope they don't pass through fully to online/bonus savers either, or even better raise them like term deposits !! When I came back to oz early last year I think ing was still paying 4.5% if I recall correctly. they are down to 3% (before yesterday's announcement). adding to the misery they are stopping their 2% cash back from 30 sept.... tough environment for savers these days, good for those with home loans though !

Yeah I'm hoping the online savings rates stay too. I signed up with Rabobank; 3.25% for four months...not sure if they will stick to that or not now. I'll shop around when the four months is up again (reverts to 2.3%...that might also drop...).

Pretty easy to get 0% on purchases on credit cards at the moment. NAB is offering 15months of 0%.

happy

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Re: Australian Investing Thread
« Reply #2147 on: August 03, 2016, 06:11:37 AM »


RBA cut the cash rate today to a record low of 1.50%.

Ugh, craziness. Growth is so last century.
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Re: Australian Investing Thread
« Reply #2148 on: August 04, 2016, 05:18:06 PM »
Hi, new poster, thanks for the thread.

I'm very familiar with share investing outside super and have a good portfolio but I have a few questions about investing in shares within Super.

I need some advice on a manual superannuation transfer.  Currently I have a super fund with AU$174k invested as follows -

2.67% Macquarie International Infrastructure
33.74% Vanguard Growth Index Fund
9.16% Macquarie Diversified Fixed Interest
54.43% CASH!!!!

I guess that may have cushioned me from Brexit falls but it's time to move the cash into something else.  I was thinking one of the Vanguard indexes and would appreciated any thoughts.

Also - dividends from shares held in Super - what happens to them?  Do they top up the cash account or how does it work?

Thanks for any advice.
Getting to the 4%.....

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Re: Australian Investing Thread
« Reply #2149 on: August 04, 2016, 06:42:44 PM »
Yes, dividends top up the cash account. Of course, as they are income, and your super is in accumulation phase, they are taxed at 15%. Generally you can tell your super fund what to do with incoming money (including dividends), so it automatically gets distributed between your investments. However, if it is an SMSF, you would do this yourself.