Author Topic: Australian Investing Thread  (Read 689812 times)

FFA

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Re: Australian Investing Thread
« Reply #2400 on: November 24, 2016, 04:56:59 AM »
Indeed!  So much for deploying some capital while it was cheap... I managed a parcel of VAS in the 67's, some BRK-B at 144 and some TCL in the high 9's. 

Its been equally interesting watching bond and interest rates start to head upwards.  I'm debating how quickly this will play out here, and how much of it will flow through to our crazy property market.  The lack of loading up may have been a blessing in disguise, as it means a bit of deleveraging through savings.  With my current interest rates sitting with a 3 at the front, I'm sitting very pretty.  However, replace that 3 with a 7 or 8, and things look significantly less rosy. 

Anyone come up with a useful way to harness a rising rate environment?  I would have thought fixing debt, floating rate bonds/hybrids and lowering property exposure?

Am considering fixing some more of my property loans (2 yr @3.99% is tempting). However I would prefer to have some more flexibility to use offsets, as you can only get partial offset on fixed rate loans.

There will be significant economic problems long before rates get to 7%. I can see 5.5% being a tipping point for many recent investors to hang the "for sale" sign out the front. The negative gear on many of the 3% yielding houses in inner city will be too much to bear for the unprepared.

firstly, I'm not sure rates are onwards and upwards from here. A few months ago everyone was saying lower for longer and expect low rates/yields/returns for decades. The tune changed quickly, and it can change back quickly again.

secondly, even if you call it right and rates have bottomed, it's hard to be confident how to play it. e.g. all the people holding cash/gold/index shorts in case Trump won, well they didn't work out so well for them....

So my thoughts are just to keep doing the same, re-balance. I will consider adding bonds once the pendulum swings which I have been avoiding for years due to QE (and regretting it for a while). REITs and infrastructure stocks also, as the pendulum usually overshoots, but that is thinking a fair way ahead.....

marty998

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Re: Australian Investing Thread
« Reply #2401 on: November 25, 2016, 08:41:51 PM »
Infrastructure assets will start to underperform... and because the big ones such as ports, airports, rail, electricity generators and water utilities are valued semi-annually or annually it will be a while before the performance figures start to be known.

They are all valued on a DCF basis, and as everyone knows if you increase the discount rate, which is based on a risk free rate (e.g. treasuries) + a margin, then the asset value will go down.

Not saying it's a bad idea to invest, but if you're confident you're getting something that has been beaten down more what one could consider reasonable, then you'll be ok.

sirdeets

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Re: Australian Investing Thread
« Reply #2402 on: November 25, 2016, 09:18:38 PM »
NAB has a 3 month free brokerage deal at the moment.  Getting on it as just sold my property (to rent) and pumping the proceeds into shares.

Anyone have any experience with Nab trade?  Seems international trades have come down a lot in price also through them.. and that 3 month deal includes foreign trades but excludes the foreign forex... and may simplify tax as it appears no need to lodge the W8BEN (forget exact name).

MissPiggy

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Re: Australian Investing Thread
« Reply #2403 on: November 27, 2016, 04:49:11 AM »
Hello fellow Australian Mustachians!

Just introducing myself to the thread and to MMM - starting my FI journey and love reading this thread. Starting from the first post back in July 2014 and making my way up to the most recent, already having learnt so much along the way.

Looking forward to getting to know all of you!
xx Miss Piggy

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Wadiman

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Re: Australian Investing Thread
« Reply #2404 on: November 27, 2016, 01:44:50 PM »
NAB has a 3 month free brokerage deal at the moment.  Getting on it as just sold my property (to rent) and pumping the proceeds into shares.

Anyone have any experience with Nab trade?  Seems international trades have come down a lot in price also through them.. and that 3 month deal includes foreign trades but excludes the foreign forex... and may simplify tax as it appears no need to lodge the W8BEN (forget exact name).

Hi SirDeets - Have been with NABtrade for about 9 months and quite like them - especially for their pricing on international trades as you have mentioned.  The research is also useful although the website experience could be improved.

sirdeets

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Re: Australian Investing Thread
« Reply #2405 on: November 27, 2016, 03:11:22 PM »
Cheers Wadiman.  One concerning thing I heard was for international shares the dividends were converted into AUD and paid.. same with the proceeds from the sale of shares, both being subjected to the banks FOREX rate.  I haven't been able to confirm.  I use optionsxpress currently and its all done in USD for US shares.

Wadiman

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Re: Australian Investing Thread
« Reply #2406 on: November 27, 2016, 07:42:58 PM »
Cheers Wadiman.  One concerning thing I heard was for international shares the dividends were converted into AUD and paid.. same with the proceeds from the sale of shares, both being subjected to the banks FOREX rate.  I haven't been able to confirm.  I use optionsxpress currently and its all done in USD for US shares.

Hmm - interesting - let me know if you find out any more re this.

bigchrisb

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Re: Australian Investing Thread
« Reply #2407 on: November 27, 2016, 08:34:57 PM »
I too was worried about the FX rates with Nabtrade.  The rates on the estimate showed they were charging a few percent spread, which is not good value.  However, once the actual transaction went through, it was much closer to the spot rate I was expecting. 

I'm yet to receive a dividend (only buying BRK-B direct), so can't comment on that.

MissPiggy

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Re: Australian Investing Thread
« Reply #2408 on: November 28, 2016, 03:20:17 AM »
I have two (newb) questions about Vanguard:

1) VAS: I've set aside $6000 to invest in VAS but the price has risen from $65 to $70 in the past few weeks since Trump's win. I know it's anti-mustachian to time the market however it seems to be highly priced. Should I wait or should I just buy at the $70 share price?

2) Is it better to invest in Vanguard's Index Australian Shares Fund (VAN0010AU) in VAS? Apart from the difference in fees, what are the reasons to invest directly with Vanguard if they index the same S&P300?

What do you think?
xx Miss Piggy

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FFA

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Re: Australian Investing Thread
« Reply #2409 on: November 28, 2016, 03:50:58 AM »
Generally MMM forum would give a definitive NO to 1), but I think this particular thread is a bit more open minded to a bit of market timing.... rogue aussies! I tend to time a little at the margin but the core of my allocation is fixed. if you do, you need to be disciplined and have some process you can follow consistently. Without that, I think the answer is it's best to regularly invest on a schedule and don't mind the prices.

2) the main difference is the fees. There might be some other very subtle differences but the portfolio and underlying investments are basically the same. The managed fund gives you a bit more service to call Vanguard, invest via BPay/EFT, capital gains tax statements, etc. The ETF might be slightly more work but nothing insurmountable. Personally I use the ETF's VAS, VGS, etc. If you're trading in $5k parcels or more ETF's would be more cost effective.

MissPiggy

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Re: Australian Investing Thread
« Reply #2410 on: November 28, 2016, 04:05:28 AM »
Generally MMM forum would give a definitive NO to 1), but I think this particular thread is a bit more open minded to a bit of market timing.... rogue aussies! I tend to time a little at the margin but the core of my allocation is fixed. if you do, you need to be disciplined and have some process you can follow consistently. Without that, I think the answer is it's best to regularly invest on a schedule and don't mind the prices.

2) the main difference is the fees. There might be some other very subtle differences but the portfolio and underlying investments are basically the same. The managed fund gives you a bit more service to call Vanguard, invest via BPay/EFT, capital gains tax statements, etc. The ETF might be slightly more work but nothing insurmountable. Personally I use the ETF's VAS, VGS, etc. If you're trading in $5k parcels or more ETF's would be more cost effective.

Thanks FFA! Very helpful.

I am planning to invest $6k initial amount following $1k monthly contributions. From what you've mentioned investing directly in Vanguard may the better option once fees are considered.
xx Miss Piggy

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FFA

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Re: Australian Investing Thread
« Reply #2411 on: November 28, 2016, 05:25:59 PM »
Generally MMM forum would give a definitive NO to 1), but I think this particular thread is a bit more open minded to a bit of market timing.... rogue aussies! I tend to time a little at the margin but the core of my allocation is fixed. if you do, you need to be disciplined and have some process you can follow consistently. Without that, I think the answer is it's best to regularly invest on a schedule and don't mind the prices.

2) the main difference is the fees. There might be some other very subtle differences but the portfolio and underlying investments are basically the same. The managed fund gives you a bit more service to call Vanguard, invest via BPay/EFT, capital gains tax statements, etc. The ETF might be slightly more work but nothing insurmountable. Personally I use the ETF's VAS, VGS, etc. If you're trading in $5k parcels or more ETF's would be more cost effective.

Thanks FFA! Very helpful.

I am planning to invest $6k initial amount following $1k monthly contributions. From what you've mentioned investing directly in Vanguard may the better option once fees are considered.
Pleasure, yeah brokerage on $1k might be a bit expensive (>1%). Another option you could just invest $3k quarterly, assuming $15 brokerage (eg nabtrade) would be 0.5%, which I think is acceptable. Otherwise the fees in the retail fund at 0.9% are rather steep versus the ETF at 0.14%. Adds up over the long run. Good luck !

AnotherGoodGuy

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Re: Australian Investing Thread
« Reply #2412 on: November 29, 2016, 05:58:55 PM »
G'day all. I have the below individual parcels which I bought in the last 2 years with the combined worth of around 100-110k

ANZ, NAB, CBA, MQG, COH, CSL, TPM, VIT, BHP, MPL, ORG, TLS, RHC, ISD & WOW

We have our own PPOR and an IP in Sydney and we both are 43 years old and have 2 school going kids.
Our combined gross income is 260k per annum. We have a mortgage of 820k on our PPOR and
220k loan on the IP which is positively geared. We donít have any other loans and have 50k for emergency.

Few weeks ago we started our own SMSF with 310k and I am keen to invest a portion of the money in few ETFs.
I am leaning towards investing 50k in VTS and I would like to keep some in cash to spread the risk. I was thinking of investing a portion in VEU and VAP but I am not entirely convinced. Since I already have the individual parcels that are mostly made up of bluechip companies, I think I shouldn't invest in VAS. I would be interested in hearing other peopleís ideas please.

Thanks

steveo

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Re: Australian Investing Thread
« Reply #2413 on: November 29, 2016, 09:54:30 PM »
G'day all. I have the below individual parcels which I bought in the last 2 years with the combined worth of around 100-110k

ANZ, NAB, CBA, MQG, COH, CSL, TPM, VIT, BHP, MPL, ORG, TLS, RHC, ISD & WOW

We have our own PPOR and an IP in Sydney and we both are 43 years old and have 2 school going kids.
Our combined gross income is 260k per annum. We have a mortgage of 820k on our PPOR and
220k loan on the IP which is positively geared. We donít have any other loans and have 50k for emergency.

Few weeks ago we started our own SMSF with 310k and I am keen to invest a portion of the money in few ETFs.
I am leaning towards investing 50k in VTS and I would like to keep some in cash to spread the risk. I was thinking of investing a portion in VEU and VAP but I am not entirely convinced. Since I already have the individual parcels that are mostly made up of bluechip companies, I think I shouldn't invest in VAS. I would be interested in hearing other peopleís ideas please.

Thanks

My take is:-

1. Sell the IP.
2. Use the proceeds to pay off debt.
3. Invest all available money in relation to the SMSF into 100% stocks. I'd go VAS and VGS but I'd probably lean towards more in VGS.
4. I'm assuming the Shares are outside of Super and if so I'd probably just stick with them.
5. Save a tonne of money outside of super and bare minimum into Super. I'd invest mostly in VAS, VAF and VGS after all your debts are paid off.
6. Retire when you have enough to get to your Super from money outside of super and you reach whatever target you think is going to work -i.e. a 3%-5% WR.

One question - do you really need the SMSF ?

marty998

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Re: Australian Investing Thread
« Reply #2414 on: November 30, 2016, 12:20:40 AM »
G'day all. I have the below individual parcels which I bought in the last 2 years with the combined worth of around 100-110k

ANZ, NAB, CBA, MQG, COH, CSL, TPM, VIT, BHP, MPL, ORG, TLS, RHC, ISD & WOW

We have our own PPOR and an IP in Sydney and we both are 43 years old and have 2 school going kids.
Our combined gross income is 260k per annum. We have a mortgage of 820k on our PPOR and
220k loan on the IP which is positively geared. We donít have any other loans and have 50k for emergency.

Few weeks ago we started our own SMSF with 310k and I am keen to invest a portion of the money in few ETFs.
I am leaning towards investing 50k in VTS and I would like to keep some in cash to spread the risk. I was thinking of investing a portion in VEU and VAP but I am not entirely convinced. Since I already have the individual parcels that are mostly made up of bluechip companies, I think I shouldn't invest in VAS. I would be interested in hearing other peopleís ideas please.

Thanks

My take is:-

1. Sell the IP.
2. Use the proceeds to pay off debt.
3. Invest all available money in relation to the SMSF into 100% stocks. I'd go VAS and VGS but I'd probably lean towards more in VGS.
4. I'm assuming the Shares are outside of Super and if so I'd probably just stick with them.
5. Save a tonne of money outside of super and bare minimum into Super. I'd invest mostly in VAS, VAF and VGS after all your debts are paid off.
6. Retire when you have enough to get to your Super from money outside of super and you reach whatever target you think is going to work -i.e. a 3%-5% WR.

One question - do you really need the SMSF ?

Whoa whoa whoa whoa whoa back it up a second!

1. Selling the IP will incur significant capital gains taxes, especially at their current incomes. If the IP is in Sydney they've probably done really well out of it.

2. Open an offset account against the PPOR and put the $50k emergency fund there. This reduces your interest bill on the mortgage, and you are no longer taxed on the interest income on this "savings"

3. An SMSF only really works if you actually do all the work yourself. No use having to pay $5k to an administrator for the accounting work, might as well pay $100 a year to an industry fund. Not a big fan of international (don't like currency volatility), so try and find a hedged option for investments.

4. I would sell the shares and pay down the PPOR mortgage (in an offset account). This is personal preference. It would be better to sell the shares and just hold VAS. Easy to administer, unless you know you're onto a winner with your picks. Do you have a reason for holding what you do?

5. Salary sacrifice your maximum $30k this year, and $25k a year afterwards. With the balance of your wage surplus, pay down PPOR mortgage and invest in shares in a 50:50 ratio.

6. Retire when you think you're done. Might be good to downsize and free up capital from the PPOR in future when the kids have left home. PPOR sale will be CGT free, better outcome than selling the IP. You can live off the rent plus the surplus from the PPOR sale + the dividends from VAS.

This only needs to get you to 60 at which point you can draw a big pension from Super.

steveo

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Re: Australian Investing Thread
« Reply #2415 on: November 30, 2016, 01:15:50 AM »
1. Selling the IP will incur significant capital gains taxes, especially at their current incomes. If the IP is in Sydney they've probably done really well out of it.

This is a really good point. I hate IP especially in Australia but if you get smashed with capital gains tax then it is probably not a good idea to sell. When can you sell that thing though ?

2. Open an offset account against the PPOR and put the $50k emergency fund there. This reduces your interest bill on the mortgage, and you are no longer taxed on the interest income on this "savings"

Good idea.

4. I would sell the shares and pay down the PPOR mortgage (in an offset account). This is personal preference. It would be better to sell the shares and just hold VAS. Easy to administer, unless you know you're onto a winner with your picks. Do you have a reason for holding what you do?

I agree with this but the capital gains tax is why I would hold on the shares. Sell them when you are retired with a lower income.

5. Salary sacrifice your maximum $30k this year, and $25k a year afterwards. With the balance of your wage surplus, pay down PPOR mortgage and invest in shares in a 50:50 ratio.

I get your point here but if you are going to retire early I think you need a lot of money outside of super. I would salary sacrifice when I know that I have enough outside of super.

6. Retire when you think you're done. Might be good to downsize and free up capital from the PPOR in future when the kids have left home. PPOR sale will be CGT free, better outcome than selling the IP. You can live off the rent plus the surplus from the PPOR sale + the dividends from VAS.

This only needs to get you to 60 at which point you can draw a big pension from Super.

This is a good option. VAS outside of super and sell PPOR. Why not go and live in the IP after that and then sell it as well.

AnotherGoodGuy

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Re: Australian Investing Thread
« Reply #2416 on: November 30, 2016, 02:04:57 AM »
Thanks Steve and Marty.

1. Selling the IP is not an option for the very obvious reason.....to avoid CGT. Also the IP has almost doubled since we bought in 2007.
    Also it will be atleast another 15 years before the kids move out.
2. Sorry, forgot to mention that 50k is already sitting in the Offset account
3. I can consider selling the shares but 70% are doing good and the rest are not. So far, I've had a growth of 3.1% plus I collected couple of grand of dividends along the way. I don't hold any VAS or any other ETF's.
4. The annual cost for running the SMSF is $799/annum and the fee for the first 2 years has been waived as part of their offer at the time

My main question is, how effectively do I invest the money that is in SMSF? I was leaning towards investing 70% in ETF's (particularly Vanguard....VTS & VEU) and leave 30% of cash in SMSF. Please let me know your thoughts on this.

Thanks again.
« Last Edit: November 30, 2016, 02:07:15 AM by AnotherGoodGuy »

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Re: Australian Investing Thread
« Reply #2417 on: November 30, 2016, 03:27:21 AM »
Hi mate,

I think the general principles for long term investments (super) and a large amount of capital ($300k) are:-

1. Invest now with everything that you have - i.e. don't dollar cost average into the market.
2. Use a low cost world index tracker.

I use VGS rather than VTS/VEU but that is your call for your world index tracker. I think that there is some information within this thread on the advantages of either option. I choose VGS and I can't remember the pros and cons of VGS versus VTS/VEU. Someone else might provide some more info here.

You do though have some other options. Do you want to be 100% allocated to stocks ? Do you want to have some cash/bonds as part of your asset allocation ? Do you want to have some money invested into the Australian Index - i.e. VAS.

I would personally just go 100% VGS right now and invest in VAS outside of Super but I think that there are arguments to do the reverse. If you want to dollar cost average into the market or just have some cash on the side I think that is fine as well but from a rational perspective it's probably better to just invest it all at once.

urbanista

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Re: Australian Investing Thread
« Reply #2418 on: December 01, 2016, 08:43:56 PM »

3. I can consider selling the shares but 70% are doing good and the rest are not. So far, I've had a growth of 3.1% plus I collected couple of grand of dividends along the way. I don't hold any VAS or any other ETF's.

You absolutely should sell shares and put the money into your offset account. Then do mortgage redraw for the same amount and buy shares again (but different shares, VAS, for example). That way mortgage interest for the part that you redraw will be tax deductible. This strategy will give you $4,000 tax deductions ($1600 after tax) per year if your mortgage is at 4% and amount invested is $100K. That's what we did with our shares. Otherwise it is suboptimal to have mortgage on PPOR and shares sitting outside super.

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Re: Australian Investing Thread
« Reply #2419 on: December 01, 2016, 08:51:36 PM »
... sell PPOR. Why not go and live in the IP after that and then sell it as well.

The moment you move into your IP, it becomes a PPOR and triggers the CGT event, i.e. CGT is payable as if you sold the IP.

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Re: Australian Investing Thread
« Reply #2420 on: December 01, 2016, 08:54:04 PM »
AnotherGoodGuy, have you ever lived in your IP? If yes, you can still sell it and claim as a PPOR so no CGT payable.

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Re: Australian Investing Thread
« Reply #2421 on: December 01, 2016, 08:55:37 PM »
NAB has a 3 month free brokerage deal at the moment.  Getting on it as just sold my property (to rent) and pumping the proceeds into shares.

Anyone have any experience with Nab trade?  Seems international trades have come down a lot in price also through them.. and that 3 month deal includes foreign trades but excludes the foreign forex... and may simplify tax as it appears no need to lodge the W8BEN (forget exact name).

I had nabtrade for 2 years. They gave me 3 months trading for free as well, and generally, I had no issues with them.

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Re: Australian Investing Thread
« Reply #2422 on: December 01, 2016, 10:46:01 PM »
Wait a minute.

You can only claim for one PPOR at a time. Yes, you can move into your IP and then it becomes a PPOR, but you can only claim PPOR status for it for the time that it actually was a PPOR, NOT for the whole time you have owned it. Actually I think you can claim for the time you haven't claimed for another PPOR, so in theory you possibly could claim for when you owned the IP but no PPOR - that's a bit dodgy though.

Moving into a IP changes its status, but the CGT event only occurs when you eventually sell it. You need to have a valuation done when you are about to move into it, so that you know what your capital gains liability will be when you eventually sell it.

steveo

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Re: Australian Investing Thread
« Reply #2423 on: December 02, 2016, 12:34:09 AM »
Wait a minute.

You can only claim for one PPOR at a time. Yes, you can move into your IP and then it becomes a PPOR, but you can only claim PPOR status for it for the time that it actually was a PPOR, NOT for the whole time you have owned it. Actually I think you can claim for the time you haven't claimed for another PPOR, so in theory you possibly could claim for when you owned the IP but no PPOR - that's a bit dodgy though.

Moving into a IP changes its status, but the CGT event only occurs when you eventually sell it. You need to have a valuation done when you are about to move into it, so that you know what your capital gains liability will be when you eventually sell it.

That sucks. It just reinforces to me though how poor an investment investment properties are. In stating that the capital growth has been out of this world.

urbanista

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Re: Australian Investing Thread
« Reply #2424 on: December 02, 2016, 03:57:46 AM »
Moving into a IP changes its status, but the CGT event only occurs when you eventually sell it. You need to have a valuation done when you are about to move into it, so that you know what your capital gains liability will be when you eventually sell it.

That's right, I stand corrected :)

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Re: Australian Investing Thread
« Reply #2425 on: December 02, 2016, 04:09:41 AM »
Thank you steveo, urbanista & deborah for your inputs.

Back to my main query now. I have around 300k in my SMSF that we recently setup. What are my options for investing that money wisely?


marty998

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Re: Australian Investing Thread
« Reply #2426 on: December 02, 2016, 04:41:51 AM »

3. I can consider selling the shares but 70% are doing good and the rest are not. So far, I've had a growth of 3.1% plus I collected couple of grand of dividends along the way. I don't hold any VAS or any other ETF's.

You absolutely should sell shares and put the money into your offset account. Then do mortgage redraw for the same amount and buy shares again (but different shares, VAS, for example). That way mortgage interest for the part that you redraw will be tax deductible. This strategy will give you $4,000 tax deductions ($1600 after tax) per year if your mortgage is at 4% and amount invested is $100K. That's what we did with our shares. Otherwise it is suboptimal to have mortgage on PPOR and shares sitting outside super.

Oh god I hope you didn't redraw, and thus have a mixed purpose loan. You really need to have a split loan in place.

Gets incredibly messy with a part PPOR loan part investment loan and having to apportion interest, repayments and redraws.

You can piss in a pot but see how far you get trying to un-mix it afterwards...

marty998

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Re: Australian Investing Thread
« Reply #2427 on: December 02, 2016, 04:45:03 AM »
... sell PPOR. Why not go and live in the IP after that and then sell it as well.

The moment you move into your IP, it becomes a PPOR and triggers the CGT event, i.e. CGT is payable as if you sold the IP.

This isn't true either. A specified CGT event has to occur.

Once you finally sell the IP that you have moved into, then you work out an apportioned gain based on the number of days held as an IP and number of days held as a PPOR.

For example if your gain is $300,000, and you lived in it as a PPOR for 40% of the time, then your taxable gain is $180,000 x 50% if eligible for the CGT discount.

AnotherGoodGuy

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Re: Australian Investing Thread
« Reply #2428 on: December 02, 2016, 04:51:52 AM »
Not yet Marty.....I am only gathering information at the moment and not making any move.  Also I don't like the idea of selling the shares and cop the CGT and then redraw the same money from the offset to buy shares again. If I sell the shares and deposit the money in the offset account, what is the meaning of diversification when it comes to investment?

Additionally, the parcels (approx 45k) that I've bought in the last 12-14 months has been doing really well....have gone up by more than 10%.




AnotherGoodGuy

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Re: Australian Investing Thread
« Reply #2429 on: December 02, 2016, 04:55:27 AM »
... sell PPOR. Why not go and live in the IP after that and then sell it as well.

The moment you move into your IP, it becomes a PPOR and triggers the CGT event, i.e. CGT is payable as if you sold the IP.

This isn't true either. A specified CGT event has to occur.

Once you finally sell the IP that you have moved into, then you work out an apportioned gain based on the number of days held as an IP and number of days held as a PPOR.

For example if your gain is $300,000, and you lived in it as a PPOR for 40% of the time, then your taxable gain is $180,000 x 50% if eligible for the CGT discount.

I agree, this is my understanding as well. We bought the apartment in 2007 and lived there until end of 2009. It has been rented out from then till now and if I were to sell, the appreciation since I've moved out will only be taken into consideration when paying CGT.

marty998

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Re: Australian Investing Thread
« Reply #2430 on: December 02, 2016, 05:05:39 AM »
... sell PPOR. Why not go and live in the IP after that and then sell it as well.

The moment you move into your IP, it becomes a PPOR and triggers the CGT event, i.e. CGT is payable as if you sold the IP.

This isn't true either. A specified CGT event has to occur.

Once you finally sell the IP that you have moved into, then you work out an apportioned gain based on the number of days held as an IP and number of days held as a PPOR.

For example if your gain is $300,000, and you lived in it as a PPOR for 40% of the time, then your taxable gain is $180,000 x 50% if eligible for the CGT discount.

I agree, this is my understanding as well. We bought the apartment in 2007 and lived there until end of 2009. It has been rented out from then till now and if I were to sell, the appreciation since I've moved out will only be taken into consideration when paying CGT.

You've just gone past the 6 year rule as well...

urbanista

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Re: Australian Investing Thread
« Reply #2431 on: December 02, 2016, 08:52:02 PM »

3. I can consider selling the shares but 70% are doing good and the rest are not. So far, I've had a growth of 3.1% plus I collected couple of grand of dividends along the way. I don't hold any VAS or any other ETF's.

You absolutely should sell shares and put the money into your offset account. Then do mortgage redraw for the same amount and buy shares again (but different shares, VAS, for example). That way mortgage interest for the part that you redraw will be tax deductible. This strategy will give you $4,000 tax deductions ($1600 after tax) per year if your mortgage is at 4% and amount invested is $100K. That's what we did with our shares. Otherwise it is suboptimal to have mortgage on PPOR and shares sitting outside super.

Oh god I hope you didn't redraw, and thus have a mixed purpose loan. You really need to have a split loan in place.

Gets incredibly messy with a part PPOR loan part investment loan and having to apportion interest, repayments and redraws.

You can piss in a pot but see how far you get trying to un-mix it afterwards...

Of course I split the loan first. Sorry, I thought it was obvious :)

urbanista

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Re: Australian Investing Thread
« Reply #2432 on: December 02, 2016, 09:00:31 PM »
Not yet Marty.....I am only gathering information at the moment and not making any move.  Also I don't like the idea of selling the shares and cop the CGT and then redraw the same money from the offset to buy shares again. If I sell the shares and deposit the money in the offset account, what is the meaning of diversification when it comes to investment?

Additionally, the parcels (approx 45k) that I've bought in the last 12-14 months has been doing really well....have gone up by more than 10%.

CGT 100K * 10% / 2 = 5K taxable income to pay tax once.

Meanwhile, 4K deductions are lost every year.

Just saying.


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Re: Australian Investing Thread
« Reply #2433 on: December 03, 2016, 12:46:58 AM »
Not yet Marty.....I am only gathering information at the moment and not making any move.  Also I don't like the idea of selling the shares and cop the CGT and then redraw the same money from the offset to buy shares again. If I sell the shares and deposit the money in the offset account, what is the meaning of diversification when it comes to investment?

Additionally, the parcels (approx 45k) that I've bought in the last 12-14 months has been doing really well....have gone up by more than 10%.
Didn't you say they were mixed? Some went up and some went down? If you have some that are capital losses, this helps the case to sell some shares if the tax is reduced. Unless you have a lower income year coming up soon, I think the idea is worth considering.

I still consider myself an investing beginner - for basic things like asset allocation the thing that helped me the most was reading the bogleheads wiki and coming up with an IPS.

deborah

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Re: Australian Investing Thread
« Reply #2434 on: December 03, 2016, 02:34:00 AM »
Not yet Marty.....I am only gathering information at the moment and not making any move.  Also I don't like the idea of selling the shares and cop the CGT and then redraw the same money from the offset to buy shares again. If I sell the shares and deposit the money in the offset account, what is the meaning of diversification when it comes to investment?

Additionally, the parcels (approx 45k) that I've bought in the last 12-14 months has been doing really well....have gone up by more than 10%.

CGT 100K * 10% / 2 = 5K taxable income to pay tax once.

Meanwhile, 4K deductions are lost every year.

Just saying.


Where did you get the 4k from?

marty998

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Re: Australian Investing Thread
« Reply #2435 on: December 03, 2016, 06:11:23 AM »

3. I can consider selling the shares but 70% are doing good and the rest are not. So far, I've had a growth of 3.1% plus I collected couple of grand of dividends along the way. I don't hold any VAS or any other ETF's.

You absolutely should sell shares and put the money into your offset account. Then do mortgage redraw for the same amount and buy shares again (but different shares, VAS, for example). That way mortgage interest for the part that you redraw will be tax deductible. This strategy will give you $4,000 tax deductions ($1600 after tax) per year if your mortgage is at 4% and amount invested is $100K. That's what we did with our shares. Otherwise it is suboptimal to have mortgage on PPOR and shares sitting outside super.

Oh god I hope you didn't redraw, and thus have a mixed purpose loan. You really need to have a split loan in place.

Gets incredibly messy with a part PPOR loan part investment loan and having to apportion interest, repayments and redraws.

You can piss in a pot but see how far you get trying to un-mix it afterwards...

Of course I split the loan first. Sorry, I thought it was obvious :)

Not obvious when you said redraw. If you said pay down and take a new loan, that's a different story. I cringe every-time I hear people redrawing for a car or holiday... ruins everything down the track.

Not yet Marty.....I am only gathering information at the moment and not making any move.  Also I don't like the idea of selling the shares and cop the CGT and then redraw the same money from the offset to buy shares again. If I sell the shares and deposit the money in the offset account, what is the meaning of diversification when it comes to investment?

Additionally, the parcels (approx 45k) that I've bought in the last 12-14 months has been doing really well....have gone up by more than 10%.

CGT 100K * 10% / 2 = 5K taxable income to pay tax once.

Meanwhile, 4K deductions are lost every year.

Just saying.

Where did you get the 4k from?

100k borrowings x 4%. The idea is to replace PPOR debt with deductible debt. If you are going to hold $100k shares, you may as well use borrowed money against the house, rather than having a bigger PPOR loan.

goldenmoustache

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Re: Australian Investing Thread
« Reply #2436 on: December 04, 2016, 05:02:18 AM »
Newbie question about managed index funds ROI and capital loss

I bought over a few months $146,000 of Vanguard Balanced Index Fund, equivalent to 106,195 units (blended price ($146,000/106,195) = $1.3748) .
I reinvested the various distributions ($11,506) which added 8,655 units to the fund (the blended price of the reinvestment ($11,506/8,655) = $1.3294) .

My blended price for total fund ($157,506/114,850) = $1.37

Current unit price is $1.3297, equal to a total value of (114,850 x $1.3297) = $152,716

Question 1: how do I count my current return on investment?

a) $152,716 / $146,000 = +4.6%  (current value divided by what I actually put in excluding reinvestment) or 
b) $152,716 / $157,506 = -3%  (current value divided by what I actually put in + reinvestment)

Question 2: If I sell all my units (say to move to a 100% shares ETFs e.g. VGS), can I claim $157,506 - $152,716 = $4,790 as capital loss?

thanks

deborah

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Re: Australian Investing Thread
« Reply #2437 on: December 04, 2016, 10:10:44 AM »
There is a sticky thread for the order to invest - see http://forum.mrmoneymustache.com/investor-alley/investment-order/. I suggested to the moderators that it could be changed st that it had the order for each country, and the country's name at the beginning of the particular post. What order do we want to put in that thread? Off the top of my head...

WHAT           
0. Pay the minimum required on all debts.
1. Establish an emergency fund to your satisfaction.  See https://www.bogleheads.org/wiki/Emergency_fund.  This is most efficient if it is in your mortgage offset account.       
2. Pay off any debts with interest rates above your mortgage rate.
3. Put money into your PPOR mortgage offset account.           
4. If your taxable income is less than $51,021 (before salary sacrifice) consider contributing $1000 per year to superannuation to get the Government co-contribution.
5. Pay off any debts above the return you can get on your investments.
6. If you taxable income is more than $37,000 Salary Sacrifice no more than 25% of the remainder into Superannuation - depending on your ER age.
7. Invest any extra.           
           
WHY           
0. Don't get yourself into trouble.           
1. Give yourself at least enough buffer to avoid worries about bouncing checks.
2.& 3. Because it's untaxed, the effective return on your mortgage offset account is likely to be the highest percent return you can get on your money           
4. When the government is giving you money - take it.
5. It's better to pay of expensive debt than to invest.
6. Salary sacrifice is taxed at 15% as it goes into superannuation and people on low incomes have a lower tax rate. You will need other money to last you between when you retire and when you are eligible for superannuation. However superannuation tax rates are low.           
7. Because earnings, even if taxed, are beneficial           

deborah

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Re: Australian Investing Thread
« Reply #2438 on: December 04, 2016, 10:12:58 AM »
Newbie question about managed index funds ROI and capital loss

I bought over a few months $146,000 of Vanguard Balanced Index Fund, equivalent to 106,195 units (blended price ($146,000/106,195) = $1.3748) .
I reinvested the various distributions ($11,506) which added 8,655 units to the fund (the blended price of the reinvestment ($11,506/8,655) = $1.3294) .

My blended price for total fund ($157,506/114,850) = $1.37

Current unit price is $1.3297, equal to a total value of (114,850 x $1.3297) = $152,716

Question 1: how do I count my current return on investment?

a) $152,716 / $146,000 = +4.6%  (current value divided by what I actually put in excluding reinvestment) or 
b) $152,716 / $157,506 = -3%  (current value divided by what I actually put in + reinvestment)

Question 2: If I sell all my units (say to move to a 100% shares ETFs e.g. VGS), can I claim $157,506 - $152,716 = $4,790 as capital loss?

thanks

4.6% return, $4790 capital loss.

marty998

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Re: Australian Investing Thread
« Reply #2439 on: December 04, 2016, 02:05:51 PM »
The industry works it out using daily compounded returns, which take into account when you have re-invested your distributions.

So your denominator is somewhere between $146k and $157,500, but we can't work this out without knowing when your reinvestments occurred.

For Q2, your capital loss will be reduced by any tax deferred income gained via those distributions. Vanguard will detail this to you in the annual tax statements and give you the CGT information if you dispose of your investment.
« Last Edit: December 04, 2016, 02:07:58 PM by marty998 »

goldenmoustache

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Re: Australian Investing Thread
« Reply #2440 on: December 04, 2016, 02:37:18 PM »
The industry works it out using daily compounded returns, which take into account when you have re-invested your distributions.

So your denominator is somewhere between $146k and $157,500, but we can't work this out without knowing when your reinvestments occurred.

For Q2, your capital loss will be reduced by any tax deferred income gained via those distributions. Vanguard will detail this to you in the annual tax statements and give you the CGT information if you dispose of your investment.

the reinvestments occurred automatically the first day of each new quarter (as I have the "reinvest" option for distribution) without going into daily details, does this simplify the calculation?

I still don't understand why my current gross return is not (current total value / cash I put in). Naively, the way I think of it is: I paid $X for something, that something is a "black box" that is now worth $Y , my return is $Y / $X.


englyn

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Re: Australian Investing Thread
« Reply #2441 on: December 04, 2016, 08:22:23 PM »
Just to clarify:
DO NOT pay extra on your mortgage and then redraw from it for other investments ie IP deposit or shares. You would have a mixed purpose loan and a huge headache.
DO store extra cash in an offset account against your home mortgage, and later use that cash for investment purposes. This is different! Also valid: store extra cash in an offset against IP loan and later use that cash for personal purposes. In these cases it's not an extra loan, so doesn't have complications.
OR DO leave cash in offset against home PPOR mortgage and set up new loan against equity in PPOR for investment purposes for increased tax deductibility.

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Re: Australian Investing Thread
« Reply #2442 on: December 04, 2016, 10:12:15 PM »

Didn't you say they were mixed? Some went up and some went down? If you have some that are capital losses, this helps the case to sell some shares if the tax is reduced. Unless you have a lower income year coming up soon, I think the idea is worth considering.

I still consider myself an investing beginner - for basic things like asset allocation the thing that helped me the most was reading the bogleheads wiki and coming up with an IPS.

Thanks cakie for your reply. I did say I had mixed results and as I've mentioned before only the shares that I bought over the last 12 months are going good. Anyway, I plotted my portfolio using this fantastic site called sharesight.com.au and it gave me all the critical numbers I want. Total return so far is 4.95% and the capital gain is -0.55%  with an income of 5.5%. Also I have collected 6.5% along the way as dividends. I will give a thought about selling them and moving the money into my offset account.

Also, I read this very nice blog by a young Canadian couple http://www.millennial-revolution.com/ ...... written in plain English for beginners like me.


happy

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Re: Australian Investing Thread
« Reply #2443 on: December 05, 2016, 03:12:51 AM »
My 2c.

WHAT           
0. Pay the minimum required on all debts.   Agree
1. Establish an emergency fund to your satisfaction.  See https://www.bogleheads.org/wiki/Emergency_fund If  you have a mortgage its most efficient to put it in a mortgage offset account  OR use springy debt http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/   
2. Pay off any debts with interest rates above your mortgage rate. Agree
3. Put money into your PPOR mortgage offset account. agree          
4. If your taxable income is less than $51,021 (before salary sacrifice) consider contributing $1000 per year to superannuation to get the Government co-contribution. Agree
5. Pay off any debts above the return you can get on your investments. agree
6. If you taxable income is more than $37,000 Salary Sacrifice no more than 25% of the remainder into Superannuation - depending on your ER age. Disagree here, how much to put in super depends on your age,  current super balance, estimated ER date, and income ( marginal tax rate).  For a young person with an income in the highest marginal rate its still appropriate to sacrifice the full amount IMO.  I think its too hard to specify - need to say something like optimise super  salary sacrifice depending on your age,  current super balance, estimated ER date, and income ( marginal tax rate)
7. Invest any extra into low cost index funds. Note for those wishing to go the IP route this is not correct, but then the whole list is not correct with regard to paying off debt in that case.           
           
     
Journalling at Happy Aussie Downshifter

deborah

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Re: Australian Investing Thread
« Reply #2444 on: December 05, 2016, 03:35:38 AM »
My 2c.

WHAT           
0. Pay the minimum required on all debts.   Agree
1. Establish an emergency fund to your satisfaction.  See https://www.bogleheads.org/wiki/Emergency_fund If  you have a mortgage its most efficient to put it in a mortgage offset account  OR use springy debt http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/   
2. Pay off any debts with interest rates above your mortgage rate. Agree
3. Put money into your PPOR mortgage offset account. agree          
4. If your taxable income is less than $51,021 (before salary sacrifice) consider contributing $1000 per year to superannuation to get the Government co-contribution. Agree
5. Pay off any debts above the return you can get on your investments. agree
6. If you taxable income is more than $37,000 Salary Sacrifice no more than 25% of the remainder into Superannuation - depending on your ER age. Disagree here, how much to put in super depends on your age,  current super balance, estimated ER date, and income ( marginal tax rate).  For a young person with an income in the highest marginal rate its still appropriate to sacrifice the full amount IMO.  I think its too hard to specify - need to say something like optimise super  salary sacrifice depending on your age,  current super balance, estimated ER date, and income ( marginal tax rate)
7. Invest any extra into low cost index funds. Note for those wishing to go the IP route this is not correct, but then the whole list is not correct with regard to paying off debt in that case.           
           
     
Thanks very much Happy!  How about...

6. If you taxable income is more than $37,000 optimise Salary Sacrifice into Superannuation - you need to work this out individually, because how much depends on at what age you will ER, how much is already inside/outside superannuation, and your marginal tax rate.

Anatidae V

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Re: Australian Investing Thread
« Reply #2445 on: December 05, 2016, 04:03:44 AM »
I have skimmed this thread, forgotten what I learnt, and tried to catch up again. We have a tiny amount in shares (VAS/VHY), most of our money in cash and are totally undecided if or when we should buy a house/PPOR. So we've tried putting off the decision again, since I've heard I'm emotionally unreliable at the moment, being pregnant ;-)

Should we keep the cash as it is, since we *could* buy a house? How long is it reasonable to maintain a cash deposit before it becomes ridiculous and obvious one isn't going to purchase? Years? (I'm concerned I'm losing by being out of the market but then maybe we'll find the house we want late next year...)

These steps assume a mortgage, and don't mention HECS. Any thoughts on where HECS would fit in the "debt payoff", and if perpetual renters can just skip to Step 7? Where would one put "save home deposit" in this recommendation?
My 2c.

WHAT           
0. Pay the minimum required on all debts.   Agree
1. Establish an emergency fund to your satisfaction.  See https://www.bogleheads.org/wiki/Emergency_fund If  you have a mortgage its most efficient to put it in a mortgage offset account  OR use springy debt http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/   
2. Pay off any debts with interest rates above your mortgage rate. Agree
3. Put money into your PPOR mortgage offset account. agree          
4. If your taxable income is less than $51,021 (before salary sacrifice) consider contributing $1000 per year to superannuation to get the Government co-contribution. Agree
5. Pay off any debts above the return you can get on your investments. agree
6. If you taxable income is more than $37,000 Salary Sacrifice no more than 25% of the remainder into Superannuation - depending on your ER age. Disagree here, how much to put in super depends on your age,  current super balance, estimated ER date, and income ( marginal tax rate).  For a young person with an income in the highest marginal rate its still appropriate to sacrifice the full amount IMO.  I think its too hard to specify - need to say something like optimise super  salary sacrifice depending on your age,  current super balance, estimated ER date, and income ( marginal tax rate)
7. Invest any extra into low cost index funds. Note for those wishing to go the IP route this is not correct, but then the whole list is not correct with regard to paying off debt in that case.           
           
     
Thanks very much Happy!  How about...

6. If you taxable income is more than $37,000 optimise Salary Sacrifice into Superannuation - you need to work this out individually, because how much depends on at what age you will ER, how much is already inside/outside superannuation, and your marginal tax rate.

deborah

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Re: Australian Investing Thread
« Reply #2446 on: December 05, 2016, 04:59:49 AM »
I have skimmed this thread, forgotten what I learnt, and tried to catch up again. We have a tiny amount in shares (VAS/VHY), most of our money in cash and are totally undecided if or when we should buy a house/PPOR. So we've tried putting off the decision again, since I've heard I'm emotionally unreliable at the moment, being pregnant ;-)

Should we keep the cash as it is, since we *could* buy a house? How long is it reasonable to maintain a cash deposit before it becomes ridiculous and obvious one isn't going to purchase? Years? (I'm concerned I'm losing by being out of the market but then maybe we'll find the house we want late next year...)

These steps assume a mortgage, and don't mention HECS. Any thoughts on where HECS would fit in the "debt payoff", and if perpetual renters can just skip to Step 7? Where would one put "save home deposit" in this recommendation?
My 2c.

WHAT           
0. Pay the minimum required on all debts.   Agree
1. Establish an emergency fund to your satisfaction.  See https://www.bogleheads.org/wiki/Emergency_fund If  you have a mortgage its most efficient to put it in a mortgage offset account  OR use springy debt http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/   
2. Pay off any debts with interest rates above your mortgage rate. Agree
3. Put money into your PPOR mortgage offset account. agree          
4. If your taxable income is less than $51,021 (before salary sacrifice) consider contributing $1000 per year to superannuation to get the Government co-contribution. Agree
5. Pay off any debts above the return you can get on your investments. agree
6. If you taxable income is more than $37,000 Salary Sacrifice no more than 25% of the remainder into Superannuation - depending on your ER age. Disagree here, how much to put in super depends on your age,  current super balance, estimated ER date, and income ( marginal tax rate).  For a young person with an income in the highest marginal rate its still appropriate to sacrifice the full amount IMO.  I think its too hard to specify - need to say something like optimise super  salary sacrifice depending on your age,  current super balance, estimated ER date, and income ( marginal tax rate)
7. Invest any extra into low cost index funds. Note for those wishing to go the IP route this is not correct, but then the whole list is not correct with regard to paying off debt in that case.           
           
     
Thanks very much Happy!  How about...

6. If you taxable income is more than $37,000 optimise Salary Sacrifice into Superannuation - you need to work this out individually, because how much depends on at what age you will ER, how much is already inside/outside superannuation, and your marginal tax rate.
HECS is a debt that comes in under point 0 - pay off what you have to, and (currently) doesn't come under any other point, because it is a lower interest than investments. I was not really assuming a mortgage, though it reads a bit like it does - in this case 2. and 3. are irrelevant.

Let's see where we are...

WHAT           
0. Pay the minimum required on all debts.
1. Establish an emergency fund to your satisfaction.  See https://www.bogleheads.org/wiki/Emergency_fund.  Use your mortgage offset account OR use springy debt http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/  .       
2. Pay off any debts with interest rates above your mortgage rate (if you have one)
3. Put money into your PPOR mortgage offset account (if you have one).           
4. If your taxable income is less than $51,021 (before salary sacrifice) consider contributing $1000 per year to superannuation to get the Government co-contribution.
5. Pay off any debts above the return you can get on your investments.
6. If you taxable income is more than $37,000 optimise Salary Sacrifice into Superannuation - you need to work this out individually, because how much depends on at what age you will ER, how much is already inside/outside superannuation, and your marginal tax rate.
7. Invest any extra into low cost index funds.           
           
WHY           
0. Don't get yourself into trouble.           
1. Give yourself at least enough buffer to avoid worries about bouncing checks.
2.& 3. Because it's untaxed, the effective return on a mortgage offset account is likely to be the highest percent return you can get on your money           
4. When the government is giving you money - take it.
5. It's better to pay of expensive debt than to invest.
6. Salary sacrifice is taxed at 15% as it goes into superannuation and people on low incomes have a lower tax rate. You will need other money to last you between when you retire and when you are eligible for superannuation. However superannuation tax rates are low.           
7. Because earnings, even if taxed, are beneficial           

marty998

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Re: Australian Investing Thread
« Reply #2447 on: December 05, 2016, 01:43:11 PM »
I don't really have a view on 1-8 other than pay off all credit card and personal loan debts first.

The rest (shares, realestate, HECS, super) is all personal reference, except for salary sacrificing super above $80,000 income which IMO is well worth it for the 24% tax saving.

Just posting here to note the Banks have been busy raising the interest rates on their fixed rate loans, and investor loans are being hit the hardest.

Time to lock in was 3 months ago if you wanted to. Onwards and upwards from here.

yurgs

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Re: Australian Investing Thread
« Reply #2448 on: December 05, 2016, 07:50:41 PM »
Few weeks ago we started our own SMSF with 310k and I am keen to invest a portion of the money in few ETFs.
I am leaning towards investing 50k in VTS and I would like to keep some in cash to spread the risk. I was thinking of investing a portion in VEU and VAP but I am not entirely convinced. Since I already have the individual parcels that are mostly made up of bluechip companies, I think I shouldn't invest in VAS. I would be interested in hearing other peopleís ideas please.

In regards to your question how to invest the 310k. MMM wrote an article how to invest a lump sum a while ago:
http://www.mrmoneymustache.com/2014/08/20/how-to-invest-in-overvalued-market/

If you are not comfortable with that approach, you could invest 10% - 20% of your capital each month until you have invested all money. You should set yourself a reminder in the calendar to invest each month and stick to it.

Personally, I would invest in VGS. You are already heavily exposed to Australia with your shares and property. You need some diversification into global stocks.

zinny1

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Re: Australian Investing Thread
« Reply #2449 on: December 07, 2016, 10:01:46 PM »
So, I've read the whole thread! Took me a week (while at work - I also read http://forum.mrmoneymustache.com/investor-alley/basic-australian-investing-thread/) and I'm learning a lot but have a ton more to learn. I have been considering investing more seriously recently after deciding that the deposit I was saving for a house needs to be redirected as I have decided not to purchase a property in the near future/ever.

From Deborah's post;

WHAT           
0. Pay the minimum required on all debts. DONE - no debts at all
1. Establish an emergency fund to your satisfaction.  See https://www.bogleheads.org/wiki/Emergency_fund.  This is most efficient if it is in your mortgage offset account. DONE - have EF in HISA (UBank)
2. Pay off any debts with interest rates above your mortgage rate. DONE - no debts at all
3. Put money into your PPOR mortgage offset account. N/A     
4. If your taxable income is less than $51,021 (before salary sacrifice) consider contributing $1000 per year to superannuation to get the Government co-contribution. N/A
5. Pay off any debts above the return you can get on your investments. DONE - no debts at all
6. If you taxable income is more than $37,000 Salary Sacrifice no more than 25% of the remainder into Superannuation - depending on your ER age. I Salary Sacrifice the maximum concessional amount into Super (30K this year, 25K from 2017 onwards)
7. Invest any extra. This is where I'm up to!

I have $20K (over and above my EF) sitting in UBank earning 2.87% and can add $1000 per fortnight (while still having some fun/travel money and maintaining my EF).

I am tentatively considering either;

a) 20K straight into Vanguard LifeStrategy Balanced Fund and then $1000 every fortnight
b) 20K into ETFs (VAS and ??) and then buy in $6K bundles every quarter

I'm thinking that my investment timeframe is 7-10 (maybe even 15 years). I'm 40 early next year and would like to RE at 50-55. I like my job so it's not a massive hardship to work for the next 10-15 years.
 
Opinions - a versus b? Another approach? I'm still a learner so maybe I can start simple and possibly change tacks as I understand more!

Thanks for any input. Please feel free to reply as if I am an idiot - I am.
« Last Edit: December 08, 2016, 04:54:36 PM by zinny1 »