Author Topic: Australian Investing Thread  (Read 538131 times)

potm

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Re: Australian Investing Thread
« Reply #2450 on: December 10, 2016, 05:03:58 AM »
Why do you say your timeframe is up to 15 years? Is that because that's when you plan to retire.

You will still need your shares after you retire so your timeframe is a lot longer than that. Unless you have plans that require you to sell the shares, it seems to me your timeframe is long term indefinite.

In your position I would go the ETF route.

stashgrower

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Re: Australian Investing Thread
« Reply #2451 on: December 12, 2016, 05:05:50 AM »
Thanks, Deborah and happy.

Anatidae V: There are some answers to your Q beginning on page 38(!) of this thread. Also there's some info later on another thread: forum.mrmoneymustache.com/investor-alley/australian-investor-where-do-i-start/

I agree it would be helpful to see where saving for a house deposit fits on the list.

happy

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Re: Australian Investing Thread
« Reply #2452 on: December 12, 2016, 04:03:55 PM »

I agree it would be helpful to see where saving for a house deposit fits on the list.

If you have no debt, and some sort of e-fund, have maxed your super optimally to your satisfaction, then you are up to 7.
Now I see the list is aimed at the average Joe who comes scarred by consumerism.

If you are young and starting with a clean slate so to speak I still think the best way is to regard housing as an expense, that you need to save and invest for. If I had my time over I would go the Bigchrisb route for housing. Rent and sublet rooms so that my housing costs were minimal or even better didn't cost me anything, save and invest.  Save and invest.  Once your investments are large enough buy a house with no mortgage or minimal mortgage. It might take 10 years. How long you save for, how much house you buy, how little mortgage probably depends on where you live, and how much you earn and on  your individual desires/preferences.
Journalling at Happy Aussie Downshifter

pancakes

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Re: Australian Investing Thread
« Reply #2453 on: December 12, 2016, 04:17:19 PM »

Our situations are so similar Anatidae it is a bit eerie to read. We've held a (growing) cash deposit for 8 years now. It seems so silly when I think about it but every year is the year we just might buy a place. Next year with the baby might just be the push we need?

On the positive side my bank increased their savings interest rate back up to 3% this week...

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?

zinny1

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Re: Australian Investing Thread
« Reply #2454 on: December 12, 2016, 05:11:16 PM »
Why do you say your timeframe is up to 15 years? Is that because that's when you plan to retire.

You will still need your shares after you retire so your timeframe is a lot longer than that. Unless you have plans that require you to sell the shares, it seems to me your timeframe is long term indefinite.

In your position I would go the ETF route.

Many thanks for the advice - and of course you are correct, it's an ongoing timeframe. I'm still looking at various sources for advice about the balance of EFTs.

Thanks again.

marty998

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Re: Australian Investing Thread
« Reply #2455 on: December 12, 2016, 11:49:41 PM »
Grr... the Bank is increasing my investor loan interest rates again out of cycle.

Merry Christmas to all property investors I guess...

_______________

Anyone following the Bellamys saga? The executives might be in for some investigation as they were busy selling shares a couple of months ago when it was already known that market share was collapsing. Problem was, they forgot to inform the market about the decline share of baby formula sales.


nnls

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Re: Australian Investing Thread
« Reply #2456 on: December 13, 2016, 01:01:21 AM »
Grr... the Bank is increasing my investor loan interest rates again out of cycle.

Merry Christmas to all property investors I guess...

_______________

Anyone following the Bellamys saga? The executives might be in for some investigation as they were busy selling shares a couple of months ago when it was already known that market share was collapsing. Problem was, they forgot to inform the market about the decline share of baby formula sales.

Are you considering locking in your rates to avoid future rises?


marty998

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Re: Australian Investing Thread
« Reply #2457 on: December 13, 2016, 02:46:53 AM »
Grr... the Bank is increasing my investor loan interest rates again out of cycle.

Merry Christmas to all property investors I guess...

_______________

Anyone following the Bellamys saga? The executives might be in for some investigation as they were busy selling shares a couple of months ago when it was already known that market share was collapsing. Problem was, they forgot to inform the market about the decline share of baby formula sales.

Are you considering locking in your rates to avoid future rises?



Locked in just under half of my net debt 2 years ago at 4.89%. That will run through to September 2019. Not the best decision in hindsight, but at the time it was equal to the variable rate and no one had ever seen interest rates with a 4 in front of them before.

I figure in a couple of years time I may want to start paying all debt down, so there is little point in fixing. Fixed rates started going up 3 months ago - missed the boat on that one anyway.

Anatidae V

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Re: Australian Investing Thread
« Reply #2458 on: December 13, 2016, 03:30:07 AM »

Our situations are so similar Anatidae it is a bit eerie to read. We've held a (growing) cash deposit for 8 years now. It seems so silly when I think about it but every year is the year we just might buy a place. Next year with the baby might just be the push we need?

On the positive side my bank increased their savings interest rate back up to 3% this week...

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?
Well if you're free on Thursday or Sunday we could catch up about this over a non-alcoholic drink... (or one-on-one in January if a crowd is too much :) )

deborah

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Re: Australian Investing Thread
« Reply #2459 on: December 13, 2016, 04:21:12 AM »
The latest version:
AUSTRALIA

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 (long term investments - 10 years) or high interest accounts (short term - 2 or 3 years).           
           
WHY           
0. Don't get yourself into trouble.           
1. Give yourself at least enough buffer to avoid worries about paying bills.
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 off 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. If you are saving for the short term (eg. a house deposit whether PPOR or IP), you want to be absolutely sure that you will get back what you saved, but longer term savings are better off in an index fund.

Note: This assumes that you are employed. If you are a business, make sure that you put the 9.5% superannuation guarantee for yourself because if the business fails, you will at least have that money in old age.



happy

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Re: Australian Investing Thread
« Reply #2460 on: December 13, 2016, 12:06:17 PM »
So HECS might be included in no5., depending on one's return on investments?
Journalling at Happy Aussie Downshifter

deborah

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Re: Australian Investing Thread
« Reply #2461 on: December 13, 2016, 01:50:59 PM »
So HECS might be included in no5., depending on one's return on investments?
Yes. Obviously HECS is also included in 0 because you are paying the minimium back on ALL debts.



bigchrisb

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Re: Australian Investing Thread
« Reply #2462 on: December 13, 2016, 02:03:17 PM »
I'd suggest adding a step 8.  Once you have hit FI, if you get OMY syndrome, consider post tax contributions to super.  Provides some insurance padding in a tax effective environment.

deborah

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Re: Australian Investing Thread
« Reply #2463 on: December 13, 2016, 03:23:17 PM »
I'd suggest adding a step 8.  Once you have hit FI, if you get OMY syndrome, consider post tax contributions to super.  Provides some insurance padding in a tax effective environment.
I think this should be between step 6 and 7 because it is more tax effective. Would you agree?



GT

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Re: Australian Investing Thread
« Reply #2464 on: December 13, 2016, 03:56:14 PM »
At which point should Trusts be setup for tax advantages?


deborah

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Re: Australian Investing Thread
« Reply #2465 on: December 13, 2016, 04:18:29 PM »
IMO, in general, trusts are not a reasonable thing for ERing mustachians because:

1. A trust can be a mechanism for a high earning individual to pay less tax - ERing mustachians probably won't be in this position long enough to justify the fees.

2. Trusts can distribute income from highly taxed individuals to low taxed individuals (who will need to pay tax on the earnings from the trust). ERing mustachians probably aren't in this position.

3. Superannuation is a better tool depending upon how long it is between ERing and your preservation age.

4. Investment bonds (held for 10 years) are a way to access excess money later (before your superannuation preservation age) and tax efficiently.



marty998

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Re: Australian Investing Thread
« Reply #2466 on: December 14, 2016, 12:05:40 AM »
Still useful for anyone with a business. And if you have a significant amount of assets.

The main point wouldn't be to fund your ER, but one benefit would be to assist in structuring assets to pass to the next generation.

deborah

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Re: Australian Investing Thread
« Reply #2467 on: December 14, 2016, 12:42:46 AM »
Still useful for anyone with a business. And if you have a significant amount of assets.

The main point wouldn't be to fund your ER, but one benefit would be to assist in structuring assets to pass to the next generation.
Definitely. That's why I said "in general". If I was structuring to pass to the next generation, I would use a Testamentary Trust. These are a way of not having a trust until after you die, so you can pass to the next generation, and they can be set up by a will, and are not a way of saving/investing.



MsRichLife

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Re: Australian Investing Thread
« Reply #2468 on: December 14, 2016, 07:16:19 PM »
Still useful for anyone with a business. And if you have a significant amount of assets.

The main point wouldn't be to fund your ER, but one benefit would be to assist in structuring assets to pass to the next generation.
Definitely. That's why I said "in general". If I was structuring to pass to the next generation, I would use a Testamentary Trust. These are a way of not having a trust until after you die, so you can pass to the next generation, and they can be set up by a will, and are not a way of saving/investing.

We are using our family trust as part of our estate planning. Assuming our son grows up to be financially responsible, I'd like to think that he'll start a more active role in the management of the trust funds. I'd like to hope that the family wealth continues to grow and is handed down through the generations. It's one reason I don't plan to sell assets to fund our lifestyle.

TimCinel

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Re: Australian Investing Thread
« Reply #2469 on: December 15, 2016, 11:26:29 PM »
Hey guys, long time lurker. Just a heads up that there's a Sydney Mustachians meetup tomorrow if any of you are in Sydney and want to have a chinwag with other FI badasses (or FI badass wannabes, like me).

Event details: https://www.meetup.com/Sydney-Mustachians/events/236154554/?eventId=236154554

marty998

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Re: Australian Investing Thread
« Reply #2470 on: December 16, 2016, 12:09:31 AM »
Sorry mate, Saturdays for me are always booked out with cricket and a few other things.

Good luck, hope you get a turn out.

TimCinel

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Re: Australian Investing Thread
« Reply #2471 on: December 17, 2016, 05:38:27 PM »
Turn out was better than expected - 9 adults, 3 kids.

I posted some photos to the event page if anybody is curious to see what a group of Sydney Stache-wielders might look like.

Anatidae V

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Re: Australian Investing Thread
« Reply #2472 on: December 17, 2016, 05:47:00 PM »
Turn out was better than expected - 9 adults, 3 kids.

I posted some photos to the event page if anybody is curious to see what a group of Sydney Stache-wielders might look like.
There's a Sydney meetup thread where it might be more appropriate :)

hodor

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Re: Australian Investing Thread
« Reply #2473 on: December 18, 2016, 10:29:56 PM »
At which point should Trusts be setup for tax advantages?

If you think you will be in a position that trusts will be of advantage to you it is best to go down the trust path ASAP and acquire the assets within said trust.

What are you hoping to achieve by using a trust?

bigchrisb

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Re: Australian Investing Thread
« Reply #2474 on: December 18, 2016, 10:51:57 PM »
IMO, in general, trusts are not a reasonable thing for ERing mustachians because:

1. A trust can be a mechanism for a high earning individual to pay less tax - ERing mustachians probably won't be in this position long enough to justify the fees.

2. Trusts can distribute income from highly taxed individuals to low taxed individuals (who will need to pay tax on the earnings from the trust). ERing mustachians probably aren't in this position.

3. Superannuation is a better tool depending upon how long it is between ERing and your preservation age.

4. Investment bonds (held for 10 years) are a way to access excess money later (before your superannuation preservation age) and tax efficiently.

I disagree on this (and use a trust/company setup myself).  If young and on a high income, trusts and companies can give a good option to build a stash outside of super where it is accessible much sooner.  They are also effective to defer income to lower tax years (as franking credits will stay unused in the company).  The payback for me was at about $250k in invested assets, with anything above that a significant bonus. 

They also provide a lot more flexibility through life - either in terms of swapping between income earning partners, providing support to others in pre tax dollars, and for estate planning.   

They also offer some quite useful asset protection benefits on the side, which hopefully none of us have to actually put to the test!

After doing some research on insurance bonds, I'm not a fan.  The fees are high (comparable with the costs of running a trust if you have a few hundred k), and the taxation less favorable (no CGT discounts, 30% rather than 28.5%), and have less flexibility (minimum 10 year hold for tax treatment, and strict rules on how contributions work).  If talking a few hundred k or more, I'd rather hold in the cheaper more flexible structure of a trust than an insurance bond. 

marty998

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Re: Australian Investing Thread
« Reply #2475 on: December 18, 2016, 11:39:00 PM »
I find the "asset protection" reason for setting up trusts to be rather spurious.

The intention is to avoid assets being in play when you are the subject of legal action but far too often it is a method to avoid the long list of creditors (and taxpayers) a disgraced businessman leaves behind when his empire collapses.

Exhibit A: Mr Edward Obeid?

deborah

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Re: Australian Investing Thread
« Reply #2476 on: December 18, 2016, 11:48:59 PM »
I agree that in your situation, a trust makes a lot of sense, that's why I said "in general" and had point 1 first. They are worth it for VERY high income people, who won't ER as quickly as they could.



marty998

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Re: Australian Investing Thread
« Reply #2477 on: December 23, 2016, 10:33:35 PM »
Santa would say I've been a bit naughty by doing some market timing.

Just moved 70% of my super to Cash (remaining 30% in Australian Equities). All future contributions are going to Aus Equities, in theory it'll be averaging down.

Nothing has fundamentally changed in the Australian market in the last month, yet equities have been on a tear because of Trump. Gut feeling is that shit will hit the fan when he takes office and all the existing problems in our economy will still be here (he certainly won't be making Australia great etc).

We'll still have budget deficits, rising unemployment, rising underemployment, rising interest rates. My guess is inflation will tick up as well.

Rising interest rates (in a moderate fashion) will actually be a good thing for Banks and bank shares as pressure on net interest margins is released, but obviously a net negative for the rest of the market.

Bond markets are also acting a bit funny with yields rising - I've taken all my Super that was in Fixed Interest out of there for now.

Not an Oracle by any stretch but I do get the heeby jeebies whenever markets go up and P/E ratios expand with no real justification...

FFA

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Re: Australian Investing Thread
« Reply #2478 on: December 24, 2016, 01:52:22 AM »
I'm taking note because I recall last time you did this it went pretty well ! I'm in two minds on one hand I can see a repeat of last year where we have a correction to start the year. However on the other hand I wonder if that's too predictable and the market might have a strong year. I'm not confident in Trump for the long-term, but the short-term momentum can carry on a while. And he is appointing extremely market friendly people into top positions so I think the prospects for companies in the US are pretty strong. You're right that doesn't mean much directly for Australia but our market will tend to follow along nonetheless. Anyway all this is really speculating so at the end of it all I will probably stick to my asset allocation, ... plus or minus a bit.

marty998

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Re: Australian Investing Thread
« Reply #2479 on: December 27, 2016, 08:21:28 PM »
It did go really well actually. Timed it right twice at the start and mid year as well.

CBA, TLS and WES report half year results in early Feb, that will set the tone for the rest of the year.

Take note of the A$.... hovering in the 71c range at the moment - exactly where the RBA wants it to be.

Companies can only use a fall in the rate once to shore up earnings reports, as it is unlikely to be repeated again in the following half and any underlying weakness will be exposed.

I'll be watching for any profit growth that is due solely to currency movements and not volume changes... it will be interesting to see if the miners are making the most of the favourable conditions.

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Re: Australian Investing Thread
« Reply #2480 on: December 27, 2016, 10:10:38 PM »
hi everyone, I hope many of you are enjoying the great weather across Australia and for those of you not FI yet (like myself) I hope you were able to take some time off around Xmas.

Kind of a newbie question: is there a way of trading specific lots in Australia instead of 'first in, first out' ? In the USA, one can specify which lot will be sold in a specific trade, but I was not able to find this in my Westpac brokerage account. This is for tax purpose of course.

cheers

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Re: Australian Investing Thread
« Reply #2481 on: December 27, 2016, 10:25:39 PM »
hi everyone, I hope many of you are enjoying the great weather across Australia and for those of you not FI yet (like myself) I hope you were able to take some time off around Xmas.

Kind of a newbie question: is there a way of trading specific lots in Australia instead of 'first in, first out' ? In the USA, one can specify which lot will be sold in a specific trade, but I was not able to find this in my Westpac brokerage account. This is for tax purpose of course.

cheers

Partially answering my own question.

The ATO website here (https://www.ato.gov.au/General/Capital-gains-tax/In-detail/Shares,-units-and-similar-investments/Identifying-when-shares-or-units-were-acquired/) says:

A common question people ask when they dispose of only part of their investment is:

‘How do I identify the particular shares or units I have disposed of’.
If you have the relevant records (for example, share certificates), you may be able to identify which particular shares or units you have disposed of. In other cases, the Commissioner will accept your selection of the identity of shares disposed of.
Alternatively, you may wish to use a 'first in, first out' basis where you treat the first shares or units you bought as being the first you disposed of.


Does this: In other cases, the Commissioner will accept your selection of the identity of shares disposed of.

mean I can select the lot when I file my return i.e. I don't have to do it at the moment of the transaction?

deborah

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Re: Australian Investing Thread
« Reply #2482 on: December 27, 2016, 10:54:35 PM »
You are correct. You keep records of which shares you think you disposed of. Of course, you can't dispose of the same shares twice.



marty998

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Re: Australian Investing Thread
« Reply #2483 on: December 28, 2016, 12:06:40 AM »
Yeah keep your own records, Westpac will not keep this for you (just your contract notes for the buys and sells perhaps - they won't record reinvestments).

Just apportion your cost base on a per share basis.

E.g. you buy 500 @ $5.00 and 1000 @ $6.00

You then sell 750 @ $10.00

You can choose your taxable gain to be $(7,500 - 4,500) = $3,000 by using 750 shares out of the 1000 parcel, or you could take all 500 from the 1st parcel and 250 from the 2nd parcel and your gain is $(7,500 - (2,500 + 1,500) = $3,500

Or you can take 250 from the 1st parcel and 500 from the 2nd... etc


Just remember which ones you have "sold" as deborah said.

goldenmoustache

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Re: Australian Investing Thread
« Reply #2484 on: December 28, 2016, 12:15:00 AM »
Thanks. I have now a spreadsheet which match the various bought/sold lots, using some "super sophisticated" color coding and contract cross referencing ;)

Not that hard actually, especially if you trade < 10x / year.

Brokerage platform allowing you to select specific lots when you sell them (hence automatically generate the appropriate capital gain/loss and tax statement) would be even easier.

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Re: Australian Investing Thread
« Reply #2485 on: December 29, 2016, 03:02:29 PM »
Any opinions on Vanguard's VAE ETF?

in a world of crazy P/E ratios,   15.6 seems "almost" reasonable. I also like the 8.2% earning growth rate.

Not as a primary holding but as a way of tilting exposure a bit more towards asia without going full emerging market.

Keep loading on VTS is increasingly hard for me. I know, do not time market etc... but 24 P/E at same 8.2% earnings growth rate does not compute anymore.

FFA

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Re: Australian Investing Thread
« Reply #2486 on: December 29, 2016, 03:16:01 PM »
I just have a small allocation to emerging markets... have not gone to that level of tweaking with VAE.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #2487 on: January 01, 2017, 02:47:08 PM »
Hi everyone and Happy New Year! I'm new here and just discovered MMM a couple months ago and it's changed my life. I've been working on my plans and strategies and reading as much as I can. I just finished reading all 50 pages of this thread and can't thank you all enough for your contributions. I still don't understand the stock market anywhere close to many of you and I accept that that is ok.  I have a simple plan now that I'm going to execute and trust in the system. So again, thanks everyone for sharing and helping me to enhance my life.

FFA

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Re: Australian Investing Thread
« Reply #2488 on: January 01, 2017, 03:07:20 PM »
Nice stuff MrThatsDifferent, good luck, I fully agree with this -

I still don't understand the stock market anywhere close to many of you and I accept that that is ok.  I have a simple plan now that I'm going to execute and trust in the system.

You don't need to know much about the stock market to do well. A simple plan is more than adequate. Executing over the long term is probably where a lot of people fail, need to stay the course.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #2489 on: January 01, 2017, 03:28:54 PM »
Nice stuff MrThatsDifferent, good luck, I fully agree with this -

I still don't understand the stock market anywhere close to many of you and I accept that that is ok.  I have a simple plan now that I'm going to execute and trust in the system.

You don't need to know much about the stock market to do well. A simple plan is more than adequate. Executing over the long term is probably where a lot of people fail, need to stay the course.

Thanks FFA! I'm in it for the long haul and have contingencies in place. I also know my strengths and weaknesses and I've decided to stay within my comfort zones as much as I can for this journey into the unknown. Very exciting.

LittleAussieBattler

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Re: Australian Investing Thread
« Reply #2490 on: January 01, 2017, 11:42:18 PM »
Happy New Year fellow mustachians

I've been a bit inactive of late (Since page 5-12 of this thread) as I moved to Singapore for work. It is a tough place to be an MMM and 50% saver, but we have endured for the past year and have found out all the cheap places to shop/eat/live.

I was doing my end of 2016 finances today, figured out it was my two year anniversary of my mortgage and with current money in the offset plus future income should be paid off in Jan 2019. I would have like to pay cash to be a true MMM, but Sydney prices even 25Km's from the CBD where I bought are still eye watering.

I'm now looking forward to diverting those extra funds back into VAS/VGS. I currently hold VTS/VEU like the rest of the long term MMM Australian community, but it seems that VGS is the way to go now.

Deborah - On the order of investment, I was wondering whether we should be explicit in paying back the mortgage before investing. The wording currently indicates you invest if any is left, but with mortgage rates at 4-4.5% with no tax perhaps slightly changed wording:

Current Wording:

3. Put money into your PPOR mortgage offset account (if you have one).

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

I kind of feel like the wording in step 7 gives you an option to not pay your mortgage back first. I know in the past I have invested while paying the mortgage. Which was not ideal at 5% and a 750K loan, but I wanted to have enough time for compounding. The reality is though anyone from Melbourne or Sydney who has the "Average" Australian loan of 460K @ 4.5% for those cities will be chewing on 379K interest. If they take their 1K a month they are using for investment they can save 190K of interest just by putting it into the PPOR offset.

7. Invest any extra into low cost index funds (long term investments - 10 years) or high interest accounts (short term - 2 or 3 years).

     

What are FFA's, bigchrisb and your thoughts on this?

From Debt to Net in 3 Years.

marty998

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Re: Australian Investing Thread
« Reply #2491 on: January 02, 2017, 03:02:44 AM »
VAS estimated dividend is 92.8133 cents per unit.

Goes ex tomorrow (3 Jan) with payment date Wednesday January 18.

Show me da money!

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Re: Australian Investing Thread
« Reply #2492 on: January 02, 2017, 03:45:48 AM »
Bit of corporate shenanigans happening at Hunter Hall (HHL). WHSP appears to have vultured over a very distressed seller in Peter Hall.

Highlights the dangers of investing in a company run by a single personality.

FFA

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Re: Australian Investing Thread
« Reply #2493 on: January 02, 2017, 04:14:02 AM »
Yeah would love to know the real story behind Peter Hall's rash exit, if we ever find out.

Hi LittleAussieBattler, to keep things simple I generally agree, pay off all non-deductible debt first and then invest. However to be honest I would prefer people start investing in a diversified portfolio earlier, in parallel with paying off the home. Even if it's a small amount, to get started on the journey, while channeling most surplus funds into mortgage repayment. I discussed at some length on Rob_S 's journal. There is a value to the learning, and also diversification. Going fully sequentially means you have only investing in our home for X years and then only invest in VAS/VGS (or whatever you decide) for the remainder. So during that X years period you are very exposed if shares happen to perform well and, God forbid, if housing ever falls...

LittleAussieBattler

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Re: Australian Investing Thread
« Reply #2494 on: January 02, 2017, 06:36:02 AM »
The Hunter Hall news story is very abrupt. If this was a planned transition markets would have been told and plans documented and publicised.

FFA - I tend to agree, one of the reasons I can pay the PPOR off is such short order is the fact I was in the market for 8 years beforehand. I also received RSU's (Restricted Stock Units) from two large US companies I worked for that have vested. Given I am in Singapore where:

A) My AUS income/Spouses income is only dividends this year.
B) No capital gains are incurred on selling the RSU's which have a combined return of 241% since gifted
C) I can sell the AUS shares outside of the ETF's with my spouses income at near 0 and not trigger much of a capital gain.
D) I can sell the RSU's with no capital gains tax at all and send it to AUS to pay off the mortgage

Now if this was the US and we have 3.5% loans fixed for 30 years and it was deductible I think we would be in a different scenario.

The other view I am interested in, is whether given your time over again would you invest in the Vanguard wholesale fund? The fact that Vanguard are offering access to the wholesale funds for 100K or more, the cost is very low, it has also reduced since 2014. Would you do the managed fund with Vanguard now? I ask because when the next bunch of RSU's magically fall from heaven, I'll be in that boat and trying to decide. I know MisterHorsey and Murdoch both switched in the past year. While my wife is financially smart I am not sure I want to give her the burden of managing my ETF hobby as well as a bunch of midcaps I have bought as well as my BKR-B holdings internationally.
From Debt to Net in 3 Years.

FFA

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Re: Australian Investing Thread
« Reply #2495 on: January 02, 2017, 03:28:38 PM »
I lived in SG for 7 years too so know what you mean, I don't think the $150 sunday brunches are very mustachian ! It's good being tax non resident though, those Australian dividends are tax free if they are fully franked.

I'd be tempted to go the wholesale fund route. The fees are basically same as ETF's. I think it's much more conducive to disciplined regular investing. The main concern I have, which I've posted about a lot upthread, is ASX300 sector concentration. For international shares I think the indices (eg. VGS) are perfectly fine. But locally I've added some MVW and others to get better diversification. Anyway that's just me, and it is a bit of a hobby/interest. I still feel the VAS/VGS option is a good default a would probably lean to the wholesale funds over the ETF's if I had >$100k.

mjr

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Re: Australian Investing Thread
« Reply #2496 on: January 02, 2017, 03:36:40 PM »
Hi all,

long time MMM lurker.  I have recently setup an SMSF and it has $1m in it now that I am about to invest.

I'm 51 and intend retiring early in a year or two, I have considerable funds outside of super that will get me to preservation age.

I'm planning on keeping it simple:  40% VAS, 40% VTS, 10% REIT and the remaining 10% in cash and term deposits.  Not keen on a bond allocation at this time with interest rates probably on the way up.

Investing this kind of money with share markets at near record highs in a mature bull market makes me nervous, despite my knowledge about the pointlessness of trying to time the market.  I don't intend ever selling these shares.

Anyone have any comments on the soundness, or otherwise, of this approach before I take the plunge ?

Thanks,

Michael
Brisbane.

FFA

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Re: Australian Investing Thread
« Reply #2497 on: January 02, 2017, 03:47:44 PM »
Hi Michael,

My comments would be -
1. Consider VGS instead of VTS ? Unless you have a specific reason for the US only. VGS is also approx. 50% US.
2. 80% shares is relatively high so you need to be able to stay with that allocation through any correction/crashes.
3. I share your view on bonds, and for me I put REITs in the same bucket. They will also get hit as rates rise. I also feel there is enough property exposure embedded in VAS.
4. $1m is a big lump and I'd average it in over a year, e.g. perhaps $400k on day one and then $50k per month to be fully invested after 12 months.
5. Is there anything else in your SMSF ? If not, I'd re-consider if you want to keep it or switch to an industry fund which can easily handle such an asset allocation, probably with lower cost (even for the size of your assets) and less admin/hassle.

mjr

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Re: Australian Investing Thread
« Reply #2498 on: January 02, 2017, 04:04:31 PM »
Hi FFA,

thanks for your reply and thoughts.

I did consider VGS, but my thoughts are that Europe is bound for further trouble over the next few years.  Also, VTS's 0.05% MER is attractive.

I can deal with the 80%.  I won't be selling during downturns and expect to be able to live purely off the dividends from 2025.

I also considered DCA with that sum, but it does feel somewhat like market timing.  It's essentially betting that the markets will be going down.

There's nothing else in the SMSF. I have just set it up, specifically to lower the costs now that I have a large sum in there.  I just whacked in my $540k NCC before the rules change.  I'm not about to turn around now and put that money back into a managed fund, especially union-run industry fund.  Charges with my SMSF with these funds will be about 0.2%.

FFA

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Re: Australian Investing Thread
« Reply #2499 on: January 02, 2017, 04:26:12 PM »
Hi Michael, looks like you've thought it through.

Investing a lump sum comes up often. My view is DCA over 6-12 months is a better base case. The way I look at it, you would have a substantial exposure to the prices on that particular day. As we know, share prices in the short-term can be random. Planning to average over 6-12 months is for me a more logical starting point when the amount of money involved is significant compared to your overall net worth. This suggestion is not driven by the fact the US market is near all time highs, I have given others the same suggestion regardless of market level. To me it's not about trying to time the market, it's just about managing your exposure when you shift your asset allocation significantly. Even boglehead gurus like Rick Ferri have advised lump sums >20% of Net worth should be DCA'd. For small investments I fully agree, just put them in the market and don't worry too much about the price if you are a long term, buy and hold investor. Anyway it's your call, just to give you an alternative to consider...