Author Topic: Australian Investing Thread  (Read 613691 times)

alexrahr

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Re: Australian Investing Thread
« Reply #2950 on: March 30, 2017, 04:14:32 AM »
Join an online broker and buy the following ETF (Exchange Traded Fund):

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/fundDetail/etf/portId=0970/?overview

Note, that fund is domiciled in the US. So any dividends will come to you in US dollars. Which can be a bit of an admin issue.

But there are other options you may wish to consider as well.  Like the International (ex Aus) ETF:

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/fundDetail/etf/portId=8212/?overview

Or the retail managed funds:

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/productType=retail

Cool. What are the pros and cons of each (i.e why would you consider International (ex Aus) ETF or retail managed funds over using an online broker?

Also any recommendations on an online broker? I am signed up with Commsec - but assuming we need a specialised broker for this?

Thanks!

Anatidae V

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Re: Australian Investing Thread
« Reply #2951 on: March 30, 2017, 04:18:53 AM »
Join an online broker and buy the following ETF (Exchange Traded Fund):

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/fundDetail/etf/portId=0970/?overview

Note, that fund is domiciled in the US. So any dividends will come to you in US dollars. Which can be a bit of an admin issue.

But there are other options you may wish to consider as well.  Like the International (ex Aus) ETF:

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/fundDetail/etf/portId=8212/?overview

Or the retail managed funds:

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/productType=retail

Cool. What are the pros and cons of each (i.e why would you consider International (ex Aus) ETF or retail managed funds over using an online broker?

Also any recommendations on an online broker? I am signed up with Commsec - but assuming we need a specialised broker for this?

Thanks!
I can purchase these shares through Commsec, no need for a specialised broker :)

nnls

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Re: Australian Investing Thread
« Reply #2952 on: March 30, 2017, 04:34:09 AM »
I started my own thread. But thought I would post the link here to see if any aussies had any ideas and who may not see the other thread

https://forum.mrmoneymustache.com/ask-a-mustachian/extra-into-super-pay-of-mortgage-or-investments-outside-of-super/       

switch42

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Re: Australian Investing Thread
« Reply #2953 on: April 01, 2017, 07:09:25 PM »

What are the pros and cons of each (i.e why would you consider International (ex Aus) ETF or retail managed funds


Hello all :).

I'm also interested in opinions on this - I'm shifting my super from ING direct shares (300% fee increase!) to a SMSF with esuperfund.  So, I now have a choice of an etf portfolio or a wholesale managed fund.

I'm considering either

35% VAS
35% VGS
5% VGE
5% VAP
20% term deposits

or
90% Vanguard high growth fund VAN0111AU
10% term deposits

My super goes in quarterly so there will only be 4 trades per year and I'll use them to rebalance.  DRP for etfs.

Is there any advantage in the wholesale fund that justifies the extra expense?


Wadiman

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Re: Australian Investing Thread
« Reply #2954 on: April 01, 2017, 08:07:41 PM »
Hi Switch42 -

Not sure about the benefits of the wholesale fund but agree with your call to exit ING - I am doing the same and have set up a SMSF with Esuperfund.  Even though there will be some CGT to pay i'll be better off within a year.

switch42

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Re: Australian Investing Thread
« Reply #2955 on: April 02, 2017, 01:30:45 AM »
Yeah, I've only been with ING for just under a year so I have to wait for the 12 months to get the CGT discount. It will cost me about $1k to get out but that's less than a year of ING's new fees.  I still can't believe they were arrogant enough to lift their fees as much as they did.

dbm

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Re: Australian Investing Thread
« Reply #2956 on: April 03, 2017, 09:44:04 PM »
Hi Switch42,

I'm in the same boat an have been looking at esuperfund as well.  Have you actually gone through the process or still at the early stages?  If you have, how was the process, did you pay more for a corporate trustee or did you find someone else to be a trustee, do they seem like a reputable upstanding business?

I've an added option of a super fund through work, but will need to compare the staff pricing to esuperfund.

Disappointed with ING, but probably understand it wasn't profitable.  I had been a great salesman for their super product, in the end about 5 people actually listened and opened accounts with them.  Have been in their product since 2012...

Cheers

Dbm

mjr

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Re: Australian Investing Thread
« Reply #2957 on: April 03, 2017, 10:33:22 PM »

Disappointed with ING, but probably understand it wasn't profitable.

They're a global, experienced bank.  They knew exactly what they were doing.

Now, after going through the hassle of getting my mother's pension in there last year, I have to go through the hassle of getting it out and into an SMSF that I'll have to manage.  Thanks for nothing, ING.

I've no experience with eSuperfund, but I'm happy to plug Green Frog Super, whom I used for my own SMSF last year.

switch42

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Re: Australian Investing Thread
« Reply #2958 on: April 04, 2017, 01:35:11 AM »
Hi Switch42,

I'm in the same boat an have been looking at esuperfund as well.  Have you actually gone through the process or still at the early stages?  If you have, how was the process, did you pay more for a corporate trustee or did you find someone else to be a trustee, do they seem like a reputable upstanding business?



I submitted the application last week, keen to get the free setup and first year fees before end March.  It seems they offer that regularly though.

Went with corporate trustee as most of the things I read said it was better long term.  My partner may come across sometime in the future, depends how much money I lose :), but it's just me for now so it was my only choice anyway.

They provided all the paperwork for signing via pdf in an email, and posted them to me as well, within 3 days in regional Vic.  I signed, scanned and uploaded them Friday, it was all fairly painless. There is a lot of info on each step on their website, worth reading even if you don't go with them.

It'll be a few weeks apparently until I'm up and running so a bit early to say too much, but all good so far.

I agree with mjr that ING knew what they were doing.  I hope they get dragged over the coals by whoever does that as they deserve a kick up the backside. 

FFA

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Re: Australian Investing Thread
« Reply #2959 on: April 04, 2017, 04:42:39 AM »
just to remind people many industry funds offer very low fees with index options (e.g. Australian Super, Hostplus, Sunsuper, ...). Also several allow you to invest directly in shares from the ASX200/300, if you desire. Depending on how complicated your Super portfolio is, it's an option to consider instead of setting up a SMSF.

misterhorsey

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Re: Australian Investing Thread
« Reply #2960 on: April 04, 2017, 06:43:46 AM »
Join an online broker and buy the following ETF (Exchange Traded Fund):

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/fundDetail/etf/portId=0970/?overview

Note, that fund is domiciled in the US. So any dividends will come to you in US dollars. Which can be a bit of an admin issue.

But there are other options you may wish to consider as well.  Like the International (ex Aus) ETF:

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/fundDetail/etf/portId=8212/?overview

Or the retail managed funds:

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/productType=retail

Cool. What are the pros and cons of each (i.e why would you consider International (ex Aus) ETF or retail managed funds over using an online broker?

Also any recommendations on an online broker? I am signed up with Commsec - but assuming we need a specialised broker for this?

Thanks!

Just realised I never responded to this.

ETFs are managed funds/index funds that are bought and sold as if they are shares on the stock exchange (hence the name, Exchange Traded Funds).  You need a broker to buy and sell these, as with any other shares.  Comsec will do it for you - although there are cheaper. 

Take a deep dive into the vanguard website. It's full of reasonably good info.

On the other hand a Retailed Managed Fund is managed directly by Vanguard.  You don't go through a broker. You bpay to vanguard.

There are a whole range of reasons why one is preferable to the other - but the reasons aren't necessarily objective - they depend on the individual circumstances of each investor.

I'm thinking of trying to write a FAQ on these kinds of fundamental concepts - but it may take me a while. In the meantime, if anyone has any suggestions do chime in.


Dropbear

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Re: Australian Investing Thread
« Reply #2961 on: April 04, 2017, 07:53:00 AM »
While researching all these super options, I read on SuperGuide that companies receive a tax deduction for the money they send to super on their employee's behalf.  So it would be logical to suppose that having more employees salary sacrificing more of their incomes would increase the company's super component in their total payroll, and subsequently increase the company's deduction, but is that actually the case?  If it is, do many companies offer financial incentives to encourage their employees to salary sacrifice?

I'm about to ask to have some extra super put away before the end of the financial year, and I wondered if I should be asking my employer if they might kindly share some of their windfall by making some extra contributions to my fund if I do too?  Thanks in advance!

mjr

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Re: Australian Investing Thread
« Reply #2962 on: April 04, 2017, 01:35:27 PM »
just to remind people many industry funds offer very low fees with index options (e.g. Australian Super, Hostplus, Sunsuper, ...). Also several allow you to invest directly in shares from the ASX200/300, if you desire. Depending on how complicated your Super portfolio is, it's an option to consider instead of setting up a SMSF.

Industry funds are run by unions.  I am not interested in bringing politics into this thread, but this fact is enough to keep me away from industry funds on principle.

mjr

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Re: Australian Investing Thread
« Reply #2963 on: April 04, 2017, 01:43:04 PM »
I read on SuperGuide that companies receive a tax deduction for the money they send to super on their employee's behalf.  So it would be logical to suppose that having more employees salary sacrificing more of their incomes would increase the company's super component in their total payroll, and subsequently increase the company's deduction, but is that actually the case?  If it is, do many companies offer financial incentives to encourage their employees to salary sacrifice?

Companies don't receive any more of a tax deduction for pre-tax super contributions than they do for normal salary payments.
« Last Edit: April 04, 2017, 04:31:56 PM by mjr »

cakie

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Re: Australian Investing Thread
« Reply #2964 on: April 04, 2017, 06:32:10 PM »
just to remind people many industry funds offer very low fees with index options (e.g. Australian Super, Hostplus, Sunsuper, ...). Also several allow you to invest directly in shares from the ASX200/300, if you desire. Depending on how complicated your Super portfolio is, it's an option to consider instead of setting up a SMSF.

Industry funds are run by unions.  I am not interested in bringing politics into this thread, but this fact is enough to keep me away from industry funds on principle.
I conflate industry funds with vanguard and credit unions - a coop structure where fees just cover expenses, nice and cheap as there is no motive for them to make extra money off you.

Are you ideologically opposed to all unions (regardless of how they are run)? Would you consider an industry fund if you liked the union that started it? What is your opinion on vanguard and credit unions?

Please don't take this as an attack on your views. They're not rhetorical questions, I'm actually curious! I always find it interesting to meet people with different outlooks on the world.

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bigchrisb

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Re: Australian Investing Thread
« Reply #2965 on: April 04, 2017, 07:41:06 PM »
I spent about 3 months trying to get cost transparency data out of my old industry fund.  I wanted to know what my actual cost breakdown was, and how it was being spent.  I couldn't get this from them.

Hence I started a self managed fund.  I no longer pay for a huge staff bill (do the numbers on funds under management per staff member), a huge marketing bill, or grandiose financial services wages.  I also have full control and transparency on my fund, where they are invested, how I manage my tax, and how I treat my super assets vs my non super assets.  For my fund balance, its also cheaper to self manage, and I can manage asset allocation to optimise post tax performance.  I also don't get exposed to capital gains from others pooled investments.

I'm not an advocate of retail funds either, but after doing my own due diligence I'm of the view that industry funds are ripping off their members (as is most of the financial services industry).  Crap like drawing from members accounts a percentage of funds under management to cover the fund if the fund committed fraud really got under my skin.

My own view - use the lowest cost fund you can until you get your assets up to a level where self management is viable.  As soon as it is, cut off the gravy train. 

mjr

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Re: Australian Investing Thread
« Reply #2966 on: April 04, 2017, 09:51:01 PM »
I conflate industry funds with vanguard and credit unions - a coop structure where fees just cover expenses, nice and cheap as there is no motive for them to make extra money off you.

Are you ideologically opposed to all unions (regardless of how they are run)? Would you consider an industry fund if you liked the union that started it? What is your opinion on vanguard and credit unions?

Please don't take this as an attack on your views. They're not rhetorical questions, I'm actually curious! I always find it interesting to meet people with different outlooks on the world.

No worries, I don't perceive your question as an attack.

I'm reticent to answer in detail, because I don't think my answers belong in an Australian Investing thread.  For disclosure, I do have an ideological issue with unions in general.

Mostly though, I have an issue with industry funds being run by under-qualified trustees who are there by virtue of their union ties, where they get pay and perks for years in a closed-shop.  Also, many workers are given no choice of funds under enterprise agreements and by virtue of ­default funds in awards.

I have no issues with Vanguard and credit unions.  Indeed, I have over half of my wealth now in Vanguard.

I did have my money where my mouth was, I paid significant charges to a retail fund for many years until I got up the courage to start an SMSF.  Are big fat-cat corporate funds any better than union funds ?  Many will argue they are worse - certainly most are more expensive and I was happy to get out of my retail fund because they were ripping me off with 2.2% MER.  But at least they have to fight for customers, staff and executives in the open market and that's important to me.
« Last Edit: April 04, 2017, 10:20:53 PM by mjr »

dbm

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Re: Australian Investing Thread
« Reply #2967 on: April 04, 2017, 10:04:58 PM »


They're a global, experienced bank.  They knew exactly what they were doing.

Now, after going through the hassle of getting my mother's pension in there last year, I have to go through the hassle of getting it out and into an SMSF that I'll have to manage.  Thanks for nothing, ING.

I've no experience with eSuperfund, but I'm happy to plug Green Frog Super, whom I used for my own SMSF last year.

That makes me laugh, I recently finished working for a global bank, a US one not a euro one, and trust me you would surprised what their decision process actually involved.

But thanks will check out Green Frog.

Cheers

Dbm

cakie

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Re: Australian Investing Thread
« Reply #2968 on: April 04, 2017, 10:09:56 PM »
I conflate industry funds with vanguard and credit unions - a coop structure where fees just cover expenses, nice and cheap as there is no motive for them to make extra money off you.

Are you ideologically opposed to all unions (regardless of how they are run)? Would you consider an industry fund if you liked the union that started it? What is your opinion on vanguard and credit unions?

Please don't take this as an attack on your views. They're not rhetorical questions, I'm actually curious! I always find it interesting to meet people with different outlooks on the world.

No worries, I don't perceive your question as an attack.

I'm reticent to answer in detail, because I don't think my answers belong in an Australian Investing thread.  For disclosure, I do have an ideological issue with unions in general.

Mostly though, I have an issue with industry funds being run by under-qualified trustees who are there by virtue of their union ties, where they get pay and perks for years in a closed-shop.  Also, many workers are given no choice of funds under enterprise agreements and by virtue of ­default funds in awards.

I have no issues with Vanguard and credit unions.  Indeed, I have over half of my wealth now in Vanguard.

I did have my money where my mouth was, I paid significant charges to a retail fund for many years until I got up the courage to start an SMSF.  Are big fat-cat corporates funds any better than union funds ?  Many will argue they are worse - certainly most are more expensive and I was happy to get out of my retail fund because they were ripping me off with 2.2% MER.  But at least they have to fight for customers, staff and executives in the open market and that's important to me.
Thanks for your replies mjr and chris, interesting perspectives from both of you

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AussieCat

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Re: Australian Investing Thread
« Reply #2969 on: April 04, 2017, 10:40:28 PM »
Hello folks!

Been a reader for a while, had a stint chatting a while back. Back again! I need to head back and read through this thread, but thought I'd say g'day and adk some opening questions first.

We are both 41. Early next year we are selling some property at which point our net worth should look like this:

Home $450,000  (Melb outer suburbs)

Hostplus Super indexed balanced $360,000 (been salary sacrificing, but also bumped up by the above sale of land that was an active asset - rolling part of the gain in = no CGT on the sale)

Cash $430,000

Shares $10,000

Mortgage $290,000

Net inc house: $960,000

Happy to consider paying out mortgage, then redrawing some to end up with some tax deductible debt.

There is a chance the land is worth up to a third more than what we are using here - its very difficult to judge given the limited sales in the area. I'll stick with a price/acre we are confident with.

We also have a family trust with several hundred thousand in carried forward losses (income, not capital). We want to utilise these losses if we can, but also minimise franking credits 'lost'. We are both back to being employees - for the moment - but there's a chance I might go back to consulting and be able to utilise the losses that way.

Both hubby and I will be working part time, 32.5% marginal tax rates. Will continue sal sac to super, but due to a potential change at husbands work, being able to salary sacrifice mortgage repayments is a possibility in the near future too.

Would love some thoughts on allocations etc, as well as some feedback on franking on various ETF's.

I'm thinking of:

- paying down entirely and then redrawing $200k on mortgage to invest, bringing us to $340,000 cash

- splitting this $340,000 between $30,000 cash and $310,000 either VAS and VGS, or VAS and VEU/VTS. I'm unsure about allocations.

- I can invest up $110,000 of this via our trust. This is why I was thinking VEU/VTS over VGS - if there isn't as much in the way of franking, we wont be paying tax on this income, and wont be losing the benefit of franking credits (but I'm not sure if I have it right that there are no franking credits on these two)

- leaving Hostplus as is

Feel free to shred any or all of this, here to learn!



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GT

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Re: Australian Investing Thread
« Reply #2970 on: April 04, 2017, 10:53:56 PM »
Word is Bendigo Bank are now refusing to refinance investment properties from other banks.

NotSure

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Re: Australian Investing Thread
« Reply #2971 on: April 04, 2017, 11:44:08 PM »
Hi,

I've asked in previous page about asset allocation strategies in my Super, but didn't get responses, so try again :) Is there perhaps some guidelines of how much to invest in each category for example Australian shares, International shares, property etc.?

I'm after some guidance how to better spread my money in Sunsuper with index options.

potm

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Re: Australian Investing Thread
« Reply #2972 on: April 05, 2017, 12:05:34 AM »
I wouldn't recommend setting up a smsf just to buy index ETFs. You can get very cheap index options from host plus, aus super and sunsuper. Some are much cheaper than an ETF. The extra admin, audit, asic company, ato levy and brokerage fees will be much higher than the admin fees from the above mentioned industry funds.

I have had positive experiences with Esuperfund with zero setup fees and no fees for the first 2 years. Still there was company fees and ato levy to be paid.
Esuperfund make it as easy as possible for you but there is a lot of paperwork to fill out and a lot of obligations and rules to understand. I would recommend against it for the vast majority of people.

FFA

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Re: Australian Investing Thread
« Reply #2973 on: April 05, 2017, 01:12:29 AM »
I wouldn't recommend setting up a smsf just to buy index ETFs. You can get very cheap index options from host plus, aus super and sunsuper. Some are much cheaper than an ETF. The extra admin, audit, asic company, ato levy and brokerage fees will be much higher than the admin fees from the above mentioned industry funds.

I have had positive experiences with Esuperfund with zero setup fees and no fees for the first 2 years. Still there was company fees and ato levy to be paid.
Esuperfund make it as easy as possible for you but there is a lot of paperwork to fill out and a lot of obligations and rules to understand. I would recommend against it for the vast majority of people.
yep that was exactly what I was trying to convey earlier. I appreciate there might be ideological or other trust issues with industry funds. I am quite comfortable myself but everyone should do their own research and act in line with their own values/beliefs. As well as your own situation and investment approach, i.e. if you are more actively in/out and optimizing a portfolio between a SMSF vs family trust etc. Or more simple buy and hold investing with regular contributions.

switch42

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Re: Australian Investing Thread
« Reply #2974 on: April 05, 2017, 01:47:49 AM »
I wouldn't recommend setting up a smsf just to buy index ETFs. You can get very cheap index options from host plus, aus super and sunsuper. Some are much cheaper than an ETF. The extra admin, audit, asic company, ato levy and brokerage fees will be much higher than the admin fees from the above mentioned industry funds.


ING's recent fee increase has taught me that we aren't in control of the fees with super funds, they can do what they want. 

eSuperfund are in an open market for audit/admin services on my smsf so if they increase their fees too much I can look elsewhere without copping CGT again. To leave those super funds (assuming etf/share investments) I'd get another CGT hit.  Once bitten, twice shy.

I also dislike the lack of transparency in some of those funds, Hostplus especially.  I apparently have trust issues with unions.

englyn

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Re: Australian Investing Thread
« Reply #2975 on: April 05, 2017, 02:12:52 AM »
Aussiecat & Notsure, I don't think there are any guidelines about allocations. Different people make different choices for different reasons, and there's a little about personal choices elsewhere in the 60(!) pages of this thread, but I think that's about all you're going to get.

marty998

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Re: Australian Investing Thread
« Reply #2976 on: April 05, 2017, 02:23:56 AM »
I read on SuperGuide that companies receive a tax deduction for the money they send to super on their employee's behalf.  So it would be logical to suppose that having more employees salary sacrificing more of their incomes would increase the company's super component in their total payroll, and subsequently increase the company's deduction, but is that actually the case?  If it is, do many companies offer financial incentives to encourage their employees to salary sacrifice?

Companies don't receive any more of a tax deduction for pre-tax super contributions than they do for normal salary payments.

Hi - yes mjr is right - super counts as a deduction in the same way as salary and wages.

However I should point out here that employees who salary sacrifice will reduce a Company's payroll tax bill, as that tax is levied on wages (not total employment costs).

marty998

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Re: Australian Investing Thread
« Reply #2977 on: April 05, 2017, 02:26:01 AM »
Word is Bendigo Bank are now refusing to refinance investment properties from other banks.

Blunt way of trying to stay under the 10% Investment loan limit and the 30% Interest only limit.

When every bank implements this the only thing left to do is increase prices (rates). Which is already happening :(

mjr

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Re: Australian Investing Thread
« Reply #2978 on: April 05, 2017, 04:46:09 AM »
However I should point out here that employees who salary sacrifice will reduce a Company's payroll tax bill, as that tax is levied on wages (not total employment costs).

I haven't checked all states. but this link for Qld indicates that payroll tax is payable on super contributions.

https://www.business.qld.gov.au/running-business/employing/payroll-tax/taxable-wages/superannuation


stashgrower

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Re: Australian Investing Thread
« Reply #2979 on: April 05, 2017, 05:34:06 AM »
While researching all these super options, I read on SuperGuide that companies receive a tax deduction for the money they send to super on their employee's behalf.  So it would be logical to suppose that having more employees salary sacrificing more of their incomes would increase the company's super component in their total payroll, and subsequently increase the company's deduction, but is that actually the case?  If it is, do many companies offer financial incentives to encourage their employees to salary sacrifice?

I have worked for a company that *charged* a small percentage to sal sac. Strikes me as unfair.

Wadiman

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Re: Australian Investing Thread
« Reply #2980 on: April 05, 2017, 05:49:22 AM »
Back to the SMSF discussion and ESuperfund

Like Switch42, I have also found the process of setting up a SMSF with them very straightforward to date.

I was thinking about doing it anyway as I want to invest in peer2peer lending with Ratesetter, hold some capital notes, perhaps direct bonds and also unlisted property funds in super for tax reasons - this is not possible in retail funds AFAIK.

The company setup fee is a one-off so should be ahead after about a year and like BigChris - I am keen to have full transparency and understand everything that is going on.

A question - any thoughts on whether a total portfolio subscription service (eg Sharesight premium) would be tax deductible if you have a SMSF?

potm

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Re: Australian Investing Thread
« Reply #2981 on: April 05, 2017, 06:22:19 AM »
Here is a full list of yearly costs for an SMSF with Esuperfund and a corporate trustee, being one of the cheapest providers.

ATO levy $259
Esuperfund fee which includes te audit $799
ASIC company fee $47

The current offer from esuperfund is the first year is free, it use to be 2 years free. In the first year you will also incur company set up cost and a double ATO levy fee though.
Say you were to buy ETFs in a simple 3 ETF portfolio once per quarter. That is another $240 of brokerage incurred. Make sure you do the sums before deciding that an smsf is right for you.

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Re: Australian Investing Thread
« Reply #2982 on: April 05, 2017, 06:37:19 AM »
I wouldn't recommend setting up a smsf just to buy index ETFs. You can get very cheap index options from host plus, aus super and sunsuper. Some are much cheaper than an ETF. The extra admin, audit, asic company, ato levy and brokerage fees will be much higher than the admin fees from the above mentioned industry funds.


ING's recent fee increase has taught me that we aren't in control of the fees with super funds, they can do what they want. 

eSuperfund are in an open market for audit/admin services on my smsf so if they increase their fees too much I can look elsewhere without copping CGT again. To leave those super funds (assuming etf/share investments) I'd get another CGT hit.  Once bitten, twice shy.

I also dislike the lack of transparency in some of those funds, Hostplus especially.  I apparently have trust issues with unions.

Do you cop CGT when you transfer/roll Super from one fund to another? I've done it once or twice over the years and if I recall correctly the withdrawn balance (based on exit unit prices the day you leave) is sent across to the new fund without any tax withdrawn/withheld.

Dropbear

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Re: Australian Investing Thread
« Reply #2983 on: April 05, 2017, 06:42:08 AM »
I haven't checked all states. but this link for Qld indicates that payroll tax is payable on super contributions.

https://www.business.qld.gov.au/running-business/employing/payroll-tax/taxable-wages/superannuation

Looking into it further, the NSW situation for me appears to be the same as in QLD: http://www.osr.nsw.gov.au/taxes/payroll/wages/superannuation

Thanks mjr and marty for your comments and showing me where to look for the answers.  It was worth a try!  And to stashgrower, yes, being charged to salary sacrifice sounds terrible!

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Re: Australian Investing Thread
« Reply #2984 on: April 05, 2017, 06:48:48 AM »
Here is a full list of yearly costs for an SMSF with Esuperfund and a corporate trustee, being one of the cheapest providers.

ATO levy $259
Esuperfund fee which includes te audit $799
ASIC company fee $47

The current offer from esuperfund is the first year is free, it use to be 2 years free. In the first year you will also incur company set up cost and a double ATO levy fee though.
Say you were to buy ETFs in a simple 3 ETF portfolio once per quarter. That is another $240 of brokerage incurred. Make sure you do the sums before deciding that an smsf is right for you.

Compared to say hostplus at $78 p.a. admin
plus lower internal management fees in the fund itself (e.g. 0.02% MER indexed balanced)
less time/hassle of SMSF compliance

Sunsuper is a bit higher on admin as they also have 0.1% of funds on top of the $78. But that 0.1% caps out at $800 presumably to slightly undercut what one could achieve with eSuperfund.

Any concerns about fund performance, you can always monitor returns versus the index for tracking error.

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Re: Australian Investing Thread
« Reply #2985 on: April 05, 2017, 03:11:54 PM »
I haven't checked all states. but this link for Qld indicates that payroll tax is payable on super contributions.

https://www.business.qld.gov.au/running-business/employing/payroll-tax/taxable-wages/superannuation

Looking into it further, the NSW situation for me appears to be the same as in QLD: http://www.osr.nsw.gov.au/taxes/payroll/wages/superannuation

Thanks mjr and marty for your comments and showing me where to look for the answers.  It was worth a try!  And to stashgrower, yes, being charged to salary sacrifice sounds terrible!

Oops, sorry mate. Maybe I was thinking of other forms of salary sacrifice...

Brain fart.

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Re: Australian Investing Thread
« Reply #2986 on: April 05, 2017, 04:07:08 PM »
DH gets charged 1% or 1.5%, can't remember, to sal sacrifice as he's paid through an agency. I guess we can just count that as part of the increased rates he gets as a contractor but it's still a pain.

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Re: Australian Investing Thread
« Reply #2987 on: April 05, 2017, 04:31:55 PM »

Do you cop CGT when you transfer/roll Super from one fund to another? I've done it once or twice over the years and if I recall correctly the withdrawn balance (based on exit unit prices the day you leave) is sent across to the new fund without any tax withdrawn/withheld.

No CGT when transferring out of managed funds - when I left AMP there was no tax payable.

However selling etfs will incur CGT.  Since my ING super is mostly in etfs (only for 12 months) and I made a gain I'll pay CGT.

My concern is getting involved with another super fund like hostplus, and in 5 years time they decide to hike the fees.  My gain will be much greater so CGT will effectively lock me in until preservation age.  Alternatively I go with a managed fund and donate a portion of the returns to a fund manager.

esuperfund is moderately expensive now, but when the balance hits $1.7M (as projected within 10 years for me and my partner combined) the fees will be 0.1%, or 0.05% each.  I have complete transparency, my trust actually owns the assets, and I have freedom to invest wherever I want without a super fund skimming off the returns.  For me I believe it's worth it.

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Re: Australian Investing Thread
« Reply #2988 on: April 05, 2017, 05:15:28 PM »
I read on SuperGuide that companies receive a tax deduction for the money they send to super on their employee's behalf.  So it would be logical to suppose that having more employees salary sacrificing more of their incomes would increase the company's super component in their total payroll, and subsequently increase the company's deduction, but is that actually the case?  If it is, do many companies offer financial incentives to encourage their employees to salary sacrifice?

Companies don't receive any more of a tax deduction for pre-tax super contributions than they do for normal salary payments.

Hi - yes mjr is right - super counts as a deduction in the same way as salary and wages.

However I should point out here that employees who salary sacrifice will reduce a Company's payroll tax bill, as that tax is levied on wages (not total employment costs).
Actually, for some employers salary sacrificing does reduce their wages/super deductions as they aren't obliged to pay SGC on the original wage, they can pay it on net of the salary sacrificed amount.

Thus:

 - $100,000 salary, no sacrifice, employer is up for $109,500 in wages/super

- $100,000 salary, sacrifice $20k to super, employer is up for $107,600 (SGC is only on $80k)

Need to take above into account when sacrificing, as its still a loop hole employers can use. Your 'package' can end up less, reducing some of the benefit of sacrificing.

Husband and I are lucky enough that our employers (one govt, one private) pay SGC on the pre sacrifice amount.



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Re: Australian Investing Thread
« Reply #2989 on: April 05, 2017, 05:26:31 PM »
Aussiecat & Notsure, I don't think there are any guidelines about allocations. Different people make different choices for different reasons, and there's a little about personal choices elsewhere in the 60(!) pages of this thread, but I think that's about all you're going to get.
Thank you

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bigchrisb

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Re: Australian Investing Thread
« Reply #2990 on: April 05, 2017, 05:57:38 PM »
For unit funds (aka most industry and retail super funds), CGT gets grossed into the unit price.  Hence every unitholder is subject to some CGT drag, depending on how much underlying churn there is.   There are also differing treatments of the deferred tax liabilities.

This does not sit well with me, as one of the major advantages of super investing is being able to avoid transaction costs over multiple decades.  From what I could extract from my past fund (and it was incomplete), the drag from this was about 20 basis points.  If self managing (or if operating a segregated account) you can manage what and when you reallise as capital gain, and actively manage the taxes.

The opacity of this from the industry funds is one of the reasons I left.  If they can't give a straight answer on how much embedded tax I'm paying, how can I trust their union rep boards not to hide other more sinister things?

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Re: Australian Investing Thread
« Reply #2991 on: April 05, 2017, 06:59:23 PM »
Just to sanity test myself, I re-ran these numbers again based on current data.  I did a sanity test based upon the weekly crediting rates from CBUS's high growth option.   I took the compound weekly return over the year to date (1 July to 29 March) for both these funds in pension mode (no tax), and accumulation mode.

The compound crediting rates were 12.79% for the income stream and 11.43% for the accumulation account.  This means that the aggregate tax rate of the accumulation account was 1.35% of the account, or in percentage of returns terms, 10.6% tax on returns. If no capital gains tax was incorporates into the  crediting rates, and all this was attributable to tax on earnings, this is equivalent to the returns being 9% income and 3.8% growth.  9% income over 9 months (12% annualized) is simply not plausible. 

Its hard to replicate the same asset mix as that portfolio due to the direct property and infrastructure holdings, but if we assumed a yield equivalent to the ASX (15.9% total return over this time, of which 12% was capital gain), then you are paying CGT on close to the whole price return, or a tax drag of something like 1%.

I get very frustrated that things like this get buried in the crediting rates, and are not disclosed adequately in the PDS.  It means people do a comparison on only part of the story. 

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Re: Australian Investing Thread
« Reply #2992 on: April 05, 2017, 07:33:30 PM »
esuperfund is moderately expensive now, but when the balance hits $1.7M (as projected within 10 years for me and my partner combined) the fees will be 0.1%, or 0.05% each.  I have complete transparency, my trust actually owns the assets, and I have freedom to invest wherever I want without a super fund skimming off the returns.  For me I believe it's worth it.
Just remember the $1.6mill cap per person.



bigchrisb

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Re: Australian Investing Thread
« Reply #2993 on: April 05, 2017, 07:41:39 PM »
Here is a full list of yearly costs for an SMSF with Esuperfund and a corporate trustee, being one of the cheapest providers.

ATO levy $259
Esuperfund fee which includes te audit $799
ASIC company fee $47

The current offer from esuperfund is the first year is free, it use to be 2 years free. In the first year you will also incur company set up cost and a double ATO levy fee though.
Say you were to buy ETFs in a simple 3 ETF portfolio once per quarter. That is another $240 of brokerage incurred. Make sure you do the sums before deciding that an smsf is right for you.

Compared to say hostplus at $78 p.a. admin
plus lower internal management fees in the fund itself (e.g. 0.02% MER indexed balanced)
less time/hassle of SMSF compliance

Sunsuper is a bit higher on admin as they also have 0.1% of funds on top of the $78. But that 0.1% caps out at $800 presumably to slightly undercut what one could achieve with eSuperfund.

Any concerns about fund performance, you can always monitor returns versus the index for tracking error.

Or, taking a top down approach on industry funds, HostPlus managed to spend almost $100,000,000 ($96.7M, p98 of their 2016 annual report) on "administration" expenses.  I find the amount of money blown by super administrators absolutely mind-boggling.

FFA

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Re: Australian Investing Thread
« Reply #2994 on: April 05, 2017, 08:12:37 PM »
I'm pretty neutral on the whole industry fund issue. A bit like Cakie said earlier I just view them as a not for profit. As for their overall operations they could well be inefficient. I haven't found their normal investment options, e.g. regular Balanced / Growth / etc, particularly interesting. I'd be wary of some of their infrastructure investments. So maybe that ties up with the top down analysis.

My comments here and I think potm's too are specifically for people looking at a simple index portfolio in their Super, which I believe is a significant percentage in this community. I just look at the admin fees they charge me and the management fee embedded in the option - that's all that impacts on me. Also as you said it's worth checking historical returns against the benchmark index to make sure it tracks well and there is no other hidden inefficiency embedded inside the unit pricing. I haven't found that to be the case with Hostplus indexed balanced, but I might check it again more closely after all the concerns I'm picking up here. If you're looking at active (non-index) investment options then it's much harder to analyse and part of the gap is also the fund manager performance (alpha).

All managed funds, LIC's and even ETF's have some disadvantages like embedded capital gains, etc. Sometimes this can be favourable too (e.g. a fund with embedded losses), as well as other times unfavourable. Sometimes it is more transparent (e.g. LIC's publish NTA after tax) and other times hard to know (e.g. managed funds/ETF's don't generally disclose embedded tax position). There are obvious benefits to pooled investing but everything comes with pros and cons. Yes DIY has benefits of full control, transparency and understanding what's going on but it also takes more time and can lose economies of scale.

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Re: Australian Investing Thread
« Reply #2995 on: April 05, 2017, 08:28:18 PM »
Agree with everything FFA said.
I just wanted to add you are still investing in ETFs, so you are still relying on Vanguard or some other fund manager.
Vanguard are actually managing sunsuper's index options now. Just minimise the fees as much as possible and monitor the performance against the index, ETFs or whatever benchmark you want.

SMSFs will be more worthwhile as your balance increases or you share with multiple people. Esuperfund charges the same fee for 4 people.
With the downward movement on fees and increased index options we have seen in the last couple of years, I am still sceptical of the benefit of an SMSF for someone who just wants to buy Index ETFs. I'm not dismissing SMSFs totally though, I have set one up myself. I also still have an account with Sunsuper.

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Re: Australian Investing Thread
« Reply #2996 on: April 08, 2017, 05:53:26 PM »
On the topic of Esuperfund, I read in that commissions make up a significant portion of their income stream:

http://www.afr.com/personal-finance/superannuation-and-smsfs/how-discount-smsf-players-are-clipping-your-ticket-20150710-gi9seh

It would be nice to use a commission rebater to receive commissions on my super investments - I wonder if the commissions could be paid out to me directly (as opposed to superannuation me).

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Re: Australian Investing Thread
« Reply #2997 on: April 08, 2017, 07:35:35 PM »
Hi Tim -

I can't access the AFR article - who is ESuperfund paying commissions to?

Thanks


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Re: Australian Investing Thread
« Reply #2998 on: April 08, 2017, 09:29:53 PM »
Article is from 2015 so things may have shifted in the last 18 months.  There's plenty of (disclosed) info in their own FSG https://www.esuperfund.com.au/Libraries/documents/smsf-financial-service-guide.pdf
Quote
Clients of Esuperfund are compulsorily required to open a transaction account with either ANZ or Commonwealth Bank of Australia. In addition, it is compulsory for clients to use one of the two brokers it nominates, either CommSec or Ebroking (a white-label platform licensed by Esuperfund).

According to Esuperfund's financial services guide, ANZ and CBA pay it commissions of between 100 and 115 basis points on the cash balances of every transaction account opened by Esuperfund clients. That is, all of them.

A spokesperson for CBA says the bank does not discuss commercial arrangements with third parties. ANZ says it did not pay the commissions at the level outlined in the financial services guide.

In addition, every trade made by clients on either the CommSec or Ebroking platforms will attract a commission of up to $16.75 for trades under $25,000 and 0.075 per cent for trades over $25,000.

But that's just the start. The network of relationships and commissions on products extends to options, contracts for difference, term deposits, precious metals and life insurance. For instance, a policy bought from Macquarie or AIA triggers commissions of 0.20 per cent and 0.30 per cent respectively.

Perhaps the most lucrative of the arrangements sees Macquarie and St George Bank paid upfront commissions of 0.65 per cent and trailing commissions of 0.15 per cent on loans or limited recourse borrowing arrangements used to purchase property.

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Re: Australian Investing Thread
« Reply #2999 on: April 09, 2017, 02:16:44 AM »
Thanks SF!