Author Topic: Australian Investing Thread  (Read 692610 times)

TimCinel

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Re: Australian Investing Thread
« Reply #3000 on: April 11, 2017, 09:47:32 AM »
Hi Tim -

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

Thanks

Oops, sorry.

For now, AFR can be viewed without a subscription: Disable Javascript or press the stop button really quickly before the JS loads :D

Eucalyptus

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Re: Australian Investing Thread
« Reply #3001 on: April 12, 2017, 06:48:20 PM »
I just discovered that the Concessional Cap limit to Super will reduce in the next financial year from $30k/yr to $25k/yr

(All individuals, regardless of age)

That kinda sucks, I was planning in 5-10 years to max that out for a while.

Will anyone here shift their strategies as a result of this?

ATO link:
https://www.ato.gov.au/super/self-managed-super-funds/contributions-and-rollovers/contribution-caps/

bigchrisb

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Re: Australian Investing Thread
« Reply #3002 on: April 12, 2017, 07:50:27 PM »
I just discovered that the Concessional Cap limit to Super will reduce in the next financial year from $30k/yr to $25k/yr

Will anyone here shift their strategies as a result of this?

Yep, we are all captured by this.  I've been maxing my contributions for close to a decade, and will continue to do so, so I'll be paying full tax on an extra $5k/year. 

Government seems a bit shy to change the rules too much about how money is taken out of super, so most of the rule changes of late have been about how (and how much) money you can get into super.  Non-concessional contribution rules are also changing (dropping from $180k to $100k, and no longer able to do so if balance is over $1.6m).   It is getting harder and harder to do a super "sprint" in the last few years pre-retirement.

The concessional contribution is a limited resource.  Despite all the issues about having the money locked up and exposed to sovereign risk, I'll be maxing this out every year that I am able to do so.

mjr

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Re: Australian Investing Thread
« Reply #3003 on: April 12, 2017, 08:22:20 PM »
Yep, that news has been out since the May 2016 federal budget.  They had to cave on the proposed $500k non-concessional cap (replaced with the $100k/year cap as per bigchrisb), but the reduction in the concessional cap got through.

You can consider dropping in the full $540k (over 3 years) in non-concessional contributions before the end of June.  Which you can do only if (a) you have the dosh lying around and (b) you haven't already invoked the bring-forward rule in the last 2 years.

At least the concessional contribution is easier to max out now that's $25k. 
« Last Edit: April 12, 2017, 08:26:35 PM by mjr »


marty998

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Re: Australian Investing Thread
« Reply #3005 on: April 13, 2017, 01:51:48 AM »
I've been contributing around $22-$24k for the past couple of years... so while the reduction in the cap to $25k is unwelcome, it won't actually make a difference to me.

I would think if you are lucky enough to have over $1.6m in super you probably don't require the tax concession as an additional incentive to save.

Pay your marginal rate of tax like every poor sucker millennial has to.

deborah

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Re: Australian Investing Thread
« Reply #3006 on: April 13, 2017, 05:22:30 AM »
The problem with the $1.6mill is that if you have a pension (any pension I think), it is considered to be worth 16 x the amount you receive each year. As government pensions are from untaxed funds, the recipient has to pay tax on the pension, so they are actually worth a lot less (at least according to actuaries). There are a lot of people who receive a pension and have money in super who are over the limit. I guess it's a nice problem for them to have, but financial planners were initially told that the regulation was going to exclude government pensions, so there is a lot of incorrect information out there (including on a number of trusted web sites - for instance, until a couple of weeks ago, Trish Power had the wrong information, and now some of her information doesn't make sense), which is going to cause problems for these people in the coming months.

FFA

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Re: Australian Investing Thread
« Reply #3007 on: April 13, 2017, 04:54:22 PM »
I'm same as bigchrisb, so no change in strategy, still max to the limit.
« Last Edit: April 15, 2017, 06:02:02 PM by FFA »

Luckyvik

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Re: Australian Investing Thread
« Reply #3008 on: April 14, 2017, 04:34:25 AM »
The problem with the $1.6mill is that if you have a pension (any pension I think), it is considered to be worth 16 x the amount you receive each year. As government pensions are from untaxed funds, the recipient has to pay tax on the pension, so they are actually worth a lot less (at least according to actuaries). There are a lot of people who receive a pension and have money in super who are over the limit. I guess it's a nice problem for them to have, but financial planners were initially told that the regulation was going to exclude government pensions, so there is a lot of incorrect information out there (including on a number of trusted web sites - for instance, until a couple of weeks ago, Trish Power had the wrong information, and now some of her information doesn't make sense), which is going to cause problems for these people in the coming months.
The 1.6 cap only applies to the pension phase as at 1/7/17 so you can have extra money above this in the super phase (tax-free) or roll the excess back into the super phase. Eg. You can have 2M in the super phase, the cap would only come into play when you decide to start a pension.

For defined benefit, government pensions, anything that's not a straight forward allocated pension, the annual income comes into play when calculating the cap, it's not a straight forward 16x calculation, depends on the pension, the calculation for different type of pensions is in the regulations that came out late march but can be complex, the super fund should be able to give you some info or a specialised adviser.


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deborah

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Re: Australian Investing Thread
« Reply #3009 on: April 15, 2017, 12:04:16 AM »
The problem with the $1.6mill is that if you have a pension (any pension I think), it is considered to be worth 16 x the amount you receive each year. As government pensions are from untaxed funds, the recipient has to pay tax on the pension, so they are actually worth a lot less (at least according to actuaries). There are a lot of people who receive a pension and have money in super who are over the limit. I guess it's a nice problem for them to have, but financial planners were initially told that the regulation was going to exclude government pensions, so there is a lot of incorrect information out there (including on a number of trusted web sites - for instance, until a couple of weeks ago, Trish Power had the wrong information, and now some of her information doesn't make sense), which is going to cause problems for these people in the coming months.
The 1.6 cap only applies to the pension phase as at 1/7/17 so you can have extra money above this in the super phase (tax-free) or roll the excess back into the super phase. Eg. You can have 2M in the super phase, the cap would only come into play when you decide to start a pension.

For defined benefit, government pensions, anything that's not a straight forward allocated pension, the annual income comes into play when calculating the cap, it's not a straight forward 16x calculation, depends on the pension, the calculation for different type of pensions is in the regulations that came out late march but can be complex, the super fund should be able to give you some info or a specialised adviser.


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What you said may be correct, and I may have read it wrong.

A super fund can be in one of two phases - accumulation phase and pension phase. I assume you were using "super phase" to mean "accumulation phase". When your money is in accumulation phase, it pays tax of 15% on any income, as well as CGT... so it is not tax free. When it goes into pension phase it is tax free. You can put any amount into pension phase, and keep some of it in accumulation phase if you want to. Because all super in accumulation phase is taxed, you may be better off having any extra above $1.6mill outside superannuation, since you will only start to pay tax on its income once you reach a  taxable income of $18,200.

The regulations were supposed to be different for different types of funds, but those regulations were not passed, so after extensive research I have taken the advice that is just about everywhere that EVERY DB pension is the straight forward 16x calculation. If you have information that this is not correct, please advise, as the newspaper financial columns, and everywhere else (including the superannuation funds) I have seen have advised about the 16x calculation in all their recent information.


Ozstache

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Re: Australian Investing Thread
« Reply #3010 on: April 15, 2017, 04:41:32 AM »
.. since you will only start to pay tax on its income once you reach a  taxable income of $18,200.

With the Seniors & Pensioners Tax Offset (SAPTO), that tax free threshold can raise as high as $28,974 each person meaning a couple can pull in $57,948 tax free outside of super. See https://www.superguide.com.au/smsfs/no-tax-retirement-sapto

marty998

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Re: Australian Investing Thread
« Reply #3011 on: April 15, 2017, 04:47:57 AM »
*Crankypants rant removed* Wasn't a very well thought out post.
« Last Edit: April 15, 2017, 04:57:27 AM by marty998 »

deborah

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Re: Australian Investing Thread
« Reply #3012 on: April 15, 2017, 05:53:19 AM »
.. since you will only start to pay tax on its income once you reach a  taxable income of $18,200.

With the Seniors & Pensioners Tax Offset (SAPTO), that tax free threshold can raise as high as $28,974 each person meaning a couple can pull in $57,948 tax free outside of super. See https://www.superguide.com.au/smsfs/no-tax-retirement-sapto
Correct - which makes it even more unreasonable to keep money in accumulation phase when you are old enough for the SAPTO.

*Crankypants rant removed* Wasn't a very well thought out post.
Yes, superannuation still needs to be fixed so that the tax incentives are sustainable. The current problem is a) that people have been given the run around, so they haven't a clue about how a change that is arriving in less than an couple of months will affect them and b) more changes still need to be made, so everyone is feeling that super is not worth it because it changes all the time. John Howard was not good for the economy - he didn't have to do what he did, he made it very difficult for his successors to claw back benefits that really didn't need to be given, and he wasted a once-in-a-lifetime windfall on tax breaks, when it should have been used to future-proof Australia.
« Last Edit: April 15, 2017, 06:06:26 AM by deborah »

Luckyvik

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Australian Investing Thread
« Reply #3013 on: April 15, 2017, 04:28:53 PM »

[/quote]
The regulations were supposed to be different for different types of funds, but those regulations were not passed, so after extensive research I have taken the advice that is just about everywhere that EVERY DB pension is the straight forward 16x calculation. If you have information that this is not correct, please advise, as the newspaper financial columns, and everywhere else (including the superannuation funds) I have seen have advised about the 16x calculation in all their recent information.
[/quote]

My understanding is for a DB pension the calculation is 16*annual pension but annual pension is based on the first pension payment after 1 July annualised so if a pension was indexed in Sept this is ignored. Best to check with your fund for the exact calculation.

If you are over the 100kpa what you pay in tax is different depending on whether the pension has an untaxed component or not.

https://www.ato.gov.au/individuals/super/accessing-your-super/transfer-balance-cap/#Cappeddefinedbenefitincomestreammodific1




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« Last Edit: April 15, 2017, 04:32:29 PM by Luckyvik »

deborah

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Re: Australian Investing Thread
« Reply #3014 on: April 15, 2017, 05:53:31 PM »
My understanding is for a DB pension the calculation is 16*annual pension but annual pension is based on the first pension payment after 1 July annualised so if a pension was indexed in Sept this is ignored. Best to check with your fund for the exact calculation.

If you are over the 100kpa what you pay in tax is different depending on whether the pension has an untaxed component or not.

https://www.ato.gov.au/individuals/super/accessing-your-super/transfer-balance-cap/#Cappeddefinedbenefitincomestreammodific1

So basically you are saying that  it is 16 x the pension for all DB (or DB like) pensions. Thanks for the link for the over $100k per annum pensions. I definitely don't need it, but I may come across someone who does.

Luckyvik

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Re: Australian Investing Thread
« Reply #3015 on: April 16, 2017, 02:41:55 PM »


[/quote]So basically you are saying that  it is 16 x the pension for all DB (or DB like) pensions. Thanks for the link for the over $100k per annum pensions. I definitely don't need it, but I may come across someone who does.
[/quote]

Yes this is my understanding for DB pensions.



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Eucalyptus

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Re: Australian Investing Thread
« Reply #3016 on: April 17, 2017, 03:44:36 AM »
Catch up catch up!

https://www.superguide.com.au/boost-your-superannuation/super-catch-up-concessional-contributions

Oooh. The Catch Up stuff looks quite useful. Is there an easy way to determine how much you have in this catch up bank to use? Eg something in the ATO part of MyGov (laughs, hahahahahahahah)?

Anatidae V

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Re: Australian Investing Thread
« Reply #3017 on: April 17, 2017, 03:46:59 AM »
Catch up catch up!

https://www.superguide.com.au/boost-your-superannuation/super-catch-up-concessional-contributions

Oooh. The Catch Up stuff looks quite useful. Is there an easy way to determine how much you have in this catch up bank to use? Eg something in the ATO part of MyGov (laughs, hahahahahahahah)?
Fucking ATO part of MyGov was down all of Easter longer weekend "for upgrades", so we couldn't make the HECS repayment we were going to put through. Buggers.

Luckyvik

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Australian Investing Thread
« Reply #3018 on: April 18, 2017, 04:03:58 AM »
Bad news the catch-up contributions don't start till the 2018-2019 financial year boo :(


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Eucalyptus

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Re: Australian Investing Thread
« Reply #3019 on: April 18, 2017, 07:05:38 AM »
Catch up catch up!

https://www.superguide.com.au/boost-your-superannuation/super-catch-up-concessional-contributions

Oooh. The Catch Up stuff looks quite useful. Is there an easy way to determine how much you have in this catch up bank to use? Eg something in the ATO part of MyGov (laughs, hahahahahahahah)?
Fucking ATO part of MyGov was down all of Easter longer weekend "for upgrades", so we couldn't make the HECS repayment we were going to put through. Buggers.

I've noticed they've had a flag up for payments on there for a while... they still haven't fixed the issue.

Why are you paying off your HECS, now that there is no longer a bonus for any extra repayments (as of start of this year)?

Rowellen

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Re: Australian Investing Thread
« Reply #3020 on: April 18, 2017, 09:45:49 PM »
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.

Did you end up doing this? I just ask because I've been trying to work out if it would be better to go for the etf portion or the retail managed find option. I have an accounting background and still find it horrendously complicated. I've been reading this forum and googling but not sure what to look for. If anyone can point me in the right direction for info I'd appreciate it.

Anatidae V

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Re: Australian Investing Thread
« Reply #3021 on: April 19, 2017, 01:37:04 AM »
Catch up catch up!

https://www.superguide.com.au/boost-your-superannuation/super-catch-up-concessional-contributions

Oooh. The Catch Up stuff looks quite useful. Is there an easy way to determine how much you have in this catch up bank to use? Eg something in the ATO part of MyGov (laughs, hahahahahahahah)?
Fucking ATO part of MyGov was down all of Easter longer weekend "for upgrades", so we couldn't make the HECS repayment we were going to put through. Buggers.

I've noticed they've had a flag up for payments on there for a while... they still haven't fixed the issue.

Why are you paying off your HECS, now that there is no longer a bonus for any extra repayments (as of start of this year)?
Emotional decision, and we have no other debt. I'm just grumpy because this should have been so easy (and done last year...)

marty998

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Re: Australian Investing Thread
« Reply #3022 on: April 19, 2017, 03:16:39 AM »
Catch up catch up!

https://www.superguide.com.au/boost-your-superannuation/super-catch-up-concessional-contributions

Oooh. The Catch Up stuff looks quite useful. Is there an easy way to determine how much you have in this catch up bank to use? Eg something in the ATO part of MyGov (laughs, hahahahahahahah)?
Fucking ATO part of MyGov was down all of Easter longer weekend "for upgrades", so we couldn't make the HECS repayment we were going to put through. Buggers.

I've noticed they've had a flag up for payments on there for a while... they still haven't fixed the issue.

Why are you paying off your HECS, now that there is no longer a bonus for any extra repayments (as of start of this year)?
Emotional decision, and we have no other debt. I'm just grumpy because this should have been so easy (and done last year...)

I have posted about this before but there is still a small benefit in paying off your HECS in a lump sum if it is your last year of repayments.

This is because indexation is applied on 1 June each year... so you save a couple of % in interest / CPI. You then simply get all the extra tax deducted through the year back in your tax return.

marty998

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Re: Australian Investing Thread
« Reply #3023 on: April 19, 2017, 03:22:02 AM »
https://www.investordaily.com.au/markets/41128-ubs-wins-17bn-passive-mandate

AMP Capital has awarded UBS what is possibly the single largest index fund mandate in the country at $17 billion.

Astonishing that an active fund manager is basically raising the white flag and saying that their customers want index funds in Fixed Interest and Equities.

Question is...why should a retail customer bother going through AMP and paying 2 sets of fees (1 to UBS and then a platform fee to AMP)?

deborah

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Re: Australian Investing Thread
« Reply #3024 on: April 19, 2017, 03:33:50 AM »
AMP is known for being the most expensive fund, yet they still have business.

Anatidae V

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Re: Australian Investing Thread
« Reply #3025 on: April 19, 2017, 04:05:15 AM »
Catch up catch up!

https://www.superguide.com.au/boost-your-superannuation/super-catch-up-concessional-contributions

Oooh. The Catch Up stuff looks quite useful. Is there an easy way to determine how much you have in this catch up bank to use? Eg something in the ATO part of MyGov (laughs, hahahahahahahah)?
Fucking ATO part of MyGov was down all of Easter longer weekend "for upgrades", so we couldn't make the HECS repayment we were going to put through. Buggers.

I've noticed they've had a flag up for payments on there for a while... they still haven't fixed the issue.

Why are you paying off your HECS, now that there is no longer a bonus for any extra repayments (as of start of this year)?
Emotional decision, and we have no other debt. I'm just grumpy because this should have been so easy (and done last year...)

I have posted about this before but there is still a small benefit in paying off your HECS in a lump sum if it is your last year of repayments.

This is because indexation is applied on 1 June each year... so you save a couple of % in interest / CPI. You then simply get all the extra tax deducted through the year back in your tax return.
Ugh, maybe we should wait a few months and do it next financial year, then (it is my partner's HECS debt). *bangs head against brick wall* Back to your regularly scheduled money chats...

FFA

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Re: Australian Investing Thread
« Reply #3026 on: April 20, 2017, 04:25:33 AM »
AMP is known for being the most expensive fund, yet they still have business.
thankfully, us mustachians are still the minority :)

Freshwater

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Re: Australian Investing Thread
« Reply #3027 on: April 20, 2017, 06:30:36 PM »
AMP is known for being the most expensive fund, yet they still have business.
thankfully, us mustachians are still the minority :)

Maybe most people are on heavily discounted arrangements though corporate plans? But yeah, if it's the fund your company has chosen then most wouldn't compare. When I was working in corporate I used them and I can't remember the details because hubby checked it (he was in the industry) but it made it comparable because it was a 1% fee discount or something. As you can tell I am across it all :/

marty998

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Re: Australian Investing Thread
« Reply #3028 on: April 21, 2017, 04:17:55 AM »
AMP is known for being the most expensive fund, yet they still have business.
thankfully, us mustachians are still the minority :)

Maybe most people are on heavily discounted arrangements though corporate plans? But yeah, if it's the fund your company has chosen then most wouldn't compare. When I was working in corporate I used them and I can't remember the details because hubby checked it (he was in the industry) but it made it comparable because it was a 1% fee discount or something. As you can tell I am across it all :/

My very first professional job in 2005 I was placed in an AMP corporate super plan.

A commission of 4% was deducted from every contribution and paid to a financial planner I'd never met or dealt with. Insurance premiums representing a further 30% of my total balance over the 6 months I was in there were also deducted. They'd put me in some high risk category and given me almost a million bucks in death cover.

Bastards.

I wised up very quickly as soon as I got my first half year statement (didn't have the ability to login online and view my balance/transactions any earlier) and I've have been with Australian Super ever since.

superannuationfreak

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Re: Australian Investing Thread
« Reply #3029 on: April 21, 2017, 06:18:48 AM »
https://www.investordaily.com.au/markets/41128-ubs-wins-17bn-passive-mandate

AMP Capital has awarded UBS what is possibly the single largest index fund mandate in the country at $17 billion.

Astonishing that an active fund manager is basically raising the white flag and saying that their customers want index funds in Fixed Interest and Equities.

Question is...why should a retail customer bother going through AMP and paying 2 sets of fees (1 to UBS and then a platform fee to AMP)?

Although I'm no fan of AMP, this is probably an existing fund mandate just with a new manager rather than "raising the white flag".  Most diversified funds will have at least a component in an index mandate (as it's cheap), although I'm more used to seeing Vanguard, Blackrock and State Street as the dominant providers.  AMP Super had about $70b in assets at June last year, probably more now, so it's not nothing but it's probably ~20% of their assets.

And I imagine the majority of customers don't see any fees from UBS as it's most likely part of their diversified options, particularly their MySuper ones.  Almost every fund outsources the index component of their funds as it's very cheap to do when you're talking multiple billions while outsourcing many of the operational risks to those with the largest economies of scale.  It'll just be part of the overall investment fees.  I think Aussie do some of their own index implementation but that's the exception.

11ducks

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Re: Australian Investing Thread
« Reply #3030 on: April 23, 2017, 03:20:12 AM »
Hey guys,

I had a question. I invested my first $10k last year (AFI: diversified LIC, fully-franked dividends reinvested, recommended by barefoot investor for long-term investing) -it cost $29.95 (commsec acct, v low ongoing fees). I was warned to save up and deposit big sums (to avoid the trading fee eating away at my money. But it will take me over a year to save my next $10k (saving around $700 a fortnight atm). I'm around $6k now, and $10k seems forever away!

It got me thinking, where is the line between keeping cash in an account earning barely anything, vs paying the fee each time but having that then sitting in shares (hopefully outpacing inflation)? My current 'high interest' savings account earns around 1.7% interest, which is tiny. Where would you draw the line - should I invest in $1k or $2k or $5k lots, or keep saving until I hit $10k?
 

(* I'm sure there are probably better ways to invest or pay low fees - I chose commsec as it seems very simple for a novice investor - I just want to 'set and forget' essentially, and hope to leave it there making conservative gains over the long term).
Cheaper beans...CHEAPER BEANS! - dagiffy1

mjr

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Re: Australian Investing Thread
« Reply #3031 on: April 23, 2017, 03:38:10 AM »
If you set up a  Commonwealth Direct Investment Account with Commsec, you'll drop the brokerage from $29.95 to $19.95 for your sub $10,000 trades. 

$19.95 brokerage on a $2000 trade is of course 1%, straight off your 1st year's return.

If you want to use Commsec for convenience, you'll pay for it.  If you want to execute frequent low-value trades you should find a low-cost broker like ig.

I use Westpac for the same convenience reasons, but I never trade less than $18k to make sure I don't pay more than 0.11% brokerage.
« Last Edit: April 23, 2017, 03:47:44 AM by mjr »

Grogounet

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Re: Australian Investing Thread
« Reply #3032 on: April 23, 2017, 03:50:11 AM »
AMP is known for being the most expensive fund, yet they still have business.
thankfully, us mustachians are still the minority :)

Maybe most people are on heavily discounted arrangements though corporate plans? But yeah, if it's the fund your company has chosen then most wouldn't compare. When I was working in corporate I used them and I can't remember the details because hubby checked it (he was in the industry) but it made it comparable because it was a 1% fee discount or something. As you can tell I am across it all :/

My very first professional job in 2005 I was placed in an AMP corporate super plan.

A commission of 4% was deducted from every contribution and paid to a financial planner I'd never met or dealt with. Insurance premiums representing a further 30% of my total balance over the 6 months I was in there were also deducted. They'd put me in some high risk category and given me almost a million bucks in death cover.

Bastards.

I wised up very quickly as soon as I got my first half year statement (didn't have the ability to login online and view my balance/transactions any earlier) and I've have been with Australian Super ever since.

Yeah... It took me 5 years to realize I was getting screwed... Just switched to Hostplus. I can't believe I was so blind about AMP fees...

casserole_dish

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Re: Australian Investing Thread
« Reply #3033 on: April 23, 2017, 06:02:02 AM »
Hey guys,

I had a question. I invested my first $10k last year (AFI: diversified LIC, fully-franked dividends reinvested, recommended by barefoot investor for long-term investing) -it cost $29.95 (commsec acct, v low ongoing fees). I was warned to save up and deposit big sums (to avoid the trading fee eating away at my money. But it will take me over a year to save my next $10k (saving around $700 a fortnight atm). I'm around $6k now, and $10k seems forever away!

It got me thinking, where is the line between keeping cash in an account earning barely anything, vs paying the fee each time but having that then sitting in shares (hopefully outpacing inflation)? My current 'high interest' savings account earns around 1.7% interest, which is tiny. Where would you draw the line - should I invest in $1k or $2k or $5k lots, or keep saving until I hit $10k?
 

(* I'm sure there are probably better ways to invest or pay low fees - I chose commsec as it seems very simple for a novice investor - I just want to 'set and forget' essentially, and hope to leave it there making conservative gains over the long term).

I am also a brand new investor, I went with VAS and VGS after months of research and indecision.
I also went with commsec, happy to pay more brokerage for the simplicity.
I've got my savings with ING earning 3% and I calculated the optimum lump sum amount/time out of market trade off in excel including brokerage. From memory, for me it worked out best to invest about every 5-6 weeks to maximise time in market while minimising brokerage. But I haven't stuck with it, I just buy shares when the balance gets to a certain amount that I feel is too much in cash.

I'm saving about double what you are so if your cash was earning 3% you might be best investing every 3 months or so.

Freshwater

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Re: Australian Investing Thread
« Reply #3034 on: April 23, 2017, 06:14:41 AM »
Marty, how the hell did you have $1m of death cover - I thought you need to fill in medical questionnaires to get anywhere near that much!!??

If you look at Canstar it would seem that AMP are one of the cheapest - their estimate of annual fees are nowhere near what I've paid them when I was no longer on a massive discount. Their statements are also quite opaque so I can understand how people would not realise. So much for the moves to transparency. It shows them as being about $100 cheaper than Australian Super whereas I actually I save a few hundred.

deborah

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Re: Australian Investing Thread
« Reply #3035 on: April 23, 2017, 02:43:04 PM »
Marty, how the hell did you have $1m of death cover - I thought you need to fill in medical questionnaires to get anywhere near that much!!??

If you look at Canstar it would seem that AMP are one of the cheapest - their estimate of annual fees are nowhere near what I've paid them when I was no longer on a massive discount. Their statements are also quite opaque so I can understand how people would not realise. So much for the moves to transparency. It shows them as being about $100 cheaper than Australian Super whereas I actually I save a few hundred.
I just sorted Canstar in order of cheapness, and they were 25th out of 66, and they only had 3 stars, so Canstar can't think THAT much of them. However, it is interesting that in the Superguide, Trish Power says that they are one of the 10 cheapest when the fund is in PENSION phase - https://www.superguide.com.au/boost-your-superannuation/comparing-super-funds-check-out-the-cheapest-funds.

marty998

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Re: Australian Investing Thread
« Reply #3036 on: April 23, 2017, 03:13:46 PM »
Marty, how the hell did you have $1m of death cover - I thought you need to fill in medical questionnaires to get anywhere near that much!!??

If you look at Canstar it would seem that AMP are one of the cheapest - their estimate of annual fees are nowhere near what I've paid them when I was no longer on a massive discount. Their statements are also quite opaque so I can understand how people would not realise. So much for the moves to transparency. It shows them as being about $100 cheaper than Australian Super whereas I actually I save a few hundred.

It was a corporate plan - must have been negotiated as standard cover for everyone in the plan.

I guess the accounting partners I was working for needed lots of cover for themselves, and it was extended down to the serfs who were working for them :)

11ducks

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Re: Australian Investing Thread
« Reply #3037 on: April 24, 2017, 03:15:59 AM »
If you set up a  Commonwealth Direct Investment Account with Commsec, you'll drop the brokerage from $29.95 to $19.95 for your sub $10,000 trades. 

$19.95 brokerage on a $2000 trade is of course 1%, straight off your 1st year's return.

If you want to use Commsec for convenience, you'll pay for it.  If you want to execute frequent low-value trades you should find a low-cost broker like ig.

I use Westpac for the same convenience reasons, but I never trade less than $18k to make sure I don't pay more than 0.11% brokerage.

Thanks MJR, will look into it!
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11ducks

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Re: Australian Investing Thread
« Reply #3038 on: April 24, 2017, 03:18:10 AM »
Hey guys,

I had a question. I invested my first $10k last year (AFI: diversified LIC, fully-franked dividends reinvested, recommended by barefoot investor for long-term investing) -it cost $29.95 (commsec acct, v low ongoing fees). I was warned to save up and deposit big sums (to avoid the trading fee eating away at my money. But it will take me over a year to save my next $10k (saving around $700 a fortnight atm). I'm around $6k now, and $10k seems forever away!

It got me thinking, where is the line between keeping cash in an account earning barely anything, vs paying the fee each time but having that then sitting in shares (hopefully outpacing inflation)? My current 'high interest' savings account earns around 1.7% interest, which is tiny. Where would you draw the line - should I invest in $1k or $2k or $5k lots, or keep saving until I hit $10k?
 

(* I'm sure there are probably better ways to invest or pay low fees - I chose commsec as it seems very simple for a novice investor - I just want to 'set and forget' essentially, and hope to leave it there making conservative gains over the long term).

I am also a brand new investor, I went with VAS and VGS after months of research and indecision.
I also went with commsec, happy to pay more brokerage for the simplicity.
I've got my savings with ING earning 3% and I calculated the optimum lump sum amount/time out of market trade off in excel including brokerage. From memory, for me it worked out best to invest about every 5-6 weeks to maximise time in market while minimising brokerage. But I haven't stuck with it, I just buy shares when the balance gets to a certain amount that I feel is too much in cash.

I'm saving about double what you are so if your cash was earning 3% you might be best investing every 3 months or so.

I didn't know there was a Vanguard Australia, will look into it  next time I go to invest, thanks. This is perfect, thankyou, may work on $5k lump sums or the  like.
Cheaper beans...CHEAPER BEANS! - dagiffy1

dystopic

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Re: Australian Investing Thread
« Reply #3039 on: April 25, 2017, 07:41:15 PM »
Vanguard is reducing costs and revising strategic asset allocation for wholesale diversified funds. All fees are down to 0.29%.

dystopic

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Re: Australian Investing Thread
« Reply #3040 on: April 25, 2017, 08:21:09 PM »
Hey guys,

I had a question. I invested my first $10k last year (AFI: diversified LIC, fully-franked dividends reinvested, recommended by barefoot investor for long-term investing) -it cost $29.95 (commsec acct, v low ongoing fees). I was warned to save up and deposit big sums (to avoid the trading fee eating away at my money. But it will take me over a year to save my next $10k (saving around $700 a fortnight atm). I'm around $6k now, and $10k seems forever away!

It got me thinking, where is the line between keeping cash in an account earning barely anything, vs paying the fee each time but having that then sitting in shares (hopefully outpacing inflation)? My current 'high interest' savings account earns around 1.7% interest, which is tiny. Where would you draw the line - should I invest in $1k or $2k or $5k lots, or keep saving until I hit $10k?
 

(* I'm sure there are probably better ways to invest or pay low fees - I chose commsec as it seems very simple for a novice investor - I just want to 'set and forget' essentially, and hope to leave it there making conservative gains over the long term).

Sounds like Vanguard Retail funds may be a better option for you. You can BPAY however small amount however often you want.

Tyler

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Re: Australian Investing Thread
« Reply #3041 on: April 25, 2017, 10:09:34 PM »
I've gotta say, the moment I had a question about Australian investing I knew exactly where I would turn.  :)

I've been doing a lot of research into foreign markets (I'm American, but interested in modeling portfolios everywhere), and I'm a little stuck on Australian bonds.  I've read that they have treasuries out to 30 years these days, but I can't seem to find any historical interest rate data past 10 years maturity.  So I have two questions:

1) Are long term bond index funds legit options in Australia?  If so, can you please point me to one?
2) Does anyone know where I can find good historical data on long term Australian interest rates (maturities greater than 10 years)?

Thanks for the help.
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Ozstache

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Re: Australian Investing Thread
« Reply #3042 on: April 25, 2017, 11:02:41 PM »
My wife will one day inherit my MIL's share portfolio, which we are currently managing on her behalf as Power of Attorney. While we know how many shares she has in each company through the dividend letters we get, we are unable to locate any records of hers as to when she bought each share parcel over the years. Her memory is not currently reliable enough to come even close to reconstituting these records.

Given that we may wish to sell some of these shares in future, possibly even before she dies to pay towards entry into an aged care facility, we need to know the respective share purchase history to determine the cost base for calculating CGT. Does anyone know how to going about finding out this information? Contact the companies directly? Share broker? Law firm?

steveo

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Re: Australian Investing Thread
« Reply #3043 on: April 25, 2017, 11:07:21 PM »
My wife will one day inherit my MIL's share portfolio, which we are currently managing on her behalf as Power of Attorney. While we know how many shares she has in each company through the dividend letters we get, we are unable to locate any records of hers as to when she bought each share parcel over the years. Her memory is not currently reliable enough to come even close to reconstituting these records.

Given that we may wish to sell some of these shares in future, possibly even before she dies to pay towards entry into an aged care facility, we need to know the respective share purchase history to determine the cost base for calculating CGT. Does anyone know how to going about finding out this information? Contact the companies directly? Share broker? Law firm?

The share registry should be the place to go. I remember some scamming bastard got that information and tried to buy shares at below market prices. He ripped off old people that way.

deborah

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Re: Australian Investing Thread
« Reply #3044 on: April 25, 2017, 11:53:29 PM »
Contact the companies directly. GOOD LUCK!!! I had similar problems and couldn't find out the information I needed because the share registry didn't go back far enough.

FFA

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Re: Australian Investing Thread
« Reply #3045 on: April 26, 2017, 12:12:44 AM »
Hi Ozstache, I'd try the share registry too, and also the broker if you know who she used to purchase, in case they keep records back far enough. Your power of attorney should enable you to make those enquiries on her behalf. I'm trying to keep track of it for my parents too as I can see this coming up in future. Unfortunately they had some DRP's which create lots of small parcels. Have managed to hunt down most of it, but there are some AMP shares that were via AXA and some earlier demutualization which is a nightmare to figure out what the cost base should be.

Sorry Tyler, would like to help but I don't know the answer for long term bond indices and/or rates.

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Re: Australian Investing Thread
« Reply #3046 on: April 26, 2017, 12:45:33 AM »
Thanks for the suggestions everyone. I'll try each of them until I get somewhere!

MajorTom

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Re: Australian Investing Thread
« Reply #3047 on: April 26, 2017, 05:31:37 PM »
Hi Tyler,
I can't help with the information you're after but just wanted to say your site is great and I'm very interested in being able to model Australian-specific portfolios.

Dystopic,
Thanks for pointing out the Vanguard Diversified Wholesale changes. I've been planning on probably investing in either the Growth or High Growth funds (just as soon as I finish paying off the house in the next year and a bit), so the drop in fees from 0.36% or 0.37% to 0.29% is very welcome. I was pretty on board with the current makeup of the funds though, so will have to get my head around the new ones (basically dropping property as a discrete class, reducing home bias/increasing international shares, introducing hedging for about 1/3 of international shares, changing the fixed interest components) - but in the end I'll probably just defer to Vanguard knowing more than me, which is likely a safe bet.

marty998

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Re: Australian Investing Thread
« Reply #3048 on: April 27, 2017, 05:28:57 AM »
I've gotta say, the moment I had a question about Australian investing I knew exactly where I would turn.  :)

I've been doing a lot of research into foreign markets (I'm American, but interested in modeling portfolios everywhere), and I'm a little stuck on Australian bonds.  I've read that they have treasuries out to 30 years these days, but I can't seem to find any historical interest rate data past 10 years maturity.  So I have two questions:

1) Are long term bond index funds legit options in Australia?  If so, can you please point me to one?
2) Does anyone know where I can find good historical data on long term Australian interest rates (maturities greater than 10 years)?

Thanks for the help.

1) Vanguard has one, which is invested in a mix of corporate and government securities. The bond market in Australia is not as deep or liquid as the US, indeed back in 2006 when the federal government paid off the national debt, market participants requested the government to leave a pool of bonds on issue just so there would still be a market for banks and insurance companies to be able to park money in!!

Corporate bond market is small but growing. Companies in the past have simply borrowed from the banks as it is cheaper. You should appreciate that many companies will only issue bonds if they've already been knocked back by a bank.

2) The Reserve Bank of Australia website should have some historical data, else the Australian Office of Financial Management (AOFM), which is the body that issues government bonds, should also have some info.

Tyler

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Re: Australian Investing Thread
« Reply #3049 on: April 27, 2017, 10:50:21 AM »
Paying off the national debt -- what a novel concept!  ;)  No wonder the bond market seems a bit different than what I'm used to. 

Thanks for the info -- that helps a lot. 
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