Author Topic: Australian Investing Thread  (Read 2613102 times)

nnls

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Re: Australian Investing Thread
« Reply #3400 on: August 23, 2017, 10:46:10 PM »
So who else holds VEU and/or VTS and received an email recently about voting in an upcoming Joint Special Meeting?  It looks to me that I can't even see what I would be voting on without logging in to vote...  Can anyone shed some light?

here is what I got

JuicyCrab

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Re: Australian Investing Thread
« Reply #3401 on: August 24, 2017, 06:19:57 AM »
Hi all,

Just read this report from Russell Investments titled:

2017 Long-term Investing Report
The 5 big threats to wealth creation for Australians


http://files-au.clickdimensions.com/russellinvestmentscom-axfox/files/r_rpt_asx_report_v2f_web_1707.pdf?_cldee=amFtZXNhcGx1bWJAZ21haWwuY29t

Not sure how I feel about what is presented and if there is an agenda behind the report at all that Russell's would benefit from.

tl;dr:

Exec Summary:
The 2017 Russell Investments/ASX Long-term Investing
Report shows how 5 major threats to long-term wealth
creation could potentially play out for millions of
Australians.
Traditional investment approaches are unlikely to achieve
the returns investors need to achieve their goals, as lower
returns and the potential for increasingly volatile markets
are predicted for core asset classes. So where and how can
investors find optimum returns while mitigating risk?
All the signs point to a future where savvy investors
will increasingly use diversified multi-asset strategies,
designed to efficiently capture new sources of return
opportunities, to help build their long-term wealth.


I feel like the data in the report is suggesting investors to back off equities and local property and invest more into global bonds and global property.

Thoughts?

misterhorsey

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Re: Australian Investing Thread
« Reply #3402 on: August 24, 2017, 07:38:07 AM »
I've only briefly skimmed it. But I note that the first point re: 'Rear Mirror Investing' is sound:

"Making investment decisions based on past performance is a high-risk strategy at the best of times, and we never recommend it. In the current climate, where the strength of investment fundamentals has weakened and new norms are being created1, it is even more important that investors look beyond historical numbers and incorporate new investment insights.

But then they spend the next few pages outlining past performance of various asset classes, then summarise a comparison between them across 10 year and 20 year time periods.

I know they're trying to convince investors to trust the active management of Russell Investments, but it's not really making a convincing case for it.

itchyfeet

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Re: Australian Investing Thread
« Reply #3403 on: August 24, 2017, 10:28:05 AM »
Whilst not much help for forecasting the future, I do like looking back at the past returns.

The main take away for me is that I have been so lucky to stumble into buying my first property 21 years ago.

Whilst, I wasn't brave enough to build a big & massively leveraged residential property portfolio, which would have left me rich now, I have been lucky in carrying More leverage than most on my homes for a very long time now.

Being highly leveraged in an asset class that has returned 10.3% pa for 20 years will cover up many other financial errors. In particular, spending and not saving.

I remember reading real estate investing books in the early 90s espousing the merits of leveraged property investment, and property portfolio accumulation. I was sceptical that property prices could keep going up faster than wages back then and today for me it is unfathomable. However, I wish now that I had brashly accumulated property. I'd be FIRED. Oh well, whilst it could be better but I am still ridiculously fortunate.

I reckon the next 20 years will be nothing like the past 20 years....... it's just as likely that I'll be wrong again.

marty998

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Re: Australian Investing Thread
« Reply #3404 on: August 24, 2017, 03:34:00 PM »
Marty - what bank hybrids are on offer ATM that you are aware of?

http://www.asx.com.au/asx/markets/interestRateSecurityPrices.do?type=HYBRID

See here - full list of Hybrid securities on the ASX

Wadiman

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Re: Australian Investing Thread
« Reply #3405 on: August 24, 2017, 03:55:08 PM »
Thanks Marty!

Ozstache

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Re: Australian Investing Thread
« Reply #3406 on: August 24, 2017, 04:51:16 PM »
I was sceptical that property prices could keep going up faster than wages back then and today for me it is unfathomable.

There are many one-shot factors that have allowed this mathematically unsustainable situation to continue for the last 50 years (eg. dual incomes, longer loan periods, looser lending standards, working women, decreasing interest rates, favourable tax breaks, foreign demand, etc), but I struggle to think of what else could keep this historical blip going on for too much longer.

Rowellen

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Re: Australian Investing Thread
« Reply #3407 on: August 24, 2017, 05:10:26 PM »
Immigration. That's all I've got.

Ozstache

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Re: Australian Investing Thread
« Reply #3408 on: August 24, 2017, 05:33:56 PM »
Immigration. That's all I've got.
That's one that should already be on the 50 year trick list. We could always crank it up even more I guess and make Dick Smith even crankier!

Rowellen

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Re: Australian Investing Thread
« Reply #3409 on: August 24, 2017, 05:55:54 PM »
Immigration. That's all I've got.
That's one that should already be on the 50 year trick list. We could always crank it up even more I guess and make Dick Smith even crankier!

That is true.

Just thought of another. The ever increasing pool of Super.

Ozstache

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Re: Australian Investing Thread
« Reply #3410 on: August 24, 2017, 06:21:04 PM »
Just thought of another. The ever increasing pool of Super.
Good point.

deborah

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Re: Australian Investing Thread
« Reply #3411 on: August 24, 2017, 06:30:13 PM »
It's possible that super will stop increasing soon. There are two reasons it is increasing - it hasn't been in full swing long enough to become stable; and there haven't been upper limits on it. Both will soon cease - especially as the baby boomers are a bigger generation than the couple that come after them.

misterhorsey

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Re: Australian Investing Thread
« Reply #3412 on: August 24, 2017, 06:46:06 PM »
Whilst not much help for forecasting the future, I do like looking back at the past returns.

The main take away for me is that I have been so lucky to stumble into buying my first property 21 years ago.

Whilst, I wasn't brave enough to build a big & massively leveraged residential property portfolio, which would have left me rich now, I have been lucky in carrying More leverage than most on my homes for a very long time now.

Being highly leveraged in an asset class that has returned 10.3% pa for 20 years will cover up many other financial errors. In particular, spending and not saving.

I remember reading real estate investing books in the early 90s espousing the merits of leveraged property investment, and property portfolio accumulation. I was sceptical that property prices could keep going up faster than wages back then and today for me it is unfathomable. However, I wish now that I had brashly accumulated property. I'd be FIRED. Oh well, whilst it could be better but I am still ridiculously fortunate.

I reckon the next 20 years will be nothing like the past 20 years....... it's just as likely that I'll be wrong again.

I missed the property boat.  Started FT work in 2000.  Did have a property for about 6 years, but bought at the top of a boom in 2003 and sold out before the most recent wave.

Although I wish I had bought property and leveraged up and have a greater net worth by now, I'm not sure that I would actually want to be the person who owns a property portfolio and all that typical entails.  I know I would have  found it hard to wriggle out of the earning and consumption cycle (i.e I'd have a car and probably 12 guitars).

Missing out on property made me turn to frugality as a means to achieve FIRE.  Which I kind of have. In circumstances that I would never have thought possible or desirable previously (a low passive income, a low cost of living.). I might go back to some kind of work at some stage but the freedom is pretty addictive.

So for those who missed out on property it's still possible to FIRE - although you may have to make certain sacrifices, which aren't that hard if you don't think of them as sacrifices.

itchyfeet

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Re: Australian Investing Thread
« Reply #3413 on: August 25, 2017, 12:19:23 AM »
As we all know, having an expensive home is absolutely zero help in achieving FI, unless you are willing to sell your home.

DW and I are still struggling with this. On paper we have a high NW. However, If we move back into our home we have bugger all invested wealth generating cashflow.

We know we must sell, but have no idea where to go instead.

If we finally decide not to move, the house appreciation will be meaningless, and I will have several more years of working ahead of me (and I won't be a happy hubby).


misterhorsey

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Re: Australian Investing Thread
« Reply #3414 on: August 25, 2017, 01:10:03 AM »
I certainly find it hard to let go of investments that have done well so I can relate.  What I was getting at in my previous post is that although I would love to have lots of property, perhaps missing out on the property boom may have done me a favour. I would never have made the jump into FIRE as the leap would be too much?

But if your main priority is to FIRE, surely if you've done well you have options?

I don't mean this flippantly - but perhaps soften yourself up by reading up on minimalism.

I read this recently. It's pretty kooky and somewhat extreme.  But there are valuable lessons in it, even for people who may not want to end up in a 20sqm apt.

https://www.goodreads.com/book/show/30231806-goodbye-things

itchyfeet

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Re: Australian Investing Thread
« Reply #3415 on: August 25, 2017, 01:57:41 AM »
I am all for minimalism. DW seems to like a bit of clutter of memorabilia around our house though. Sometimes one needs to compromise a little to keep the SO happy. Our house in Sydney is quite small so that keeps the useless stuff under control somewhat.

So it's not the size that makes our house valuable, it's the location. It's in a fairly expensive inner city suburb, purchased when I thought retiring at 55 was early retirement. My views on my career have evolved significantly over the past 10 years. 😂 .

We love our house because it allows us to walk to shops, restaurants, bars into the city, to our friends places etc. Giving up things is not really the issue, but giving up the location is. We debtate about moving into an apartment, but we have a dog who enjoys the small backyard and we enjoy our vegetable patch and sitting on the back deck sipping a beer or coffee. We miss being outside now we are living in an apartment in Dubai.

We own another place in Brisbane which we might move to for a trial run after we repatriate. That way we are not committing to buying or selling immediately even if we know the actual house in Brisbane is not really right for us. It was purchased purely as a rental. At least we can get a feel for a Brissy and see if we like it.

misterhorsey

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Re: Australian Investing Thread
« Reply #3416 on: August 25, 2017, 07:13:08 AM »
I am all for minimalism. DW seems to like a bit of clutter of memorabilia around our house though. Sometimes one needs to compromise a little to keep the SO happy. Our house in Sydney is quite small so that keeps the useless stuff under control somewhat.

So it's not the size that makes our house valuable, it's the location. It's in a fairly expensive inner city suburb, purchased when I thought retiring at 55 was early retirement. My views on my career have evolved significantly over the past 10 years. 😂 .

I hear you. I think minimalism is great, but it's also important to find whatever works.

I agree with you on location as well.  I'm originally from car driving Western Sydney but now live in Inner City Melbourne, where everything is a bike ride away. It's like living in a village, but 4kms/20min bike ride into the CBD.  So no disrespect for car driving enthusiasts, but I prefer walkable locales too.

It is possible to rent a place in the inner city - admittedly it can be a pain finding a place and moving. Although I've moved so much that it has motivated me to adopt a more minimalist life - which pays dividends in being much more flexible and free.

I guess I'm struck by how anchored property ownership can make you towards the particular house that you own. I think it's a natural consequence of owning something and not just being financially invested, but emotionally as well. And it's convenient. And easy to go back to your own place. But there are also downsides to being so attached to a particular house or location that it may not serve you optimally for certain life stages.

I do miss not being able to invest fully into a garden and home, but I'm happy to forgo that if it means I can be mentally free of work.  I'm also sharing house at the moment, but as a single person, I actually find that preferable to when I've lived on my own.

Anyway, it does sound like you have a reasonable suite of options. As well as others you may not have considered (i.e renting someplace other than your existing properties).

itchyfeet

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Re: Australian Investing Thread
« Reply #3417 on: August 25, 2017, 12:07:24 PM »
Renting is very much a possibility once we sell.

lush

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Re: Australian Investing Thread
« Reply #3418 on: August 26, 2017, 12:38:35 AM »
Hi All, Just went to do MYTAX and I had anticipated that all details from my vanguard wholesale funds tax statement would be all pre-filled, like my interest, - but nothing! Anyone know anything about this? Thanks.

mjr

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Re: Australian Investing Thread
« Reply #3419 on: August 26, 2017, 01:51:53 AM »
They don't need to send this info to the ATO until the end of October.  Completely normal to not be there by now.  Maybe September if we're really lucky.

marty998

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Re: Australian Investing Thread
« Reply #3420 on: August 26, 2017, 02:29:19 AM »
You should have the tax statement anyway - these were available at the end of July.

lush

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Re: Australian Investing Thread
« Reply #3421 on: August 26, 2017, 03:06:16 PM »
You should have the tax statement anyway - these were available at the end of July.


Thanks everyone for the info about tax info.
Marty - yes I got the tax statement, and sent it to my accountant, and he reckons only the stuff I need to add to my taxable income is on under " Taxable Income Statement" on the first page. However on the second page there is an amount under 'Net Cash Distributions' that I thought would also be taxable. So I am a bit confused by it all. I also called Vangaurd last week, and they said they can't talk to the tax statement. So no help there.

marty998

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Re: Australian Investing Thread
« Reply #3422 on: August 26, 2017, 03:11:32 PM »
Nope...you should ignore the net cash distributions section.

The point of the tax statement is that what you put in your tax return is different to the cash you receive :)


Rowellen

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Re: Australian Investing Thread
« Reply #3423 on: August 26, 2017, 03:46:07 PM »
Nope...you should ignore the net cash distributions section.

The point of the tax statement is that what you put in your tax return is different to the cash you receive :)

Exactly.

lush

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Re: Australian Investing Thread
« Reply #3424 on: August 26, 2017, 04:08:08 PM »
Thanks again! That is a huge relief! So I just have to take into consideration these sections:

1) Non Primary Production Income
2) Franked Distributions
3) Net Capital Gain
4) Assessable Foreign Source Income

It's a learning curve :)

mymatenate

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Re: Australian Investing Thread
« Reply #3425 on: August 30, 2017, 02:09:57 PM »
Guys - what's your thoughts on investing in Australian farm land?

I've been running the numbers and chatting to my farmer friends and it doesn't seem all that bad

For example-

Good, flat arable land suitable for cropping and grazing in fairly reliable rainfall area for $2000 per acre.
Can lease easily for $60 per acre per year
Rates approx $8 per acre per year

Renter pays insurance.

Could buy a couple a hundred acres of flat productive land, without a house, so easy to manage and little in the way of other costs besides maintaining the boundary fences.

say, 200 acres x 2000 = $400,000 capital
200  x 60 = $12000 / year less $1600 rates = $10400
2.6% return

I know 2.6% is quite low, but you would expect the land will rise in value at least alongside inflation (over the long term), so 3% + 2.6% = 5.6%. Or looking at it another way, 2.6% that you can safely "withdraw" and spend.

Thoughts?
« Last Edit: August 30, 2017, 03:58:22 PM by mymatenate »

marty998

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Re: Australian Investing Thread
« Reply #3426 on: August 30, 2017, 03:38:34 PM »
Guys. What's your thoughts on investing in Australian farm land?

I've been running the numbers and chatting to my farmer friends and it doesn't seem all that bad in Australia at the moment, compared to other asset classes.

For example-

Good country in relatively reliable rainfall area suitable for cropping/grazing at $2000 / acre.
Can lease easily for $50 per acre per year
Rates approx $8 per acre per year

Renter pays insurance.

Could buy a couple a hundred acres of flat productive land, without a house, so easy to manage and little in the way of other costs besides replacing the boundary fence once every decade or two.

say, 100 acres x 2000 = $200,000 capital
100  x 50 = $5000 year less $800 rates = $4200
2.1% return

I know 2.1% is quite low, but you would expect the land will rise in value at least alongside inflation (over the long term), so 3% + 2.1% = 5.1%. Or looking at it another way, 2.1% that you can safely "withdraw" and spend.

Thoughts?

I would be very surprised if you could buy productive land for only* $2000 an acre.

What part of the country are you looking to buy in?

*As a comparison, it amazes me that people in Sydney are paying $2000 per square metre(!) for land.

mymatenate

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Re: Australian Investing Thread
« Reply #3427 on: August 30, 2017, 04:06:44 PM »
Sorry Marty, I just edited the post as I goofed up the figures initially

But yes, $2000/acre is achievable. You've got to get a sufficient distance away from the cities so that the land is priced according to it's farming (productive) value rather than other factors like city-dwellers buying it as a lifestyle block/ weekender or whatever. So yep, you can buy productive farmland for as little as $100 an acre further west :-) $2000/acre can be found just over the great divide in the western slopes country

Ozstache

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Re: Australian Investing Thread
« Reply #3428 on: August 30, 2017, 04:23:11 PM »
little in the way of other costs besides maintaining the boundary fences.

Thoughts?

If my maths is correct, 200 acres will have 3.6kms of boundary fencing if square. If you had to replace 5% per year, which I don't think is too unreasonable a maintenance estimate, @ $50 a metre, that's $9K per year eating into your income. Even at 1% that's still $1600 per year.

deborah

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Re: Australian Investing Thread
« Reply #3429 on: August 30, 2017, 04:29:34 PM »
little in the way of other costs besides maintaining the boundary fences.

Thoughts?

If my maths is correct, 200 acres will have 3.6kms of boundary fencing if square. If you had to replace 5% per year, which I don't think is too unreasonable a maintenance estimate, @ $50 a metre, that's $9K per year eating into your income. Even at 1% that's still $1600 per year.
You could get it off your tax. Is there a minimum you need to be a farmer? Like 1000 acres (and why are we using measurements that haven't been used since I was a child?).

bigchrisb

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Re: Australian Investing Thread
« Reply #3430 on: August 30, 2017, 05:43:41 PM »
little in the way of other costs besides maintaining the boundary fences.

Thoughts?

If my maths is correct, 200 acres will have 3.6kms of boundary fencing if square. If you had to replace 5% per year, which I don't think is too unreasonable a maintenance estimate, @ $50 a metre, that's $9K per year eating into your income. Even at 1% that's still $1600 per year.

This got me thinking about the costs - if it was right, its going to make farmland a crazy proposition.  So I had a look at rural fence costs and found a calculator from the Qld Government. https://publications.qld.gov.au/dataset/agbiz-tools-business-and-finance-farm-operations/resource/1ea38755-0159-4aec-89a4-0c5dd83f24b7 

Using the defaults on that gets fence costs at approx $2000/km ($2/metre), and then apportions them between the properties ($1/m).  Gives a very different number.

However, I'm more interested in the lease structures - I suspect farmland leases are fully net, so that the tenant pays for all outgoings?  Is this right Nate?

Ozstache

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Re: Australian Investing Thread
« Reply #3431 on: August 30, 2017, 05:54:52 PM »
My bad. The webpage I looked at was $48 a metre for a fancy wooden fence as opposed to a wire fence for $100 per 100m or $1 per m as bigchrisb says. Carry on!

mymatenate

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Re: Australian Investing Thread
« Reply #3432 on: August 30, 2017, 06:07:15 PM »

However, I'm more interested in the lease structures - I suspect farmland leases are fully net, so that the tenant pays for all outgoings?  Is this right Nate?

Do you mean the tenant, say for instance a crop farmer, pays for all his/her expenses? E.g. fertiliser, seed, sowing, harvesting, etc. If so, yes. The only thing the owner of the land pays is rates and boundary fence maintenance (and the boundary fence costs are supposed to be split with your neighbor, actually, as you mentioned).

mymatenate

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Re: Australian Investing Thread
« Reply #3433 on: August 30, 2017, 06:09:39 PM »
You could get it off your tax. Is there a minimum you need to be a farmer? Like 1000 acres (and why are we using measurements that haven't been used since I was a child?).

Sorry deborah...I probably should have converted to hectares. I spend a lot of time chatting with older cockies and they all operate in acres

marty998

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Re: Australian Investing Thread
« Reply #3434 on: August 31, 2017, 04:35:23 AM »
Today marked the end of reporting season. I reckon it was uninspiring all round.

Quite a bit of pain for CBA and Telstra shareholders, some upside for BHP, RIO and FMG... not a lot of action otherwise among large caps. Woolies seems to have found its groove again. Also good news for Energy Retailer stocks like AGL (not so good if you're an electricity consumer!)

Market overall has been very flat for quite a bit of time now (I said that earlier up the thread)

Something's gotta give sooner or later. Surely the ASX can't go the entire year cycling between 5650 and 5850?

Rowellen

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Re: Australian Investing Thread
« Reply #3435 on: August 31, 2017, 05:14:29 AM »
I actually had a gain in our direct shareholdings (from pre-MMM). I bought CL1 in the float. They increased their dividend payout this quarter and the share price jumped about 50c. They aren't back to their peak but still a great profit if I sold today.  Bought at $1. Currently $3.41. I still won't be gambling on direct shares in future as, sadly, my few gains don't make up for all the losses.

melfire

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Re: Australian Investing Thread
« Reply #3436 on: August 31, 2017, 07:11:43 AM »
Hi all,

Great to see some Aussie Mustachian's around! I found the MMM blog a few months ago, managed to binge read everything before moving on to JColins/Afford Anything and have been reading a few MMM recommended books every other week.

I have just finished reading all 69 pages over the last few days.. thank you so much for sharing all of the helpful information. I have a few questions that haven't been covered and would look to get a second opinion on my strategy if anyone is around.

Age: 23
Debt: 19K HECS
ING Savings (F You Money): 10k
Joint Savings: 5k
Super: A dismal 4k


I'm a typical millennial... currently living at home, trying to save and get a head start. I started looking into my finances when I lost my first full time job as the company went into liquidation. A few major wakeup calls from that - missing super alerted me to high fees (I consolidated to REST core strategy); aggressive repayments of HECs lead to minimal emergency savings (I have since stopped making extra repayments, and focussing on saving 70% of my current income into an emergency fund until I reach 15k); and since watching friends/family struggle with overpriced property/mortgages over the last few years, I have started looking for other ways to invest besides the "Aussie dream" of owning property.

Oops. So much for keeping this short.

My questions are:
1. Should I make extra super contributions to make up for the my lost super?
2. Once I hit 15k savings, I plan to save 20k to invest in ETFs (VAS = 50%, VGS 50%) in 2x 10k transactions with Commsec. Continuing to invest quarterly as I can afford. Is this a sound strategy for my current position?
3. I plan to move to London with my S/O in 3-5 years time for 12 months or so (hence the join savings account for the move). Is there anything I should consider in terms of ETFs when living overseas/not earning AUD income? I saw it was mentioned in regards to US, does anyone have any UK specific information?
4. Lastly, I do have some concerns about the property market in Syd/Melb. I can see our population growth won't be slowing down anytime soon, and even though I don't have a crystal ball, I don't expect prices to drop but perhaps stagnate temporarily. I've discussed with S/O and have agreed for the next 5-10 years renting is definitely the better option (we plan to move around due to job changes/looking for a good place to settle long term). While we are happy to rent and invest in ETFs, I can't help but wonder if we are setting ourselves up to fail down the road if we do decide to buy a PPOR. Any tips/insights for things to consider?

I promise that's it. Thanks for reading so far!


itchyfeet

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Re: Australian Investing Thread
« Reply #3437 on: August 31, 2017, 10:53:26 AM »
I think you are approaching this the right way.

When I was young (45 now) I was really happy to see the back of my HECS debt, so completely understand you wanting to do likewise.

I also agree not prioritising buying in Sydney or Melbourne right now. It is insanely expensive. Hard to imagine getting good returns on investments. Rent yields are low, and after the capital price growth over the past 7 years i can only conclude that we are at the top of the cycle. Any rises in interest rates will keep a cap on prices for some time I think. But this is just a personal opinion and I don't own a crystal ball.

At 23 I wouldn't worry too much about super, although 40 years of tax free returns are an attraction I suppose.

If you live in London you will still be an Australian tax resident if you are only going for only one year. There is a DTA with the UK, but prob worth getting some advice on tax implications of buying stocks etc from the UK.

melfire

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Re: Australian Investing Thread
« Reply #3438 on: August 31, 2017, 08:52:23 PM »
Thanks for the prompt reply Itchyfeet.

In regards to super, I guess i'm just worried i've fallen behind the curve due to a few thousand being lost. But as you say, 20-30 years until retirement is still plenty of time to catch up a few small repayments.

Any idea on a good way to search for reputable financial advisors? Or perhaps, things to look out for to make sure I get valuable feedback?

lush

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Re: Australian Investing Thread
« Reply #3439 on: August 31, 2017, 09:11:11 PM »
Hi All, in trying to reach FIRE we are cutting back everywhere. We are now looking at our private health insurance ( just a couple no kids) and just want basic hospital cover. Any recommendations from this clever crowd? Thanks

mjr

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Re: Australian Investing Thread
« Reply #3440 on: August 31, 2017, 09:16:43 PM »
Any idea on a good way to search for reputable financial advisors? Or perhaps, things to look out for to make sure I get valuable feedback?

You've read 69 pages of this thread and JLCollins and you're looking for a financial adviser ?   I would have said that the general advice from these fora is to stay away from them.

If you must find one, get one that charges a fee-for-service,not on-going assets-under-management.  That fee is likely to be several thousand dollars, mind you.

melfire

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Re: Australian Investing Thread
« Reply #3441 on: August 31, 2017, 09:19:47 PM »
@MJR: So perhaps financial advisor isn't the correct term, but as suggested by itchyfeet, i do agree getting specific advice on working in the UK and investing in AU is warranted. Is there a specific service (that isn't a financial advisor) that i should seek out?

banksie_82

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Re: Australian Investing Thread
« Reply #3442 on: August 31, 2017, 09:38:04 PM »
Hi Melfire

There is a problem with the general population of Australia, in that they think super is the only way to save for retirement, and if you have a low super balance when you turn 65 then youíre screwed. You see this reinforced a lot in the media and by peopleís reaction to changes in the superannuation laws.

I could be wrong, but you seem to have this mindset, at least to some degree.

People on this forum think of super a little differently. For us, at least for amounts over and above compulsory contributions, itís simply a way to save on tax. The trade-off is not being allowed to touch it (and itís gains) until youíre in your 60s. Hopefully for us, that is many, many years after retirement has already begun.

Even for people who retire at 65, there is no reason that all of their nest egg needs to be in superÖ itís just nice if it was, for tax reasons.

Different people will have different opinions on if itís worth adding extra to super, and certainly it is different for each personal circumstance. The general consensus is Ė the higher your marginal tax rate, and the closer you are to your 60ís then the more worthwhile it is.

So, yes, you have missed out on some super paymentsÖ that sucks. But what to do with new savings should be a decision based on what is optimal for that dollar, not trying to right old wrongs that you now canít do anything about.

As to your other questions:

Why do you plan to save $20k before investing in ETFís? Iíd buy a parcel every time I had $5k spare if I was you. To me, thatís a sweet spot of keeping brokerage as a % fairly low, but not having too much money sitting on the sidelines.

I donít know about non-resident tax rules, or specifics for the UK. I lived over there for 2 years when I was 18-19. But at the time I was blissfully ignorant of share investing, foreign income and tax, andÖ wellÖ anything financial expect earning enough money to buy my next pint.

With respect to property, Iíd say the top has to be close, and if prices donít drop then they must surely flatline for a while. But, and this is a big but, Iíve been saying that for the last few years and yet prices keep rising. So donít listen to me.

Finally, youíre looking for a tax accountant that can help with international residency.

mjr

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Re: Australian Investing Thread
« Reply #3443 on: August 31, 2017, 09:45:05 PM »
Is it tax you're asking about ?  If you have a specific question, e.g. you're going to live in the UK and buy Australian ETFs and want to know what the tax implications are, you can ask the ATO.  They can be surprisingly helpful about such things.

PDM

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Re: Australian Investing Thread
« Reply #3444 on: August 31, 2017, 09:50:36 PM »
Hi all,

Great to see some Aussie Mustachian's around! I found the MMM blog a few months ago, managed to binge read everything before moving on to JColins/Afford Anything and have been reading a few MMM recommended books every other week.

I have just finished reading all 69 pages over the last few days.. thank you so much for sharing all of the helpful information. I have a few questions that haven't been covered and would look to get a second opinion on my strategy if anyone is around.

Age: 23
Debt: 19K HECS
ING Savings (F You Money): 10k
Joint Savings: 5k
Super: A dismal 4k


My questions are:
1. Should I make extra super contributions to make up for the my lost super?
2. Once I hit 15k savings, I plan to save 20k to invest in ETFs (VAS = 50%, VGS 50%) in 2x 10k transactions with Commsec. Continuing to invest quarterly as I can afford. Is this a sound strategy for my current position?
3. I plan to move to London with my S/O in 3-5 years time for 12 months or so (hence the join savings account for the move). Is there anything I should consider in terms of ETFs when living overseas/not earning AUD income? I saw it was mentioned in regards to US, does anyone have any UK specific information?
4. Lastly, I do have some concerns about the property market in Syd/Melb. I can see our population growth won't be slowing down anytime soon, and even though I don't have a crystal ball, I don't expect prices to drop but perhaps stagnate temporarily. I've discussed with S/O and have agreed for the next 5-10 years renting is definitely the better option (we plan to move around due to job changes/looking for a good place to settle long term). While we are happy to rent and invest in ETFs, I can't help but wonder if we are setting ourselves up to fail down the road if we do decide to buy a PPOR. Any tips/insights for things to consider?

I promise that's it. Thanks for reading so far!


Hey,
A few thoughts:
1) Do you need a $15k emergency fund? I read somewhere (maybe MMM) maybe greaterfool.ca that this is kind of unnecessary in this day and age with debt being cheap and freely available. I.e you could get a credit card tomorrow - wrack up $5k of debt, then transfer that to a second card on 18months interest free basis.
 
Not saying having some cash is a bad thing - just make sure its at least in a high interest account trying to keep up with inflation.
It'd help with providing general advice if we knew how much you earn?

2) I like VGS but has been a bit volatile lately with Trump, North Korea, AUD changes. But those are short term things. Old adage - time in the market, not timing the market. Personally I don't like VAS but that is my anti ASX sentiment.  Personally, in line with 1) above, I'd lower the emergency fund and put more into ETFs. They are fairly simple to sell (i.e very liquid) much like actual cash. However much higher potential for return.

3) No idea. US is a bit wacky with their double taxing deal. I think Australia as agreements with the UK that you only pay tax once.

4) My wife and I are in the rent + invest in ETFs camp. Brisbane not Mel/Syd. My tip here is to consider that you're building a diverse wealth base and have amazing flexibility. Unlike someone who has bought a house and has a single asset and is exposed entirely to the property market. Create a spreadsheet that tracks your net worth (super, investments, cash etc). It really helps with convincing yourself you're not missing out by getting a mega mortgage.
At some future point, you'll be able to buy a house with the value of ETFs or keep renting and live of the return. Maybe FIRE where ever you like - not in a house you bought near your work. Or travel the world.

You are setting yourselves up for down the road - just not to fail. Being debt free is awesome. Being a debt slave to a massive mortgage is not.

The biggest test is going to BBQ after BBQ where the only topic of conversation is property. Or having to pretend a friend has made a great decision to buy what you think is a massively over priced property.

I wish I'd started FIRE at 23!
Other unsolicited advice:
Make sure your SO is on the same journey and understand things.
Write a budget.
Track your Savings rate.
Still spend some money on yourself. Treat yo' self
Don't pay of HECs sooner than required.
Live, laugh, love
Dance like noone is watching. (ok those last two were a joke).

misterhorsey

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Re: Australian Investing Thread
« Reply #3445 on: August 31, 2017, 10:23:11 PM »
Hi All, in trying to reach FIRE we are cutting back everywhere. We are now looking at our private health insurance ( just a couple no kids) and just want basic hospital cover. Any recommendations from this clever crowd? Thanks

Everyone's circumstances are different so I'd suggest looking at the non-commission comparison sites:

http://www.privatehealth.gov.au/dynamic/search

If you keep an eye on Ozbargain they tend to share the occasional incentivised switch by companies like iSelect.  If you don't mind giving up your contact details for a bit of communication it's an expensive way to earn a $200 gift voucher.

For what its worth, I've been with Frank and NIB.  But only paid very basic private hospital because I was earning enough to have to pay the surcharge, and buying basic private was  cheaper than the Medicare Surcharge.  But do read the terms and conditions carefully if you actually plan on relying on the insurance.  I went with these insurers assuming I'd still go public if something bad happened.  I have been in a shared public ward for a minor op. It's not like a private cabin in a cruise ship but there are worse experiences.

I've since left private insurance as I won't be earning anything for a bit. As you may know you have to pay a loading if you don't get it before the age of 30. They do give you 3 years off without resetting your loading, but its not well publicised.

The value of buying private health insurance if you don't earn above the threshold where the surcharge kicks in is debatable.

Here's an article about some of the maths involved in paying insurance, and what's advantageous in certain circumstances.

https://www.choice.com.au/money/insurance/health/articles/how-to-pay-the-lifetime-health-cover-loading-and-save

misterhorsey

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Re: Australian Investing Thread
« Reply #3446 on: August 31, 2017, 10:25:59 PM »
In regards to super, I guess i'm just worried i've fallen behind the curve due to a few thousand being lost. But as you say, 20-30 years until retirement is still plenty of time to catch up a few small repayments.

You needn't worry about being behind the curve.  Thinking about this stuff and planning ahead at the age of 23 puts you well ahead of the curve.  Most people don't ever think about this stuff and then when they do, it's later in life.

I didn't even start earning a full time salary until 25. Aargh!

mjr

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Re: Australian Investing Thread
« Reply #3447 on: August 31, 2017, 11:24:44 PM »
As per Banksie, I didn't get overly excited about super until quite late in the piece.  Throughout all my young years, I had much more money saved outside of super than in it.  It's only now, in the home straight (and the rules just changed) that I ploughed large sums into super, knowing that I still have plenty outside of super to get me to age 60.

Also, it depends on what makes you happy of course, but a PPOR was much more of a priority for me.  I know that property can be iffy as an investment vehicle compared to shares and I certainly did't over-invest in my house, but the security of place to live and no-one can make me move is worth $$$ to me. 


itchyfeet

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Re: Australian Investing Thread
« Reply #3448 on: September 01, 2017, 02:04:29 AM »
Peering into my imaginary crystal ball I would say that for a 23 year old there will be better times in the next 20 years to buy a home in Sydney or Melbourne than today.

Back in 2004 we had made a killing on property between 1995 and 2004, so we took out a massive mortgage and bought a nice place on Sydney's northern beaches.

That place was worth less than what we paid for it for the next 5 years, and when we sold it in 2010 it was worth only 10% more than what we purchased it for, a gain of about 1.5% per year, or a real loss of about 1.5% per year.

Buying property at the top of a cycle is a bad idea.

If you are patient, and invest in stocks while you bide your time, you will see property prices stall and maybe even retreat a little. This will happen soon enough. Either this year or next..

When this stalling happens keep waiting. Your stocks will go up in value as money moves from property to stocks. Interest rates will rise, and more money will move out of property. Keep waiting.

After a few years, or several years you will note that auction clearance rates will start rising for the first time in years, and the number of people at open house will start increasing.

This is the time to revisit whether you really want to own a home in Sydney.

By this time you will have a solid deposit, and will be less at risk of mortgage stress if interest rates rise after you buy.

It is a time for exercising patience.

superannuationfreak

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Re: Australian Investing Thread
« Reply #3449 on: September 01, 2017, 05:21:44 AM »
3. I plan to move to London with my S/O in 3-5 years time for 12 months or so (hence the join savings account for the move). Is there anything I should consider in terms of ETFs when living overseas/not earning AUD income? I saw it was mentioned in regards to US, does anyone have any UK specific information?

4. Lastly, I do have some concerns about the property market in Syd/Melb. I can see our population growth won't be slowing down anytime soon, and even though I don't have a crystal ball, I don't expect prices to drop but perhaps stagnate temporarily. I've discussed with S/O and have agreed for the next 5-10 years renting is definitely the better option (we plan to move around due to job changes/looking for a good place to settle long term). While we are happy to rent and invest in ETFs, I can't help but wonder if we are setting ourselves up to fail down the road if we do decide to buy a PPOR. Any tips/insights for things to consider?

3. I'm not a tax so seek advice/do your own research if unsure.  My understanding is that the UK taxes funds/ETFs punitively if they do not have "reporting status" or something like that.  Most Australian funds do not, however Vanguard's US-domiciled ETFs did have reporting status when I checked HMRC's spreadsheet.  When I was considering living in the US or UK I thus focused on Vanguard US-domiciled ETFs.

There are some Vanguard US-domiciled ETFs you can buy on the ASX (in particular, VTS and VEU) - at the time I thought those would be OK although I ended up buying Vanguard ETFs using a US broker anyway.

4. If I planned to travel I wouldn't be buying property in Melbourne or Sydney.  If I planned to move back to Australia and buy property within 5 years I would build my deposit largely in AUD cash, if I was looking longer-term it would depend how risk-averse I was (i.e. how willing I was to wait longer to buy property if the share market wasn't cooperating when I planned to buy)

 

Wow, a phone plan for fifteen bucks!