Author Topic: Australian Investing Thread  (Read 1236845 times)

PDM

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Re: Australian Investing Thread
« Reply #3700 on: January 01, 2018, 06:37:04 PM »
Being on the top tax rate, I usually buy ex-div.  The most extreme opposite case would be to buy just before ex-div when the share price is loaded up with the pending dividend, which is then paid out and I lose half of it in tax.  I'd rather that money go into more shares than to the ATO.

Good point.
I'm not in the top tax bracket, also with the amounts I'll be buying it probably won't make much difference. I'm still thinking about what to get, the new diversified vanguard etfs look nice and easy, I might start buying one of them and forget about adding to my VAS and VGS

Aren't you a Postdoc? I'm sure you can handle a DIY complicated portfolio rather than paying a slightly higher MER for it ;-)

Yep I'm on the postdoc/academia hamster wheel. True it isn't that complicated but I'm pretty lazy. I'll have to think about it but it's possible with the amounts I'm purchasing that the brokerage outweighs the MER if I were to buy a similar number of etfs. I also like the idea of being a bit more diversified than just VAS and VGS, I also hold two LICs that I might add more to.

Also keep in mind that VAS may be very similar​ to your superannuation fund's investments - depending on which option or plan you're on. You're likely to be doubling up on a fair few stocks in the ASX. Just something to be wary of with diversifying.
I like VGE and VEQ for non ASX exposure in addition to VGS.


Chris AU

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Re: Australian Investing Thread
« Reply #3701 on: January 02, 2018, 08:01:54 PM »
Any thoughts on this new book?: http://www.johnderavin.com/

PDM

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Re: Australian Investing Thread
« Reply #3702 on: January 03, 2018, 03:23:04 AM »
Any thoughts on this new book?: http://www.johnderavin.com/

Seems like a waste of $39.95 + $9.95 for a book that has compiled what is mostly information freely available on the internet.
From the description large portions seem to be what government websites provide? How to make a will, get government support etc.
The rest doesn't seem ground breaking. "Strategies"...

lush

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Re: Australian Investing Thread
« Reply #3703 on: January 03, 2018, 05:07:17 PM »
Vanguard VAS & Balanced Wholesale funds perfromed very low - just looked at the CPU and it hurt a bit :(

misterhorsey

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Re: Australian Investing Thread
« Reply #3704 on: January 03, 2018, 06:21:43 PM »
What figures are you looking at?  Just the Cents Per Unit?

Also, do you mean the market performed poorly? Or VAS performed poorly in replicating the market?

I do think it's pointless to follow quarterly returns too closely.  There's too much variability across the financial year. But I thought I'd do a quick calculation for VAS for the past October to December Quarter 2017 as your disappointment at the last quarter piqued my curiosity.

Price
VAS closing price on 2nd Oct - $72.91
VAS closing price on 29 Dec - $77.81

On price, a gain of $4.90, or 6.7%. Pretty solid result.

Distribution
A distribution of 68.0989 cents per unit. Assuming we go off the 29 Dec closing price of $77.81, then that's a yield of 0.8%.

(Or a yield of 0.93% if you want to be cheeky and go off the 2 Oct closing price)

Total Return
6.7% capital growth + .08% income is a total return of 7.6% for one quarter.

Remembering that distributions and growth are quite variable across quarters. But I think that's pretty decent.

If every quarter was like this we'd be looking at a 30.4% return for the year. Which has happened in the past.

Benchmark
Comparing the performance of VAS to the benchmark  ASX300

2 Oct - 5,655.476
29 Dec - 6,023.304

A gain of 367.828 points, or 6.5%.  This does not include dividends.  But assuming the ASX 300 has an average yield of about 3-4% per annum, then this suggests you can tack on about 1 per cent to allow for dividends, which makes a total return of 7.5%.

Which is what VAS returned for the same period.

Summary?
So I think both the market performed quite well, and VAS did really well in tracking the market.  I've never tracked this data before and it's comforting to know that VAS is so well aligned. It's one thing to go off official Vanguard reports, it's nice to know that double checking their reports gives the same results.

Also, the Cents Per Unit for VAS at 0.8% for the quarter theoretically equates to about 3.2% per annum, which is what you'd expect for the ASX 300. Whether or not that's a good thing depends on your circumstances.  Some people want big dividends, others would prefer to avoid the tax consequences.

So I think it's important to recognise that it's actually a pretty good result. 

There will be quarters where performance will be strongly negative.  Where unemployment increases, people start taking public transport more frequently, abandoning pets, stop going to restaurants and the economy contracts and you'll see a real decline in the market and dividends will come under pressure. But I think it's just as important to remain sanguine in these circumstances as it is now.

Hope this helps with the hurt!

mjr

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Re: Australian Investing Thread
« Reply #3705 on: January 03, 2018, 06:56:11 PM »
" misterhorsey, but I'll add that he hasn't included the 25.78 c/share of franking credits.  That's 94 c/share gross return for the quarter.

If anyone wants to get down in the mouth on low dividends without doing any analysis or big-picture thinking, there's the VAP quarterly dividend of 15c or 0.2%.

misterhorsey

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Re: Australian Investing Thread
« Reply #3706 on: January 03, 2018, 07:01:25 PM »
Yep thanks, I was going to acknowledge my ignoring of the franking. But was going big picture, and my post was already too long! But it's a significant point.

mjr

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Re: Australian Investing Thread
« Reply #3707 on: January 03, 2018, 07:05:19 PM »
and to be pedantic, VAP didn't pay a dividend this quarter.  That low 15c distribution is pretty much entirely capital gains.

lush

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Re: Australian Investing Thread
« Reply #3708 on: January 03, 2018, 11:17:52 PM »
Mister Horsey & Mr J - thanks for your analysis of the returns etc for VAS....Mister Horsey what an amazing overview you provided!!!! Just brilliant.
FYI - I was more disappointed with the Wholesale Balanced Fund distribution where I have the majority of my money invested - but I completely understand the ups and downs of it all. For me it's about the CPU as I am looking at it based on the potential to live off so I can retire early. I am about 2 years off, but wonder with these sorts of results if that is realistic, hence why I was a little dis-heartened, mainly because I had just worked so hard over the last year to put a large chunk of funds into VAS in Dec. Also double whammy of a low CPU coupled with higher re-investment prices  (I have my funds automatically reinvesting). Thanks again guys! I just better get back to the hard work part and not worry too much. Cheers.

mjr

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Re: Australian Investing Thread
« Reply #3709 on: January 04, 2018, 12:32:58 AM »
The ASX300/VAS fairly reliably pays ~4% dividends p.a.  It doesn't reliably pay 1% dividends/quarter.  You'll need a buffer of at least a year to smooth out the cash flow.  Of course, depending on your asset allocation, you'd probably have more than that in cash anyway.

4% dividends is quite conveniently the same as a 4% withdrawal rate.  If VAS is your sole investment, then you can more or less plan to take the 4% dividends as your income stream and let the capital appreciation handle growth and inflation.

marty998

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Re: Australian Investing Thread
« Reply #3710 on: January 04, 2018, 03:56:46 AM »
Adding my thanks to you both as well for doing the reconciliations on VAS.

Now. Gimme my reinvested shares!

lush

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Re: Australian Investing Thread
« Reply #3711 on: January 04, 2018, 12:44:19 PM »
The ASX300/VAS fairly reliably pays ~4% dividends p.a.  It doesn't reliably pay 1% dividends/quarter.  You'll need a buffer of at least a year to smooth out the cash flow.  Of course, depending on your asset allocation, you'd probably have more than that in cash anyway.

4% dividends is quite conveniently the same as a 4% withdrawal rate.  If VAS is your sole investment, then you can more or less plan to take the 4% dividends as your income stream and let the capital appreciation handle growth and inflation.

Mjr - thanks again for the information. Currently my main investment is Vanguard Wholesale Balanced Fund – and the distribution for that was 0.6003…VAS makes up 20% of the Balanced Fund portfolio. However I want to increase that to about 40% - so I opened a VAS wholesale fund and hope to get to that 40% in the next couple of years. Overall I have come to the conclusion that yes I need some good cash reserves to get through each year if I want to retire early. 

banksie_82

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Re: Australian Investing Thread
« Reply #3712 on: January 04, 2018, 05:42:01 PM »
If you're after more stable and predictable dividends, then I suggest looking into LICs.

They usually only pay twice a year, but they are consistent and are generally slightly higher yielding than the broader market.

Jimmy9

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Re: Australian Investing Thread
« Reply #3713 on: January 04, 2018, 05:57:52 PM »
G'day, my apologies if this is the wrong thread to post my question but just after a bit of advice....

Just looking for opinions on where to park a bit of coin short term.
After recently selling our property and renting while we look for another to build on we're looking for somewhere to make a bit more than the whopping 2.55% we're currently getting.
We're looking to invest about a quarter of our funds for a one to two year time frame.
Currently thinking the vanguard wholesale growth fund or the ETF equivalent with possibly a fixed interest ETF aswell.
Could possibly do more than a quarter but it'd need to be pretty safe and liquid as that'd be the funds for when the right property pops up.
So basically after a 'what would you do...' if you had a fairly sizeable chunk of cash sitting in a HISA while actively looking for a property that may take a day or a year to find then have construction time on top.  Would you opt for the safety/liquidity of a HISA or the opportunity/risk of an investment?

Cheers 🙂

misterhorsey

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Re: Australian Investing Thread
« Reply #3714 on: January 04, 2018, 06:39:37 PM »
Hey Lush

I'm actually in a similar boat in that I'm looking at trying to get income from VAS, VGS as well as a Wholesale High Growth Fund to put food on the table and keep keeping the lights on.

Except that I went semi-FIREd without actually figuring it all out properly!  Although it may be a prolonged sabbatical, with a return to some kind of work in the future.

I may do a case study of my situation when I get around to it. I probably need some advice from the ever helpful MMM hive mind to refine my strategy.

But one observation that I have noted since quitting work and I think worth sharing is that once you stop earning active income, you can become even more resourceful and imaginative in your frugality than you would have imagined - without necessarily impacting on your quality of life. I've discovered that it's far more enjoyable to live frugally, but have your own time and freedom to do whatever you want, than it is to work 9-5 and be able to buy whatever you want.

I think we all know this as we are all on this forum. But I mention it again because once you have the frugal habit down pat and you've forecast a reasonable amount of income to cover yourself, you may surprise yourself with how little of it you consume.  And those savings, in turn, continue to grow your stash.

It's possible that I'm looking at the numbers more than most FIREd, as my quitting was somewhat unexpected and there was a sense of uneasiness about the pay checks ceasing. I may also be frugal with a capital F compared to others (no car, no kids, share housing).

I finished up work in April 2017, and before I did some sums and forecast a certain amount of passive income to cover according to the 4% rule. Due to my own frugal habits and (unexpected) increasing market returns,  I'm currently living on around 54% of my theoretical passive income.  When I pulled the plug I actually thought I would be living on around 75% -85% of theoretical passive income. I may consume more with a bit of travel in 2018, and my spending may get closer to 4%, but I'm pleasantly surprised by how much buffer I have.  I certainly wasn't counting on it when I finished up with work.

Of course, if the market had sunk post Trump, I could well be exceeding my theoretical passive income. I was lucky I guess - which is actually the first time for me to be a beneficiary of overall market uplift.

So yes, keep working, saving. And maybe quit a little before you think you can actually afford to!!

Anyway, I meant to reply to post this link to the ASX 300 should you wish to do your own analysis each quarter.

https://us.spindices.com/indices/equity/sp-asx-300

although it seems that the Vanguard report is pretty accurate so perhaps let them do it.

misterhorsey

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Re: Australian Investing Thread
« Reply #3715 on: January 04, 2018, 06:59:10 PM »
So basically after a 'what would you do...' if you had a fairly sizeable chunk of cash sitting in a HISA while actively looking for a property that may take a day or a year to find then have construction time on top.  Would you opt for the safety/liquidity of a HISA or the opportunity/risk of an investment?

For me the potential upside of investing the cash doesn't compensate for the potential decline in your investment as well as the uncertainty.

But I see you are only wanting to put 1/4 of your cash into investments. I guess that's a way of hedging your bets. 

In a worse case scenario, if your investment declined, you could get a mortgage for a larger amount and then pay it off once your investment recovers (assuming it does).

I'd model this on a spreadsheet to see how comfortable you would be with a worst case scenario as well as figure out whether the best case scenario is worth the risk and uncertainty.  Sometimes it's quite sobering to do the numbers. It fleshes out an idea and can make your mind up for you.

Llewellyn2006

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Re: Australian Investing Thread
« Reply #3716 on: January 04, 2018, 07:28:37 PM »
G'day, my apologies if this is the wrong thread to post my question but just after a bit of advice....

Just looking for opinions on where to park a bit of coin short term.
After recently selling our property and renting while we look for another to build on we're looking for somewhere to make a bit more than the whopping 2.55% we're currently getting.
We're looking to invest about a quarter of our funds for a one to two year time frame.
Currently thinking the vanguard wholesale growth fund or the ETF equivalent with possibly a fixed interest ETF aswell.
Could possibly do more than a quarter but it'd need to be pretty safe and liquid as that'd be the funds for when the right property pops up.
So basically after a 'what would you do...' if you had a fairly sizeable chunk of cash sitting in a HISA while actively looking for a property that may take a day or a year to find then have construction time on top.  Would you opt for the safety/liquidity of a HISA or the opportunity/risk of an investment?

Cheers 🙂

With that sort of timeframe I'd just keep it in something like a RAMS account (currently paying 2.8% providing no withdrawals in the month and that you deposit at least $200 a month). You're covered by the govt guarantee up to $250k. The LIC's like Argo and AFIC have a slightly better yield but they only pay out twice a year so you might miss out if you only keep your money in there for the short term and you have the risk of a fall in the share price while you're in there.

Jimmy9

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Re: Australian Investing Thread
« Reply #3717 on: January 04, 2018, 10:59:25 PM »
Cheers for the input guys...
I thought I was being overly cautious by only using a quarter of it in reasonably low risk investments. I was thinking I'd hate to look back in a year or two and just see a wasted opportunity but I guess there's no risk in playing it safe.

Hypothetically what would be your answer if my post was worded like this....

'You've been given the use of $250k for a timeframe of 2 years, at the end of the 2 years you have to give it back in full so whatever you make on it is yours but if you make a loss you need to make it up out of your own pocket. What would you do? 😁

Llewellyn2006

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Re: Australian Investing Thread
« Reply #3718 on: January 05, 2018, 12:01:31 AM »
Cheers for the input guys...
I thought I was being overly cautious by only using a quarter of it in reasonably low risk investments. I was thinking I'd hate to look back in a year or two and just see a wasted opportunity but I guess there's no risk in playing it safe.

Hypothetically what would be your answer if my post was worded like this....

'You've been given the use of $250k for a timeframe of 2 years, at the end of the 2 years you have to give it back in full so whatever you make on it is yours but if you make a loss you need to make it up out of your own pocket. What would you do? 😁

I'd do exactly the same as I suggested above. IMO any investment in the stock market should have a 4 or 5 year minimum timeframe. Even with an LIC the value of your original capital can go down. Even if the money is in a boring old account earning between 2 and 3 per cent it will be compounding with a very high degree of certainty that you'll have more money by the time you withdraw it than you did in the beginning.

mjr

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Re: Australian Investing Thread
« Reply #3719 on: January 05, 2018, 12:06:50 AM »
That's easy.  I'd look for the highest interest rate I can get with a government guaranteed account.

marty998

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Re: Australian Investing Thread
« Reply #3720 on: January 05, 2018, 12:22:09 AM »
@Jimmy9 - the Vanguard Fixed Income Fund might be an appropriate (if slightly riskier) option for you.

Reasonably safe if you believe that Governments and major companies will still be paying their bills in a couple of years time.


lush

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Re: Australian Investing Thread
« Reply #3721 on: January 05, 2018, 12:55:28 AM »
Hey Lush

I'm actually in a similar boat in that I'm looking at trying to get income from VAS, VGS as well as a Wholesale High Growth Fund to put food on the table and keep keeping the lights on.

.

Hi Misterhorsey - thanks for the insight into your early retirement phase and how you are managing things. I hope you do the case study! I know there would be a lot of people interested in your case and learnings so far. I am glad you have had some luck in the upturn in the market. I take your point about being more frugal and maybe starting retirement a bit earlier, you certainly have me dreaming a little :)

Jimmy9

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Re: Australian Investing Thread
« Reply #3722 on: January 05, 2018, 02:08:06 AM »
Here I thought I was being lazy by not getting our money working for us but it turns out I was doing the sensible prudent thing all along 😁 though it is all lumped in one account so not under the guarantee....better start shopping around for some savings accounts.

Must say I'm a little disappointed I wasn't spoon fed with an answer of 'put your coin in XYZ fund, go have a beer, come back in a couple of years and it will have eclipsed the other 3/4 in the savings account' 😋 ....maybe I'll dip the toe with a smaller percentage just so I feel like I'm doing something productive

Fresh Bread

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Re: Australian Investing Thread
« Reply #3723 on: January 06, 2018, 12:46:12 AM »
Citibank still has 3% for a 6 month TD for balances of 250k or more. We parked our reno/building money there because we need low risk on that pot. Opening a Citibank account is a pain, fyi - while I was sat there filling out the third or fourth form I was wishing I'd left the money at 2.75% in our CUA online account.

Llewellyn2006

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Re: Australian Investing Thread
« Reply #3724 on: January 06, 2018, 04:12:24 PM »
Citibank still has 3% for a 6 month TD for balances of 250k or more. We parked our reno/building money there because we need low risk on that pot. Opening a Citibank account is a pain, fyi - while I was sat there filling out the third or fourth form I was wishing I'd left the money at 2.75% in our CUA online account.

Anything to do with banking with Citibank is a pain. I had a client that used to bank with them and even the smallest change needed several forms filled in and the whole exercise just became one giant PITA. There are plenty of places where you can open an account online in a few minutes.

Eucalyptus

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Re: Australian Investing Thread
« Reply #3725 on: January 06, 2018, 05:05:39 PM »
Citibank still has 3% for a 6 month TD for balances of 250k or more. We parked our reno/building money there because we need low risk on that pot. Opening a Citibank account is a pain, fyi - while I was sat there filling out the third or fourth form I was wishing I'd left the money at 2.75% in our CUA online account.

Anything to do with banking with Citibank is a pain. I had a client that used to bank with them and even the smallest change needed several forms filled in and the whole exercise just became one giant PITA. There are plenty of places where you can open an account online in a few minutes.

Agree. I was using them a few years ago living in Japan, as it was the cheapest way I could access my Australian cash there. However now a few years later I've tried to get my last remaining ~$80 and close the account and cancel the cards and so far been unsuccessful! Grrr. I'm not a stupid person. Grrr. Be so much easier if I could just walk into a Branch.

deborah

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Re: Australian Investing Thread
« Reply #3726 on: January 06, 2018, 05:15:59 PM »
I have been using an almost branchless bank for many years, and their service is excellent. Banks that have been set up that way tend to be much better than those who have evolved into being branchless in my opinion.

Eucalyptus

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Re: Australian Investing Thread
« Reply #3727 on: January 06, 2018, 05:57:06 PM »
I have been using an almost branchless bank for many years, and their service is excellent. Banks that have been set up that way tend to be much better than those who have evolved into being branchless in my opinion.

Yes, I've used several and they've been great. Unfortunately in this case its a PITA. Could just be my personal situation trying to get access and closing, with this particular bank. I'll try again this week...

Mind you, CBA in all honesty absolutely rocks in an online and App based environment. I haven't seen anything better yet, comparing to work colleagues and family with different banks. They have branches... ;-)

Llewellyn2006

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Re: Australian Investing Thread
« Reply #3728 on: January 07, 2018, 12:04:01 AM »

Yes, I've used several and they've been great. Unfortunately in this case its a PITA. Could just be my personal situation trying to get access and closing, with this particular bank. I'll try again this week...

Mind you, CBA in all honesty absolutely rocks in an online and App based environment. I haven't seen anything better yet, comparing to work colleagues and family with different banks. They have branches... ;-)

I use all the big four websites for my clients and the CBA is so far ahead of the others that it's not funny. The other 3 should just licence their own version of the CBA site and dump their own sites because by and large they're shite.

Abundant life

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Re: Australian Investing Thread
« Reply #3729 on: January 07, 2018, 08:09:47 PM »
Quote
Mind you, CBA in all honesty absolutely rocks in an online and App based environment. I haven't seen anything better yet, comparing to work colleagues and family with different banks. They have branches... ;-)

I find the CBA online a PITA, mainly because I have POA for my elderly relatives who still have passbooks. Yes I can see the balances but I'm not able to transfer out of them, necessitating physically withdrawing $xxxx in cash and depositing it in St George across the road.

Another online bank with a good interest rate and not so many hoops to jump through is ME Bank. OH recently opened one. To get the bonus interest taking you to 2.95% you have to open an everyday account and just use pay pass once a week, but you don't have to deposit any particular amount per month. The bonus interest is good up to $250,000.

https://www.mebank.com.au/lps/osa/high-online-savings-account/?cid=OSAC0167&keyword_k=me%20bank%20online%20savings%20account&gclid=EAIaIQobChMI9ueutbDH2AIVEyUrCh1QtA9qEAAYASAAEgKZqfD_BwE&gclsrc=aw.ds

Also sometimes St George gives a 3% introductory rate on their maxi saver online account for 3 months. We used this in between selling and buying. When the 3 months is up you can negotiate a good interest rate for the next three months (that is a PITA too), but at least they have a 'gold service hotline' for you. I think the more money in there the better interest rate you can negotiate.
« Last Edit: January 07, 2018, 08:15:57 PM by Abundant life »

asosharp

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Re: Australian Investing Thread
« Reply #3730 on: January 08, 2018, 07:26:28 AM »
Does anyone here know much about property investing?

I was trying to figure out where the best places to invest in Perth are. I came across some websites recommending Boomtown (doesn't work on the computer very well), DSR Data (but you have to pay from $129+ and I have no idea if it works and there's no free version), Microburbs (last updated in 2016), myrealestate.com.au (last updated in 2016).

Rob_S

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Re: Australian Investing Thread
« Reply #3731 on: January 08, 2018, 07:00:45 PM »
I'm no property investor, nor am I in Perth but I would take a look at the propertychat www.propertychat.com.au forum for leads on where to invest.
« Last Edit: January 09, 2018, 12:06:04 AM by Rob_S »

Llewellyn2006

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Re: Australian Investing Thread
« Reply #3732 on: January 08, 2018, 10:26:49 PM »
Does anyone here know much about property investing?

I was trying to figure out where the best places to invest in Perth are. I came across some websites recommending Boomtown (doesn't work on the computer very well), DSR Data (but you have to pay from $129+ and I have no idea if it works and there's no free version), Microburbs (last updated in 2016), myrealestate.com.au (last updated in 2016).

As far as I know it's still a tenant's market here with plenty of empty properties and correspondingly falling rents (may have stopped falling but they are still 30-40% below their peak of a few years ago). TBH I think there's better value elsewhere if you really must have a rental property. Just for the record I'm no fan of owning rental properties.

asosharp

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Re: Australian Investing Thread
« Reply #3733 on: January 09, 2018, 05:16:20 AM »
Does anyone here know much about property investing?

I was trying to figure out where the best places to invest in Perth are. I came across some websites recommending Boomtown (doesn't work on the computer very well), DSR Data (but you have to pay from $129+ and I have no idea if it works and there's no free version), Microburbs (last updated in 2016), myrealestate.com.au (last updated in 2016).

As far as I know it's still a tenant's market here with plenty of empty properties and correspondingly falling rents (may have stopped falling but they are still 30-40% below their peak of a few years ago). TBH I think there's better value elsewhere if you really must have a rental property. Just for the record I'm no fan of owning rental properties.

I actually get a feeling here that people are diversified but mostly shares/ETF all the way.

In other news, I forwarded my mum an article about retirees and that they should hold shares and not property when they are retired. It was a Q&A with Noel Whittaker. I also think some of you may be interested in it.

http://www.smh.com.au/money/ask-an-expert/the-downside-to-investing-in-property-for-retirees-20160819-gqwoqh.html

Q. I refer to your recent article concerning the difficulty facing retirees as interest rates fall. Why would you not recommend property? It is still not hard to find a 6.5 per cent yield, let's say 5 per cent after expenses, probably less risky than shares and your capital base should appreciate with inflation or better.

The problem with property for retirees is increasing maintenance, as the property ages, and vacancies if it is hard to find a tenant. Also, the biggest disadvantage is that property is a lumpy asset and if you need money you would normally have to sell the entire property, which may take months. Also you would incur capital gains tax if it has grown in value.

A good share portfolio has none of these disadvantages as you are never liable for direct expenses, vacancies are non-existent, and you can sell a portion of your holding at short notice. The ability to sell in small parcels enables retirees in many cases to eliminate capital gains tax or at least minimise it. If you own a property, you can't sell the back bedroom.

Eucalyptus

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Re: Australian Investing Thread
« Reply #3734 on: January 09, 2018, 07:23:23 PM »
That's a golden paragraph Asosharp! Thanks for sharing :-)


Reading down their thread, brings up Investment Bonds again for me. Its something I've been thinking about doing instead of this terrible ASG portfolio my ex manipulated into getting for our daughter. It performs terribly (the agent actually told me I should make sure that there is always at least $2000 in it otherwise with fees it could go backwards over the ~16 year period I was talking about...). Now that she has started school I might be able to draw it all out and put it in an investment bond instead.


Anyone know of good summary places to review investment bonds?

deborah

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Re: Australian Investing Thread
« Reply #3735 on: January 09, 2018, 08:42:20 PM »
There was an interesting post by George Cochrane recently about insurance bonds (aka investment bonds) http://www.canberratimes.com.au/money/ask-an-expert/how-to-invest-for-your-grandchildren-20180109-h0fg9y.html ...

Quote
I've rarely been impressed with the performance of insurance bonds, even after taking into account their 30 per cent tax on their income. It could be that top fund managers are attracted to where the glamour and salaries are high, such as investment trusts and superannuation funds.

Eucalyptus

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Re: Australian Investing Thread
« Reply #3736 on: January 09, 2018, 10:16:55 PM »
There was an interesting post by George Cochrane recently about insurance bonds (aka investment bonds) http://www.canberratimes.com.au/money/ask-an-expert/how-to-invest-for-your-grandchildren-20180109-h0fg9y.html ...

Quote
I've rarely been impressed with the performance of insurance bonds, even after taking into account their 30 per cent tax on their income. It could be that top fund managers are attracted to where the glamour and salaries are high, such as investment trusts and superannuation funds.


Thanks Deborah.


Yes the fees seem fairly high unfortunately. Probably better for me to just start putting it into my ETFs when I can withdraw it, and taking careful note of units and purchase date for my daughter.


I'm slowly starting to teach her about money and the concept of saving and interest. In a few years maybe I'll be able to start teaching her about all this. She starts school in a couple of weeks.

Eucalyptus

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Re: Australian Investing Thread
« Reply #3737 on: January 09, 2018, 10:19:23 PM »
This article on Residential property prices is interesting:
http://www.abc.net.au/news/2018-01-10/housing-weakness-set-to-worsen-tips-morgan-stanley/9317422


Anyone know of a similar forecasting index to the MSHAUS one mentioned in the article, but for non residential property?


Yes, cue market timing of REITs ;-)

asosharp

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Re: Australian Investing Thread
« Reply #3738 on: January 10, 2018, 03:35:54 AM »
There was an interesting post by George Cochrane recently about insurance bonds (aka investment bonds) http://www.canberratimes.com.au/money/ask-an-expert/how-to-invest-for-your-grandchildren-20180109-h0fg9y.html ...

Quote
I've rarely been impressed with the performance of insurance bonds, even after taking into account their 30 per cent tax on their income. It could be that top fund managers are attracted to where the glamour and salaries are high, such as investment trusts and superannuation funds.


Thanks Deborah.


Yes the fees seem fairly high unfortunately. Probably better for me to just start putting it into my ETFs when I can withdraw it, and taking careful note of units and purchase date for my daughter.


I'm slowly starting to teach her about money and the concept of saving and interest. In a few years maybe I'll be able to start teaching her about all this. She starts school in a couple of weeks.

I think there's a bit in the Barefoot Investor about children and I think he recommends ETFs and LICs. He doesn't recommend bonds unless you're in a higher tax income bracket but from what I've been reading bonds are not that great as the rates on those are almost like putting your cash into a HISA.

bigchrisb

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Re: Australian Investing Thread
« Reply #3739 on: January 10, 2018, 02:09:55 PM »
This article on Residential property prices is interesting:
http://www.abc.net.au/news/2018-01-10/housing-weakness-set-to-worsen-tips-morgan-stanley/9317422


Anyone know of a similar forecasting index to the MSHAUS one mentioned in the article, but for non residential property?


Yes, cue market timing of REITs ;-)

The PCA  (property council of Australia) publishes some sentiment data. See http://research.propertycouncil.com.au/research-and-data/anz-property-council-survey to have a look.

pistolpete

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Re: Australian Investing Thread
« Reply #3740 on: January 10, 2018, 07:49:51 PM »
Just wondering on how would you go about setting up an ivestmebt plan for a mid 20's person looking to invest for the very long term 30 year plus trying to make it as simple as possible?

Reading jl Collins and following his principles looks easy but implementing them to Aust markets is a bit different due to the etf lic offerings.

I was thinking maybe vas, vgs and cash I addition to some lics purchased as discount to nta such as argo,  bki, aui , mir or qve for mid small caps and pmc for international dividend yields taking advantage of the company structure of these lics and the fully franked divs and dividend smoothing over etf trust structures?!!

Thoughts.


MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3741 on: January 10, 2018, 09:40:05 PM »
Just wondering on how would you go about setting up an ivestmebt plan for a mid 20's person looking to invest for the very long term 30 year plus trying to make it as simple as possible?

Reading jl Collins and following his principles looks easy but implementing them to Aust markets is a bit different due to the etf lic offerings.

I was thinking maybe vas, vgs and cash I addition to some lics purchased as discount to nta such as argo,  bki, aui , mir or qve for mid small caps and pmc for international dividend yields taking advantage of the company structure of these lics and the fully franked divs and dividend smoothing over etf trust structures?!!

Thoughts.

As easy as possible? Vanguard life strategy fund and automate regular deposits from each pay, don’t touch, sit back and watch it grow. Also, consolidate all supers into an industry super fund, like Aus super, download the app, watch it grow. That’s probably as simple as it could get.

pistolpete

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Re: Australian Investing Thread
« Reply #3742 on: January 10, 2018, 11:25:25 PM »
Understand that the life strategy is auto rebalanced from vanguard but on draw down phase what if I wanted to rebalanced different classes which ever is stronger or weaker (I can't) and the lic holding I believe are a bit better due to the fully franked divs and company structure only thing with these is the trading to premium of nta where etfs then seem more favourable. I guess that's why I mentioned having the best of both worlds etfs if lics are trading at substantial premiums! I guess there has to be a compromise somewhere!

Eucalyptus

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Re: Australian Investing Thread
« Reply #3743 on: January 13, 2018, 07:40:13 PM »
Understand that the life strategy is auto rebalanced from vanguard but on draw down phase what if I wanted to rebalanced different classes which ever is stronger or weaker (I can't) and the lic holding I believe are a bit better due to the fully franked divs and company structure only thing with these is the trading to premium of nta where etfs then seem more favourable. I guess that's why I mentioned having the best of both worlds etfs if lics are trading at substantial premiums! I guess there has to be a compromise somewhere!


Yeah, then you want to DIY with ETFs. I'm sure if you've got this far, and are thinking about how to best rebalance, you can figure out and handle it :-)


Be careful on adjusting based on whatever is stronger/weaker. Choose an asset allocation and stick to it if possible. Otherwise, this is akin to stock picking and will end up seeing you over-rebalancing, and, selling low and buying high. Basically, stock picking but with ETFs.


Look up Kitces. He has some interesting analyses on adjusting Asset allocations intelligently with "glide path ratios". Also on how to adjust allocations and SWRs (slightly) based on CAPE ratios.

ynotme

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Re: Australian Investing Thread
« Reply #3744 on: January 15, 2018, 02:01:09 AM »
Hi all

I've been thinking about diversifying my portfolio into REITs and infrastructure as I've heard they smooth out a bear market. However i've also read that it's not the best time to buy these sectors as interest rates rise since they usually have a lot of debt. I don't need income at the moment as I'm still working but have limited property market exposure so wondering if REITs may be worth buying.

Can I ask if you all have a specific allocation to these sectors outside the whole of market ETFs? And if so, your experiences with them.

I'd prefer to keep things simple and stick with a small number of ETFs so don't want to buy sectors unless there is a good reason to.

I'd appreciate any of your thoughts!


Wadiman

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Re: Australian Investing Thread
« Reply #3745 on: January 15, 2018, 02:16:50 AM »
Ynotme -

I have about a 10% allocation to REIT ETFs - VAP (6%) and DJRE (4% - global REIT).

I have these for diversification purposes as in some years they have performed quite differently to other sectors.

7 year total returns (including GFC) have been 13.8% for VAP and 3 year return (since inception) for DJRE is about 5%.  However, you may want to consider longer term trends - refer here: http://insights.vanguard.com.au/static/asset-class/app.html



Eucalyptus

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Re: Australian Investing Thread
« Reply #3746 on: January 15, 2018, 04:53:05 AM »
Ynotme - check out Tyler's Portfolio Charts and have a play with Australian allocations. Including REITs in small percentages (e about 10%) in diversified ETF AAs tends to be a good thing on SWRs. So does a little gold of a few percent, and "commodoties" (Not sure what commodity data Tyler is using exactly or what ETFs replicate that in Aus...). Gold is easy to buy as an ETF here but general commodities not so much as an index (the options aren't that great, high MERs, etc), neither Infrastructure last time I looked. But I do like the thinking. Maybe we'll see more lower ETF MERs for these things in the future?


TIPS that focus on infrastructure might be an option also in small amounts. I think there is a Sydney airport one. Single asset though...



Eg try this calculator:
https://portfoliocharts.com/portfolio/financial-independence/


Actually Tyler's calculators, which seem to give the most options for Australians, generally suggest that diversified ETF portfolios are definitely the way to go, and more critical for Australians that Americans if one wants to get a SWR above 4%.


(Note his calculators don't include franking credits for Australians)


marty998

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Re: Australian Investing Thread
« Reply #3747 on: January 15, 2018, 04:57:52 AM »
Hi all

I've been thinking about diversifying my portfolio into REITs and infrastructure as I've heard they smooth out a bear market. However i've also read that it's not the best time to buy these sectors as interest rates rise since they usually have a lot of debt. I don't need income at the moment as I'm still working but have limited property market exposure so wondering if REITs may be worth buying.

Can I ask if you all have a specific allocation to these sectors outside the whole of market ETFs? And if so, your experiences with them.

I'd prefer to keep things simple and stick with a small number of ETFs so don't want to buy sectors unless there is a good reason to.

I'd appreciate any of your thoughts!

I have problems with REITS... it was one of the (multiple) ways I got burned in the GFC.

When you buy real estate you buy bricks and mortar. When you buy a REIT, you buy bricks and mortar with probably a little bit of financial engineering on top.

There's simply more things that can go wrong.

I will never again touch a REIT that uses commercial mortgage backed securities as their primary source of funding. If normal banks would lend to them and they have to source more exotic loans from non-traditional lenders, why would I take a punt and invest in them?

Infra is a whole 'nother kettle of fish. Usually the domain of big super funds with the patience to hold forever. They have done very well the past few years - low inflation, utilities with virtually guaranteed rates of return, low interest rates - almost the perfect conditions.

Don't know if that will continue, but I suppose the name of the game is to find an asset / fund manager who simply will keep the lights on and not do anything stupid to fuck it up.

ynotme

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Re: Australian Investing Thread
« Reply #3748 on: January 15, 2018, 01:39:32 PM »
Thanks for all your replies and experiences.

With REITs, VAP seems a good choice and I also liked MVA which caps exposure to any single REIT to 10%. It does have a higher fee, 0.35% vs 0.23% for VAP.

I did find a global infrastructure etf listed on the ASX, VanEck's IFRA, which has Transurban as one of the top holdings. It has got a higher fee at 0.52% and is hedged.

Anyway will read more and play with Tyler's portfolio tool. No hurry to make a decision.

bigchrisb

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Re: Australian Investing Thread
« Reply #3749 on: January 15, 2018, 02:43:10 PM »
I've done very well out of REITS - my REIT holdings have outperformed the balance of my portfolio since I got serious about building the stash.

However, this has been a benefit of timing - I only really started pumping money in during the early-mid stages of the GFC, and bought a number of REITS after they had imploded.  Look at the 10 year returns of the surviving REITS to get a picture of what returns have been like for those who held at the start of the GFC.  GPT, -2.4%p.a. GMG, -3.5% p.a.  and don't even mention the survivorship bias - anyone hold Centro at the time?

I also got a sense of which of the REITS were well run - most of the REITS were part of my client base when I had my business. 

I still have an overweight exposure to REITS, with them being about 24% of my direct holdings (excluding index/LICs).   However, I've been seeing less value here of late, and have been letting these just sit there.

I also chose not to use indexes for REITS, as the fees are high, and the index is small.  8 securities gets you 86% of the index (SCG, WFD, GMG, SGP, DXS, GPT, VCX, MGR).  Why pay Vanguard 0.23% (or more to other providers) if you can replicate the same holdings easily?

On infrastructure, I've occasionally looked at Argo Listed Infrastructure, a LIC with global holdings. I got interested recently looking at the discount to NTA - you can currently buy $1.15 of assets for $1 with them.  However, I then look at the management costs (1.2%) and say no way.