Author Topic: Australian Investing Thread  (Read 1124974 times)

Abundant life

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Re: Australian Investing Thread
« Reply #3750 on: January 15, 2018, 03:10:20 PM »
Quote
anyone hold Centro at the time?
Ugh, I remember clearly wanting to sell, but OH saying, no they will come back up again, yeah right! For a long time our holding was $79 and wasn't worth selling. It did morph into Federation Centres, then Vicinity Centres and my holding  gradually climbed to $1200 when I sold. From memory I think our original holding plus DR was $9000+, definitely a learning experience.

ynotme

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Re: Australian Investing Thread
« Reply #3751 on: January 15, 2018, 03:59:29 PM »
Thanks for all your input. I hadn't realised the Aussie REITs had structural issues and imploded during the GFC. I also found a reference to Vanguard removing the allocation to listed property in their diversified funds last year.

Without knowing the sector well, I may just keep market cap exposure for now.

Liesel

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Re: Australian Investing Thread
« Reply #3752 on: January 15, 2018, 09:16:53 PM »
Hi, I'm new to the forum.  I have a question for Australians, please, re Vanguard.
I have an 18 year old son who is just starting university this year.  He will be living at home, working part time and saving for the next three years, a combination of casual shiftwork and army reserve, and saving $200-$300 per week depending on shifts.  From reading MMM I think this money should be going into some sort of Vanguard index fund, with dividends reinvested and regular contributions.  Which is the best option for him, with a low amount to start with ($1000)?  which has the lowest fees?
My 16 year old is also working casual shifts and wants to open an investment account to deposit his earnings.  I'd appreciate any advice whether he can open a Vanguard index fund as per the above to make contributions through the year.
Thanks in advance.

Notch

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Re: Australian Investing Thread
« Reply #3753 on: January 15, 2018, 11:52:06 PM »
Hi, I'm new to the forum.  I have a question for Australians, please, re Vanguard.
I have an 18 year old son who is just starting university this year.  He will be living at home, working part time and saving for the next three years, a combination of casual shiftwork and army reserve, and saving $200-$300 per week depending on shifts.  From reading MMM I think this money should be going into some sort of Vanguard index fund, with dividends reinvested and regular contributions.  Which is the best option for him, with a low amount to start with ($1000)?  which has the lowest fees?
My 16 year old is also working casual shifts and wants to open an investment account to deposit his earnings.  I'd appreciate any advice whether he can open a Vanguard index fund as per the above to make contributions through the year.
Thanks in advance.

Welcome to the forums, and good work for getting your kids so interested in investing!

Iíd start with a Vanguard retail fund because theyíre so simple to set-up and contribute to.  Australian Shares or Diversified High Growth funds would be fine.
« Last Edit: January 16, 2018, 12:03:36 AM by Notch »

marty998

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Re: Australian Investing Thread
« Reply #3754 on: January 16, 2018, 02:19:56 AM »
Agree - the Vanguard retail fund would be best (not the ETF, as brokerage will eat away chunk everytime you go to buy).

For the 16 year old, be careful of punitive marginal tax rates. Minors get the first $416 of investment income tax free and then after that get taxed quite heavily (at 66%, reducing to 49% after about $1000 of income). The idea is to discourage parents from putting assets in the name of their kids and getting the benefits of more tax free thresholds and reduced marginal rates.....

BattlaP

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Re: Australian Investing Thread
« Reply #3755 on: January 16, 2018, 03:35:01 AM »
Although I agree with the recommendation (retail fund) and it is what I'm opening for my child also, I just wanted to note that it is a minimum of $5000 for the initial investment, so it doesn't really meet your request.

FFA

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Re: Australian Investing Thread
« Reply #3756 on: January 16, 2018, 03:42:56 AM »
I'm not sure about that, these days brokerage can be quite cheap, commsec has the $10 option for $1k trades. And then there are cheaper brokers.

Saving $200-300/week means you could be buying $1k parcels each month. $10 brokerage is 1% but the retail fees are much higher than ETF's (e.g. VAS 0.14% versus Retail 0.75%). You would already be in front with ETF's by the second year, and then gaining 0.61% p.a. from then on... Or invest $3k quarterly and you can reduce to 0.5% or less on the brokerage (e.g. using NABTrade). I favour the ETF route if you don't mind doing executing a trade every now and then.

Liesel

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Re: Australian Investing Thread
« Reply #3757 on: January 16, 2018, 03:39:50 PM »
Agree - the Vanguard retail fund would be best (not the ETF, as brokerage will eat away chunk everytime you go to buy).

For the 16 year old, be careful of punitive marginal tax rates. Minors get the first $416 of investment income tax free and then after that get taxed quite heavily (at 66%, reducing to 49% after about $1000 of income). The idea is to discourage parents from putting assets in the name of their kids and getting the benefits of more tax free thresholds and reduced marginal rates.....

Ah I didn't know that - back in my day we were paid cash in hand for teenager jobs!  Does the heavy tax also apply to actual on-the-books declared wages earned by the 16 year old (he works casual shifts at a fast food franchise)?

For the 18 year old, it looks as though from everyone's advice that he should save up parcels of $1000 at a time and put that in Vanguard ETF with the lowest brokerage fee we can find.

bob999

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Re: Australian Investing Thread
« Reply #3758 on: January 20, 2018, 08:51:08 PM »
Hi, I'm new to the forum.  I have a question for Australians, please, re Vanguard.
I have an 18 year old son who is just starting university this year.  He will be living at home, working part time and saving for the next three years, a combination of casual shiftwork and army reserve, and saving $200-$300 per week depending on shifts.  From reading MMM I think this money should be going into some sort of Vanguard index fund, with dividends reinvested and regular contributions.  Which is the best option for him, with a low amount to start with ($1000)?  which has the lowest fees?
My 16 year old is also working casual shifts and wants to open an investment account to deposit his earnings.  I'd appreciate any advice whether he can open a Vanguard index fund as per the above to make contributions through the year.
Thanks in advance.

I know a lot of people would recommend the Vanguard Retail fund but I would stay away from it. Reason being the 0.9% management fee. Vanguard are a great company and I invest through them (wholesale fund) but their retail fund in Australia is just way too expensive.

Consider investing through another robo platform or app such as Acorn. They are (from memory) around 0.25%.

Red_Gold

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Re: Australian Investing Thread
« Reply #3759 on: January 23, 2018, 02:10:47 AM »
Hi, I'm new to the forum.  I have a question for Australians, please, re Vanguard.
I have an 18 year old son who is just starting university this year.  He will be living at home, working part time and saving for the next three years, a combination of casual shiftwork and army reserve, and saving $200-$300 per week depending on shifts.  From reading MMM I think this money should be going into some sort of Vanguard index fund, with dividends reinvested and regular contributions.  Which is the best option for him, with a low amount to start with ($1000)?  which has the lowest fees?
My 16 year old is also working casual shifts and wants to open an investment account to deposit his earnings.  I'd appreciate any advice whether he can open a Vanguard index fund as per the above to make contributions through the year.
Thanks in advance.

I got sons of same ages and here is what we have done for the 18 year old. Set up high interest Ubank account, if they deposit $200 per month they are eligible for bonus rate which is reasonable enough in this low rate environment. Then, once their savings reached over 5000 I instructed him to buy VGS through NABtrade. I regret not signing him up with SelfWealth for cheaper trades. Once he received paperwork we set up dividend reinvestment plan. When his savings reach over 5k again he will buy more VGS or VAS.
I looked at Acorns and Stockspots and their fees are too high imo. I have retail Vanguard High Growth fund from time before ETFs were available on the market and consider selling it and purchasing ETFs instead. In the long run I should be ahead due to lower management fees of ETFs even considering brokerage. Also switched to SelfWealth because of their $9.5 flat brokerage fee.
Our kids are young and there is no rush to jump into the market. Let the money grow untaxed in the high interest account then buy Vanguard ETFs in larger parcels with the lowest fee you can find. Untaxed because kids are unlikely to earn over 18k and so won't pay any tax on their earnings. And unless you invest large sums of money in their names, their dividend income won't reach $416 for a very very long time. 5k of VGS just brought us $22 in dividends, so not an issue at all.

misterhorsey

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Re: Australian Investing Thread
« Reply #3760 on: January 23, 2018, 04:57:22 PM »

I know a lot of people would recommend the Vanguard Retail fund but I would stay away from it. Reason being the 0.9% management fee. Vanguard are a great company and I invest through them (wholesale fund) but their retail fund in Australia is just way too expensive.


Yes the retail funds start off high, but the management fee has a sliding scale.  Taking the Retail High Growth Life Strategy Fund, it's 0.9% on the first $50k, then 0.6% for the next $50k and then 0.35% for amounts over $100k.  The 0.9% is a bit high I'd agree, and it still averages out as a higher fee, but it may suit some investors who don't qualify for a wholesale fund, and it's a rather painless way of getting your toe in the water.

For those just getting into investing, it may be better to be invested with a slightly less optimal fee, then not invested.  Just remember to review occasionally!

It's worth repeating as well that although the Vanguard Wholesale fund has a published $500k minimum initial investment, they don't necessarily enforce it. But speak to them first.

Notch

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Re: Australian Investing Thread
« Reply #3761 on: January 23, 2018, 05:55:32 PM »

I know a lot of people would recommend the Vanguard Retail fund but I would stay away from it. Reason being the 0.9% management fee. Vanguard are a great company and I invest through them (wholesale fund) but their retail fund in Australia is just way too expensive.


Yes the retail funds start off high, but the management fee has a sliding scale.  Taking the Retail High Growth Life Strategy Fund, it's 0.9% on the first $50k, then 0.6% for the next $50k and then 0.35% for amounts over $100k.  The 0.9% is a bit high I'd agree, and it still averages out as a higher fee, but it may suit some investors who don't qualify for a wholesale fund, and it's a rather painless way of getting your toe in the water.

For those just getting into investing, it may be better to be invested with a slightly less optimal fee, then not invested.  Just remember to review occasionally!

It's worth repeating as well that although the Vanguard Wholesale fund has a published $500k minimum initial investment, they don't necessarily enforce it. But speak to them first.

They definitely donít enforce it. $100k is the minimum. Source: called them and invested $100k last month. 

hm520

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Re: Australian Investing Thread
« Reply #3762 on: January 23, 2018, 08:23:14 PM »
Hey guys,

I'm sure this is a question that's been previously answered but I'm unable to find it within this thread (and I've read a fair bit of it).

Currently wondering about the major differences between a VAS + VGS vs VAS + VEU + VTS portfolio. The first is a lot more convenient and has less brokerage although seems to not have done was well in the last few years based on "historical returns".

As VTS and VEU are both US domiciled, are there any negative implications associated with this? Dividend reinvestment isn't an issue. This would be my investment for hte next >20 years, so tax considerations would be important.

Regards

FFA

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Re: Australian Investing Thread
« Reply #3763 on: January 24, 2018, 05:49:43 AM »
Yeah the VTS/VEU US domicile creates a bit more regulatory risk (assuming you're an Australian resident). Often mentioned is US estate taxes. I don't think it's an issue for Australian residents due to the tax treaty but do your own research, and it's always subject to change. VGS is Oz domicile so avoids that.

The key diff is VGS has no emerging markets, whereas VEU does about 20% I believe. So a proper comparison is VGS/VGE vs VTS/VEU. Now you have similar complexity / # of funds... Or you can go without emerging markets.

Also no DRP's on VTS/VEU as you mentioned that's not an issue for you though.

VGS fee is a bit higher but hopefully will come down over time towards VTS/VEU. The real, after tax gap is probably less too as others have explained VEU will have some withholding taxes internally that will not get credited, whereas VGS picks up all the foreign tax credit offsets.

personally I'd choose VGS (and VGE if you want emerging markets).

kaetana

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Re: Australian Investing Thread
« Reply #3764 on: January 24, 2018, 07:44:41 AM »

I know a lot of people would recommend the Vanguard Retail fund but I would stay away from it. Reason being the 0.9% management fee. Vanguard are a great company and I invest through them (wholesale fund) but their retail fund in Australia is just way too expensive.


Yes the retail funds start off high, but the management fee has a sliding scale.  Taking the Retail High Growth Life Strategy Fund, it's 0.9% on the first $50k, then 0.6% for the next $50k and then 0.35% for amounts over $100k.  The 0.9% is a bit high I'd agree, and it still averages out as a higher fee, but it may suit some investors who don't qualify for a wholesale fund, and it's a rather painless way of getting your toe in the water.

For those just getting into investing, it may be better to be invested with a slightly less optimal fee, then not invested.  Just remember to review occasionally!

It's worth repeating as well that although the Vanguard Wholesale fund has a published $500k minimum initial investment, they don't necessarily enforce it. But speak to them first.

They definitely donít enforce it. $100k is the minimum. Source: called them and invested $100k last month.

+1. I held off for a long time because I thought I needed the $500k, but I called them a few months ago and just asked if $100k would be enough to get the wholesale rates and they said yes, certainly. Sent through the application and it was set up pretty quickly. No wheedling or hassle at all.

BRAFRA

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Re: Australian Investing Thread
« Reply #3765 on: January 25, 2018, 08:21:21 PM »
If the Australian dollar becomes weaker, the impact will be positive on VGS ?

Simple scenario as an example:
the AUD drops 10% compared to all other currencies in 1 day. Will there be a ~10% increase of VGS ?

mjr

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Re: Australian Investing Thread
« Reply #3766 on: January 25, 2018, 10:39:23 PM »
Simple answer: yes

PDM

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Re: Australian Investing Thread
« Reply #3767 on: January 25, 2018, 10:57:30 PM »
If the Australian dollar becomes weaker, the impact will be positive on VGS ?

Simple scenario as an example:
the AUD drops 10% compared to all other currencies in 1 day. Will there be a ~10% increase of VGS ?

There is definitely an impact. I've noticed days where it tracks movements almost exactly. But other times it seems to not impact. Lately VGS has been doing well while the AUD is rising against the USD.


MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3768 on: January 26, 2018, 01:06:53 PM »
Hey all, apologies in advance for the dumb question: Iím considering buying property for the first time and have been reading about keeping money in an offset account. Currently, I pay money into my investment account after each fortnightly pay so I donít really keep any money in savings. If I save the money in the offset account itís not making me money in the investment account. Whatís the strategy for this or does it make more sense to grow the money in the investment account and then pay a lump sum later to reduce the mortgage? Or, should I not even care about paying down the mortgage?

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Re: Australian Investing Thread
« Reply #3769 on: January 26, 2018, 02:32:45 PM »
Hey all, apologies in advance for the dumb question: Iím considering buying property for the first time and have been reading about keeping money in an offset account. Currently, I pay money into my investment account after each fortnightly pay so I donít really keep any money in savings. If I save the money in the offset account itís not making me money in the investment account. Whatís the strategy for this or does it make more sense to grow the money in the investment account and then pay a lump sum later to reduce the mortgage? Or, should I not even care about paying down the mortgage?

The "pay off/don't pay off" the mortgage is the subject of endless debate on here so it really comes down to personal choice. But the thinking behind putting money in an offset account is that the amount in the offset account is deducted from the total mortgage and interest is charged on what's left. Effectively you will be getting a return of whatever your mortgage interest rate is on the funds in the offset account. For example, if your mortgage is $500k and you have $100k in an offset account, you only pay interest on $400k but you won't earn any physical interest on the $100k in the offset.

If you can earn a better % than your mortgage interest rate by investing the money you would have in the offset account, then you should probably do that, otherwise it's more beneficial in the offset account.

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Re: Australian Investing Thread
« Reply #3770 on: January 26, 2018, 10:31:16 PM »
It's even better that that, because the interest on the money you put into your offset account isn't taxed, so you get extra from your offset than you would from investment income (even superannuation - where income is taxed at 15%).

marty998

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Re: Australian Investing Thread
« Reply #3771 on: January 27, 2018, 03:07:22 AM »
Agree - the Vanguard retail fund would be best (not the ETF, as brokerage will eat away chunk everytime you go to buy).

For the 16 year old, be careful of punitive marginal tax rates. Minors get the first $416 of investment income tax free and then after that get taxed quite heavily (at 66%, reducing to 49% after about $1000 of income). The idea is to discourage parents from putting assets in the name of their kids and getting the benefits of more tax free thresholds and reduced marginal rates.....

Ah I didn't know that - back in my day we were paid cash in hand for teenager jobs!  Does the heavy tax also apply to actual on-the-books declared wages earned by the 16 year old (he works casual shifts at a fast food franchise)?

For the 18 year old, it looks as though from everyone's advice that he should save up parcels of $1000 at a time and put that in Vanguard ETF with the lowest brokerage fee we can find.

@Liesel sorry for the late reply.

Earned income from wages is taxed at normal rates (first $18,200 tax free etc). It's only investment income that is treated differently. But  the ATO will scrutinise scenarios where you'd employed your kid in the family business paying them $50 an hour for example :)

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3772 on: January 27, 2018, 05:12:53 PM »
Ok, would love to hear your thoughts: Iím looking at buying a property in Sydney for $620k, but hadnít planned this. Iíve been putting all my money in Vanguard. Iím not sure if I could pull all of it out and do the 20% deposit, some and do the 10% or nothing and do the 5%?  Iíd love to leave my money in Vanguard and then keep adding small amounts and then attack the mortgage. I know, I know all the reasons to not pay the mortgage down aggressively but I feel like Aus is a bit different. I want to retire in 5 years and want this paid off while I have income coming in.

Anyways, would you dip into your investment account or go 5%? Our other option is to buy in a year and save up more but weíve found an ideal, unique place that we have a shot at and hate to pass it up if we can grab it.

PDM

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Re: Australian Investing Thread
« Reply #3773 on: January 27, 2018, 05:20:56 PM »
$620 - is it an apartment? The Sydney apartment market is looking a bit shakey based on everything I've read. It also looks like across the board prices have flattened (https://www.macrobusiness.com.au/2018/01/corelogic-weekly-australian-house-price-update-falls-coast-coast/) sign up for free trial. Sydney is also coming off some crazy growth.

Llewellyn2006

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Re: Australian Investing Thread
« Reply #3774 on: January 27, 2018, 05:27:07 PM »
I know, I know all the reasons to not pay the mortgage down aggressively but I feel like Aus is a bit different. I want to retire in 5 years and want this paid off while I have income coming in.

Anyways, would you dip into your investment account or go 5%? Our other option is to buy in a year and save up more but weíve found an ideal, unique place that we have a shot at and hate to pass it up if we can grab it.

Without wanting to reignite the whole pay off/don't pay off debate I think the highlighted part is really important and I agree because the US and Australian markets ARE different - we can't deduct mortgage interest on our PPR from taxable income over here which would be an incentive to pay the minimum amount and claim maximum interest.

Anyway, back to your question. I think if the property is what you're really after and you can do it with a 5% deposit while still investing money in something else then go for it, although I think taking advantage of an offset account is worth considering too. Maybe a mix of both? Good luck.


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Re: Australian Investing Thread
« Reply #3775 on: January 27, 2018, 06:00:54 PM »
Ok, would love to hear your thoughts: Iím looking at buying a property in Sydney for $620k, but hadnít planned this. Iíve been putting all my money in Vanguard. Iím not sure if I could pull all of it out and do the 20% deposit, some and do the 10% or nothing and do the 5%?  Iíd love to leave my money in Vanguard and then keep adding small amounts and then attack the mortgage. I know, I know all the reasons to not pay the mortgage down aggressively but I feel like Aus is a bit different. I want to retire in 5 years and want this paid off while I have income coming in.

Anyways, would you dip into your investment account or go 5%? Our other option is to buy in a year and save up more but weíve found an ideal, unique place that we have a shot at and hate to pass it up if we can grab it.

Is this as an investment or for living in?  Personally I would say go for it if it is to be your home.  As an investment I would say the long term growth of property prices in Australia does not match the long term growth of shares.   Sydney is probably going nowhere for a long time as well.  I would stay in the vanguard instead.  Just the opinion of someone who invested in property and is now slowly trying to reduce the amount we have.

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Re: Australian Investing Thread
« Reply #3776 on: January 27, 2018, 07:54:43 PM »
I have money sitting in an account in Europe in EUR and plan to invest in VGS with dividends reinvested.

Better buy the equivalent of VGS in EUR to avoid the ~0.6% of commission from money exchange via online platforms ?
I found an offer with a big dog for 0.2% annual fee compared to 0.18% with Vanguard.

I won't miss franking credits as VGS excludes Aussie shares, correct ?

This investment will obviously be exposed to the evolution of the EUR / AUD exchange rate.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3777 on: January 27, 2018, 10:40:06 PM »
$620 - is it an apartment? The Sydney apartment market is looking a bit shakey based on everything I've read. It also looks like across the board prices have flattened (https://www.macrobusiness.com.au/2018/01/corelogic-weekly-australian-house-price-update-falls-coast-coast/) sign up for free trial. Sydney is also coming off some crazy growth.

Yes, $620k for a 1 bed, 1 bath, no car within a 25 min bike ride to the cbd.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3778 on: January 27, 2018, 10:43:57 PM »
I know, I know all the reasons to not pay the mortgage down aggressively but I feel like Aus is a bit different. I want to retire in 5 years and want this paid off while I have income coming in.

Anyways, would you dip into your investment account or go 5%? Our other option is to buy in a year and save up more but weíve found an ideal, unique place that we have a shot at and hate to pass it up if we can grab it.

Without wanting to reignite the whole pay off/don't pay off debate I think the highlighted part is really important and I agree because the US and Australian markets ARE different - we can't deduct mortgage interest on our PPR from taxable income over here which would be an incentive to pay the minimum amount and claim maximum interest.

Anyway, back to your question. I think if the property is what you're really after and you can do it with a 5% deposit while still investing money in something else then go for it, although I think taking advantage of an offset account is worth considering too. Maybe a mix of both? Good luck.

Well, my thinking is, we are on good salaries. We could pay this down to around $150k in 5 years and live in it until then, with our money sitting in an offset.  Iíll add $500 a fortnight to Vanguard. Once we pay it down, we rent it out as an investment property while we geo-arbitrage overseas. It will then Provide a steady flow of income and Iíll invest money back in Vanguard and live off the rest.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3779 on: January 27, 2018, 10:45:09 PM »
Ok, would love to hear your thoughts: Iím looking at buying a property in Sydney for $620k, but hadnít planned this. Iíve been putting all my money in Vanguard. Iím not sure if I could pull all of it out and do the 20% deposit, some and do the 10% or nothing and do the 5%?  Iíd love to leave my money in Vanguard and then keep adding small amounts and then attack the mortgage. I know, I know all the reasons to not pay the mortgage down aggressively but I feel like Aus is a bit different. I want to retire in 5 years and want this paid off while I have income coming in.

Anyways, would you dip into your investment account or go 5%? Our other option is to buy in a year and save up more but weíve found an ideal, unique place that we have a shot at and hate to pass it up if we can grab it.

Is this as an investment or for living in?  Personally I would say go for it if it is to be your home.  As an investment I would say the long term growth of property prices in Australia does not match the long term growth of shares.   Sydney is probably going nowhere for a long time as well.  I would stay in the vanguard instead.  Just the opinion of someone who invested in property and is now slowly trying to reduce the amount we have.

Yes, live in, then rent out after 4-5 years.

PDM

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Re: Australian Investing Thread
« Reply #3780 on: January 27, 2018, 11:25:28 PM »
$620 - is it an apartment? The Sydney apartment market is looking a bit shakey based on everything I've read. It also looks like across the board prices have flattened (https://www.macrobusiness.com.au/2018/01/corelogic-weekly-australian-house-price-update-falls-coast-coast/) sign up for free trial. Sydney is also coming off some crazy growth.

Yes, $620k for a 1 bed, 1 bath, no car within a 25 min bike ride to the cbd.

I know it is Sydney but wowsers! For a 1 bedder, no car. That seems nuts.

Apartments prices will lead any downturn in prices. I realise it isn't that much of an issue if you plan to live in but you don't want to be paying off more that it is worth. So many new apartments being built/have been built in the last few years. Not to mention the Chinese dollar leaving the market...yikes.

Have you lived in a one bedder? The smallest I'd live in with my wife is two bedrooms...and even then.


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Re: Australian Investing Thread
« Reply #3781 on: January 28, 2018, 12:18:53 AM »
Yeah the VTS/VEU US domicile creates a bit more regulatory risk (assuming you're an Australian resident). Often mentioned is US estate taxes. I don't think it's an issue for Australian residents due to the tax treaty but do your own research, and it's always subject to change. VGS is Oz domicile so avoids that.

The key diff is VGS has no emerging markets, whereas VEU does about 20% I believe. So a proper comparison is VGS/VGE vs VTS/VEU. Now you have similar complexity / # of funds... Or you can go without emerging markets.

Also no DRP's on VTS/VEU as you mentioned that's not an issue for you though.

VGS fee is a bit higher but hopefully will come down over time towards VTS/VEU. The real, after tax gap is probably less too as others have explained VEU will have some withholding taxes internally that will not get credited, whereas VGS picks up all the foreign tax credit offsets.

personally I'd choose VGS (and VGE if you want emerging markets).

Thanks for your reply.

It's a tricky question. I guess inherently I'm biased towards the US market (for no particular reason) and personally feel a heavier weighting towards it will lead to more growth.

Even with regular purchasing, a 'set-and-forget' DRP is appealing.

deborah

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Re: Australian Investing Thread
« Reply #3782 on: January 28, 2018, 12:45:30 AM »
DRPs aren't set-and-forget. OK, you don't get the dividends and then have to work out where you are going to put them, but...

- when you sell them, you need to work out when you bought every single one of them and work out your CGT separately for each parcel.
- it makes you lazy about rebalancing your portfolio, and the portfolio drifts out of alignment with your goals since some investments have more dividends than others, so you automatically buy more shares in those.
- you always leave some of your dividend in the account (not a lot, but some), as you are only going to buy whole shares.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3783 on: January 28, 2018, 02:21:31 AM »
$620 - is it an apartment? The Sydney apartment market is looking a bit shakey based on everything I've read. It also looks like across the board prices have flattened (https://www.macrobusiness.com.au/2018/01/corelogic-weekly-australian-house-price-update-falls-coast-coast/) sign up for free trial. Sydney is also coming off some crazy growth.

Yes, $620k for a 1 bed, 1 bath, no car within a 25 min bike ride to the cbd.

I know it is Sydney but wowsers! For a 1 bedder, no car. That seems nuts.

Apartments prices will lead any downturn in prices. I realise it isn't that much of an issue if you plan to live in but you don't want to be paying off more that it is worth. So many new apartments being built/have been built in the last few years. Not to mention the Chinese dollar leaving the market...yikes.

Have you lived in a one bedder? The smallest I'd live in with my wife is two bedrooms...and even then.

Yes, it is nuts. Itís the best deal we can find. We are dreading the idea of a 1 bedroom. We did it when we first met. Will be tough to go backwards but we can pay it off.

Can we claim the interest on our taxes and how does it work if a couple? We split the interest and claim half each.

deborah

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Re: Australian Investing Thread
« Reply #3784 on: January 28, 2018, 02:28:30 AM »
No - unless it is an investment unit. Your PPOR is CGT free and you also cannot claim the interest.

PDM

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Re: Australian Investing Thread
« Reply #3785 on: January 28, 2018, 03:09:06 AM »
The Sydney market is crazy.

BRAFRA

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Re: Australian Investing Thread
« Reply #3786 on: January 28, 2018, 08:06:11 AM »
No - unless it is an investment unit. Your PPOR is CGT free and you also cannot claim the interest.
Claim the interest ?

itchyfeet

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Re: Australian Investing Thread
« Reply #3787 on: January 28, 2018, 08:16:30 AM »
The Sydney market is crazy.

Prices are dropping. Since the peak back in June last year my place has dropped in value by $100,000 or so, say 5%. I do think that prices will continue to retreat through 2018.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3788 on: January 28, 2018, 01:02:23 PM »
The Sydney market is crazy.

Prices are dropping. Since the peak back in June last year my place has dropped in value by $100,000 or so, say 5%. I do think that prices will continue to retreat through 2018.

Yes, this is kinda my gut sense and why Iím thinking we might be better off just waiting for 18 months?  Hereís whatís crazy: we currently pay a lot in rent. We could move to a 2 bedder for $600/week, but if we buy the 1 bedder, our mortgage would be around $600/week, so paying the same for less, although weíll own it. Decisions! Decisions!

marty998

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Re: Australian Investing Thread
« Reply #3789 on: January 28, 2018, 01:11:41 PM »
The Sydney market is crazy.

Prices are dropping. Since the peak back in June last year my place has dropped in value by $100,000 or so, say 5%. I do think that prices will continue to retreat through 2018.

Yes, this is kinda my gut sense and why Iím thinking we might be better off just waiting for 18 months?  Hereís whatís crazy: we currently pay a lot in rent. We could move to a 2 bedder for $600/week, but if we buy the 1 bedder, our mortgage would be around $600/week, so paying the same for less, although weíll own it. Decisions! Decisions!

Mine has held up in value, though I'm in the outer suburbs. But yes I do expect prices to come back a little bit through this year, especially if interest rates go up.

Which suburb are you looking to buy in?

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3790 on: January 28, 2018, 01:24:55 PM »
The Sydney market is crazy.

Prices are dropping. Since the peak back in June last year my place has dropped in value by $100,000 or so, say 5%. I do think that prices will continue to retreat through 2018.

Yes, this is kinda my gut sense and why Iím thinking we might be better off just waiting for 18 months?  Hereís whatís crazy: we currently pay a lot in rent. We could move to a 2 bedder for $600/week, but if we buy the 1 bedder, our mortgage would be around $600/week, so paying the same for less, although weíll own it. Decisions! Decisions!

Mine has held up in value, though I'm in the outer suburbs. But yes I do expect prices to come back a little bit through this year, especially if interest rates go up.

Which suburb are you looking to buy in?

Roseberry, Moore Park and Alexandria. I looked at a lot of homes and there didnít seem to be much interest. I think lots of people are waiting to see what happens and if our worst case is renting something slightly smaller, having an extra $10k not going to rent and investing, weíre still ok.

PDM

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Re: Australian Investing Thread
« Reply #3791 on: January 28, 2018, 02:02:29 PM »
The Sydney market is crazy.

Prices are dropping. Since the peak back in June last year my place has dropped in value by $100,000 or so, say 5%. I do think that prices will continue to retreat through 2018.

Yes, this is kinda my gut sense and why Iím thinking we might be better off just waiting for 18 months?  Hereís whatís crazy: we currently pay a lot in rent. We could move to a 2 bedder for $600/week, but if we buy the 1 bedder, our mortgage would be around $600/week, so paying the same for less, although weíll own it. Decisions! Decisions!
That there is your classic rent money is dead money fallacy. What would an equivalent 2 bedder cost to buy? A lot more than $600/week. And don't forget all the other costs of ownership renters don't pay - body corporate, repairs etc.
Renting gives you a flexibility that owning doesn't.

sully1985

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Re: Australian Investing Thread
« Reply #3792 on: January 28, 2018, 05:13:39 PM »
The Sydney market is crazy.

Prices are dropping. Since the peak back in June last year my place has dropped in value by $100,000 or so, say 5%. I do think that prices will continue to retreat through 2018.

Yes, this is kinda my gut sense and why Iím thinking we might be better off just waiting for 18 months?  Hereís whatís crazy: we currently pay a lot in rent. We could move to a 2 bedder for $600/week, but if we buy the 1 bedder, our mortgage would be around $600/week, so paying the same for less, although weíll own it. Decisions! Decisions!

Mine has held up in value, though I'm in the outer suburbs. But yes I do expect prices to come back a little bit through this year, especially if interest rates go up.

Which suburb are you looking to buy in?

Roseberry, Moore Park and Alexandria. I looked at a lot of homes and there didnít seem to be much interest. I think lots of people are waiting to see what happens and if our worst case is renting something slightly smaller, having an extra $10k not going to rent and investing, weíre still ok.

FYI I live in the Rosebery/Zetland area and seriously, I would not buy anything (apartment-wise) in that area, I'm living in a 2 bed place that was built around 7-8 years ago and it's not aging well (Meriton). Thank God I don't own the place.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3793 on: January 28, 2018, 10:55:48 PM »
The Sydney market is crazy.

Prices are dropping. Since the peak back in June last year my place has dropped in value by $100,000 or so, say 5%. I do think that prices will continue to retreat through 2018.

Yes, this is kinda my gut sense and why Iím thinking we might be better off just waiting for 18 months?  Hereís whatís crazy: we currently pay a lot in rent. We could move to a 2 bedder for $600/week, but if we buy the 1 bedder, our mortgage would be around $600/week, so paying the same for less, although weíll own it. Decisions! Decisions!
That there is your classic rent money is dead money fallacy. What would an equivalent 2 bedder cost to buy? A lot more than $600/week. And don't forget all the other costs of ownership renters don't pay - body corporate, repairs etc.
Renting gives you a flexibility that owning doesn't.

This has been my thinking to date. Iím not sure if Iím experiencing FOMO or what?

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3794 on: January 28, 2018, 10:59:14 PM »
The Sydney market is crazy.

Prices are dropping. Since the peak back in June last year my place has dropped in value by $100,000 or so, say 5%. I do think that prices will continue to retreat through 2018.

Yes, this is kinda my gut sense and why Iím thinking we might be better off just waiting for 18 months?  Hereís whatís crazy: we currently pay a lot in rent. We could move to a 2 bedder for $600/week, but if we buy the 1 bedder, our mortgage would be around $600/week, so paying the same for less, although weíll own it. Decisions! Decisions!

Mine has held up in value, though I'm in the outer suburbs. But yes I do expect prices to come back a little bit through this year, especially if interest rates go up.

Which suburb are you looking to buy in?

Roseberry, Moore Park and Alexandria. I looked at a lot of homes and there didnít seem to be much interest. I think lots of people are waiting to see what happens and if our worst case is renting something slightly smaller, having an extra $10k not going to rent and investing, weíre still ok.

FYI I live in the Rosebery/Zetland area and seriously, I would not buy anything (apartment-wise) in that area, I'm living in a 2 bed place that was built around 7-8 years ago and it's not aging well (Meriton). Thank God I don't own the place.

Funny you say that, we looked at the place and they just had some water damage fixed. Do you not like the area?

marty998

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Re: Australian Investing Thread
« Reply #3795 on: January 29, 2018, 12:05:56 AM »
The Sydney market is crazy.

Prices are dropping. Since the peak back in June last year my place has dropped in value by $100,000 or so, say 5%. I do think that prices will continue to retreat through 2018.

Yes, this is kinda my gut sense and why Iím thinking we might be better off just waiting for 18 months?  Hereís whatís crazy: we currently pay a lot in rent. We could move to a 2 bedder for $600/week, but if we buy the 1 bedder, our mortgage would be around $600/week, so paying the same for less, although weíll own it. Decisions! Decisions!

Mine has held up in value, though I'm in the outer suburbs. But yes I do expect prices to come back a little bit through this year, especially if interest rates go up.

Which suburb are you looking to buy in?

Roseberry, Moore Park and Alexandria. I looked at a lot of homes and there didnít seem to be much interest. I think lots of people are waiting to see what happens and if our worst case is renting something slightly smaller, having an extra $10k not going to rent and investing, weíre still ok.

FYI I live in the Rosebery/Zetland area and seriously, I would not buy anything (apartment-wise) in that area, I'm living in a 2 bed place that was built around 7-8 years ago and it's not aging well (Meriton). Thank God I don't own the place.

Funny you say that, we looked at the place and they just had some water damage fixed. Do you not like the area?

I would not go anywhere near Alexandria/Zetland either. For the same reasons - crappy construction and mega strata fees. And down the track do you really think you'll be able to rent it with all the supply going up? There's literally 10's of thousands of identical shoeboxes going up in that whole corridor bounded by the CBD, Airport, Southern Cross Drive and the Eastern Suburbs/Illawarra Railway line between Wolli Creek and the city.

Renters will do exceptionally well with all the negotiating power.

I'd look around Edgecliff / Waverley if I were going to spend $600k on a 1 bedder. Much more likely to hold value.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3796 on: January 29, 2018, 12:30:36 AM »
Yeah Marty, each agent I asked said that whole area was going to be torn down and new buildings put up. I canít see how rents will rise. The place weíre looking at is unique but will it be unique enough? I think youíre right though. Feels like there will be a huge glut in 5 years.

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Re: Australian Investing Thread
« Reply #3797 on: January 29, 2018, 02:23:03 AM »
When we apartment shopping in 2007/8 we looked at the Victoria Park area and the buildings looked very shoddy even when they were only a few years old. The cladding looked bad and there were water issues.

$650k gets you a one bedder in the Manly area and the price would hold I reckon?

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Re: Australian Investing Thread
« Reply #3798 on: January 29, 2018, 02:27:56 AM »
When we apartment shopping in 2007/8 we looked at the Victoria Park area and the buildings looked very shoddy even when they were only a few years old. The cladding looked bad and there were water issues.

$650k gets you a one bedder in the Manly area and the price would hold I reckon?
I second Manly or an area with older buildings with lower strata 800-1000/quarter max ie no lift, no pool. Lower north shore, inner west, inner east centennial park etc.


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MrThatsDifferent

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Re: Australian Investing Thread
« Reply #3799 on: January 29, 2018, 04:43:25 AM »
Well, weíre putting that plan on hold until we save up 20% not using my Vanguard shares, which makes me happy. Weíll look again in a year. Thanks everyone for helping talk some sense in my head.