Author Topic: Australian Investing Thread  (Read 2613103 times)

Juan Ponce de Leůn

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Re: Australian Investing Thread
« Reply #4400 on: February 23, 2019, 05:10:18 AM »
When you have a clock watcher like this bloke I'm guessing the current employer will write a glowing reference - can't wait to get an actual worker in and pay them the 85k.

MOD EDIT: Don't be rude, please.
« Last Edit: February 24, 2019, 08:10:36 PM by arebelspy »

AussieMM

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Re: Australian Investing Thread
« Reply #4401 on: February 23, 2019, 10:56:56 PM »
Is the 40hr pw job likely to actually only be 40hrs?

How much do you like your current job? Boss? Colleagues?

If all of those things were positive, and I wasn't sure about the new boss/team/culture, or sure about the certainty of the hours, I would pass.

I second this. I'd rather work longer in a workplace I like and that offered good work-life balance, rather than earn more but be miserable. Although that isn't necessary the two options Dropbear is dealing with.

Ultimately, if you try out the new job and it isn't suiting you, you could always find another job elsewhere.
« Last Edit: February 23, 2019, 11:00:29 PM by AussieMM »

Dropbear

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Re: Australian Investing Thread
« Reply #4402 on: February 24, 2019, 12:11:29 AM »
Thanks to those who've offered constructive responses, you've certainly helped add some mustachian perspectives on money and time.

To avoid a complicated discussion here I won't go into the finer details, but there's myriad reasons to stay or go, hence my wanting to give this question good consideration.

Cheers!

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4403 on: February 24, 2019, 12:46:02 PM »
Thanks to those who've offered constructive responses, you've certainly helped add some mustachian perspectives on money and time.

To avoid a complicated discussion here I won't go into the finer details, but there's myriad reasons to stay or go, hence my wanting to give this question good consideration.

Cheers!

Sure, except you didnít provide us with a myriad of reasons, you gave us 37.5 vs 40 hrs for an increase of $15k. With just that to go with, most people would choose the 40 hrs (cause I donít know anyone that does 37.5 on the nose anyways). If thereís other info or mitigating factors, share them for more nuanced advice, otherwise it seems like a no-brainer.

chasingthegoodlife

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Re: Australian Investing Thread
« Reply #4404 on: March 01, 2019, 05:04:53 PM »
I don’t think it’s an unreasonable question. I would think twice before adding an extra 30 mins a day to my commute for a slightly higher salary, so why not for a workday? And I don’t have kids. I’m sure 30mins could be a big deal for those with young children, pick up schedules and early bedtimes.

FWIW I work a 40 hour week to accrue an RDO each month, and I don’t find the extra hours too onerous.

Seconding other posters that expectations for unpaid overtime and flexibility of hours are probably more important than your ‘official’ hours.

Also worth keeping in mind that 15k isn’t 15k after tax either.

Dropbear

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Re: Australian Investing Thread
« Reply #4405 on: March 01, 2019, 06:09:09 PM »
I've taken the new offer!  It'll make my walk to work a bit longer, but that's my own time, and I'll make the most of it... or otherwise shorten it by jumping on a bike.  The new place is quite flexible by the sound of it, so I'll plan around a work / life balance.

I didn't want to go into the whole set of considerations of the old job verses the new job because this is an investing thread after all...  Anyway, thanks lots!

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4406 on: March 01, 2019, 11:36:40 PM »
I've taken the new offer!  It'll make my walk to work a bit longer, but that's my own time, and I'll make the most of it... or otherwise shorten it by jumping on a bike.  The new place is quite flexible by the sound of it, so I'll plan around a work / life balance.

I didn't want to go into the whole set of considerations of the old job verses the new job because this is an investing thread after all...  Anyway, thanks lots!

Congrats!

givemesunshine

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Re: Australian Investing Thread
« Reply #4407 on: March 02, 2019, 08:02:42 PM »
Slightly off topic, but need some Australian input.

I am considering investing my Emergency Fund (6 months expenses) and using my accrued Long Service Leave as my EF. As far as I can tell unless I was fired for serious misconduct I am guaranteed my LSL payout (currently ~18 weeks, which is >100% of my EF value).

I'm trying to consider all the 'worst case scenarios' that could occur. Job loss is one, although very unlikely, I am a good employee who has worked in my company for over 11 years and they struggle to get rid of the poor performing employees. A health emergency is another possibility but I think my workplace, sick leave and income protection would cover most eventualities. I get enough Rec Leave per year to not touch my LSL so my plan is to leave it until I retire to either use for a long holiday on half pay or as a payout.

Other securities in case of emergencies include;
- HISA account for immediate access (~$5K) in case of washing machine/fridge explosion (although I could likely cash flow this over a pay cycle)
- HISA with my accruing investment money (I invest when I have ~$10K, 3-5 times per year)
- Credit Cards (zero balance, $28K limits) if I need access to spending above the available $5K whilst I liquidate some investments
- 50+ days Sick Leave
- Income Protection (75% of wage after 14 days + sick leave used up) - no issues living on this amount, I'd have money left over
- TPD insurance
- ability to reduce expenses to bare minimum and willingness to work in any job to keep earning
- family that could help financially in extreme cases

I have had 'til now another HISA with 6 months expenses ($20K) sitting earning under 3% - I am considering investing this cash into the market.

Would appreciate any opinions on other things I haven't considered or encouragement to invest it!

Much appreciated.

deborah

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Re: Australian Investing Thread
« Reply #4408 on: March 02, 2019, 09:46:44 PM »
People seem to use their mortgage offset account as an emergency fund. Iím not sure that LSL would work. A HISA would work similarly to a mortgage offset account, but why do you have one if it isnít your emergency fund?

Firstly, a number of employers go down the gurgler owing employees LSL, annual leave and superannuation. So, if youíre planning to use your emergency fund on loss of employment, youíd be out of luck. There are provisions where the government picks up the tab, but it takes time.

Secondly, you seem to be assuming that you can cash out your LSL while youíre still working. Or are you only planning to use your emergency fund for when you canít? There are plenty of situations where you will need an emergency fund and may still be working. What if your house burnt to the ground? You might not own it, but it takes a lot to replace your possessions and find somewhere new to live... Insurance only gives you so much, and you need to get your life back immediately. Certainly credit cards... are quite good at giving you a reasonable amount, but would that be enough in a timely manner?

So many people have not got income protection/TPD when problems occurred that I donít trust that type of insurance at all.

Iíve had several emergencies in my life. Fire consuming every single possession except the clothes I was actually wearing; accident writing off my car and giving me whiplash for three years, causing a lot of time off work (and I fell through the cracks in insurance); job loss... You are often eligible for some compensation, but you may need emergency funds to cover extra, and to cover immediate requirements. I donít think LSL would have worked in any of the emergencies I have faced.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4409 on: March 02, 2019, 10:17:43 PM »
Barring what Deborah wrote, I generally think an EF is overrated if you have a permanent job and donít own a home.  Not sure what your situation is but I generally keep a couple hundred cash in my savings, a couple thousand in my HISA and thatís it. Generally my CC could cover any emergency and then my salary would pay back instead of going to investing for that period. I donít think you can use your LSL as an EF cause that only works if you resign and you get paid it out along with holiday leave. Unless youíre retiring for good, I doubt youíd resign without another job waiting. But I see where you going with this and agree that your money is probably better off earning more money invested than a HISA.

givemesunshine

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Re: Australian Investing Thread
« Reply #4410 on: March 03, 2019, 01:04:00 AM »
Many thanks for your responses. To clarify, I don't have a mortgage (so no offset) and my current EF is in a HISA (UBank). Also, single, healthy, employable - conscious that those things can change!

A HISA would work similarly to a mortgage offset account, but why do you have one if it isnít your emergency fund?

Firstly, a number of employers go down the gurgler owing employees LSL, annual leave and superannuation. So, if youíre planning to use your emergency fund on loss of employment, youíd be out of luck. There are provisions where the government picks up the tab, but it takes time.

I appreciate those points but I work for a State Government department so I'm not particularly worried about not getting my entitlements. I should have explained my situation better - apologies. I would (I think) only need my EF if I left my current job, in which case I could use my LSL as it would be paid out in a pay cycle or two.

I have contents insurance in case of fire/flood/destruction of possessions, which I appreciate I may have to wait for but think I could cover paying a new rental bond and the basics (bed, fridge, clothes) with my small EF ($5K - which I'll keep) and credit cards in the meantime (and even cash flow from salary). My TPD and Income Protection are through my Super and I have seen them pay out in a timely manner to a colleague who had a medical condition.

I fully appreciate that unexpected things can happen and I'm fairly conservative in general but I'm starting to sway towards investing my 6 month EF and worst case scenario I have to liquidate some ETFs should the worst happen.

But I see where you going with this and agree that your money is probably better off earning more money invested than a HISA.

This is what I'm thinking.

Thanks both for your responses.

AussieMM

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Re: Australian Investing Thread
« Reply #4411 on: March 03, 2019, 01:37:33 AM »
This article discusses this topic, and runs some numbers on it. It concludes that offset account, followed by investing is better than a savings account for an EF. Maybe have a read? https://ordinarydollar.com/emergency-funds-intro/

bigchrisb

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Re: Australian Investing Thread
« Reply #4412 on: March 03, 2019, 11:53:38 AM »
Many thanks for your responses. To clarify, I don't have a mortgage (so no offset) and my current EF is in a HISA (UBank). Also, single, healthy, employable - conscious that those things can change!

You have safety net after safety net.  What situation do you see where your other safety nets won't work?  Getting sued, perm disability while waiting for insurance to kick in and developing a drug/gambling habit are the ones that come to my mind.  Will $20k make the difference for these?  I doubt it.  So I don't see much reason for you holding it in cash  - I'd invest it.

For the record, I haven't had an EF as such.  Since starting investing seriously I've had some form of debt (margin loan or house mortgage), and have had available credit from those.  Holding cash while also holding debt made no sense to me.

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Re: Australian Investing Thread
« Reply #4413 on: March 03, 2019, 01:41:24 PM »
Same here. I've never had an EF as such but always had what MMM terms springy debt available: money in offset and being miles ahead on mortgage payments available online at the press of a button. As a short-term immediate backup have had cc with  a moderately high limit. I've never had income protection or disability insurance since I always held at least 6 months fully paid leave in sick/LSL/AL (also a public servant) and figured I could sell the house and reorganise finances if need be in that period of time. I dropped life insurance as as I figured out my kids would be fine if I died.

If you invest in shares, you can always sell them if need be fairly quickly.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4414 on: March 03, 2019, 02:09:59 PM »
Keep in mind that Americans need EFís generally because of healthcare and few jobs that are guaranteed, itís very easy to fire them. Aussies with permanent jobs are hard to fire unless someone has screwed up royally so generally easier to see coming and the severance plus holiday and LSL payouts become the safety net.

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Re: Australian Investing Thread
« Reply #4415 on: March 04, 2019, 08:43:17 PM »
Anyone else waiting for the housing correction to finish so that they can jump back into real estate?

People's wages are flatlining and a lot of people are confined to renting, so hopefully rental yields remain strong and steady. Though my worry is that the government will keep making it harder for property investors to do their thing, by punishing investment.

givemesunshine

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Re: Australian Investing Thread
« Reply #4416 on: March 05, 2019, 07:37:41 PM »
Thanks to you all for responding to my post. I think I will keep $5K of the $20K and add it to the small EF (which will then be $10K in a HISA) and invest the remaining $15K. $10K cash should keep me out of most types of trouble and allows for an easier move to anew rental if everything goes up in smoke.

Appreciate all the points of view, as ever very glad this forum exists and that so many thoughtful people contribute.

Cheers!

Dropbear

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Re: Australian Investing Thread
« Reply #4417 on: March 06, 2019, 04:54:25 AM »
So we've almost hit a 10-year high on the ASX, while at the same time it's been announced that we're in a technical recession...

Andy R

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Re: Australian Investing Thread
« Reply #4418 on: March 06, 2019, 05:31:56 AM »
Where has it been announced it is a technical recession.
From 10 years ago until now, it has tripped when including dividends. 11% CAGR.
We are basically right at the peak from just before the bear market at the end of last year too.

Dropbear

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Re: Australian Investing Thread
« Reply #4419 on: March 06, 2019, 06:02:56 AM »
"Australia has fallen into a per-capita recession for the first time in 13 years..."

"In response to the figures, the Australian dollar fell to a two-month low, from US70.88c to US70.34c."

"The falling currency and the prospect of cheaper borrowing was a boon for the ASX200, however, with the index rising 46.3 points, or 0.75%, to 6,245.6 points."

https://www.theguardian.com/business/2019/mar/06/election-blow-for-coalition-as-australian-falls-into-per-capita-recession

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4420 on: March 06, 2019, 01:37:47 PM »
The fact that we're in a per capita recession means nothing. Obviously we're going to struggle in terms of GDP per capita when we keep importing workers who end up as cabbies and 7-11 attendants. This doesn't do wonders for the aggregate economy, but it does keep restaurant prices, Uber fares and other basic services nice and cheap, so it has a significant benefit for those like us who have above-average skillsets and want to FIRE.

I don't even care about the wider economy; as long as it's stable and not growing or shrinking particularly fast, it doesn't matter one bit.

A lack of economic confidence also means that it's cheaper to invest in assets because you don't pay a surcharge like you would in a bull market. We shouldn't fear bad sentiment.

Aussies are a bit soft anyway, always looking for magical growth and handouts.

mjr

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Re: Australian Investing Thread
« Reply #4421 on: March 07, 2019, 12:34:27 AM »
Some states went into recession in 2008.  The only reason the country as a whole didn't meet the technical criterion for a recession is that the government of the time spent like drunken sailors to avoid it.

They bought the tag-line of "no recession" with a bucket-load of debt and recurring spending.

A recession avoided by government largesse isn't anything to be proud of.  Government spending doesn't enhance productivity.

Fresh Bread

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Re: Australian Investing Thread
« Reply #4422 on: March 07, 2019, 01:19:42 AM »
Some states went into recession in 2008.  The only reason the country as a whole didn't meet the technical criterion for a recession is that the government of the time spent like drunken sailors to avoid it.

They bought the tag-line of "no recession" with a bucket-load of debt and recurring spending.

A recession avoided by government largesse isn't anything to be proud of.  Government spending doesn't enhance productivity.

Would you rather have had the recession? Sounds a bit cold.

marty998

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Re: Australian Investing Thread
« Reply #4423 on: March 07, 2019, 01:59:11 AM »
Some states went into recession in 2008.  The only reason the country as a whole didn't meet the technical criterion for a recession is that the government of the time spent like drunken sailors to avoid it.

They bought the tag-line of "no recession" with a bucket-load of debt and recurring spending.

A recession avoided by government largesse isn't anything to be proud of.  Government spending doesn't enhance productivity.

Would you rather have had the recession? Sounds a bit cold.

I'm interested to know if mjr has a better economic theory up his sleeve than a Keynesian view of the world.

On a spending to GDP ratio, the last few years of the Howard Government still outspent Rudd too. Abbott, Turnbull and Morrison are all still above Rudd and Gillard era level spending too. It was tax receipts that collapsed in 2008-2012, which is just as bad a problem if there is no plan to deal with a structural change.

Both sides have trouble with the pursestrings, it's not right to only call out the side you don't like.

middo

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Re: Australian Investing Thread
« Reply #4424 on: March 07, 2019, 04:13:06 PM »
Some states went into recession in 2008.  The only reason the country as a whole didn't meet the technical criterion for a recession is that the government of the time spent like drunken sailors to avoid it.

They bought the tag-line of "no recession" with a bucket-load of debt and recurring spending.

A recession avoided by government largesse isn't anything to be proud of.  Government spending doesn't enhance productivity.

Would you rather have had the recession? Sounds a bit cold.

I'm interested to know if mjr has a better economic theory up his sleeve than a Keynesian view of the world.

On a spending to GDP ratio, the last few years of the Howard Government still outspent Rudd too. Abbott, Turnbull and Morrison are all still above Rudd and Gillard era level spending too. It was tax receipts that collapsed in 2008-2012, which is just as bad a problem if there is no plan to deal with a structural change.

Both sides have trouble with the pursestrings, it's not right to only call out the side you don't like.

And it can easily be argued that at least one side has a plan to change some of the current tax lurks that are costing the Australian People, for that is what our government represents, billions and billions.  We as Australians benefit from a healthy economy that then provides us with services such as hospitals, education and transport infrastructure.  But to provide that the revenue needs to come from somewhere.  Howard gave away much at a time when there were opportunities to make Australia really safe from an international crisis like the GFC.  If Howard and Costello saved the boom rather than gave it away, we wouldn't be talking about deficits, but about the wise use of our nest egg.

However, from a partisan liberal viewpoint, that will make no sense at all.

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Re: Australian Investing Thread
« Reply #4425 on: March 08, 2019, 03:06:39 PM »
Some states went into recession in 2008.  The only reason the country as a whole didn't meet the technical criterion for a recession is that the government of the time spent like drunken sailors to avoid it.

They bought the tag-line of "no recession" with a bucket-load of debt and recurring spending.

A recession avoided by government largesse isn't anything to be proud of.  Government spending doesn't enhance productivity.

Would you rather have had the recession? Sounds a bit cold.

I would rather have a recession and let the cards fall where they may.

I would always back my own ability and earning power whatever the circumstances, so long as the rule of law held.

Recessions are generally good for those with stable jobs and income, anyway. Lower inflation, lower interest rates, more investment opportunities, etc

A bull economy where everything's going up  doesn't really give you many good opportunities other than just floating with the rising tide

deborah

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Re: Australian Investing Thread
« Reply #4426 on: March 08, 2019, 03:40:35 PM »
Have you actually lived through a recession?

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4427 on: March 08, 2019, 03:48:57 PM »
Nope. I'm still in my early 30s.

But I don't think that is a valid reason to critique my view.

At the end of the day, market uncertainty/downturn is a good thing. It creates opportunities for investment.

Fresh Bread

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Re: Australian Investing Thread
« Reply #4428 on: March 08, 2019, 04:08:56 PM »
Nope. I'm still in my early 30s.

But I don't think that is a valid reason to critique my view.

At the end of the day, market uncertainty/downturn is a good thing. It creates opportunities for investment.

When I said mjr sounded cold I was referring to the impact on other people. I couldn't give a stuff if there is a recession for myself for the same reasons you gave, but... what about caring for others who aren't as well off/ in stable jobs??

Recessions are pretty shitty. Shops lie empty, get vandalised, services are cut, so it does affect you even if you keep your job.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4429 on: March 08, 2019, 04:13:42 PM »
I believe that the long-term consequences of trying to avoid a recession (by spending government funds to either prop up certain industries that aren't competitive (e.g. retail) or by artificially encouraging bubbles/useless consumption via low interest rates) are more damaging on the whole than the initial acute pain of a recession. Recessions allow the economy to recalibrate. By propping something up - whether it be banks, the over-cooked housing market, or local manufacturing - you just prolong the final crash, and you also spend a lot of money in doing so.

marty998

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Re: Australian Investing Thread
« Reply #4430 on: March 08, 2019, 04:14:24 PM »
Nope. I'm still in my early 30s.

But I don't think that is a valid reason to critique my view.

At the end of the day, market uncertainty/downturn is a good thing. It creates opportunities for investment.

When I said mjr sounded cold I was referring to the impact on other people. I couldn't give a stuff if there is a recession for myself for the same reasons you gave, but... what about caring for others who aren't as well off/ in stable jobs??

Recessions are pretty shitty. Shops lie empty, get vandalised, services are cut, so it does affect you even if you keep your job.

Yeah I'd rather not have to live in a society with an increased crime rate, homelessness, a surge in mental health problems and children going hungry.

I am surprised at the callousness being displayed here. Downturns are not a good thing.

Fresh Bread

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Re: Australian Investing Thread
« Reply #4431 on: March 08, 2019, 04:35:25 PM »
Nope. I'm still in my early 30s.

But I don't think that is a valid reason to critique my view.

At the end of the day, market uncertainty/downturn is a good thing. It creates opportunities for investment.

When I said mjr sounded cold I was referring to the impact on other people. I couldn't give a stuff if there is a recession for myself for the same reasons you gave, but... what about caring for others who aren't as well off/ in stable jobs??

Recessions are pretty shitty. Shops lie empty, get vandalised, services are cut, so it does affect you even if you keep your job.

Yeah I'd rather not have to live in a society with an increased crime rate, homelessness, a surge in mental health problems and children going hungry.

I am surprised at the callousness being displayed here. Downturns are not a good thing.

Also a recession is a different beast to a downturn. It means actual noticeable cuts to services that were already a bit thin. e.g. the disadvantaged kid that was getting support loses their case worker and ends up dropping out of school, but there aren't any jobs, so you can imagine any number of scenarios with negative subsequent knock on effects for the wider economy. If things like generations of families on the dole annoy you, it only gets worse in a recession.

I was so lucky with timing in that I was old enough to be aware of the UK early 90s recession and see other families have to sell up their houses and stuff, but my mum was a teacher and my dad went onto a 3 day week at his engineering firm and we were fine. It literally was all over as I finished uni. My sister finished earlier tho and couldn't get a job and it really knocked her confidence.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4432 on: March 09, 2019, 06:04:54 PM »
You can call me callous if you like. At the end of the day I believe in personal responsibility. We've had 30 years without a recession and in that time we've had one of the world's strongest minimum wages and one of the world's best safety nets. That's plenty of time for a family to sort themselves out and get some savings in case of a downturn later on. If they chose to fritter that away then, cases of mental or physical illness aside, it's their own fault. Living in Australia is like playing a game set on "Very Easy" mode; if you can't make it in our welfare state you won't make it anywhere.

itchyfeet

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Re: Australian Investing Thread
« Reply #4433 on: March 09, 2019, 11:23:10 PM »
Yeah, youíre callous.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4434 on: March 09, 2019, 11:25:45 PM »
Doesn't bother me. At the end of the day I'll be in my mid-40s, retired with about $75k p/a in passive income and a supercar in my garage and I'll have done it while paying loads and loads of income tax along the way. My conscience is clean and I have lived by MMM principles.

marty998

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Re: Australian Investing Thread
« Reply #4435 on: March 11, 2019, 08:18:40 PM »
Westpac are bringing forward their half year dividend from 3 July to 24 June.

General practice from WBC, ANZ, NAB and Macquarie has been to pay their half year dividend in July, as a sweetner to shareholders who would not have to declare that dividend in their tax returns until the following financial year.

I'm betting that with the changes to franking credits as proposed by Labor, Westpac are being kind to their elderly cohort of shareholders by giving them three dividends this year.

Not a bad PR strategy. May also help result in a supersized June quarter ETF dividend.

mjr

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Re: Australian Investing Thread
« Reply #4436 on: March 14, 2019, 02:42:33 PM »
You can call me callous, but my view is the same as MikeBT's.    The country as a whole suffers more from kicking the can down the road.  Of course I don't want a recession and the human suffering that goes along with it, but borrowing money and splashing it around devalues the money for everyone.

mjr

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Re: Australian Investing Thread
« Reply #4437 on: March 14, 2019, 02:51:58 PM »

I'm interested to know if mjr has a better economic theory up his sleeve than a Keynesian view of the world.

On a spending to GDP ratio, the last few years of the Howard Government still outspent Rudd too. Abbott, Turnbull and Morrison are all still above Rudd and Gillard era level spending too. It was tax receipts that collapsed in 2008-2012, which is just as bad a problem if there is no plan to deal with a structural change.

Both sides have trouble with the pursestrings, it's not right to only call out the side you don't like.

I don't know what numbers you're looking at.  The first google search I did came back with this: https://tradingeconomics.com/australia/government-spending-to-gdp

It's also irrelevant.  I agree that both parties are profligate spenders and as I have said many time before I in no way say that the Coalition does everything to my satisfaction.  They don't.  But this discussion was about the technical recession and it was the ALP in power at the time.  That's why I said the government of the day instead of calling them out because I wasn't interested in turning it overtly political.

News flash.  It is also my opinion that Keynesian economics is crap.


marty998

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Re: Australian Investing Thread
« Reply #4438 on: March 15, 2019, 01:08:28 AM »

I'm interested to know if mjr has a better economic theory up his sleeve than a Keynesian view of the world.

On a spending to GDP ratio, the last few years of the Howard Government still outspent Rudd too. Abbott, Turnbull and Morrison are all still above Rudd and Gillard era level spending too. It was tax receipts that collapsed in 2008-2012, which is just as bad a problem if there is no plan to deal with a structural change.

Both sides have trouble with the pursestrings, it's not right to only call out the side you don't like.

I don't know what numbers you're looking at.  The first google search I did came back with this: https://tradingeconomics.com/australia/government-spending-to-gdp

It's also irrelevant.  I agree that both parties are profligate spenders and as I have said many time before I in no way say that the Coalition does everything to my satisfaction.  They don't.  But this discussion was about the technical recession and it was the ALP in power at the time.  That's why I said the government of the day instead of calling them out because I wasn't interested in turning it overtly political.

News flash.  It is also my opinion that Keynesian economics is crap.

Your graph is including State Government taxes and spending. Fed Government spending to GDP ratio hovers between 23-26% of GDP if I recall correctly.

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Re: Australian Investing Thread
« Reply #4439 on: March 16, 2019, 12:39:49 AM »
Why do you want to reinvest dividends? It is the easiest way I can think of to get yourself in a muddle. You have to declare the dividends as income anyway. You have to keep tabs on exactly how many you bought at every dividend and when you sell each individual parcel. If you have more than one investment, dividend reinvestment will skew your portfolio.
Where I come from, the reinvested dividends can stay in the "product" and become part of the CGT when you sell the "product".
For example, VGS reinvests the net dividends.
Surely you will take your gap year from January to December or something, so that you have two years at a very low marginal tax rate. If you continue to pay super during this time, you can virtually set your own marginal rate. Any capital gains on shares you sell during those two years will be taxed at almost nothing.
9 months later, I realise there is no accumulating ETFs in Australia, hence the confusion...
With the accumulating ETFs, the dividends don't end up in your pocket during the distribution time and get directly reinvested. The difference with a DRP is that you don't get extra units, but the unit price increases by the value of the dividend. As a result, you only pay the income tax when you sell (CGT). It is great for tax optimisation if you have FYs with low income and/or keep the ETFs until you retire as the taxman will - hopefully - never get his share of your dividends.
« Last Edit: March 16, 2019, 12:44:04 AM by BRAFRA »

marty998

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Re: Australian Investing Thread
« Reply #4440 on: March 17, 2019, 02:08:33 PM »
Why do you want to reinvest dividends? It is the easiest way I can think of to get yourself in a muddle. You have to declare the dividends as income anyway. You have to keep tabs on exactly how many you bought at every dividend and when you sell each individual parcel. If you have more than one investment, dividend reinvestment will skew your portfolio.
Where I come from, the reinvested dividends can stay in the "product" and become part of the CGT when you sell the "product".
For example, VGS reinvests the net dividends.
Surely you will take your gap year from January to December or something, so that you have two years at a very low marginal tax rate. If you continue to pay super during this time, you can virtually set your own marginal rate. Any capital gains on shares you sell during those two years will be taxed at almost nothing.
9 months later, I realise there is no accumulating ETFs in Australia, hence the confusion...
With the accumulating ETFs, the dividends don't end up in your pocket during the distribution time and get directly reinvested. The difference with a DRP is that you don't get extra units, but the unit price increases by the value of the dividend.
As a result, you only pay the income tax when you sell (CGT). It is great for tax optimisation if you have FYs with low income and/or keep the ETFs until you retire as the taxman will - hopefully - never get his share of your dividends.

For those who don't know why, the reason for this is that most ETF's and managed funds are structured as Trusts, which are required to distribute their income out each year, otherwise the trustee incurs top marginal rate tax.

Your standard listed investment company does not have to pay any dividends, and thus potentially you can defer your tax bill until you sell your shares. Unfortunately for those looking for this option, most LIC's do pay semi-annual dividends. You'll be hard pressed to find one that doesn't.

alsoknownasDean

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Re: Australian Investing Thread
« Reply #4441 on: March 17, 2019, 07:36:27 PM »
https://mobile.abc.net.au/news/2019-03-18/more-income-tax-cuts-could-on-the-cards-in-budget/10904760

I don't know about any of you, but this government has been going on about debt and deficits for a number of years. Surely if now they're forecasting a surplus, it would make sense to use it to help reduce those same debts? Especially as it's due in part to a revenue boost from commodity prices, which are by their very nature cyclical.

Oh wait, election in two months. Of course.

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Re: Australian Investing Thread
« Reply #4442 on: March 17, 2019, 07:42:07 PM »
https://mobile.abc.net.au/news/2019-03-18/more-income-tax-cuts-could-on-the-cards-in-budget/10904760

I don't know about any of you, but this government has been going on about debt and deficits for a number of years. Surely if now they're forecasting a surplus, it would make sense to use it to help reduce those same debts? Especially as it's due in part to a revenue boost from commodity prices, which are by their very nature cyclical.

Oh wait, election in two months. Of course.
It's not necessary to reduce the debt all at once. Some of the surplus can go towards the debt whilst some of it can be paid back to the people whose industry helped create our strong economy. The article mentions that our average income tax take has risen to the highest it's been in 14 years (since prior to the last wave of Howard's reforms). This is entirely due to 14 years of bracket creep. So we need some indexation.

It would be great to have some tax cuts especially since investors haven't had much relief since John Howard's era. As long as the debt is manageable I will not lose any sleep over it.

marty998

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Re: Australian Investing Thread
« Reply #4443 on: March 18, 2019, 03:39:48 AM »
https://mobile.abc.net.au/news/2019-03-18/more-income-tax-cuts-could-on-the-cards-in-budget/10904760

I don't know about any of you, but this government has been going on about debt and deficits for a number of years. Surely if now they're forecasting a surplus, it would make sense to use it to help reduce those same debts? Especially as it's due in part to a revenue boost from commodity prices, which are by their very nature cyclical.

Oh wait, election in two months. Of course.
It's not necessary to reduce the debt all at once. Some of the surplus can go towards the debt whilst some of it can be paid back to the people whose industry helped create our strong economy. The article mentions that our average income tax take has risen to the highest it's been in 14 years (since prior to the last wave of Howard's reforms). This is entirely due to 14 years of bracket creep. So we need some indexation.

It would be great to have some tax cuts especially since investors haven't had much relief since John Howard's era. As long as the debt is manageable I will not lose any sleep over it.

I'm just going to politely suggest taxes could be lower if we were not paying $20 billion in interest per year.

So yes, paying off debt is desirable, but I agree - proportion surpluses between modest tax relief and paying off debt.

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Re: Australian Investing Thread
« Reply #4444 on: March 18, 2019, 03:54:59 AM »
No disagreement from me there! It would be good to also aim for a sustainable surplus that can be used as a war chest the next time the government needs to do some contingency spending.

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Re: Australian Investing Thread
« Reply #4445 on: March 18, 2019, 01:39:14 PM »
The surplus won't ever actually happen.  Labor are going to be in very shortly and they are already talking about raising welfare, adding dental care to medicare etc.

deborah

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Re: Australian Investing Thread
« Reply #4446 on: March 18, 2019, 02:15:31 PM »
The surplus won't ever actually happen.  Labor are going to be in very shortly and they are already talking about raising welfare, adding dental care to medicare etc.

It's possible, but our best economic reforms almost all happened under the Keeting and Hawke Labor governments, which set us up for surplus for many years. The last Liberal government to do so was Fraser. Unfortunately neither political party has much to recommend in this area, and Howard was a real wrecking bar with his economic reforms.

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Re: Australian Investing Thread
« Reply #4447 on: March 18, 2019, 05:15:19 PM »
The surplus won't ever actually happen.  Labor are going to be in very shortly and they are already talking about raising welfare, adding dental care to medicare etc.

It's possible, but our best economic reforms almost all happened under the Keeting and Hawke Labor governments, which set us up for surplus for many years. The last Liberal government to do so was Fraser. Unfortunately neither political party has much to recommend in this area, and Howard was a real wrecking bar with his economic reforms.

Howard's economic reforms led to a lot more money in hand for most of the population due to tax cuts across the board. Imagine how hard it would be to build wealth if we were still paying 48.5% on all income above $62,000, as was the situation prior to his reforms.

His NG/CGT combo was also a huge boom for investors, though sadly I missed out since I was in primary school when it was introduced. I managed to get in a couple of investment properties towards the tail end (2011-2017 boom) but that was it. Still, Howard has been the best thing that ever happened for investors and high income earners.

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Re: Australian Investing Thread
« Reply #4448 on: March 18, 2019, 06:29:44 PM »
The surplus won't ever actually happen.  Labor are going to be in very shortly and they are already talking about raising welfare, adding dental care to medicare etc.

It's possible, but our best economic reforms almost all happened under the Keeting and Hawke Labor governments, which set us up for surplus for many years. The last Liberal government to do so was Fraser. Unfortunately neither political party has much to recommend in this area, and Howard was a real wrecking bar with his economic reforms.

Howard's economic reforms led to a lot more money in hand for most of the population due to tax cuts across the board. Imagine how hard it would be to build wealth if we were still paying 48.5% on all income above $62,000, as was the situation prior to his reforms.

His NG/CGT combo was also a huge boom for investors, though sadly I missed out since I was in primary school when it was introduced. I managed to get in a couple of investment properties towards the tail end (2011-2017 boom) but that was it. Still, Howard has been the best thing that ever happened for investors and high income earners.

It's always interesting reading peoples "take" on liberal vs labor governments and economic reforms and management.  So much of people's views are pre-determined by their "left" vs "right" mindset.

Labor voters tend to lionise how great Keating was, even though he kept wage growth down through the accord, which is worse for the salaried wage earners.  They also tended to follow economic rationalist policies even when they were not necessarily in the majority of the public's interest.  Privatisation of monopolies is one area here.

Liberal voters tend to lionise Howard and Costello even though they had the chance to safeguard Australia for the future with the rivers of gold that flowed into the coffers in the early 2000's.  Instead they grew welfare, particularly to the middle classes that had not needed it before.  Dependence on that welfare grew, and now we have, as a country, unrealistic expectations of handouts from the Government.

The reality is that there does need to be reform on the dividend imputation policy.  It makes no sense to hand out tax raised for no reason.  There is also a case for reform of other areas of taxation, but most of these are not being touched by either side.  Why a flat 10% GST?  Why on only half of the goods and services used?  Why do we not properly tax multinationals?  Why do we not introduce a universal basic income?  These are important questions that are not being discussed.

deborah

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Re: Australian Investing Thread
« Reply #4449 on: March 18, 2019, 06:54:06 PM »
The surplus won't ever actually happen.  Labor are going to be in very shortly and they are already talking about raising welfare, adding dental care to medicare etc.

It's possible, but our best economic reforms almost all happened under the Keeting and Hawke Labor governments, which set us up for surplus for many years. The last Liberal government to do so was Fraser. Unfortunately neither political party has much to recommend in this area, and Howard was a real wrecking bar with his economic reforms.

Howard's economic reforms led to a lot more money in hand for most of the population due to tax cuts across the board. Imagine how hard it would be to build wealth if we were still paying 48.5% on all income above $62,000, as was the situation prior to his reforms.

His NG/CGT combo was also a huge boom for investors, though sadly I missed out since I was in primary school when it was introduced. I managed to get in a couple of investment properties towards the tail end (2011-2017 boom) but that was it. Still, Howard has been the best thing that ever happened for investors and high income earners.

It's always interesting reading peoples "take" on liberal vs labor governments and economic reforms and management.  So much of people's views are pre-determined by their "left" vs "right" mindset.

Labor voters tend to lionise how great Keating was, even though he kept wage growth down through the accord, which is worse for the salaried wage earners.  They also tended to follow economic rationalist policies even when they were not necessarily in the majority of the public's interest.  Privatisation of monopolies is one area here.
No, it's well documented - for instance - https://www.economist.com/special-report/2018/10/27/clever-reforms-30-years-ago-helped-australias-growth

 

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