Author Topic: Australian Investing Thread  (Read 1371691 times)

mjr

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Re: Australian Investing Thread
« Reply #4450 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 #4451 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.

BRAFRA

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Re: Australian Investing Thread
« Reply #4452 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 #4453 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 #4454 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.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4455 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 #4456 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.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4457 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.

Trevor Reznik

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Re: Australian Investing Thread
« Reply #4458 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 #4459 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.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4460 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.

middo

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Re: Australian Investing Thread
« Reply #4461 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 #4462 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

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4463 on: March 18, 2019, 07:55:54 PM »
Most of Keating's policies were excellent. His economic policies showed that you can pursue fairness without necessarily crumbling to the altar of wanting to smooth out disparities in outcomes.

bigchrisb

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Re: Australian Investing Thread
« Reply #4464 on: March 19, 2019, 05:49:43 AM »
Being out of Australia has highlighted to me how farcical our political debates have become.  I'm currently in the Netherlands.  They have a low rate and high rate BTW (GST) here - 21% on most of the things we have Aus GST on, with the low rate on most of the things we have no GST on, such as fresh food.  While I have been here, the low rate was raised from 6% to 9%.  It barely raised a peep in the media or political debate.  Life went on.

Where as suggest any change to the rate of GST in Australia and its as though you are trying to commit genocide, let alone broadening the scope of GST. 

My personal view is that its this kind of political morass and inaction on any kind of economic reform that means as a country we are headed for a very hard recession.  The mild correction in house prices so far, and current bickering about relative inequality will seem like a summer picnic once unemployment picks up and/or interest rates normalise.  It will hurt. I'm preparing myself for it - reducing debt, increasing overseas exposure in investments.  I intend to be in a position of sufficient liquidity to be able to upgrade my house should it occur. 

I love Australia, its lifestyle, its nature.  We have had some excellent luck, and a strong tailwind from past economic reforms. However, we have been an economic policy basket case for the last two decades.  Sooner or later we will have to pay the piper.


Bloop Bloop

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Re: Australian Investing Thread
« Reply #4465 on: March 19, 2019, 06:57:44 AM »
I wouldn't be fussed if we had a recession. Recessions are like forest fires - good for clearing out the dead wood.

As for GST, I would be thrilled if we raised GST to a more sustainable level.

Minion

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Re: Australian Investing Thread
« Reply #4466 on: March 19, 2019, 06:11:26 PM »
Being out of Australia has highlighted to me how farcical our political debates have become.  I'm currently in the Netherlands.  They have a low rate and high rate BTW (GST) here - 21% on most of the things we have Aus GST on, with the low rate on most of the things we have no GST on, such as fresh food.  While I have been here, the low rate was raised from 6% to 9%.  It barely raised a peep in the media or political debate.  Life went on.

Where as suggest any change to the rate of GST in Australia and its as though you are trying to commit genocide, let alone broadening the scope of GST. 

My personal view is that its this kind of political morass and inaction on any kind of economic reform that means as a country we are headed for a very hard recession.  The mild correction in house prices so far, and current bickering about relative inequality will seem like a summer picnic once unemployment picks up and/or interest rates normalise.  It will hurt. I'm preparing myself for it - reducing debt, increasing overseas exposure in investments.  I intend to be in a position of sufficient liquidity to be able to upgrade my house should it occur. 

I love Australia, its lifestyle, its nature.  We have had some excellent luck, and a strong tailwind from past economic reforms. However, we have been an economic policy basket case for the last two decades.  Sooner or later we will have to pay the piper.

Agree, I'm working in Berlin these days. Living in the EU certainly gives you a different perspective in these things.

deborah

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Re: Australian Investing Thread
« Reply #4467 on: March 19, 2019, 06:39:09 PM »
Yes, GST is one of the better forms of tax.

itchyfeet

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Re: Australian Investing Thread
« Reply #4468 on: March 23, 2019, 01:00:05 AM »
Perspective is a funny thing. I live in the UAE, the land of zero income tax, and they introduced a measley 5% VAT here last year and people are crying poor and blaming the tax of the demise of the UAE economy. Of course there is no problem with political malaise here, being an autocracy.

marty998

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Re: Australian Investing Thread
« Reply #4469 on: March 28, 2019, 11:43:43 PM »
VAS March qtr estimated distribution ~91c per unit, payable 16 April.

Comes around so quickly these quarterly dividends!

pistolpete

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Re: Australian Investing Thread
« Reply #4470 on: April 03, 2019, 11:38:04 PM »
I got a query in regards to vanguard mfunds (wholesale). In peoples experiences have they stumbled across any dramas in order to trying to lock in a price during a market blimp or hiccup in trying to bpay funds in but as its a managed fund you only get the close of day price in stead of a mid morning drop (in contrast you can pick up vas pretty much instantly due to market makers etc etc. Is this a big deal for people?

Todge

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Re: Australian Investing Thread
« Reply #4471 on: April 03, 2019, 11:44:27 PM »
Long term - this will not be a big deal. Saying that, I don't use the vanguard wholesale - only etfs. I'm far more price sensitive to the management fee between the two, given I'll hold them long term and don't actively trade.

pistolpete

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Re: Australian Investing Thread
« Reply #4472 on: April 04, 2019, 12:11:14 AM »
Cheers! Mfunds seem easier and less hassle with bpay every month or quarter or what have you but with etf i read time and time again that ppl who save up 5 k then try and time the market and wait for dips and hold out if the market is on the rise etc etc. Looking for a long terms vehicle whilst reinvesting distributions and being able to add around 1 to 2 k a month.

Notch

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Re: Australian Investing Thread
« Reply #4473 on: April 04, 2019, 12:18:09 AM »
I use the wholesale funds - no regrets. 
I don't have to worry about setting buy prices or missing orders or working out how many units I can buy.  Just BPay and done. 
No need to set-up a brokerage account.
No need to set-up a computershare account to register for dividends.
Just one Vanguard log-in with everything on there.

Only downside is to make a withdrawal, you need to post or fax a signed form lol.

pistolpete

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Re: Australian Investing Thread
« Reply #4474 on: April 04, 2019, 12:28:38 AM »
Cheers notch? May i ask is it a diversified fund or individual fund? No major dramas/surprises or higher CGT at tax time or all pretty smooth sailing?

Trevor Reznik

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Re: Australian Investing Thread
« Reply #4475 on: April 04, 2019, 01:54:42 AM »
If you prefer wholesale fund over ETF go for it, you don't need to justify yourself to anyone else IMO.

pistolpete

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Re: Australian Investing Thread
« Reply #4476 on: April 04, 2019, 02:16:55 AM »
Cheers Trevor,

Just trying to sort through the riff raff, and i see many ppl have pros and cons of each method!

BattlaP

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Re: Australian Investing Thread
« Reply #4477 on: April 04, 2019, 05:55:20 PM »
I use the wholesale funds - no regrets. 
I don't have to worry about setting buy prices or missing orders or working out how many units I can buy.  Just BPay and done. 
No need to set-up a brokerage account.
No need to set-up a computershare account to register for dividends.
Just one Vanguard log-in with everything on there.

Only downside is to make a withdrawal, you need to post or fax a signed form lol.

Last time I pig-snorted at the mention of faxing the guy said shamefully that they are currently trying to ‘modernise’ the process, so that could change in the coming years.

Notch

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Re: Australian Investing Thread
« Reply #4478 on: April 04, 2019, 07:31:34 PM »
Cheers notch? May i ask is it a diversified fund or individual fund? No major dramas/surprises or higher CGT at tax time or all pretty smooth sailing?

I'm using five of their wholesale funds currently.  Zero issues with tax - it's all basically the same as the ETFs. 

Aso, just fyi, they say the minimum buy-in is $500,000, but they will let you open a wholesale account with only $100k, spread across as many funds as you want.

Last time I pig-snorted at the mention of faxing the guy said shamefully that they are currently trying to ‘modernise’ the process, so that could change in the coming years.

Oh that will be great!
« Last Edit: April 04, 2019, 07:34:45 PM by Notch »

mspym

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Re: Australian Investing Thread
« Reply #4479 on: April 04, 2019, 08:39:29 PM »
@pistolpete I do wholesale funds - LonerMatt is right, just call up and they will let you open with 100k+. In my case it was transferring from retail to wholesale but still very easy at tax-time. They sent me a statement, as per the retail funds, and there wasn't any issue. I can still even login using my retail id and look at all the transaction history and statements, which is better than my super fund when I rolled over to another provider recently.

My partner does ETFs, I dabbled in them a little but for me there was marginal gains in terms of cost and I didn't find them interesting enough to make it worth the effort.