Author Topic: Australian Investing Thread  (Read 2584342 times)

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5000 on: August 09, 2020, 12:17:39 AM »
Thanks Wadiman.  Did you do that the entire time of your mortgage? Did you complete your mortgage quicker or that doesn’t matter to you?

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5001 on: August 09, 2020, 12:31:19 AM »
Also, do you all use only the offset account and never extra-repayments or in the redraw account?

Wadiman

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Re: Australian Investing Thread
« Reply #5002 on: August 09, 2020, 01:18:41 AM »
Only got an offset about five years ago - started with a LOC.  Never had a redraw.  Now have an amount in the offset equivalent to the Ppor loan debt (about $500k).  As things happened - with career progression and a high savings rate I was effectively able to pay off the mortgage quite a few years ahead of schedule.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5003 on: August 09, 2020, 02:55:33 AM »
Thank you Wadiman. So what do you do when the offset equals the remainder of the loan? Did you pay it off completely or do you just keep the money in the offset and keep paying the mortgage?

marty998

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Re: Australian Investing Thread
« Reply #5004 on: August 09, 2020, 05:33:52 AM »
Thank you Wadiman. So what do you do when the offset equals the remainder of the loan? Did you pay it off completely or do you just keep the money in the offset and keep paying the mortgage?

I had a full offset for 5 years against my PPOR while I procrastinated what to do. It was going to be a house deposit for when I get married, have babies yadda yadda, but since that hasn’t happened I bit the bullet, paid the loan down to 2c, and am redrawing it to buy shares. Paying it down to a sufficiently small amount and reborrowing it has now changed the purpose So I can claim the interest on tax, without the problem of it being a mixed purpose loan.

Can’t sit around waiting for life to happen... I’ve lost years of potential investment earning by not doing this sooner.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5005 on: August 09, 2020, 02:47:51 PM »
Thank you Wadiman. So what do you do when the offset equals the remainder of the loan? Did you pay it off completely or do you just keep the money in the offset and keep paying the mortgage?

I had a full offset for 5 years against my PPOR while I procrastinated what to do. It was going to be a house deposit for when I get married, have babies yadda yadda, but since that hasn’t happened I bit the bullet, paid the loan down to 2c, and am redrawing it to buy shares. Paying it down to a sufficiently small amount and reborrowing it has now changed the purpose So I can claim the interest on tax, without the problem of it being a mixed purpose loan.

Can’t sit around waiting for life to happen... I’ve lost years of potential investment earning by not doing this sooner.

Thank you @marty998 . I’d like to learn from your hindsight. Is it ok if I PM you for more details, unless you’re ok explaining what you did here? I’m a bit slow with this stuff and need the steps broken down to understand it.

From what I am reading, you:
1. Had an offset account, and put in enough money to equal what you owed
2. You left it like that for an additional 5 years
3. You then paid off the loan entirely except for 2c (not sure if that’s really 2 cents of something else?)
4. But when you paid off, you actually put that money in a redraw account, so you could access it
5. You then pulled money out of your redraw account, used that money to buy shares
6. Because of using the money for shares you’re able to claim the interest (of the PPOR or shares?) on your taxes for a deduction

Happy if you could sort my understanding. If you had to do all again, knowing what you know now, what would be your steps and strategy? I definitely want to learn from people and don’t know anyone who is mustachian strategic with money here.

Big thank you in advance for any insights and sharing your experience.

marty998

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Re: Australian Investing Thread
« Reply #5006 on: August 09, 2020, 03:59:16 PM »
That’s exactly it. The loan was $250,000.02, with an offset of $250,000.02. And there was also about $7,500 extra available (so the loan facility total was ~$257,500).

Paid down $250,000.00. I didn’t put it in a redraw account as such. CBA loans don’t work that way.... the money is always simply just available to take out of the loan account whenever you want. I guess you could call it redraw by another name.

The bank sent me a note asking if I wanted to close the loan or keep the loan open (now with $257,500 available).

Have pulled $25,000, going to draw more over the coming months.

marty998

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Re: Australian Investing Thread
« Reply #5007 on: August 09, 2020, 04:02:09 PM »
Your circumstances are going to be different to mine @MrThatsDifferent.

I wouldn’t feel comfortable telling you what to do without knowing all your circumstances.

Juan Ponce de León

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Re: Australian Investing Thread
« Reply #5008 on: August 09, 2020, 05:36:26 PM »
Hi Marty,

So you've drawn the 25K and you're paying interest on it, have you bought the shares yet?

I think what I would do is buy some shares and say the settlement is $10,054.12 and then I would draw $10,054.12 on the loan and ship it straight over to pay the settlement bill.  That way it's pretty concrete paper trail that the money was used to buy shares.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5009 on: August 09, 2020, 09:43:59 PM »
Your circumstances are going to be different to mine @MrThatsDifferent.

I wouldn’t feel comfortable telling you what to do without knowing all your circumstances.

Thank you very much @marty998   I understand, that all makes sense. I’m a long way from executing any of this, so have plenty of time to discuss when things are more concrete. I just think having an offset account is such a brilliant thing. I want to use it well but don’t want to miss out on the market.

turboslob

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Re: Australian Investing Thread
« Reply #5010 on: August 10, 2020, 12:24:54 AM »
Seeking a bit of advice, if you can spare a few mins.
A while back, I read that VDHG was an easy 'don't overthink it' option for investing. So, I opened a managed fund and starting building it. I have a wholesale account, but I'm not close to the 500k limit where fees drop (currently ~150k, and not likely to grow quickly for next couple of years). So, I'm pondering whether to pull out and re-buy in ETFs to save on the management fee.

From what I can tell, with the managed fund, my buy & sell cost is 0.9% and management is the same.
With ETFs, buy cost is broker dependent and management is only .27%. Selling fees are again just brokerage (I'm not sure on this, if anyone can clarify).

So, every year I'm paying ~150,000*.009=1350. Whereas ETF would be 150,000*.0027 $405.
I guess I'm paying an additional 20 bucks a week for the managed fund, and will get hit with a 1350 bill to sell.

Can anyone help me with what I need to consider before ditching the managed fund for the ETFs? I'm tracking the tax stuff (let an accountant sort that out), but the way I figure it I don't intend on selling anytime soon and my break-even point is somewhere beyond a year.

Any other considerations I'm overlooking?

Thanks, Slob.

Just to close the loop on this, my initial assumption was wrong. It seems that once you're in a wholesale fund you're paying the lower rate (.029% at time of writing).

Calcs I did to confirm was:
Looked at old statement, paid about $41 per month fees with value ~166k
41 * 12 ~=500 per annum
So, interest rate should be 166000 * x = 500
x=500/166000 = ~0.03%

To sum up, I won't be moving out of the wholesale fund if I'm almost paying the same as ETFs, and enjoy the ability to put in a small amount every pay or two.

Thanks for the help; I should've just looked at a statement to begin with....
« Last Edit: August 10, 2020, 12:29:13 AM by turboslob »

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5011 on: August 15, 2020, 04:45:56 PM »
Should I cancel my insurance in my super?

I have $300k for death, $300k for disablement and $3000/month income protection.  I paid $664 for the year for that insurance, $67.07 a month. Is it worth it? I’m a SINK. If I die, my estate will already have enough for anyone that inherits. Income protection is tough to claim. Seems like a waste of money. Am I missing something? Should I drop it?

Andy R

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Re: Australian Investing Thread
« Reply #5012 on: August 15, 2020, 08:53:10 PM »
Curious why a SINK would need term life insurance. I thought that would be for dependants. I suppose if you were looking after your parents or someone else it makes sense. Not sure I would cancel disability though unless you are nearly financially independent.

marty998

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Re: Australian Investing Thread
« Reply #5013 on: August 15, 2020, 09:53:58 PM »
Should I cancel my insurance in my super?

I have $300k for death, $300k for disablement and $3000/month income protection.  I paid $664 for the year for that insurance, $67.07 a month. Is it worth it? I’m a SINK. If I die, my estate will already have enough for anyone that inherits. Income protection is tough to claim. Seems like a waste of money. Am I missing something? Should I drop it?

Death cover is a waste for you. Income protection is also a waste IMO. As Snoop Dogg would say “Drop it like it’s haaaawt”

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5014 on: August 16, 2020, 06:26:13 PM »
Thanks all. Yeah, as I was reading about it I was coming to the conclusion that only disability cover makes sense. Will cancel the other two for sure.

bigchrisb

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Re: Australian Investing Thread
« Reply #5015 on: August 17, 2020, 09:24:59 AM »
I've had a trauma claim paid, and was pretty glad to have the coverage. Even then it was traumatic to claim, taking a year to actually get paid. Ok so the pun is bad, but hopefully the point made.

Tpd policies are notoriously harder to claim.

Unless you are FI, YOU are dependent on your future earnings. If you have odorous (edit - positive, teach me to type on the phone!) net worth and no (planned) dependents, then ditch death cover for sure.
« Last Edit: August 19, 2020, 06:32:49 AM by bigchrisb »

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5016 on: August 18, 2020, 12:58:57 PM »
I've had a trauma claim paid, and was pretty glad to have the coverage. Even then it was traumatic to claim, taking a year to actually get paid. Ok so the pun is bad, but hopefully the point made.

Tpd policies are notoriously harder to claim.

Unless you are FI, YOU are dependent on your future earnings. If you have odorous net worth and no (planned) dependants, then ditch death cover for sure.

Hey @bigchrisb you’re who I think about regarding this knowing that you claimed this. I don’t think I even have trauma in my super. Hope to never want to claim this. TPD feels like a waste of money but hate to take that chance during a pandemic.

lazycow

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Re: Australian Investing Thread
« Reply #5017 on: August 19, 2020, 07:57:12 PM »
OK, I need to start reading from the beginning! Hopefully all my questions have been answered already, but my husband and I are early 50's, mortgage-free with a decent amount of cash ($600K +) and around $200K in super (he is self-employed). Still debating whether we buy a rental property locally and invest in ETFs, or buy 2 properties. Will report back in a few days when I've read all your wise words!

marty998

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Re: Australian Investing Thread
« Reply #5018 on: August 21, 2020, 02:44:46 PM »
OK, I need to start reading from the beginning! Hopefully all my questions have been answered already, but my husband and I are early 50's, mortgage-free with a decent amount of cash ($600K +) and around $200K in super (he is self-employed). Still debating whether we buy a rental property locally and invest in ETFs, or buy 2 properties. Will report back in a few days when I've read all your wise words!

This should be an easy answer. The answer is a third option.

Each of you use the $300k non-concessional “bring forward” contribution rules and place the money in super.

Let it sit and compound for 10 years.

Withdraw tax free pensions for life, with no admin hassle.
« Last Edit: August 21, 2020, 02:47:35 PM by marty998 »

lazycow

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Re: Australian Investing Thread
« Reply #5019 on: August 22, 2020, 01:35:24 AM »
OK, I need to start reading from the beginning! Hopefully all my questions have been answered already, but my husband and I are early 50's, mortgage-free with a decent amount of cash ($600K +) and around $200K in super (he is self-employed). Still debating whether we buy a rental property locally and invest in ETFs, or buy 2 properties. Will report back in a few days when I've read all your wise words!

This should be an easy answer. The answer is a third option.

Each of you use the $300k non-concessional “bring forward” contribution rules and place the money in super.

Let it sit and compound for 10 years.

Withdraw tax free pensions for life, with no admin hassle.

Thanks for that Marty998. I hadn't considered that. It would be a great option, however *whispers* my husband doesn't believe in Superannuation. Am I allowed to say that?

Andy R

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Re: Australian Investing Thread
« Reply #5020 on: August 22, 2020, 02:29:48 AM »
It would be a great option, however *whispers* my husband doesn't believe in Superannuation. Am I allowed to say that?

You're husband is an idiot. It's free money ffs.

deborah

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Re: Australian Investing Thread
« Reply #5021 on: August 22, 2020, 02:42:07 AM »
I’m the only person in my family who has superannuation. My siblings had businesses, and my parents were too old to have to have it. My parents would be much better off if they had it, and constantly complain about how much better off their friends are who do have it, but who worked at lower paid jobs. I think that it’s helped me substantially financially to have it. I’m sure my siblings would be better off if they had it too.

Arapiles

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Re: Australian Investing Thread
« Reply #5022 on: August 22, 2020, 05:41:00 PM »
I'm also curious as to his reservations.  The only real (current) downside is the absence of control over the funds invested in a superannuation vehicle.  The very significant upside are the generous tax benefits that accrue to funds held within super, particularly (but not only) once you are able to access those funds (at normally on turning 60).   I'm in a roughly similar age bracket to you and your husband.  I'm about to turn 50.  For the last 20 years or so ago, I've been fairly rigorous in keeping my total investments split equally between holdings within and outside super.  The gains in super due to compounding returns have been incredible.  I'm now seriously thinking of shifting a greater proportion of my total investments into super in the run-up to turning 60. 

marty998

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Re: Australian Investing Thread
« Reply #5023 on: August 22, 2020, 10:12:08 PM »
I'm also curious as to his reservations.

Probably believes the nonsense about the government “raiding” super accounts and changing the rules all the time* and blah blah blah.

The current government certainly hasn’t done anything to support or promote community understanding of what superannuation is and why it is important.

Even if they have no policies on it, or are ideologically opposed to it, they should not leave it to providers with vested interests to ‘educate’ the public.

Such are the times. Not many places you can go for unbiased facts., and the websites that you can go to are not well known.

*The really ridiculous trope I hate is the belief that people “need certainty” to invest / contribute to super. Two things wrong with that view. The world doesn’t owe anyone a guaranteed return, and since when has anything in life ever been certain (see 2020 lol).

Juan Ponce de León

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Re: Australian Investing Thread
« Reply #5024 on: August 23, 2020, 01:09:53 AM »
I've spoken to people recently who were taking 10k out of their super 'because if they invest it and lose it it's gone, so I should just take it out now while I can'.

chevy1956

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Re: Australian Investing Thread
« Reply #5025 on: August 23, 2020, 11:39:52 PM »
I'm also curious as to his reservations.

Probably believes the nonsense about the government “raiding” super accounts and changing the rules all the time* and blah blah blah.

The current government certainly hasn’t done anything to support or promote community understanding of what superannuation is and why it is important.

Even if they have no policies on it, or are ideologically opposed to it, they should not leave it to providers with vested interests to ‘educate’ the public.

Such are the times. Not many places you can go for unbiased facts., and the websites that you can go to are not well known.

*The really ridiculous trope I hate is the belief that people “need certainty” to invest / contribute to super. Two things wrong with that view. The world doesn’t owe anyone a guaranteed return, and since when has anything in life ever been certain (see 2020 lol).

When it comes to understanding how to invest people are clueless. I work for a big Bank. One of my friends is a general manager earning big dollars. He was telling us how he was joining some investment scheme investing in the property market. We also have our own Super fund with low fees and index options.

It's like free money is over here but because it's too easy they do something else.

jk5954

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Re: Australian Investing Thread
« Reply #5026 on: August 24, 2020, 04:57:58 AM »
I'm also curious as to his reservations.

Probably believes the nonsense about the government “raiding” super accounts and changing the rules all the time* and blah blah blah.

The current government certainly hasn’t done anything to support or promote community understanding of what superannuation is and why it is important.

Even if they have no policies on it, or are ideologically opposed to it, they should not leave it to providers with vested interests to ‘educate’ the public.

Such are the times. Not many places you can go for unbiased facts., and the websites that you can go to are not well known.

*The really ridiculous trope I hate is the belief that people “need certainty” to invest / contribute to super. Two things wrong with that view. The world doesn’t owe anyone a guaranteed return, and since when has anything in life ever been certain (see 2020 lol).

When it comes to understanding how to invest people are clueless. I work for a big Bank. One of my friends is a general manager earning big dollars. He was telling us how he was joining some investment scheme investing in the property market. We also have our own Super fund with low fees and index options.

It's like free money is over here but because it's too easy they do something else.

They really really are! My brother-in-law's (my wife's brother) family is terrible with money. Things like constantly needing to borrow money from his parents whenever the smallest unexpected bill hits, and anything money or budget related is too hard.

I bought them a copy of The Barefoot Investor thinking it might at least teach them a thing or 2 or point them in the right direction. Next thing I hear is that they have gone and seen a financial advisor who has advised them to start a SMSF and buy an investment property through it. Which they did.

At least it allows me to say to my wife, 'This is why we do some things, so that we don't end up like them.'

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5027 on: August 25, 2020, 02:29:09 PM »
Hey all I’ve asked this in the main board but as an Australian perspective would help, thought I’d post here too:
I’m curious, as I try to navigate thinking about home ownership:
1. How much deposit did you have for your first home?
2. Did you take advantage of any first home buyer’s schemes?
3. How long did that take you to accumulate?
4. Did you put your investments on hold or firehosed your money for the deposit?
5. What, if anything, would you do differently or better now?

Thanks any and all that share any insights.

middo

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Re: Australian Investing Thread
« Reply #5028 on: August 25, 2020, 07:18:08 PM »
1.  We had 17,000 deposit for a $110,000 house (back in 1993).  We actually borrowed 90% rather than wait to have the 20% deposit.  We saved it up as quick as we could, but with a baby on the way, we wanted to no longer be renting.

2.  No first home owners scheme back then. 

3.  It took us about 9 months to accumulate, as we were both working and saved every single cent.

4.  We didn't have any other investments.  I didn't even really know about investing (other then property) until 5 years ago.  :(

5.  Nothing to buy the house.  I would do the same.  But I would watch my lifestyle creep and learn about investing before I turned 45 in hindsight...
« Last Edit: August 25, 2020, 11:33:05 PM by middo »

lazycow

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Re: Australian Investing Thread
« Reply #5029 on: August 25, 2020, 10:47:39 PM »
I'm also curious as to his reservations.

Probably believes the nonsense about the government “raiding” super accounts and changing the rules all the time* and blah blah blah.

The current government certainly hasn’t done anything to support or promote community understanding of what superannuation is and why it is important.

Even if they have no policies on it, or are ideologically opposed to it, they should not leave it to providers with vested interests to ‘educate’ the public.

Such are the times. Not many places you can go for unbiased facts., and the websites that you can go to are not well known.

*The really ridiculous trope I hate is the belief that people “need certainty” to invest / contribute to super. Two things wrong with that view. The world doesn’t owe anyone a guaranteed return, and since when has anything in life ever been certain (see 2020 lol).
I should have checked with my husband before posting, as he actually does not have anything against Super, just leery of putting every available cent into it. Anyway, interesting replies, thank you. I will continue to educate myself in any case.

@marty998 I would love to be directed to reputable sites where I can get unbiased facts!


marty998

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Re: Australian Investing Thread
« Reply #5030 on: August 26, 2020, 02:56:58 PM »
https://moneysmart.gov.au/

This is a good place to start 🙂

annsie

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Re: Australian Investing Thread
« Reply #5031 on: September 20, 2020, 03:11:15 AM »
Hi,
Can I back up a bit please to better understand the thinking of having trauma instead of personal income insurance? I’m a SINK, no debt. Thank you!

mrmoonymartian

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Re: Australian Investing Thread
« Reply #5032 on: September 20, 2020, 04:04:14 PM »
Hi,
Can I back up a bit please to better understand the thinking of having trauma instead of personal income insurance? I’m a SINK, no debt. Thank you!

If you lose your job you can get back on your feet straight away. If you lose a leg that's going to be a lot harder to do.

Andy R

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Re: Australian Investing Thread
« Reply #5033 on: September 20, 2020, 10:43:14 PM »
Hi,
Can I back up a bit please to better understand the thinking of having trauma instead of personal income insurance? I’m a SINK, no debt. Thank you!

If you lose your job you can get back on your feet straight away. If you lose a leg that's going to be a lot harder to do.

You're mixing up TPD and IP

Insurance Insights: The difference & overlap between TPD, Trauma and Income Protection cover

Income protection
Temporary income replacement for when you lose your job
Temporary income replacement for when you're unable to work due to partial or total disability.

Total and Permanent Disability
Lump sum (to replace money you are unable to ever earn again)

Trauma insurance
Lump sum, designed to cover out-of-pocket medical expenses above those rebated by Medicare & individuals health insurance. Most often claimed for cancer (highest), stroke, cardiac arrest and bypass surgery.


Term life insurance is the 4th type of life insurance, which people without dependants may not need.
And thankfully we don't have 'whole of life' insurance in Australia.
« Last Edit: September 23, 2020, 01:22:48 AM by Andy R »

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5034 on: September 21, 2020, 10:11:31 PM »
Income protection doesn’t generally cover redundancy though or being terminated.

Andy R

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Re: Australian Investing Thread
« Reply #5035 on: September 23, 2020, 01:23:29 AM »
Income protection doesn’t generally cover redundancy though or being terminated.

You're right. Edited the above.
Cheers.

annsie

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Re: Australian Investing Thread
« Reply #5036 on: September 23, 2020, 03:54:49 AM »
Thanks everyone. Seems to be a pretty hazy subject to make informed decisions about. So if one has an emergency fund of a certain amount and no mortgage it seems that that it is a scaled decision as to which type you need/want. I feel like I need a tool similar to the Australian FIRE calculator to be able to decide?

middo

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Re: Australian Investing Thread
« Reply #5037 on: September 23, 2020, 06:56:59 AM »
So my daughter at 23 is about to start her first full time job, on 80+K per year. She has asked me for advice about investing, salary sacrifice and all things money.  My first thought is the 25K super max out, then what?

mjr

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Re: Australian Investing Thread
« Reply #5038 on: September 23, 2020, 02:42:58 PM »
She's young and just starting out. She'll need capital to get her start in life.  I wouldn't be advocating maxing out super to save $2600 a year in tax but lose access to the money for 40 years.

My advice to her would be to save as much as she can - she'll have plenty of need to spend money to set herself up in the next 5 years - too short a time horizon for any risky investments.

mspym

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Re: Australian Investing Thread
« Reply #5039 on: September 23, 2020, 03:04:20 PM »
So my daughter at 23 is about to start her first full time job, on 80+K per year. She has asked me for advice about investing, salary sacrifice and all things money.  My first thought is the 25K super max out, then what?
She's probably in the right spot for The Barefoot Investor approach.

marty998

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Re: Australian Investing Thread
« Reply #5040 on: September 25, 2020, 02:20:59 PM »
So my daughter at 23 is about to start her first full time job, on 80+K per year. She has asked me for advice about investing, salary sacrifice and all things money.  My first thought is the 25K super max out, then what?

I agree with mjr that she needs capital.

For better or worse, such is life. It’s gives options that are simply unavailable to those without it.

Having said that, I would still advise her maxing out her super up to $25k (to an industry fund, AusSuper, SunSuper, AwareSuper.... doesn’t really matter which to be honest, they all invest similarly) and if you have the means to do so, top up her wages with a cash gift to compensate as an incentive, that goes into a savings account for a property.

An early start with Super will make up for the years when she is not working due to children etc. It’s so important for women to have a decent level of super... the stats on older women in poverty are horrendous. Her future self will be grateful.
« Last Edit: September 25, 2020, 02:22:37 PM by marty998 »

dondon

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Re: Australian Investing Thread
« Reply #5041 on: September 28, 2020, 11:31:52 PM »
So my daughter at 23 is about to start her first full time job, on 80+K per year. She has asked me for advice about investing, salary sacrifice and all things money.  My first thought is the 25K super max out, then what?
Having said that, I would still advise her maxing out her super up to $25k (to an industry fund, AusSuper, SunSuper, AwareSuper.... doesn’t really matter which to be honest, they all invest similarly) and if you have the means to do so, top up her wages with a cash gift to compensate as an incentive, that goes into a savings account for a property.

Maxing out supper at early age should have disproportionally larger effect than anything else - assuming decent compounding over very long period of time

mspym

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Re: Australian Investing Thread
« Reply #5042 on: September 29, 2020, 01:13:20 AM »
So my daughter at 23 is about to start her first full time job, on 80+K per year. She has asked me for advice about investing, salary sacrifice and all things money.  My first thought is the 25K super max out, then what?
Having said that, I would still advise her maxing out her super up to $25k (to an industry fund, AusSuper, SunSuper, AwareSuper.... doesn’t really matter which to be honest, they all invest similarly) and if you have the means to do so, top up her wages with a cash gift to compensate as an incentive, that goes into a savings account for a property.

Maxing out supper at early age should have disproportionally larger effect than anything else - assuming decent compounding over very long period of time
I've been told off om here before for recommending maxing out Super at this age but yeah, this is one of those things that could really counteract the effect of any time off for children/slowly widening wage gap due to structural and unconscious bias.

Andy R

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Re: Australian Investing Thread
« Reply #5043 on: September 29, 2020, 04:59:45 AM »
I've been told off om here before for recommending maxing out Super at this age

Based on what?

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5044 on: September 29, 2020, 02:11:58 PM »
I’d agree that maxing our super at her age will be the best way forward. She probably wouldn’t even need to do much else than that. She can then learn to live off what’s left. Also, she’ll be be able to withdraw some for a home if she wants to. I second the Barefoot Investor boo, it’s a good one for young people. Also, if you get her to stick to paying off credit cards every month and avoiding after pay, she’ll be set.

middo

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Re: Australian Investing Thread
« Reply #5045 on: September 29, 2020, 02:51:39 PM »
I’d agree that maxing our super at her age will be the best way forward. She probably wouldn’t even need to do much else than that. She can then learn to live off what’s left. Also, she’ll be be able to withdraw some for a home if she wants to. I second the Barefoot Investor boo, it’s a good one for young people. Also, if you get her to stick to paying off credit cards every month and avoiding after pay, she’ll be set.

Thanks everyone for your advice.  She has always been good with money, only has a debit card, no debt and a bit of cash in the bank as a student, so is doing OK.

I will look into the super for home deposit scheme as it mat make locking up her money more palatable.

Murdoch

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Re: Australian Investing Thread
« Reply #5046 on: October 04, 2020, 08:05:50 PM »
Hi all,

Couldn't find it posted elsewhere, so please re-direct me if it this is already discussed.
I've just caught up on the changes to Vanguard in Australia.

The move to this new platform will incur a 0.2% AUM fee. This is on top of the fee from whatever fund you are invested in.
For the lower cost funds, this essentially doubles your management costs.
I've just been advised that I can still make Wholesale BPay purchases into funds I don't current have money within, but only until the 16th October.
After that to open any new fund it'll need to be through the new platform/software.

I don't think this is in keeping with Vanguards stated ethos of lowest cost investing.
Is anyone else a bit put out by this?

Murdoch

chevy1956

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Re: Australian Investing Thread
« Reply #5047 on: October 04, 2020, 08:24:53 PM »
Hey Murdoch - I didn't know about the new personal investor option. I just checked it out. It sounds exactly like what you state. It sounds to me like I'd be getting charged .3% management fees on my VAS ETF if I moved it under the Vanguard banner. If I just leave my etf's outside of the personal investor approach I retain a .1% fee.

I assume this just makes the ETF option a better option.

It doesn't sound like the best low fee option to me.

Murdoch

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Re: Australian Investing Thread
« Reply #5048 on: October 04, 2020, 08:34:47 PM »
Hi Chevy,

Agreed. I've previously been happy with the slightly raised management fee for ease of use.
They are now enforcing the $100k in any single Wholesale fund option, so you can't split your money across several.
Minimum investment goes up to $5k, so BPay of $100 aliquots is now gone. Many will need to save a lump sum now.
AUM goes up.

On the plus side, you aren't automatically transitioned across.
If you currently hold Wholesale funds the current arrangements continue.
I've only got the International Shares fund, so can thankfully just keep BPay'ing into that unless I'm forced over in the future.
I'll retain the current management fee of the fund only and won't incur the new platform fees as I'll just sit on the legacy system.

Bit of a bummer.
I have previously been a fan of the simplicity and low purchase options, which in my view made up for the very slightly higher management fee.
With both those now gone and the managed funds having a 0.2% premium, I would no longer advocate starting this option with them as I don't think it stacks up.

Disappointing.


Andy R

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Re: Australian Investing Thread
« Reply #5049 on: October 05, 2020, 01:54:19 AM »
One thing to note is that on the Vanguard FB group, someone mentioned that they spoke to a Vanguard representative on the phone who said the fee is likely to come down.

Nevertheless, I'd stick with ETFs. The main advantage of VPI over ETFs is that you can put in very small amounts, but you can't even set it up in an automated way.

For putting in very small amounts, have you had a look at OpenTrader? They offer $5 brokerage for up to $2,500. They are the retail arm of the wholesale broker (OpenMarkets) that SelfWealth, Riaz, and Six Park use, so I expect it to be ok, although they said their web interface is still being improved.

For set-and-forget (the main advantage of Vanguard's wholesale/retail funds while they were available), might be worth looking at a new brokerage under beta testing called Pearler. You can setup auto direct credit to auto take your money out periodically, and you can set your ETF allocation and have it auto purchase the most underweight to your allocation. So that is the closest thing to a real set and forget (and you get the tax efficiency of ETFs over managed funds). Although as I said, they are still under beta testing.