Author Topic: Australian investing question  (Read 3488 times)

Kaminoge

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Australian investing question
« on: May 09, 2014, 10:09:08 AM »
Any Australians out there with opinions on the best place to invest for an Australian. We have Vanguard but their fees are much higher than the US version. Is it still the best deal?

Here's the breakdown of my situation.

1. Currently most of my money is tied up in property.
2. I have money in a mutual fund (Colonial First State - Imputation Fund that they no longer are marketing to new customers, 1.77% fees).
3. I'm thinking of paying less money into the properties and putting more into other types of investments.
4. I built a spreadsheet and it turns out the mutual fund has basically earned the equivalent of 8% pa compounding interest over the last 15 years.

I'm assuming based on the tiny bit of knowledge gained from hanging around on here that I'd be better off with an index fund than a mutual. Agree? Disagree?

I plan to keep the properties but I could definitely pay them off slower and divert some money into other investments. Does this in general sound like a reasonable idea?

I'd love to be FI (who wouldn't!) as soon as possible and after years of not really paying any attention to what my money was doing I'm now trying to do a lot of learning.

The only other fact to add in is that I want to stay in debt (not very Mustachian!) for tax reasons. So I'm not in any huge hurry to pay the properties off.

marty998

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Re: Australian investing question
« Reply #1 on: May 09, 2014, 05:45:20 PM »
The CFS Emerging Markets options are a good choice if you want to keep your investments with CFS and want a bit of diversification outside Australia.

Yes you will pay for it in spades, but given the returns history it is well worth it.

Lukim

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Re: Australian investing question
« Reply #2 on: May 10, 2014, 02:40:46 AM »
Kaminoge - It says you are in Bulgaria - not sure if that is correct.

If you are a non tax resident of Australia, investing in Australian blue chip shares is pretty good in that you will not pay any Australian tax on the capital gains and generally the dividends are fully franked.

Just get a portfolio of blue chips (BHP, Telstra, banks etc) or you can buy shares in a listed investment company.

If you get an online broker the fees are fairly low (only trading fee) and no investment fees.

deborah

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Re: Australian investing question
« Reply #3 on: May 10, 2014, 03:03:50 AM »
Kaminoge - It says you are in Bulgaria - not sure if that is correct.

If you are a non tax resident of Australia, investing in Australian blue chip shares is pretty good in that you will not pay any Australian tax on the capital gains and generally the dividends are fully franked.

Just get a portfolio of blue chips (BHP, Telstra, banks etc) or you can buy shares in a listed investment company.

If you get an online broker the fees are fairly low (only trading fee) and no investment fees.
I think she's an Australian, but resident in Bulgaria, with no Australian tax (so not much need for franking credits) as she has 3 negatively geared properties.

Kaminoge

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Re: Australian investing question
« Reply #4 on: May 10, 2014, 06:00:43 AM »
I don't know what I am! Confused perhaps.

My understanding (which may well be wrong) is that I'm a non-resident for tax purposes. For years I remained a resident (I'm definitely a citizen) but a few years Australia changed the rules and it became very non-attractive to stay like that. Basically I would have been double taxed on everything.

I probably should find out a lot more about this but I'm a little bit nervous that I'll discover I've done something wrong and that I owe the Australian government loads of money. I have to point out I'm not trying to do anything unethical here. I work overseas and send a big chunk of my salary to Australia so the government does well out of me in terms of it all being invested in Australia and me costing the government nothing since I don't use roads/hospitals/schools etc.

I do submit a form each year saying I don't need to submit a tax return.

Kaminoge

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Re: Australian investing question
« Reply #5 on: May 10, 2014, 06:11:58 AM »
Kaminoge - It says you are in Bulgaria - not sure if that is correct.

If you are a non tax resident of Australia, investing in Australian blue chip shares is pretty good in that you will not pay any Australian tax on the capital gains and generally the dividends are fully franked.

Just get a portfolio of blue chips (BHP, Telstra, banks etc) or you can buy shares in a listed investment company.

If you get an online broker the fees are fairly low (only trading fee) and no investment fees.

It's correct that I'm in Bulgaria. I'll look into what you're saying (I don't actually know what fully franked means). Thanks for the suggestions.

marty998

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Re: Australian investing question
« Reply #6 on: May 10, 2014, 07:32:52 AM »
Didn't think franking credits are available for non residents?

deborah

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Re: Australian investing question
« Reply #7 on: May 10, 2014, 11:02:37 PM »
I don't know what I am! Confused perhaps.

My understanding (which may well be wrong) is that I'm a non-resident for tax purposes. For years I remained a resident (I'm definitely a citizen) but a few years Australia changed the rules and it became very non-attractive to stay like that. Basically I would have been double taxed on everything.

I probably should find out a lot more about this but I'm a little bit nervous that I'll discover I've done something wrong and that I owe the Australian government loads of money. I have to point out I'm not trying to do anything unethical here. I work overseas and send a big chunk of my salary to Australia so the government does well out of me in terms of it all being invested in Australia and me costing the government nothing since I don't use roads/hospitals/schools etc.

I do submit a form each year saying I don't need to submit a tax return.
From my reading, I think you need to do more than that - from the ATO website https://www.ato.gov.au/Individuals/International-tax-for-individuals/:

Quote
Investing in Australia

Foreign residents are taxed in Australia on income earned from their Australian investments. For interest, unfranked dividends and royalties, tax is generally withheld in Australia at the time of payment. But if you receive rental income from Australian properties or capital gains from selling Australian assets, you must declare these amounts in an Australian tax return.
However, as all your property is negatively geared, you will probably find that they owe you money, and/or you have a negative balance going forward that will reduce your tax bills once you do something that is taxable. My brother has a flat in Melbourne, but lives in SE Asia, and I know he puts in a tax return each year because of his property, even when it was negatively geared.