Australian Investing Thread

[FFA]

Is it just me or anyone else finding it weird that the market hasn't really done anything the last 3 weeks after being up 6% over July?

Individual stocks have been all over the place but overall the index is enjoying a strange little period of calm...

it feels bullish to me. shrugged off the brexit and on it's merry way. even after 6% in july just to drift sideways is actually quite positive, I thought it might be pulling back.

doesn't seem sustainable though, especially when people are saying to expect 5-6% total returns going forwards (i.e. dividends and hardly any cap growth). that is per annum, not per month!

[faramund]

I try to buy in lots of at least $4000, but if its been 2 months since my last purchase, I'll buy $2000. If its been 4 months, I'll buy $1000 and if hypothetically its been 8 months I'll buy $500.  (This is sortof based on the market growing at 6% a year - and how long it would take to earn back the $20 fee).

(I do have a reputation for over complicating anything involving numbers)

[faramund]

Using ETFs as equity for home deposit

Is this possible in Australia? How does it work?

Currently I'm saving for a deposit for a PPOR, but it strikes me that it could work out better for FIRE if I instead invested this money directly into ETFs now, and then was able to use the equity in them to get a loan. Is this possible, similar to how it is done with leveraging one property off another?

Well, you can certainly take out a margin loan - but that's risky if a lot, and a high-ish interest rate.

Interestingly, I'm in the same situation, we are going to upgrade our house, and I will be talking to a bank next week about using my shares as equity for that - I'll report back next week on how it goes.

Well, oddly when I was sending the bank my finances, I got the first quote on our house from a real estate agent, which was 20% more than the conservation amount that I had told the bank our house was work. I also forwarded the real estate quote to the bank.

So, the bank worked out how much they would lend me based on the real estate quote - i.e. solely on the value of the house, and not our other equity - but that was enough to pretty much give us what we wanted. So, in the end, I didn't really test what the bank would let us do with our share equity.  They did say if we wanted more than they offered, we'd have to use some of our other equity - but because what they offered was close enough, I didn't go into what that meant with them.

[faramund]

Using ETFs as equity for home deposit

Is this possible in Australia? How does it work?

Currently I'm saving for a deposit for a PPOR, but it strikes me that it could work out better for FIRE if I instead invested this money directly into ETFs now, and then was able to use the equity in them to get a loan. Is this possible, similar to how it is done with leveraging one property off another?

Well, you can certainly take out a margin loan - but that's risky if a lot, and a high-ish interest rate.

Interestingly, I'm in the same situation, we are going to upgrade our house, and I will be talking to a bank next week about using my shares as equity for that - I'll report back next week on how it goes.

Well, oddly when I was sending the bank my finances, I got the first quote on our house from a real estate agent, which was 20% more than the conservation amount that I had told the bank our house was work. I also forwarded the real estate quote to the bank.

So, the bank worked out how much they would lend me based on the real estate quote - i.e. solely on the value of the house, and not our other equity - but that was enough to pretty much give us what we wanted. So, in the end, I didn't really test what the bank would let us do with our share equity.  They did say if we wanted more than they offered, we'd have to use some of our other equity - but because what they offered was close enough, I didn't go into what that meant with them.

Its now almost a scientific test - the bank did decide to value the house, and that came back with a lower price than the real estate quote. So now, to avoid buying mortgage insurance - they will only lend up to 80% of the (value of the house + cash). So they won't accept any of the equity I have in shares for this, i.e. I'd have to sell off a chunk of shares if I did want to use that equity.

 

[Raven 900]

To all the fantastic people that have posted info in this thread, thanks. It's awesome. Just finished reading all 45 pages!

We have a good nest egg but it's just sitting in Ubank at the moment. I'm a convert to the index fund philosophy but I'd also like to put a small amount, say 10%, into something more...speculative (relatively).

It's hard to ignore the 5 year returns on the A-REIT index and associated funds such as VAP, and also infrastructure funds such as SYD and TCL (both >20% annualized returns for the last 5 years, with about 3% yield as well).

Nobody here talks about putting money into these areas of the market. What am I missing? Is it just the fear of a correction? i.e., what has gone up must now come down?

I could be convinced about a property bubble that's about to burst, but surely infrastructure isn't going to go away?

Appreciate anyone's thoughts.

[misterhorsey]

We have a good nest egg but it's just sitting in Ubank at the moment. I'm a convert to the index fund philosophy but I'd also like to put a small amount, say 10%, into something more...speculative (relatively).

It's hard to ignore the 5 year returns on the A-REIT index and associated funds such as VAP, and also infrastructure funds such as SYD and TCL (both >20% annualized returns for the last 5 years, with about 3% yield as well).

Nobody here talks about putting money into these areas of the market. What am I missing? Is it just the fear of a correction? i.e., what has gone up must now come down?

I could be convinced about a property bubble that's about to burst, but surely infrastructure isn't going to go away?

Hey Raven

Your post provoked me to check out the performance of VAP and yes, it is a stellar 20% per annum return for the past 5 years. 

https://www.vanguardinvestments.com.au/adviser/jsp/investments/etf?portId=8206##overview-tab

However, as the old adage goes, past performance is not an indicator of future performance.

Not only that, but as Ben Graham says in the Intelligent Investor, good performance attracts higher valuations which tends to lead to lower yields, which increases the risk of the investment. I'm paraphrasing terribly here, but this is what I took from it.

Also, you mention you want to allocate 10% towards more speculative investments.  I just checked the composition of my Vanguard High Growth Wholesale fund and it allocates 5% to Australian Property Securities and 5% to International Property Securities. Bingo. There's your 10%

https://static.vgcontent.info/crp/intl/auw/docs/funds/factsheets/adv/vhif.pdf?20160831|110000

The retail fund has the same composition.

https://static.vgcontent.info/crp/intl/auw/docs/funds/factsheets/adv/vlshgf.pdf?20160831|110000

So you can allocate a little more to this sector within a suite of indexes via the Vanguard funds, to the allocation that you were thinking, but perhaps without the sweaty palms and sleepless nights of direct investments.

[bigchrisb]

People have a short memory with the areits. Many had a pretty rough time through the gfc, with a lot of insolvencies and huge shareholder losses. Have a look at the 10 year returns for the sector to get an idea of how much of the last 5 years has been bouncing off apocalyptic lows. At that stage no one wanted to touch them. I did a bit of buying of reits through that phase, and have done ok. But I'm struggling to see the same value now. Instead I've been putting more focus on the currently beaten up sectors, which in my opinion are resources energy and banks. Market timing, sure is. I'm happy to play with 10-20% speculation in my portfolio.

[marty998]

People have a short memory with the areits. Many had a pretty rough time through the gfc, with a lot of insolvencies and huge shareholder losses. Have a look at the 10 year returns for the sector to get an idea of how much of the last 5 years has been bouncing off apocalyptic lows. At that stage no one wanted to touch them. I did a bit of buying of reits through that phase, and have done ok. But I'm struggling to see the same value now. Instead I've been putting more focus on the currently beaten up sectors, which in my opinion are resources energy and banks. Market timing, sure is. I'm happy to play with 10-20% speculation in my portfolio.

I lost a lot of money with Westpac Office Trust. No matter how nice the building and how long the lease, a CMBS debt can spell disaster.

They can deliver stable consistent returns, until SHTF and then you're stuffed.

[Wadiman]

People have a short memory with the areits. Many had a pretty rough time through the gfc, with a lot of insolvencies and huge shareholder losses. Have a look at the 10 year returns for the sector to get an idea of how much of the last 5 years has been bouncing off apocalyptic lows. At that stage no one wanted to touch them. I did a bit of buying of reits through that phase, and have done ok. But I'm struggling to see the same value now. Instead I've been putting more focus on the currently beaten up sectors, which in my opinion are resources energy and banks. Market timing, sure is. I'm happy to play with 10-20% speculation in my portfolio.

I lost a lot of money with Westpac Office Trust. No matter how nice the building and how long the lease, a CMBS debt can spell disaster.

They can deliver stable consistent returns, until SHTF and then you're stuffed.

Acronym police here : Got the SHTF but CMBS? 

[marty998]

Commercial Mortgage Backed Security.

Brought a number of office, industrial and retail (shopping centre) REITs undone in 2007-2009 when credit markets froze and they could not be refinanced at their maturity date.

Takes a long time to offload commercial buildings - you can't just liquidate them the next day. Only other options are to sell the trust or go into administration.

Or place your trust in those vampire investment bankers doing outrageous deals.

[GT]

I must be just having one of those days.

Regarding concessional superannuation contribution caps, the limit is $30K per annum for those under 49 years of age.

Is that:

1. Work contributions ($27K) and personal contributions ($3K)
or
2. Work contributions ($27K) and personal contributions ($30K)

Just trying to nut out some choices we may need to make in the near future.

[deborah]

I must be just having one of those days.

Regarding concessional superannuation contribution caps, the limit is $30K per annum for those under 49 years of age.

Is that:

1. Work contributions ($27K) and personal contributions ($3K)
or
2. Work contributions ($27K) and personal contributions ($30K)

Just trying to nut out some choices we may need to make in the near future.

1. Work contributions ($27K) and personal contributions ($3K)

It is more complicated than that because your work doesn't have to put their contribution in immediately, so you need to check that they have and continue to do so. Some people have been caught out when their work has put the last contribution for the previous year in after the end of that financial year, so they have gone over the limit for the current year.

[oysters]

I must be just having one of those days.

Regarding concessional superannuation contribution caps, the limit is $30K per annum for those under 49 years of age.

Is that:

1. Work contributions ($27K) and personal contributions ($3K)
or
2. Work contributions ($27K) and personal contributions ($30K)

Just trying to nut out some choices we may need to make in the near future.

1. Work contributions ($27K) and personal contributions ($3K)

It is more complicated than that because your work doesn't have to put their contribution in immediately, so you need to check that they have and continue to do so. Some people have been caught out when their work has put the last contribution for the previous year in after the end of that financial year, so they have gone over the limit for the current year.

I thought I also read recently (might have even been on this forum thread...) that the 9% compulsory isnt't a true compulsory contribution by the employer. So if you salary sacrafice some, intending to hit that 30k annual limit for example, your employer can leave off their 9% that would otherwise go on top of your salary, as long as the 9% rule is met. So be careful!

[marty998]

I must be just having one of those days.

Regarding concessional superannuation contribution caps, the limit is $30K per annum for those under 49 years of age.

Is that:

1. Work contributions ($27K) and personal contributions ($3K)
or
2. Work contributions ($27K) and personal contributions ($30K)

Just trying to nut out some choices we may need to make in the near future.

1. Work contributions ($27K) and personal contributions ($3K)

It is more complicated than that because your work doesn't have to put their contribution in immediately, so you need to check that they have and continue to do so. Some people have been caught out when their work has put the last contribution for the previous year in after the end of that financial year, so they have gone over the limit for the current year.

I thought I also read recently (might have even been on this forum thread...) that the 9% compulsory isnt't a true compulsory contribution by the employer. So if you salary sacrafice some, intending to hit that 30k annual limit for example, your employer can leave off their 9% that would otherwise go on top of your salary, as long as the 9% rule is met. So be careful!

Nope that's against the rules, you have to pay the 9.5% on the pre-salary sacrifice salary, but some employers try and get away with it and pay on the post-salary sacrifice one.

Watch out for it.

[Stimulated]

Nope that's against the rules, you have to pay the 9.5% on the pre-salary sacrifice salary, but some employers try and get away with it and pay on the post-salary sacrifice one.

Watch out for it.

What about other salary sacrificed items, such as purchased annual leave?

[deborah]

Nope that's against the rules, you have to pay the 9.5% on the pre-salary sacrifice salary, but some employers try and get away with it and pay on the post-salary sacrifice one.

Watch out for it.

What about other salary sacrificed items, such as purchased annual leave?

That's why you purchase such annual leave - you still get the same amount of super if you do.

When I worked at the bank they split your salary into base and perks (it's a long time now and I've forgotten what perks were called). Your superannuation was only on your base salary. Perks could be taken as cash, a cheap loan, salary sacrificed super... but were the bank's way of not paying all the super they should have. On the other hand, some of the perks were quite good - it depended upon what level you were what you could get.

[JLR]

Yep, we've found the same thing. For the past 10 years about 30% of my husband's income was from overtime - there was no super paid on the overtime.

Must look into whether he is currently being paid on pre- or post- salary sacrifice.

[nnls]

I must be just having one of those days.

Regarding concessional superannuation contribution caps, the limit is $30K per annum for those under 49 years of age.

Is that:

1. Work contributions ($27K) and personal contributions ($3K)
or
2. Work contributions ($27K) and personal contributions ($30K)

Just trying to nut out some choices we may need to make in the near future.

1. Work contributions ($27K) and personal contributions ($3K)

It is more complicated than that because your work doesn't have to put their contribution in immediately, so you need to check that they have and continue to do so. Some people have been caught out when their work has put the last contribution for the previous year in after the end of that financial year, so they have gone over the limit for the current year.

I thought I also read recently (might have even been on this forum thread...) that the 9% compulsory isnt't a true compulsory contribution by the employer. So if you salary sacrafice some, intending to hit that 30k annual limit for example, your employer can leave off their 9% that would otherwise go on top of your salary, as long as the 9% rule is met. So be careful!

Nope that's against the rules, you have to pay the 9.5% on the pre-salary sacrifice salary, but some employers try and get away with it and pay on the post-salary sacrifice one.

Watch out for it.

Just went and checked my payslip, thankfully my company are doing the right thing

[GT]

Yep, we've found the same thing. For the past 10 years about 30% of my husband's income was from overtime - there was no super paid on the overtime.

That's shit.

But we also get Super taken out of our annual bonuses (when we get them), and we are taxed at the maximum amount even if we aren't in that category to ensure no-one gets a bill at tax time.  It does generate a minimal return, but sucks when you see your bonus almost halved.

Worked out that less than $400 a month will max out one of our super contributions, but it is $2K per month on the other.  Definate earning disparity in this household.

Also, how do you make sure you don't go over the $30K contribution threshold?  Does the pay department at your work have to balance it out, or do you nominate an amount and then ride the luck wave to see if you matched it to exactly $30K or get spanked by the ATO if you go over?  And if the ATO get all S&M on you, how bad is it?  Do you need a safe word?

[marty998]

Yep, we've found the same thing. For the past 10 years about 30% of my husband's income was from overtime - there was no super paid on the overtime.

That's shit.

But we also get Super taken out of our annual bonuses (when we get them), and we are taxed at the maximum amount even if we aren't in that category to ensure no-one gets a bill at tax time.  It does generate a minimal return, but sucks when you see your bonus almost halved.

Worked out that less than $400 a month will max out one of our super contributions, but it is $2K per month on the other.  Definate earning disparity in this household.

Also, how do you make sure you don't go over the $30K contribution threshold?  Does the pay department at your work have to balance it out, or do you nominate an amount and then ride the luck wave to see if you matched it to exactly $30K or get spanked by the ATO if you go over?  And if the ATO get all S&M on you, how bad is it?  Do you need a safe word?

That is shit JLR, it's also not kosher. However there is a salary ($203,240) above which employers do not have to pay super on... maybe he was above that?

[deborah]

Also, how do you make sure you don't go over the $30K contribution threshold?  Does the pay department at your work have to balance it out, or do you nominate an amount and then ride the luck wave to see if you matched it to exactly $30K or get spanked by the ATO if you go over?  And if the ATO get all S&M on you, how bad is it?  Do you need a safe word?

You work it out very very carefully. Theoretically, the ATO have become a bit more lenient since they changed the legislation, but there were some real horror stories (especially with people who had put in the maximum after tax contribution, and then their pre-tax contribution went over - if my memory is right they ended up with an absolutely enormous tax bill). When I had these concerns, I checked my superannuation statements every fortnight to make sure what was deposited by my work and when, and I had a spreadsheet with the total so far this financial year in it. My payslip said how much had been put in by them in total, but not how much extra had been salary sacrificed in total. If anything happened that I didn't expect (such as when I went on leave at half pay, and public holidays were at full pay, so I got more deposited than I expected), I'd work out exactly how I was going to fix things so I didn't go over.

Most articles I read at the time said that you could salary sacrifice about $2000 less than you actually could, probably because people were getting into a lot of trouble if they went over.

[GT]

Thanks deborah.

[stripey]

My super online login thingy has a running total of what contributions have been made for the current financial year (and what type they were).

I'll admit I'm a little shy about salary sacrificing because my net pay is so damn unpredictable (I get penalties- sometimes large penalties- but sporadically) so I don't think I will ever try to hit the $30k mark- I'll try and undershoot

[Adram]

Not paying super on overtime is in line with the rules that the 9.5% super guarantee amount is payable on ordinary time earnings.

It's not shit or not kosher, since overtime is not ordinary time, they are following the requirements of the legislation. You are compensated for overtime by a higher hourly rate.

[JLR]

Yep, we've found the same thing. For the past 10 years about 30% of my husband's income was from overtime - there was no super paid on the overtime.

That is shit JLR, it's also not kosher. However there is a salary ($203,240) above which employers do not have to pay super on... maybe he was above that?

No, Marty. He wasn't above $203, 240. It must have been as Adram says, and that super is paid on ordinary time earnings.

I checked this morning and he is currently being paid 9.5% on his gross earnings, not his post-salary packaging pay.

[Primm]

I don't get paid super on my overtime or penalties. Our EB states "ordinary time earnings" or something similar.

Having said that I do have a very sweet setup where if I SS 5% my employer contributes 12.75%. So there is that. Probably works out to more than 9.5% of my total earnings anyway.

[marty998]

Yep, we've found the same thing. For the past 10 years about 30% of my husband's income was from overtime - there was no super paid on the overtime.

That is shit JLR, it's also not kosher. However there is a salary ($203,240) above which employers do not have to pay super on... maybe he was above that?

No, Marty. He wasn't above $203, 240. It must have been as Adram says, and that super is paid on ordinary time earnings.

I checked this morning and he is currently being paid 9.5% on his gross earnings, not his post-salary packaging pay.

TIL. Thanks guys :)

[rasics82]

Hi everyone, I'm quite new on the forum,a bit inexperienced, but I would consider myself pretty mustachian since forever, at least for the "be frugal" part.

I went through this conversation in the past few months and I feel a bit overwhelmed by information.

I need a clarification about a topic already discussed a million times in the forum: Vanguard Wholesale index Funds Vs a LICs/ETFs mixed portfolio:
While is pretty easy to calculate how much I would spend yearly for the fund, I have some issues with the ETFs mixed portfolio.
How is it possible to keep the expenses competitive?
If you start having a mix of 5/6 LICs/ETFs and you keep investing,let say, quarterly, plus re-balancing, I'm scared the brokerage fees will be massive.
Am I just overestimating the trades I'll do to keep my portfolio on track? What would be a "good number"? 15/20  trades  a year for 5/6 ETFs?? (roughly $200, I'm with CMC)

Still I haven't invested  anything in ETFs, just few stocks, but I'll star very soon. I'm oriented to the to the wholesale index funds (Growth or High Growth), I should be able to meet the minimum requirements ($100k), but I think I can manage the ETFs as well and build some experience over time. At the moment I'm just worried of overspending.

I have another thread, some of you already landed there, If someone want to have a look, check my signature, I have some other questions also there! :-)
Thanks in advance, this community is super helpful!!!

[BattlaP]

Hi everyone, I'm quite new on the forum,a bit inexperienced, but I would consider myself pretty mustachian since forever, at least for the "be frugal" part.

I went through this conversation in the past few months and I feel a bit overwhelmed by information.

I need a clarification about a topic already discussed a million times in the forum: Vanguard Wholesale index Funds Vs a LICs/ETFs mixed portfolio:
While is pretty easy to calculate how much I would spend yearly for the fund, I have some issues with the ETFs mixed portfolio.
How is it possible to keep the expenses competitive?
If you start having a mix of 5/6 LICs/ETFs and you keep investing,let say, quarterly, plus re-balancing, I'm scared the brokerage fees will be massive.
Am I just overestimating the trades I'll do to keep my portfolio on track? What would be a "good number"? 15/20  trades  a year for 5/6 ETFs?? (roughly $200, I'm with CMC)

Still I haven't invested  anything in ETFs, just few stocks, but I'll star very soon. I'm oriented to the to the wholesale index funds (Growth or High Growth), I should be able to meet the minimum requirements ($100k), but I think I can manage the ETFs as well and build some experience over time. At the moment I'm just worried of overspending.

I have another thread, some of you already landed there, If someone want to have a look, check my signature, I have some other questions also there! :-)
Thanks in advance, this community is super helpful!!!

Just quickly, I think the minimum is actually $50K. At least that's what they said to my partner when she switched over to wholesale. I have to switch over too so I'll call them to confirm.

Personally we have found the wholesale funds great, I like contributing weekly, takes all thought out of investing. However if you're counting pennies the ETF trading costs, given 12 monthly trades at $25, even out with the wholesale High Growth fund (0.37%) at about an $80,000 balance in your fund. Above that the ETFs will steadily become the better financial option.

In the FIRE stage (and mid-late accumulation stage) the ETFs are definitely the better option. With a balance of 750,000 in that particular fund you're paying $2775 in fees.

I hadn't really thought about this too much myself but having done the maths just now I'd say I will stick with the funds until our balances go over about $150,000, meaning the management costs start to go above $500. Maybe a bit longer, that's not too bad for the accumulation phase. Then I'd withdraw the whole balance and buy ETFs. And hope to hell that the few days in between the markets were down and not up. Maybe I'd do it in pieces. Maybe I just wouldn't do it at all and decide that the management costs were worth the money to not have to think about rebalancing. I guess I'll find out soon enough.

[GT]

For those that have flipped their Superannuation over to SunSuper (lowest cost super around currently from my understanding), what Investment Option have you chosen?

[urbanista]

there were some real horror stories

I went over in super contributions in 2015 (total contributions around $33,000, when $30,000 allowed). Apparently, ATO changed rules to be more fair as I was charged marginal tax rate on overpayment (so 39% * 3,000) in tax plus $112 in penalty. Still want to be careful though.

[BattlaP]

For those that have flipped their Superannuation over to SunSuper (lowest cost super around currently from my understanding), what Investment Option have you chosen?

I put 20% Australian Shares Index (Based on the S&P/ASX 300 Accumulation Index, 0.08% fee) and 80% International Shares Index Unhedged (Based on the MSCI World Ex-Australia Investable Market Index, 0.09% fee). For completeness sake I take it there is also admin fees of $1.50 per week and 0.10% p.a. on the first $800,000 of your account balance.

20/80 because I have irrational fears of an inevitable Australian recession, unhedged international because it is my understanding that hedging comes at a performance cost.

[potm]

Also with Sunsuper, I started out with 50/50 Aus/Int Unhedged Index options but have this year changed my future contributions to 40/60 Aus/Int.

Also worried about concentration to Aus but those sweet sweet franking credits :D

[rasics82]

Just quickly, I think the minimum is actually $50K. At least that's what they said to my partner when she switched over to wholesale. I have to switch over too so I'll call them to confirm.

I was emailing them this week, 100k is fine, maybe I should have said I had 50K

Personally we have found the wholesale funds great, I like contributing weekly, takes all thought out of investing. However if you're counting pennies the ETF trading costs, given 12 monthly trades at $25, even out with the wholesale High Growth fund (0.37%) at about an $80,000 balance in your fund. Above that the ETFs will steadily become the better financial option.

In the FIRE stage (and mid-late accumulation stage) the ETFs are definitely the better option. With a balance of 750,000 in that particular fund you're paying $2775 in fees.

I hadn't really thought about this too much myself but having done the maths just now I'd say I will stick with the funds until our balances go over about $150,000, meaning the management costs start to go above $500. Maybe a bit longer, that's not too bad for the accumulation phase. Then I'd withdraw the whole balance and buy ETFs. And hope to hell that the few days in between the markets were down and not up. Maybe I'd do it in pieces. Maybe I just wouldn't do it at all and decide that the management costs were worth the money to not have to think about rebalancing. I guess I'll find out soon enough.

This is an interesting point of view as apparently most of the people in this forum are thinking to do the other way around. Reach 100k in ETFs and move to the wholesale index funds.

Still a bit puzzled, I think it will take few months to reach 100K, if I cannot access with less to the wholesale Growth/High Growth index fund I'll go with and easy ETFs portfolio first, VAS 45%,  VGS 45%, VGE 10%  some cash in my saving account and live happy with that.

[BattlaP]

With my first lump sum (40k or so) I took advantage of a 10 free trades sign up bonus (nabtrade/commbank has them all the time) to buy bulk ETFs for free. Then I started with a managed fund.

If you have a partner you could abuse the signup bonuses for the first couple years of bulk purchases.

[andrewjohnporter]

Does anyone know much about Super when leaving the country? It's likely that I'll be going to the states and not sure if/when I'll be back in Australia as I'm only a temporary resident anyway. From my understanding I have two choices.

 - Claim back my super when I leave the country but I have to pay 38% tax on top of the 15% I've already paid (If I do take it, it will take me 10 years at 7% interest to build back up what I've lost)
 - Leave my super in Australia but six months after my visa expires my super gets transferred by the government and I wont earn any interest on it.

Cheers.

[chasingthegoodlife]

People thinking about moving between ETFS and wholesale funds once their balance has built up to a certain level - make sure you consider the capital gains tax implications of this (depending on how the assets are held and your marginal tax rate at the time, etc etc).

[steveo]

People thinking about moving between ETFS and wholesale funds once their balance has built up to a certain level - make sure you consider the capital gains tax implications of this (depending on how the assets are held and your marginal tax rate at the time, etc etc).

I can't see myself doing this based upon the capital gains tax being paid. It's also why I can't see myself re-balancing much until post retirement when my income is lower.

[goldenmoustache]

Hi everyone, wuestion for the super moustachians : I am about to create a family trust to handle my non super retirement funds, mostly for tax benefits through optimal distribution of dividends and capital gains. I already have about $500K in vanguard wholesale fund in my name. What is the most effective way to move it to the family trust? Do I have to sell and gift the cash proceeds (incurring buy/sell spread cost plus capital gain)? Or is there a way to do it without buy/sell and/or without incurring capital gains? cheers

[marty998]

https://www.vanguardinvestments.com.au/adviser/adv/invest-with-us/forms-and-notices.jsp

Go to Wholesale Managed Funds section and click the link for "Transfers"

You will have to eat the capital gains

If you can stomach the wait, I would consider redeeming a portion between now and June 2017 and the rest in July 2017 next year. Time it right and if your accountant delays the lodging the tax return you may not have to pay tax until May 2018 (for the FY 2017 redemption, and May 2019 (for the July 2017 redemption.

This splits the capital gain (if any) across 2 financial years, and may stop you going up into higher marginal tax brackets, depending on your situation.

[goldenmoustache]

thanks Marty998!! Do you know if there is something similar for ETFs? I've got some ETF based investments in a Westpac brokerage account in my name. Same situation, would like to gift them to family trust.

Good point in splitting across tax years. I will have to do some math as on the other hand, I have the opportunity to distribute to my 18 years old uni student daughter up to $18,000 tax free.

[FFA]

Look up off-market transfer (or contact Westpac about it). I think it's the same, will still incur CGT and some fees but perhaps less than brokerage and buy/sell spread if you transact on-market.

[marty998]

thanks Marty998!! Do you know if there is something similar for ETFs? I've got some ETF based investments in a Westpac brokerage account in my name. Same situation, would like to gift them to family trust.

Good point in splitting across tax years. I will have to do some math as on the other hand, I have the opportunity to distribute to my 18 years old uni student daughter up to $18,000 tax free.

Add franking credits and low income tax offset, and subtract any employment income she may earn and you could effectively distribute a lot more to her than $18,000.

She may be a little bit upset that you are "using" her in this manner though

"Daddy... did you and mum have me just so you could save on tax???" :D

[goldenmoustache]

thanks Marty998!! Do you know if there is something similar for ETFs? I've got some ETF based investments in a Westpac brokerage account in my name. Same situation, would like to gift them to family trust.

Good point in splitting across tax years. I will have to do some math as on the other hand, I have the opportunity to distribute to my 18 years old uni student daughter up to $18,000 tax free.

Add franking credits and low income tax offset, and subtract any employment income she may earn and you could effectively distribute a lot more to her than $18,000.

She may be a little bit upset that you are "using" her in this manner though

"Daddy... did you and mum have me just so you could save on tax???" :D

:D well... I am sure I will be able to find an amicable arrangement with her, most likely involving some (non moustachian) shopping at Westfield to compensate for her emotional distress...

[marty998]

Instead she may actually want the money you are notionally distributing to her... :D

[goldenmoustache]

I am looking for a new accountant as well as a lawyer for setting up family trust. Any recommendation? I live in Sydney North Shore. thanks

[qwerty8675309]

For those that have flipped their Superannuation over to SunSuper (lowest cost super around currently from my understanding), what Investment Option have you chosen?

50% Australian indexed, and 50% International indexed (unhedged). I've just replicated my portfolio that I have outside of super. I rebalance every quarter by changing where new super money is contributed to.

[MajorTom]

For those that have flipped their Superannuation over to SunSuper (lowest cost super around currently from my understanding), what Investment Option have you chosen?

50% Australian indexed, and 50% International indexed (unhedged). I've just replicated my portfolio that I have outside of super. I rebalance every quarter by changing where new super money is contributed to.

Do you mean you have to manually rebalance in super?- does Sunsuper just divide all new super payments 50:50 with your allocation and you have to keep track of how the allocations go after that, or will Sunsuper allocate payments to keep overall amounts at 50:50?

I'm planning on changing from First State high growth to Sunsuper with a 50:50 Oz:international split.

[Primm]

Do you mean you have to manually rebalance in super?- does Sunsuper (a) just divide all new super payments 50:50 with your allocation and you have to keep track of how the allocations go after that, or will Sunsuper (b) allocate payments to keep overall amounts at 50:50?

I'm planning on changing from First State high growth to Sunsuper with a 50:50 Oz:international split.

Option a. You log in and select to change current allocations or ongoing allocations or both, but as far as I know there's no way to automatically allocate to keep the overall amount at 50:50 so you have to do this yourself.

[terrier56]

Anyone else both surprised and delighted at the falls today?

Value town coming back in a big way as panic spreads about US interest rate hike. Is there any other reasoning?