Author Topic: Australian Investing Thread (Read 2416356 times)

marty998 · « **Reply #2350 on:** October 28, 2016, 06:22:51 PM »

I couldn't help but roll my eyes at the NAB results that came in.

Cash profit $6.48 billion
Statutory profit just a tiny $352 million, on the back of all the write downs associated with Clydesdale Bank sale/IPO and the sale of 80% of the Life insurance business of MLC.

It pretty much destroys whatever capital they raised in the rights issue last year, and puts them even further behind CBA, WBC and ANZ. No doubt the executive bonuses will be calculated on the cash profit figure, which tends to be "earnings before all the bad stuff".

Again, nobody is really held accountable for continuing to blow up billions of shareholder value, repeatedly. Every couple of years they invent a new way to lose money. I wish VAS could exclude this stock :)

Speaking of which, VAS briefly went under 68 on Friday. I topped up at 67.32 a few weeks back and looks like my usual entry points of 65-67 will be back around again soon.

limeandpepper · « **Reply #2351 on:** October 29, 2016, 01:10:49 AM »

Quote from: marty998 on October 28, 2016, 06:22:51 PM

Speaking of which, VAS briefly went under 68 on Friday. I topped up at 67.32 a few weeks back and looks like my usual entry points of 65-67 will be back around again soon.

That reminds me, this would be a good time to add a small chunk of money to my super soon, as I haven't yet this financial year, and my income is low enough to qualify for the government co-contribution.

englyn · « **Reply #2352 on:** October 31, 2016, 11:08:01 PM »

Quote from: Grogounet on October 27, 2016, 06:10:50 PM

Quote from: FFA on October 26, 2016, 10:59:05 PM
Quote from: MrNotRobot on October 26, 2016, 08:36:58 PM
Quote from: FFA on October 26, 2016, 07:48:15 PM
re: US estate tax issue

We must abide by the rules...

... the unavailable and/or contradictory rules
let's hope dndln does indeed ask an accountant and share the learnings here :)

There is a tax treaty between most countries and Australia.
In this case, this is the exact reason why I have chosen to invest through IB on the US stock market and then be applied the withdrawal tax instead of the income tax.

I have asked many accountants and none could give a clear answer. I have had some asking for ridiculous amount of money to investigate.

Ooookay, VGS it is from now on. And plan to dump existing holdings of vts/veu at some point before I kick the bucket.

FFA · « **Reply #2353 on:** November 02, 2016, 05:53:01 AM »

Yeah that's the approach I took about 9 months ago. I now have approx. 25% VGS and still 75% in VTS/VEU. Sometimes I take the chance to switch some over especially when prices dip as they are currently (limits any capital gains being realized).

marty998 · « **Reply #2354 on:** November 04, 2016, 01:18:21 AM »

NAB went ex-div today. Share price down by the 99c dividend + another 66c on a down day. Total fall 5.99%!

Wonder if everyone is just taking the dividend and running for the exits of all the major banks. ANZ underwhelmed as well with their full year result.

Remains to be seen if Westpac will do any better.

bigchrisb · « **Reply #2355 on:** November 09, 2016, 12:16:46 AM »

I'm a bit shocked by the us election result. Didn't expect it. However looks like it's time to start buying again. I've transferred some funds to the shares account to buy tomorrow. Anyone else preparing to load up?

turboslob · « **Reply #2356 on:** November 09, 2016, 12:29:57 AM »

I'm looking to buy tomorrow.......
Not decided yet if to buy in the Aussie or US market though....

steveo · « **Reply #2357 on:** November 09, 2016, 02:49:43 AM »

I just buy whenever I have the money. I'd like to buy more but I can't.

Abundant life · « **Reply #2358 on:** November 09, 2016, 05:14:38 AM »

I was wondering whether others would be taking advantage of the 'sale'.

I got in at 3.55pm and bought some IOO. I originally was going to buy them at $94.40 back in July, but I missed the boat and couldn't bring myself to buy them at over $100. Got them for $93.56 today.

I'm thinking of bumping up VTS or some Aussie indexes, I'll see how it goes tomorrow.

FFA · « **Reply #2359 on:** November 09, 2016, 05:26:07 AM »

I bought 20k vgs today.... transferred more to nabtrade for tomorrow too, although the futures are pointing higher already so I'm wondering if it might be another brexit.

marty998 · « **Reply #2360 on:** November 09, 2016, 01:38:53 PM »

I bought $10k of VAS at 65.60 on the close yesterday.

Missed the window of opportunity at 64.40 to 65.00 as I was not looking too closely after 11am when the count still had Hillary in front and the market was still up 1%.

Commsec then crashed which added to my frustration and cost me $75 by not getting in at the depths.

Mark31 · « **Reply #2361 on:** November 09, 2016, 06:48:52 PM »

Hello All! I’m looking for some strategy ideas for my father, who is 73 and is set to lose $4,200 or so of his pension starting on 1 January with the new age pension rules coming into effect.

He could out-frugal just about anyone on this board, so has been living fine on a part pension for the last eight years, but the new drop will make him slowly use up his savings. He absolutely loathes the idea of using his savings for regular living expenses, but I think he’s a bit depressed about the whole situation and hasn’t done anything pro-active about it, even though I first raised it 18 months ago.

I recently read an article of Noel Whittaker’s (http://www.brisbanetimes.com.au/money/super-and-funds/why-some-retirees-are-better-off-cashing-in-their-super-20161019-gs5u5f.html) which suggested he might be better off taking his money out of super, and taking advantage of the Seniors and Pensioners Tax Offset (SAPTO) and franked dividends.

First up, does this seem like a plausible strategy? Am I missing anything? They have around the same amount of money as the theoretical couple in the article.
Second up, got any other ideas?

The other part of my problem is I need to find him a financial advisor. He’s not going to radically change his finances based on my say-so, and it would be elder abuse to force the issue. If he sticks with the status quo afterwards, that’s fine, but I think he’d be much happier having made a conscious decision to go that route.

I promised to give him the name of a fee-only advisor. I just sussed out one – just asking is this your area of expertise?, based on similar clients what do you think the fee range might be? – and I was disappointed. She gave a bunch of basic free advice (nice I guess), and then started talking about annuities as a possibility. Admittedly, she did say they’re not a great deal at the moment, but I was hoping she’d say I’ve got a bunch of bright ideas for oldies that don’t mind having to do a tax return.

terrier56 · « **Reply #2362 on:** November 09, 2016, 09:23:33 PM »

His main concern should be does he have enough in assets and part pension to support his lifestyle. Not sure why he still needs free government money to subsidise your inheritance?

Mark31 · « **Reply #2363 on:** November 09, 2016, 10:55:42 PM »

Terrier56, I’m really don’t know what you mean by free government money.

This is about him getting a greater effective income from his stash, not hiding his money in order to get more pension. Franking credits are a strategy widely used by self-funded retirees, especially those over the age of 65. It’s no different to claiming the interest on an investment loan as a tax deduction. I had not previously been aware it may also be useful for part-pensioners. It may or may not be good government policy to allow this, but it’s perfectly legal and legitimate.

As far as inheritance goes, that is a rude accusation. I am helping a family member I care for. My primary motive is for my dad to be less depressed about his situation, and to have sufficient wealth and income to fund his future needs, including end of life care costs, which I think is the main (but unarticulated) reason he’s so keen to maintain his stash. I have told him repeatedly I don’t need his money, and have turned down offers of assistance in the quite recent past when he mistakenly thought we were poor.

He receives a lot less pension than many other households with double or higher net worth, because he lives in a simple house outside of the city. I don’t see this as fair, but I don’t moan about it, it’s just how the rules work.

If you don’t like the rules, try and influence public policy, advocate for your point of view to others, but please don’t question my motives.

marty998 · « **Reply #2364 on:** November 09, 2016, 11:25:54 PM »

Whether his money is in super or outside of super doesn't matter for the age pension test. He pays no tax in super and is likely not to be paying any tax outside of super.

He gets the benefit of franking credits in super as well provided his investment option is Australian shares. Unlikely to be a significant % given his age, and most balanced funds only have a 25% max allocation to Aus shares.

Quote from: Mark31 on November 09, 2016, 06:48:52 PM

He absolutely loathes the idea of using his savings for regular living expenses...

I think this is the quote that annoyed terrier56 (and it annoyed me too).

Oldies need to get used to living off their savings and spending down capital. It's patently unfair for them to draw welfare from the taxpayer and maintain hundreds of thousands of savings until after death, to be passed down as inheritances to their children.

I don't question your motives on this, but yes I am advocating my view on this to all who will listen :)

Mark31 · « **Reply #2365 on:** November 10, 2016, 12:08:40 AM »

Well, I was being honest about my Dad’s emotions! I guess I gave too much context. Most people his age grew up in a world with an age pension as essentially a right. It’s a massive paradigm shift for them to get their heads around. I just look up the ABS Survey of Wealth and Income and tell him he’s doing alright actually, to optimise his situation and move on, and not rail against the government. I really want him to cheer up about his situation, which is all about being pro-active, even if you end up pro-actively choosing the status quo.

Anyway, back to topic – Does Noel Whittaker not have a clue what he’s talking about? He did ignore the age pension income test, which limits things, but his article implies that management fees are lower outside of super rather than in. Also, from my reading, managed funds don’t necessarily give back the franked dividends, or at least not straight away, they use them to smooth returns, which I guess is OK, but sounds shifty.

Rob_S · « **Reply #2366 on:** November 10, 2016, 03:31:11 AM »

Hi Mark,

I wish I had something substantial to add. I am no expert at the pension test. I did however come across this on the super guide website a while ago. http://www.superguide.com.au/smsfs/guest-contributor-how-1-million-can-last-longer-than-you

The comments are worth a read. I liked the strategy. Its all about franked dividends. You could do this inside or outside of super. If it was inside super the cheaper option would be with a fund that offered direct selections: http://www.smh.com.au/money/super-and-funds/direct-investment-an-alternative-for-those-who-cant-be-bothered-with-diy-super-20160520-gozw9n.html

Some of the funds that offer direct are ING, Care and AusSuper. There are others.

If you go down the franked credit route your dad needs to be OK with the capital value fluctuating; the consolation is the dividends shouldn't move about all that much but should track up over time. The dividends will be even more dependable if he invests in LICs. In fact I think LICs would be the best option - smooth steady dependable fully franked dividends.

Franked dividends is a sound strategy for retirees. There's a reason Self Managed Super Funds go nuts for LIC's and dependable dividend payers like Telstra and the Banks.

While I have read two of Noel Whittaker's books I was never that taken by his idea's. His ideas felt very safe/common sense. I much prefer Peter Thornhill's take on things.

Good luck hunting down a good adviser.

Abundant life · « **Reply #2367 on:** November 10, 2016, 10:06:54 AM »

Quote

I think this is the quote that annoyed terrier56 (and it annoyed me too).

Oldies need to get used to living off their savings and spending down capital. It's patently unfair for them to draw welfare from the taxpayer and maintain hundreds of thousands of savings until after death

Well, yes and no.

These older people were the original mustachians, I know my parents were/are.
Savers, when their peers spent every weekend living the high life from payday to payday, (you know, the types that mustachians today deride for their lavish lifestyle).
Savers, before ordinary people had access to managed funds and the stock market, (so no capital gain unless it was the family home).

They also were taxpayers when the Australian Government increased tax substantially in the 1940s supposedly to fund said old age pension. They lived through the Great Depression, and WWII and knew deprivation. They started work at 13 or 14 and paid taxes in advance they thought, to fund the OAP.

Instead they are bearing the brunt of various governments syphoning off funds earmarked for the OAP, so that it's but a distant memory now and they are accused of living too long or 'drawing welfare from (today's) taxpayer'.

Mark31, I think I heard the other night some finance guru say old age pensioners could earn up to $25k each before they pay tax.

Also Centrelink Financial Information Service apparently is available to all, not just Centrelink recipients. They cannot give financial advice, but they can inform you of your options and their consequences.

11ducks · « **Reply #2368 on:** November 10, 2016, 06:15:12 PM »

Hey all,
I searched up the Australian investing thread with plans to read it, before realising it was 40 pages. Eep. I'm seeking advice, simplified for my tiny mind.

I've never invested before, but i'd like to start. I've saved $10000 to put into investments, and hope to add to it regularly ($1000 or so a month). The plan is to leave it in for the long term (20 ish years) - and use it to retire early. (I'm also saving for a house deposit, but keeping that money in a high-interest account). I'm also putting aside $50 per f/t into an ABC gold bullion gold saver account (I'd put more in, but the fees seem pretty high - 3% per transaction, and I'm not sure whether to continue that.

I want to invest in something
a) easy, that I can set and forget (with direct deposit or similar)
b) low fee
c) something where profits are directly reinvested
d) something that is as simple as possible for tax purposes

I understand the ASX200 in only the most general of ways. Can anyone point me towards a well-established, easy to understand option for investment that will give good returns over time? I'm ok with a low-moderate risk. Thank you!

Notch · « **Reply #2369 on:** November 10, 2016, 10:03:59 PM »

This is the simplest, Mustachian way to invest, and ticks all your boxes:

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/fundDetail/retail/portId=8120/?overview

Given your 20-year outlook however, I'd take on a bit more risk and go for the growth or high-growth option.

marty998 · « **Reply #2370 on:** November 11, 2016, 02:55:30 AM »

Quote from: 11ducks on November 10, 2016, 06:15:12 PM

Hey all,
I searched up the Australian investing thread with plans to read it, before realising it was 40 pages. Eep. I'm seeking advice, simplified for my tiny mind.

I've never invested before, but i'd like to start. I've saved $10000 to put into investments, and hope to add to it regularly ($1000 or so a month). The plan is to leave it in for the long term (20 ish years) - and use it to retire early. (I'm also saving for a house deposit, but keeping that money in a high-interest account). I'm also putting aside $50 per f/t into an ABC gold bullion gold saver account (I'd put more in, but the fees seem pretty high - 3% per transaction, and I'm not sure whether to continue that.

I want to invest in something
a) easy, that I can set and forget (with direct deposit or similar)
b) low fee
c) something where profits are directly reinvested
d) something that is as simple as possible for tax purposes

I understand the ASX200 in only the most general of ways. Can anyone point me towards a well-established, easy to understand option for investment that will give good returns over time? I'm ok with a low-moderate risk. Thank you!

Probably the best thing to do would be to buy AFI shares (Australian Foundation Investment Company).

Been around forever, and good, honest, inexpensive management.

11ducks · « **Reply #2371 on:** November 11, 2016, 03:14:43 AM »

Thank you so much guys, it's been mind boggling figuring out where to start! Will look into both and report back! Have a lovely weekend!

Wadiman · « **Reply #2372 on:** November 12, 2016, 03:23:25 PM »

Super: ING Direct vs Aus Super

I am currently with ING and am frustrated with their user interface and difficulties in readily determining returns/performance.

Any thoughts re the user-friendliness and level of satisfaction for those of you with Aus Super?

Thanks!

Grogounet · « **Reply #2373 on:** November 13, 2016, 03:18:37 AM »

Quote from: marty998 on November 11, 2016, 02:55:30 AM

Quote from: 11ducks on November 10, 2016, 06:15:12 PM
Hey all,
I searched up the Australian investing thread with plans to read it, before realising it was 40 pages. Eep. I'm seeking advice, simplified for my tiny mind.

I've never invested before, but i'd like to start. I've saved $10000 to put into investments, and hope to add to it regularly ($1000 or so a month). The plan is to leave it in for the long term (20 ish years) - and use it to retire early. (I'm also saving for a house deposit, but keeping that money in a high-interest account). I'm also putting aside $50 per f/t into an ABC gold bullion gold saver account (I'd put more in, but the fees seem pretty high - 3% per transaction, and I'm not sure whether to continue that.

I want to invest in something
a) easy, that I can set and forget (with direct deposit or similar)
b) low fee
c) something where profits are directly reinvested
d) something that is as simple as possible for tax purposes

I understand the ASX200 in only the most general of ways. Can anyone point me towards a well-established, easy to understand option for investment that will give good returns over time? I'm ok with a low-moderate risk. Thank you!

Probably the best thing to do would be to buy AFI shares (Australian Foundation Investment Company).

Been around forever, and good, honest, inexpensive management.

I second that. And would add to be sure you have at least 3 months (if not 6) of living expenses aside before you start investing.
Depending on your goals, salary sacrifice might be an option - I know a lot on the forum won't agree but I consider it as a good tax deferred investment that kicks in your 60s
Lastly, don't forget to have a look at your super (fees and investment option)

I would recommend you to spend time to read "the barefoot investor" He just released a new book, might be your best $30 investment made this year (well $23 until tonight + some free stuff too)

11ducks · « **Reply #2374 on:** November 13, 2016, 05:43:46 AM »

Thank you for that- I'm currently putting in 5% pre tax via salary sacrifice +12.75% govt match into my super -am not able to access that until 66 so am hoping to invest to cover the 10 years before that (or more possibly). The fund is moderate-high risk (will have to read more about the investment mix though as I'm not too familiar with it tbh).

Does the barefoot investor start simple? (Like, investing for idiots simple?) I'll give it a try thankyou!

Grogounet · « **Reply #2375 on:** November 13, 2016, 11:25:00 AM »

IMHO, one of the only guy that can explain things the simplest way indeed.
From memory, there is a section "where to start" on his website.

The other resource I would use is (and you can google it): How to invest between the flags - By Moneysmart
Moneysmart has tons of tips to help you getting started.

Gruffy · « **Reply #2376 on:** November 13, 2016, 09:16:59 PM »

Quote from: Primm on September 11, 2016, 08:36:02 PM

Quote from: MajorTom on September 11, 2016, 04:35:03 PM

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.

Hello all,

Firstly this thread is awesome!

I'm a first time poster, so a little about me. I'm in the mid thirties and have always been an okay saver. But now am looking at how to better manage my savings. This year I read "Investing Demystified" by Lars Kroijer (https://www.amazon.co.uk/Investing-Demystified-Speculation-Sleepless-Financial/dp/0273781340/ref=sr_1_1?ie=UTF8&qid=1479095932&sr=8-1&keywords=investing+demystified+by+lars+kroijer), which has convinced me to approach investing as a rational investor by looking for a low cost, diversified market returns from investing in market indexes. Which has lead me to this blog where I think the goals are similar.

I am looking at what I should do with my Super and read the above comment in this thread and had some questions.

Are Mustachians looking at SunSuper because it has low fees but have more control in asset allocations? What if I don't want to rebalance the asset allocations. Are their options for that? When you look at the SunSuper website https://www.sunsuper.com.au/Grow_your_Super/Choose_your_investment_stategy/Make_your_super_investment_choice/ it doesn't mention that you need to log and monitor your assest allocation.

Apologies if these are basic questions, I am a newb.

thanks for any input,
Gruffy

marty998 · « **Reply #2377 on:** November 13, 2016, 11:55:11 PM »

You can choose a "balanced" type option, which has a pre-mixed asset allocation. They will give ranges (for example Australian shares may make up 25-40% of the portfolio, cash 0-10% etc).

Or you can choose your own allocation, in which case you will have to do your own rebalancing every now and again.

rebalancing every day is over the top... I normally do it every 6 months or so...

FFA · « **Reply #2378 on:** November 14, 2016, 12:30:13 AM »

if you're hands-off and set & forget, there might be slightly better options than sunsuper. Hostplus index balanced is hard to beat, it will rebalance by itself, and the MER is next to nothing. However if you're a bit more hand-on and want to tailor/adjust your asset allocation then sunsuper is very good for that.

Notch · « **Reply #2379 on:** November 14, 2016, 04:19:01 AM »

Australian Super and QSuper (when it opens to public) are very low cost and reputable options too.

Wadiman · « **Reply #2380 on:** November 17, 2016, 12:23:42 AM »

SMSFs and XTBs

I am currently with ING Direct for super who are ok but am considering establishing a SMSF as I have been looking into Exchange Traded Bonds (XTBs) https://xtbs.com.au/ and really like the look of them as a holding inside super given tax implications. Retail super funds do not (to my knowledge) offer XTBs and ING Direct certsainly don't.

It seems as though (via Esuperfund) that the cost would be around $800 pa (I currently pay close to $500 pa) and there aren't any costs for the first year.

Do many posters on this thread have a SMSF?

Anyone hold any XTB's? The coupon rates look excellent - range from circa 3% to 8%.

marty998 · « **Reply #2381 on:** November 17, 2016, 03:48:25 AM »

There has been a lot of talk lately about the end of the 25 year bull run in bonds... and that blood will be spilt when yields start rising (indeed they already have started rising).

I think this is the end in terms of low interest rates, but all of those people holding long dated bonds are in for a world of hurt.

Of course an opinion is exactly just that, but I'm tempted to hop out of fixed interest for the foreseeable future.

Abundant life · « **Reply #2382 on:** November 17, 2016, 04:32:23 AM »

Quote from: Wadiman on November 17, 2016, 12:23:42 AM

SMSFs and XTBs

I am currently with ING Direct for super who are ok but am considering establishing a SMSF as I have been looking into Exchange Traded Bonds (XTBs) https://xtbs.com.au/ and really like the look of them as a holding inside super given tax implications. Retail super funds do not (to my knowledge) offer XTBs and ING Direct certsainly don't.

It seems as though (via Esuperfund) that the cost would be around $800 pa (I currently pay close to $500 pa) and there aren't any costs for the first year.

Do many posters on this thread have a SMSF?

Anyone hold any XTB's? The coupon rates look excellent - range from circa 3% to 8%.

Various super funds now offer what some call, SMSF lite. To establish and report on a SMSF can be pricey for those with modest balances.

ING have an option called Direct Shares, where you pay $300 p.a. plus on top of that you pay for each trade. They include many ETFs that are popular with MMMers, as well as individual shares, but I don't know about XTBs. There are limits to how much you can hold of any one share or XTF (no more than 20% of your balance I think).

Have you read Jim Collin's stock series? Although written from a US perspective, has lots of good information.
http://jlcollinsnh.com/stock-series/

potm · « **Reply #2383 on:** November 17, 2016, 04:52:34 AM »

Quote from: Wadiman on November 17, 2016, 12:23:42 AM

SMSFs and XTBs

I am currently with ING Direct for super who are ok but am considering establishing a SMSF as I have been looking into Exchange Traded Bonds (XTBs) https://xtbs.com.au/ and really like the look of them as a holding inside super given tax implications. Retail super funds do not (to my knowledge) offer XTBs and ING Direct certsainly don't.

It seems as though (via Esuperfund) that the cost would be around $800 pa (I currently pay close to $500 pa) and there aren't any costs for the first year.

Do many posters on this thread have a SMSF?

Anyone hold any XTB's? The coupon rates look excellent - range from circa 3% to 8%.

There is also a $259 regulatory levy for SMSFs and another $48 or so for a corporate trustee.

Wadiman · « **Reply #2384 on:** November 17, 2016, 05:41:33 PM »

Thanks folks - a few comments.

If you hold an individual bond to maturity (as opposed to an ETF like IAF) then bond pricing doesn't matter as you get the full face value back at maturity plus the ongoing coupon rate.

Total cost for the SMSF is $800 pa I believe.

FFA · « **Reply #2385 on:** November 17, 2016, 11:03:36 PM »

Quote from: Wadiman on November 17, 2016, 12:23:42 AM

Anyone hold any XTB's? The coupon rates look excellent - range from circa 3% to 8%.

I think you need to look at Yield To Maturity, not coupon rate ? The coupon rate is only relevant if you paid face value.

Little Aussie Battler · « **Reply #2386 on:** November 18, 2016, 06:53:56 PM »

Is anybody investing in P2P lending?

Wadiman · « **Reply #2387 on:** November 19, 2016, 12:26:09 AM »

Quote from: FFA on November 17, 2016, 11:03:36 PM

Quote from: Wadiman on November 17, 2016, 12:23:42 AM

Anyone hold any XTB's? The coupon rates look excellent - range from circa 3% to 8%.
I think you need to look at Yield To Maturity, not coupon rate ? The coupon rate is only relevant if you paid face value.

You're dead right FFA - newbie bond ignorance - thanks.

YTM rates are around 2-4.5% - far less attractive than coupon rates.

Wadiman · « **Reply #2388 on:** November 19, 2016, 12:27:36 AM »

Quote from: Little Aussie Battler on November 18, 2016, 06:53:56 PM

Is anybody investing in P2P lending?

Like the general idea but may not be tax effective if you are on a high marginal rate.

cakie · « **Reply #2389 on:** November 19, 2016, 12:35:23 AM »

Quote from: Wadiman on November 19, 2016, 12:27:36 AM

Quote from: Little Aussie Battler on November 18, 2016, 06:53:56 PM
Is anybody investing in P2P lending?

Like the general idea but may not be tax effective if you are on a high marginal rate.

Have it as part of our 20% bond allocation, but my SO is in a very low tax bracket (it's in his name). Also young, early in accumulation phase still so we can be riskier.

Sent from my InFocus M808 using Tapatalk

FFA · « **Reply #2390 on:** November 19, 2016, 03:24:24 PM »

Quote from: cakie on November 19, 2016, 12:35:23 AM

Quote from: Wadiman on November 19, 2016, 12:27:36 AM
Quote from: Little Aussie Battler on November 18, 2016, 06:53:56 PM
Is anybody investing in P2P lending?

Like the general idea but may not be tax effective if you are on a high marginal rate.
Have it as part of our 20% bond allocation, but my SO is in a very low tax bracket (it's in his name). Also young, early in accumulation phase still so we can be riskier.

I haven't looked at it much but I would think it belongs in the equity allocation, from a risk perspective. Bonds are supposed to be the safe/low risk/low return anchor for your portfolio. I wouldn't put P2P lending in that bucket.

goldenmoustache · « **Reply #2391 on:** November 20, 2016, 11:45:37 PM »

Quote from: FFA on November 19, 2016, 03:24:24 PM

Quote from: cakie on November 19, 2016, 12:35:23 AM
Quote from: Wadiman on November 19, 2016, 12:27:36 AM
Quote from: Little Aussie Battler on November 18, 2016, 06:53:56 PM
Is anybody investing in P2P lending?

Like the general idea but may not be tax effective if you are on a high marginal rate.
Have it as part of our 20% bond allocation, but my SO is in a very low tax bracket (it's in his name). Also young, early in accumulation phase still so we can be riskier.
I haven't looked at it much but I would think it belongs in the equity allocation, from a risk perspective. Bonds are supposed to be the safe/low risk/low return anchor for your portfolio. I wouldn't put P2P lending in that bucket.

I used to like the idea a lot and initially put 10% allocation in P2P, but I am now changing my mind it and I am gradually pulling out (by taking principal and interest repayments out and no new lending). In my view, there are quite similar to junk bonds, but with the disadvantage of no secondary market, hence no liquidity. So, if I want to participate to that type of investment in the future, I believe I am better off with low grade bonds.

This said, they have been performing well so far and returned about 9% per year (inclusive of defaults).

Of course, from tax perspective, best to do it if you are on a low tax bracket or from discretionary trust if you can distribute to low tax bracket individual.

marty998 · « **Reply #2392 on:** November 23, 2016, 04:26:52 AM »

Dow 19,000 and the ASX keeps going up too...

As well it seems the Iron Ore price is lifting all boats again :O

Can't believe after buying VAS at ~65 earlier on Trump day it's now already back over 70...

bigchrisb · « **Reply #2393 on:** November 23, 2016, 02:43:52 PM »

Indeed! So much for deploying some capital while it was cheap... I managed a parcel of VAS in the 67's, some BRK-B at 144 and some TCL in the high 9's.

Its been equally interesting watching bond and interest rates start to head upwards. I'm debating how quickly this will play out here, and how much of it will flow through to our crazy property market. The lack of loading up may have been a blessing in disguise, as it means a bit of deleveraging through savings. With my current interest rates sitting with a 3 at the front, I'm sitting very pretty. However, replace that 3 with a 7 or 8, and things look significantly less rosy.

Anyone come up with a useful way to harness a rising rate environment? I would have thought fixing debt, floating rate bonds/hybrids and lowering property exposure?

steveo · « **Reply #2394 on:** November 23, 2016, 04:25:09 PM »

I looked at my assets getting lower and I thought if this continues I'll have some good buying opportunities. That didn't happen. I'll stick with just buying when I have the money.

11ducks · « **Reply #2395 on:** November 24, 2016, 12:36:39 AM »

Hey all,

I got some good advice from you guys a week ago re investing (I was looking for easy, low fee, set and forget)- so am just checking in before I take the plunge - I've signed up with Commsec (as stockbroker) - and plan to purchase online (through my bank account - cost is $29.95/trade) - shares in AFI and ARGO LTD - both are listed investment companies with decent diversity who have been around for ages, with super low management fees and fully franked dividends (which I don't totally grasp yet but have been told will make it easier for taxes).

I'll put in $10k to start ($5k per company), and add another $1k or so each month to one or the other. The plan is to add to it regularly and have it grow over the next 15 or so years to bridge the gap between quitting work and accessing my superannuation.

Does this seem reasonable? Is two companies like this enough to invest in, or would one (or more) be better? Any gigantic/obvious flaws in my plan? Thank you!

marty998 · « **Reply #2396 on:** November 24, 2016, 01:39:04 AM »

Quote from: 11ducks on November 24, 2016, 12:36:39 AM

Hey all,

I got some good advice from you guys a week ago re investing (I was looking for easy, low fee, set and forget)- so am just checking in before I take the plunge - I've signed up with Commsec (as stockbroker) - and plan to purchase online (through my bank account - cost is $29.95/trade) - shares in AFI and ARGO LTD - both are listed investment companies with decent diversity who have been around for ages, with super low management fees and fully franked dividends (which I don't totally grasp yet but have been told will make it easier for taxes).

I'll put in $10k to start ($5k per company), and add another $1k or so each month to one or the other. The plan is to add to it regularly and have it grow over the next 15 or so years to bridge the gap between quitting work and accessing my superannuation.

Does this seem reasonable? Is two companies like this enough to invest in, or would one (or more) be better? Any gigantic/obvious flaws in my plan? Thank you!

$30 is a lot to pay for only adding $1k at a time.

You wouldn't pay a 3% contribution fee to a managed fund, so it doesn't make sense to pay the same for brokerage.

I'd save up and purchase in $5-$10k lots. It'll be easier to track fewer parcels for CGT purposes as well.

Or you can open a CDIA account and access the $19.95 brokerage rate for trades under $10k. It works just like another bank account through Netbank.

FFF · « **Reply #2397 on:** November 24, 2016, 01:39:59 AM »

Quote from: 11ducks on November 24, 2016, 12:36:39 AM

Hey all,

I got some good advice from you guys a week ago re investing (I was looking for easy, low fee, set and forget)- so am just checking in before I take the plunge - I've signed up with Commsec (as stockbroker) - and plan to purchase online (through my bank account - cost is $29.95/trade) - shares in AFI and ARGO LTD - both are listed investment companies with decent diversity who have been around for ages, with super low management fees and fully franked dividends (which I don't totally grasp yet but have been told will make it easier for taxes).

I'll put in $10k to start ($5k per company), and add another $1k or so each month to one or the other. The plan is to add to it regularly and have it grow over the next 15 or so years to bridge the gap between quitting work and accessing my superannuation.

Does this seem reasonable? Is two companies like this enough to invest in, or would one (or more) be better? Any gigantic/obvious flaws in my plan? Thank you!

11 ducks, a few things jump out at me:

1. $29.95/trade is expensive, especially if you are planning on investing a grand each month or so. Personally, I would take advantage of Commsecs introductory offer of $600 free brokerage, and then move over to a CMC account which is only $11/trade. (I did a similar thing when starting with NABtrade, used their free brokerage offer and then transferred over my shares from my NABtrade HIN to my CMC HIN. It's an easy process, only 1 form to fill in and will save you a lot in the long run)

2. I would consider saving up more than $1k to invest each time, as even at $11/trade brokerage is quite a large % of your invested amount. It's also slightly easier to keep record of if you make less trades a year.

3. You mentioned diversity with AFI and ARGO. They are both investing solely in the Aussie market, which carries concentration risk. I would pick one or the other (or alternatively VAS).

4. What about further diversity beyond the Aussie market, VTS (US market), VEU (rest of world ex. US) etc.?

marty998 · « **Reply #2398 on:** November 24, 2016, 01:43:32 AM »

Quote from: bigchrisb on November 23, 2016, 02:43:52 PM

Indeed! So much for deploying some capital while it was cheap... I managed a parcel of VAS in the 67's, some BRK-B at 144 and some TCL in the high 9's.

Its been equally interesting watching bond and interest rates start to head upwards. I'm debating how quickly this will play out here, and how much of it will flow through to our crazy property market. The lack of loading up may have been a blessing in disguise, as it means a bit of deleveraging through savings. With my current interest rates sitting with a 3 at the front, I'm sitting very pretty. However, replace that 3 with a 7 or 8, and things look significantly less rosy.

Anyone come up with a useful way to harness a rising rate environment? I would have thought fixing debt, floating rate bonds/hybrids and lowering property exposure?

Am considering fixing some more of my property loans (2 yr @3.99% is tempting). However I would prefer to have some more flexibility to use offsets, as you can only get partial offset on fixed rate loans.

There will be significant economic problems long before rates get to 7%. I can see 5.5% being a tipping point for many recent investors to hang the "for sale" sign out the front. The negative gear on many of the 3% yielding houses in inner city will be too much to bear for the unprepared.

FFA · « **Reply #2399 on:** November 24, 2016, 04:56:59 AM »

Quote from: marty998 on November 24, 2016, 01:43:32 AM

Quote from: bigchrisb on November 23, 2016, 02:43:52 PM
Indeed! So much for deploying some capital while it was cheap... I managed a parcel of VAS in the 67's, some BRK-B at 144 and some TCL in the high 9's.

Its been equally interesting watching bond and interest rates start to head upwards. I'm debating how quickly this will play out here, and how much of it will flow through to our crazy property market. The lack of loading up may have been a blessing in disguise, as it means a bit of deleveraging through savings. With my current interest rates sitting with a 3 at the front, I'm sitting very pretty. However, replace that 3 with a 7 or 8, and things look significantly less rosy.

Anyone come up with a useful way to harness a rising rate environment? I would have thought fixing debt, floating rate bonds/hybrids and lowering property exposure?

Am considering fixing some more of my property loans (2 yr @3.99% is tempting). However I would prefer to have some more flexibility to use offsets, as you can only get partial offset on fixed rate loans.

There will be significant economic problems long before rates get to 7%. I can see 5.5% being a tipping point for many recent investors to hang the "for sale" sign out the front. The negative gear on many of the 3% yielding houses in inner city will be too much to bear for the unprepared.

firstly, I'm not sure rates are onwards and upwards from here. A few months ago everyone was saying lower for longer and expect low rates/yields/returns for decades. The tune changed quickly, and it can change back quickly again.

secondly, even if you call it right and rates have bottomed, it's hard to be confident how to play it. e.g. all the people holding cash/gold/index shorts in case Trump won, well they didn't work out so well for them....

So my thoughts are just to keep doing the same, re-balance. I will consider adding bonds once the pendulum swings which I have been avoiding for years due to QE (and regretting it for a while). REITs and infrastructure stocks also, as the pendulum usually overshoots, but that is thinking a fair way ahead.....

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