Author Topic: Australian Investing Thread  (Read 687132 times)

Itchyfeet

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Re: Australian Investing Thread
« Reply #3450 on: August 31, 2017, 10:53:26 AM »
I think you are approaching this the right way.

When I was young (45 now) I was really happy to see the back of my HECS debt, so completely understand you wanting to do likewise.

I also agree not prioritising buying in Sydney or Melbourne right now. It is insanely expensive. Hard to imagine getting good returns on investments. Rent yields are low, and after the capital price growth over the past 7 years i can only conclude that we are at the top of the cycle. Any rises in interest rates will keep a cap on prices for some time I think. But this is just a personal opinion and I don't own a crystal ball.

At 23 I wouldn't worry too much about super, although 40 years of tax free returns are an attraction I suppose.

If you live in London you will still be an Australian tax resident if you are only going for only one year. There is a DTA with the UK, but prob worth getting some advice on tax implications of buying stocks etc from the UK.

melfire

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Re: Australian Investing Thread
« Reply #3451 on: August 31, 2017, 08:52:23 PM »
Thanks for the prompt reply Itchyfeet.

In regards to super, I guess i'm just worried i've fallen behind the curve due to a few thousand being lost. But as you say, 20-30 years until retirement is still plenty of time to catch up a few small repayments.

Any idea on a good way to search for reputable financial advisors? Or perhaps, things to look out for to make sure I get valuable feedback?

lush

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Re: Australian Investing Thread
« Reply #3452 on: August 31, 2017, 09:11:11 PM »
Hi All, in trying to reach FIRE we are cutting back everywhere. We are now looking at our private health insurance ( just a couple no kids) and just want basic hospital cover. Any recommendations from this clever crowd? Thanks

mjr

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Re: Australian Investing Thread
« Reply #3453 on: August 31, 2017, 09:16:43 PM »
Any idea on a good way to search for reputable financial advisors? Or perhaps, things to look out for to make sure I get valuable feedback?

You've read 69 pages of this thread and JLCollins and you're looking for a financial adviser ?   I would have said that the general advice from these fora is to stay away from them.

If you must find one, get one that charges a fee-for-service,not on-going assets-under-management.  That fee is likely to be several thousand dollars, mind you.

melfire

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Re: Australian Investing Thread
« Reply #3454 on: August 31, 2017, 09:19:47 PM »
@MJR: So perhaps financial advisor isn't the correct term, but as suggested by itchyfeet, i do agree getting specific advice on working in the UK and investing in AU is warranted. Is there a specific service (that isn't a financial advisor) that i should seek out?

banksie_82

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Re: Australian Investing Thread
« Reply #3455 on: August 31, 2017, 09:38:04 PM »
Hi Melfire

There is a problem with the general population of Australia, in that they think super is the only way to save for retirement, and if you have a low super balance when you turn 65 then youíre screwed. You see this reinforced a lot in the media and by peopleís reaction to changes in the superannuation laws.

I could be wrong, but you seem to have this mindset, at least to some degree.

People on this forum think of super a little differently. For us, at least for amounts over and above compulsory contributions, itís simply a way to save on tax. The trade-off is not being allowed to touch it (and itís gains) until youíre in your 60s. Hopefully for us, that is many, many years after retirement has already begun.

Even for people who retire at 65, there is no reason that all of their nest egg needs to be in superÖ itís just nice if it was, for tax reasons.

Different people will have different opinions on if itís worth adding extra to super, and certainly it is different for each personal circumstance. The general consensus is Ė the higher your marginal tax rate, and the closer you are to your 60ís then the more worthwhile it is.

So, yes, you have missed out on some super paymentsÖ that sucks. But what to do with new savings should be a decision based on what is optimal for that dollar, not trying to right old wrongs that you now canít do anything about.

As to your other questions:

Why do you plan to save $20k before investing in ETFís? Iíd buy a parcel every time I had $5k spare if I was you. To me, thatís a sweet spot of keeping brokerage as a % fairly low, but not having too much money sitting on the sidelines.

I donít know about non-resident tax rules, or specifics for the UK. I lived over there for 2 years when I was 18-19. But at the time I was blissfully ignorant of share investing, foreign income and tax, andÖ wellÖ anything financial expect earning enough money to buy my next pint.

With respect to property, Iíd say the top has to be close, and if prices donít drop then they must surely flatline for a while. But, and this is a big but, Iíve been saying that for the last few years and yet prices keep rising. So donít listen to me.

Finally, youíre looking for a tax accountant that can help with international residency.

mjr

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Re: Australian Investing Thread
« Reply #3456 on: August 31, 2017, 09:45:05 PM »
Is it tax you're asking about ?  If you have a specific question, e.g. you're going to live in the UK and buy Australian ETFs and want to know what the tax implications are, you can ask the ATO.  They can be surprisingly helpful about such things.

PDM

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Re: Australian Investing Thread
« Reply #3457 on: August 31, 2017, 09:50:36 PM »
Hi all,

Great to see some Aussie Mustachian's around! I found the MMM blog a few months ago, managed to binge read everything before moving on to JColins/Afford Anything and have been reading a few MMM recommended books every other week.

I have just finished reading all 69 pages over the last few days.. thank you so much for sharing all of the helpful information. I have a few questions that haven't been covered and would look to get a second opinion on my strategy if anyone is around.

Age: 23
Debt: 19K HECS
ING Savings (F You Money): 10k
Joint Savings: 5k
Super: A dismal 4k


My questions are:
1. Should I make extra super contributions to make up for the my lost super?
2. Once I hit 15k savings, I plan to save 20k to invest in ETFs (VAS = 50%, VGS 50%) in 2x 10k transactions with Commsec. Continuing to invest quarterly as I can afford. Is this a sound strategy for my current position?
3. I plan to move to London with my S/O in 3-5 years time for 12 months or so (hence the join savings account for the move). Is there anything I should consider in terms of ETFs when living overseas/not earning AUD income? I saw it was mentioned in regards to US, does anyone have any UK specific information?
4. Lastly, I do have some concerns about the property market in Syd/Melb. I can see our population growth won't be slowing down anytime soon, and even though I don't have a crystal ball, I don't expect prices to drop but perhaps stagnate temporarily. I've discussed with S/O and have agreed for the next 5-10 years renting is definitely the better option (we plan to move around due to job changes/looking for a good place to settle long term). While we are happy to rent and invest in ETFs, I can't help but wonder if we are setting ourselves up to fail down the road if we do decide to buy a PPOR. Any tips/insights for things to consider?

I promise that's it. Thanks for reading so far!


Hey,
A few thoughts:
1) Do you need a $15k emergency fund? I read somewhere (maybe MMM) maybe greaterfool.ca that this is kind of unnecessary in this day and age with debt being cheap and freely available. I.e you could get a credit card tomorrow - wrack up $5k of debt, then transfer that to a second card on 18months interest free basis.
 
Not saying having some cash is a bad thing - just make sure its at least in a high interest account trying to keep up with inflation.
It'd help with providing general advice if we knew how much you earn?

2) I like VGS but has been a bit volatile lately with Trump, North Korea, AUD changes. But those are short term things. Old adage - time in the market, not timing the market. Personally I don't like VAS but that is my anti ASX sentiment.  Personally, in line with 1) above, I'd lower the emergency fund and put more into ETFs. They are fairly simple to sell (i.e very liquid) much like actual cash. However much higher potential for return.

3) No idea. US is a bit wacky with their double taxing deal. I think Australia as agreements with the UK that you only pay tax once.

4) My wife and I are in the rent + invest in ETFs camp. Brisbane not Mel/Syd. My tip here is to consider that you're building a diverse wealth base and have amazing flexibility. Unlike someone who has bought a house and has a single asset and is exposed entirely to the property market. Create a spreadsheet that tracks your net worth (super, investments, cash etc). It really helps with convincing yourself you're not missing out by getting a mega mortgage.
At some future point, you'll be able to buy a house with the value of ETFs or keep renting and live of the return. Maybe FIRE where ever you like - not in a house you bought near your work. Or travel the world.

You are setting yourselves up for down the road - just not to fail. Being debt free is awesome. Being a debt slave to a massive mortgage is not.

The biggest test is going to BBQ after BBQ where the only topic of conversation is property. Or having to pretend a friend has made a great decision to buy what you think is a massively over priced property.

I wish I'd started FIRE at 23!
Other unsolicited advice:
Make sure your SO is on the same journey and understand things.
Write a budget.
Track your Savings rate.
Still spend some money on yourself. Treat yo' self
Don't pay of HECs sooner than required.
Live, laugh, love
Dance like noone is watching. (ok those last two were a joke).

misterhorsey

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Re: Australian Investing Thread
« Reply #3458 on: August 31, 2017, 10:23:11 PM »
Hi All, in trying to reach FIRE we are cutting back everywhere. We are now looking at our private health insurance ( just a couple no kids) and just want basic hospital cover. Any recommendations from this clever crowd? Thanks

Everyone's circumstances are different so I'd suggest looking at the non-commission comparison sites:

http://www.privatehealth.gov.au/dynamic/search

If you keep an eye on Ozbargain they tend to share the occasional incentivised switch by companies like iSelect.  If you don't mind giving up your contact details for a bit of communication it's an expensive way to earn a $200 gift voucher.

For what its worth, I've been with Frank and NIB.  But only paid very basic private hospital because I was earning enough to have to pay the surcharge, and buying basic private was  cheaper than the Medicare Surcharge.  But do read the terms and conditions carefully if you actually plan on relying on the insurance.  I went with these insurers assuming I'd still go public if something bad happened.  I have been in a shared public ward for a minor op. It's not like a private cabin in a cruise ship but there are worse experiences.

I've since left private insurance as I won't be earning anything for a bit. As you may know you have to pay a loading if you don't get it before the age of 30. They do give you 3 years off without resetting your loading, but its not well publicised.

The value of buying private health insurance if you don't earn above the threshold where the surcharge kicks in is debatable.

Here's an article about some of the maths involved in paying insurance, and what's advantageous in certain circumstances.

https://www.choice.com.au/money/insurance/health/articles/how-to-pay-the-lifetime-health-cover-loading-and-save

misterhorsey

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Re: Australian Investing Thread
« Reply #3459 on: August 31, 2017, 10:25:59 PM »
In regards to super, I guess i'm just worried i've fallen behind the curve due to a few thousand being lost. But as you say, 20-30 years until retirement is still plenty of time to catch up a few small repayments.

You needn't worry about being behind the curve.  Thinking about this stuff and planning ahead at the age of 23 puts you well ahead of the curve.  Most people don't ever think about this stuff and then when they do, it's later in life.

I didn't even start earning a full time salary until 25. Aargh!

mjr

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Re: Australian Investing Thread
« Reply #3460 on: August 31, 2017, 11:24:44 PM »
As per Banksie, I didn't get overly excited about super until quite late in the piece.  Throughout all my young years, I had much more money saved outside of super than in it.  It's only now, in the home straight (and the rules just changed) that I ploughed large sums into super, knowing that I still have plenty outside of super to get me to age 60.

Also, it depends on what makes you happy of course, but a PPOR was much more of a priority for me.  I know that property can be iffy as an investment vehicle compared to shares and I certainly did't over-invest in my house, but the security of place to live and no-one can make me move is worth $$$ to me. 


Itchyfeet

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Re: Australian Investing Thread
« Reply #3461 on: September 01, 2017, 02:04:29 AM »
Peering into my imaginary crystal ball I would say that for a 23 year old there will be better times in the next 20 years to buy a home in Sydney or Melbourne than today.

Back in 2004 we had made a killing on property between 1995 and 2004, so we took out a massive mortgage and bought a nice place on Sydney's northern beaches.

That place was worth less than what we paid for it for the next 5 years, and when we sold it in 2010 it was worth only 10% more than what we purchased it for, a gain of about 1.5% per year, or a real loss of about 1.5% per year.

Buying property at the top of a cycle is a bad idea.

If you are patient, and invest in stocks while you bide your time, you will see property prices stall and maybe even retreat a little. This will happen soon enough. Either this year or next..

When this stalling happens keep waiting. Your stocks will go up in value as money moves from property to stocks. Interest rates will rise, and more money will move out of property. Keep waiting.

After a few years, or several years you will note that auction clearance rates will start rising for the first time in years, and the number of people at open house will start increasing.

This is the time to revisit whether you really want to own a home in Sydney.

By this time you will have a solid deposit, and will be less at risk of mortgage stress if interest rates rise after you buy.

It is a time for exercising patience.

superannuationfreak

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Re: Australian Investing Thread
« Reply #3462 on: September 01, 2017, 05:21:44 AM »
3. I plan to move to London with my S/O in 3-5 years time for 12 months or so (hence the join savings account for the move). Is there anything I should consider in terms of ETFs when living overseas/not earning AUD income? I saw it was mentioned in regards to US, does anyone have any UK specific information?

4. Lastly, I do have some concerns about the property market in Syd/Melb. I can see our population growth won't be slowing down anytime soon, and even though I don't have a crystal ball, I don't expect prices to drop but perhaps stagnate temporarily. I've discussed with S/O and have agreed for the next 5-10 years renting is definitely the better option (we plan to move around due to job changes/looking for a good place to settle long term). While we are happy to rent and invest in ETFs, I can't help but wonder if we are setting ourselves up to fail down the road if we do decide to buy a PPOR. Any tips/insights for things to consider?

3. I'm not a tax so seek advice/do your own research if unsure.  My understanding is that the UK taxes funds/ETFs punitively if they do not have "reporting status" or something like that.  Most Australian funds do not, however Vanguard's US-domiciled ETFs did have reporting status when I checked HMRC's spreadsheet.  When I was considering living in the US or UK I thus focused on Vanguard US-domiciled ETFs.

There are some Vanguard US-domiciled ETFs you can buy on the ASX (in particular, VTS and VEU) - at the time I thought those would be OK although I ended up buying Vanguard ETFs using a US broker anyway.

4. If I planned to travel I wouldn't be buying property in Melbourne or Sydney.  If I planned to move back to Australia and buy property within 5 years I would build my deposit largely in AUD cash, if I was looking longer-term it would depend how risk-averse I was (i.e. how willing I was to wait longer to buy property if the share market wasn't cooperating when I planned to buy)

Wadiman

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Re: Australian Investing Thread
« Reply #3463 on: September 01, 2017, 04:05:07 PM »
Peering into my imaginary crystal ball I would say that for a 23 year old there will be better times in the next 20 years to buy a home in Sydney or Melbourne than today.

Back in 2004 we had made a killing on property between 1995 and 2004, so we took out a massive mortgage and bought a nice place on Sydney's northern beaches.

That place was worth less than what we paid for it for the next 5 years, and when we sold it in 2010 it was worth only 10% more than what we purchased it for, a gain of about 1.5% per year, or a real loss of about 1.5% per year.

Buying property at the top of a cycle is a bad idea.

If you are patient, and invest in stocks while you bide your time, you will see property prices stall and maybe even retreat a little. This will happen soon enough. Either this year or next..

When this stalling happens keep waiting. Your stocks will go up in value as money moves from property to stocks. Interest rates will rise, and more money will move out of property. Keep waiting.

After a few years, or several years you will note that auction clearance rates will start rising for the first time in years, and the number of people at open house will start increasing.

This is the time to revisit whether you really want to own a home in Sydney.

By this time you will have a solid deposit, and will be less at risk of mortgage stress if interest rates rise after you buy.

It is a time for exercising patience.

Great advice there IF!

lush

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Re: Australian Investing Thread
« Reply #3464 on: September 01, 2017, 06:38:24 PM »
Hi All, in trying to reach FIRE we are cutting back everywhere. We are now looking at our private health insurance ( just a couple no kids) and just want basic hospital cover. Any recommendations from this clever crowd? Thanks

Everyone's circumstances are different so I'd suggest looking at the non-commission comparison sites:

http://www.privatehealth.gov.au/dynamic/search

If you keep an eye on Ozbargain they tend to share the occasional incentivised switch by companies like iSelect.  If you don't mind giving up your contact details for a bit of communication it's an expensive way to earn a $200 gift voucher.

For what its worth, I've been with Frank and NIB.  But only paid very basic private hospital because I was earning enough to have to pay the surcharge, and buying basic private was  cheaper than the Medicare Surcharge.  But do read the terms and conditions carefully if you actually plan on relying on the insurance.  I went with these insurers assuming I'd still go public if something bad happened.  I have been in a shared public ward for a minor op. It's not like a private cabin in a cruise ship but there are worse experiences.

I've since left private insurance as I won't be earning anything for a bit. As you may know you have to pay a loading if you don't get it before the age of 30. They do give you 3 years off without resetting your loading, but its not well publicised.

The value of buying private health insurance if you don't earn above the threshold where the surcharge kicks in is debatable.

Here's an article about some of the maths involved in paying insurance, and what's advantageous in certain circumstances.

https://www.choice.com.au/money/insurance/health/articles/how-to-pay-the-lifetime-health-cover-loading-and-save

Thanks MisterHorsey! Has really opened my eyes as to what is not publicised!

niknah

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Re: Australian Investing Thread
« Reply #3465 on: September 01, 2017, 10:41:36 PM »
VAS mytax prefill?  Last year the statements came around 20th of july it hadn't prefilled by then so I entered it by hand on the 20th this was the last info I was waiting for.

Does anyone know if it does prefill into Mytax?

thanks. Koala.

I just had mytax prefill the VAS distributions and they were not correct.  They had added the unfranked dividends into the franked dividends number.  Best check with the annual statement, don't presume the prefill will be correct.


GT

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Re: Australian Investing Thread
« Reply #3466 on: September 01, 2017, 11:02:39 PM »
My questions are:
1. Should I make extra super contributions to make up for the my lost super?
2. Once I hit 15k savings, I plan to save 20k to invest in ETFs (VAS = 50%, VGS 50%) in 2x 10k transactions with Commsec. Continuing to invest quarterly as I can afford. Is this a sound strategy for my current position?
3. I plan to move to London with my S/O in 3-5 years time for 12 months or so (hence the join savings account for the move). Is there anything I should consider in terms of ETFs when living overseas/not earning AUD income? I saw it was mentioned in regards to US, does anyone have any UK specific information?
4. Lastly, I do have some concerns about the property market in Syd/Melb. I can see our population growth won't be slowing down anytime soon, and even though I don't have a crystal ball, I don't expect prices to drop but perhaps stagnate temporarily. I've discussed with S/O and have agreed for the next 5-10 years renting is definitely the better option (we plan to move around due to job changes/looking for a good place to settle long term). While we are happy to rent and invest in ETFs, I can't help but wonder if we are setting ourselves up to fail down the road if we do decide to buy a PPOR. Any tips/insights for things to consider?

Hi melfire.

It would have already been covered in your 69 pages of reading as we originally nutted it out in this thread, but here it is again, the investment order for Australians.  https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333550/#msg1333550

As you've not provided your annual income (which is perfectly fine), Point 4 in the investment order may be relevant to your Q1.  I may be taking advantage of this option in June of next year if I continue #daddydaycare through til then, as I'd definately be under the cutoff.

Wadiman

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Re: Australian Investing Thread
« Reply #3467 on: September 02, 2017, 03:45:52 PM »
Anyone looked at https://www.brickx.com/?

Very interesting P2P concept for Aus property


deborah

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Re: Australian Investing Thread
« Reply #3468 on: September 02, 2017, 04:17:13 PM »
Anyone looked at https://www.brickx.com/?

Very interesting P2P concept for Aus property


It was written up in Fairfax a little while ago http://www.smh.com.au/money/investing/brickx-offers-fractional-ownership-of-residential-property-for-investors-20160911-gre0eg.html - like a lot of journalism these days, it is little more than an ad.

Luckyvik

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Re: Australian Investing Thread
« Reply #3469 on: September 02, 2017, 09:54:14 PM »
Anyone looked at https://www.brickx.com/?

Very interesting P2P concept for Aus property


It was written up in Fairfax a little while ago http://www.smh.com.au/money/investing/brickx-offers-fractional-ownership-of-residential-property-for-investors-20160911-gre0eg.html - like a lot of journalism these days, it is little more than an ad.
Seems to me the fees are high.


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marty998

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Re: Australian Investing Thread
« Reply #3470 on: September 03, 2017, 03:24:43 AM »
Anyone looked at https://www.brickx.com/?

Very interesting P2P concept for Aus property


It was written up in Fairfax a little while ago http://www.smh.com.au/money/investing/brickx-offers-fractional-ownership-of-residential-property-for-investors-20160911-gre0eg.html - like a lot of journalism these days, it is little more than an ad.
Seems to me the fees are high.


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Yeah very high fees. The only people who will make money out of this are the promoters.

misterhorsey

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Re: Australian Investing Thread
« Reply #3471 on: September 03, 2017, 10:00:56 PM »
The value of buying private health insurance if you don't earn above the threshold where the surcharge kicks in is debatable.

Here's an article about some of the maths involved in paying insurance, and what's advantageous in certain circumstances.

https://www.choice.com.au/money/insurance/health/articles/how-to-pay-the-lifetime-health-cover-loading-and-save

Thanks MisterHorsey! Has really opened my eyes as to what is not publicised!

No worries. Even Failfax press recently did an article on some of the hidden surprises of private health insurance.

http://www.smh.com.au/money/planning/is-private-health-insurance-worth-it-20170831-gy7uvq.html

marty998

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Re: Australian Investing Thread
« Reply #3472 on: September 04, 2017, 03:04:31 PM »
The value of buying private health insurance if you don't earn above the threshold where the surcharge kicks in is debatable.

Here's an article about some of the maths involved in paying insurance, and what's advantageous in certain circumstances.

https://www.choice.com.au/money/insurance/health/articles/how-to-pay-the-lifetime-health-cover-loading-and-save

Thanks MisterHorsey! Has really opened my eyes as to what is not publicised!

No worries. Even Failfax press recently did an article on some of the hidden surprises of private health insurance.

http://www.smh.com.au/money/planning/is-private-health-insurance-worth-it-20170831-gy7uvq.html

Appreciate your contributions misterhorsey, but that's a silly swipe that doesn't belong here.

NotSure

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Re: Australian Investing Thread
« Reply #3473 on: September 04, 2017, 10:18:28 PM »
Anyone with SunSuper, how do you check performance of your investments on their website, can't find anything. :(

I've my wife's super in AustralianSuper and it's super simple.

PDM

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Re: Australian Investing Thread
« Reply #3474 on: September 04, 2017, 11:26:15 PM »
The value of buying private health insurance if you don't earn above the threshold where the surcharge kicks in is debatable.

Here's an article about some of the maths involved in paying insurance, and what's advantageous in certain circumstances.

https://www.choice.com.au/money/insurance/health/articles/how-to-pay-the-lifetime-health-cover-loading-and-save

Thanks MisterHorsey! Has really opened my eyes as to what is not publicised!

No worries. Even Failfax press recently did an article on some of the hidden surprises of private health insurance.

http://www.smh.com.au/money/planning/is-private-health-insurance-worth-it-20170831-gy7uvq.html

Appreciate your contributions misterhorsey, but that's a silly swipe that doesn't belong here.

I would say it is fair. Mainstream media has 100% captured by the realestate industry and the average newspaper is little more than an excuse to publish all the realestate content. Fairfax Media is basically Domian Property and little else with all journalistic content skewed to supporting it.
Former SHM reader can't stand it now.

Same applies to News Limited and Realestate.com. Property firms with formerly reliable and trustworthy newspapers.

gsp

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Re: Australian Investing Thread
« Reply #3475 on: September 04, 2017, 11:29:38 PM »
Hi All
Thank you all for sharing your financial wisdom.
I have 300k in Super. I want to SMSF with 200k on property and 100K on Vanguard ETF.
1. Which one is better Vanguard ETF or Super fund  for that 100k ?
2.If Vanguard ETF then is hedged or unhedged better ?

steveo

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Re: Australian Investing Thread
« Reply #3476 on: September 05, 2017, 02:10:43 AM »
Hi All
Thank you all for sharing your financial wisdom.
I have 300k in Super. I want to SMSF with 200k on property and 100K on Vanguard ETF.
1. Which one is better Vanguard ETF or Super fund  for that 100k ?
2.If Vanguard ETF then is hedged or unhedged better ?

Maybe I'm not understanding the question correctly so I'll play it back to you. Do you want to get a SMSF ? If so then my understanding is that you could buy a Vanguard ETF within your super fund. You can also get a variety of super funds (not a SMSF) and invest in whatever options are available within those super funds. I think some super funds do offer up Vanguard ETF options.

mymatenate

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Re: Australian Investing Thread
« Reply #3477 on: September 05, 2017, 04:04:55 AM »
I just wanted to bump my post on farmland investing once and see if anyone wanted to discuss it further. I answered the questions which were asked (page 69) but no one has followed up. Before we depart the topic if anyone has any other thoughts to share, say even why they don't think it sounds like a good investment. I'm happy to answer any further questions...

Guys - what's your thoughts on investing in Australian farm land?

I've been running the numbers and chatting to my farmer friends and it doesn't seem all that bad

For example-

Good, flat arable land suitable for cropping and grazing in fairly reliable rainfall area for $2000 per acre.
Can lease easily for $60 per acre per year
Rates approx $8 per acre per year

Renter pays insurance.

Could buy a couple a hundred acres of flat productive land, without a house, so easy to manage and little in the way of other costs besides maintaining the boundary fences.

say, 200 acres x 2000 = $400,000 capital
200  x 60 = $12000 / year less $1600 rates = $10400
2.6% return

I know 2.6% is quite low, but you would expect the land will rise in value at least alongside inflation (over the long term), so 3% + 2.6% = 5.6%. Or looking at it another way, 2.6% that you can safely "withdraw" and spend.

Thoughts?

« Last Edit: September 05, 2017, 02:03:45 PM by mymatenate »

marty998

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Re: Australian Investing Thread
« Reply #3478 on: September 05, 2017, 05:13:10 AM »
Hi All
Thank you all for sharing your financial wisdom.
I have 300k in Super. I want to SMSF with 200k on property and 100K on Vanguard ETF.
1. Which one is better Vanguard ETF or Super fund  for that 100k ?
2.If Vanguard ETF then is hedged or unhedged better ?

It doesn't sound to me like you currently have the financial knowledge and capacity to run a SMSF.

$200k is not going to get you far in terms of buying a property when you can only gear to max 70%, and need to set aside funds for stamps and legals, as well as having a buffer in place.

Have you got a plan or an idea of what sort of property to buy? Have you talked to your accountant or advisor about it?

bigchrisb

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Re: Australian Investing Thread
« Reply #3479 on: September 05, 2017, 06:52:20 PM »
What you have described is an illiquid asset with a low yield income stream that should increase with inflation.  Its probably reasonably uncorrelated with equities or bonds. 

However, if you look at other illiquid assets with inflation hedged income streams, are you any better or worse?  The obvious comparisons would be commercial property, where 5-10 year lease terms are not uncommon, along with net leases (tenant pays costs).  Rent reviews are usually either a fixed rate or CPI.  Those sorts of assets are usually running 4-8% yield. 

I'd also suggest that the dividend from equities usually increases as fast or faster than inflation, but again with a higher starting point (5.5% gross for AU equities or 3% for world equities, using VGS as a quick metric).  I'd be asking what I'm getting for having my money tied up in an illiquid asset, and if its better or worse than my alternates.

It sounds like you have done well from farmland so far, and are comfortable with it.  I don't know enough about what the risks of this type of asset are - do you lose your tenant with extended drought?  Are you exposed to soft commodities prices with farmers wanting to lease the land?  Are you able to contest the land between multiple parties to create competition, or are you stuck leasing to the neighbor?  What happens in the event of fire/flood/disaster?  I don't know the answer to those questions, and the risk may well be low.  But I suspect its not zero, and I'd want to be adequately compensated for my risks, along with a return on my capital at least equal to the risk free rate.

But, if you are comfortable with the returns, your idea of spending the income as a swr on this land seems reasonable, as long as you are provisioning for any long term costs, such as fencing.

Thanks for bringing it up too - I'd like to see more asset classes discussed on here than just stocks, bonds and resi property.

I just wanted to bump my post on farmland investing once and see if anyone wanted to discuss it further. I answered the questions which were asked (page 69) but no one has followed up. Before we depart the topic if anyone has any other thoughts to share, say even why they don't think it sounds like a good investment. I'm happy to answer any further questions...

Nora

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Re: Australian Investing Thread
« Reply #3480 on: September 05, 2017, 08:19:15 PM »
Hi All, in trying to reach FIRE we are cutting back everywhere. We are now looking at our private health insurance ( just a couple no kids) and just want basic hospital cover. Any recommendations from this clever crowd? Thanks

HIF was the cheapest when I looked into this a few years back. Only got it to avoid mls. Otherwise would have just stuck with public.

misterhorsey

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Re: Australian Investing Thread
« Reply #3481 on: September 05, 2017, 08:33:44 PM »
The value of buying private health insurance if you don't earn above the threshold where the surcharge kicks in is debatable.

Here's an article about some of the maths involved in paying insurance, and what's advantageous in certain circumstances.

https://www.choice.com.au/money/insurance/health/articles/how-to-pay-the-lifetime-health-cover-loading-and-save

Thanks MisterHorsey! Has really opened my eyes as to what is not publicised!

No worries. Even Failfax press recently did an article on some of the hidden surprises of private health insurance.

http://www.smh.com.au/money/planning/is-private-health-insurance-worth-it-20170831-gy7uvq.html

Appreciate your contributions misterhorsey, but that's a silly swipe that doesn't belong here.

It was a 'swipe', yes. And it was 'silly', indeed.

But it's not without reason.

The aforementioned news publishing company misjudged the disrupted advent of the interwebs very badly - as many incumbent news orgs did across the world - and as a result is struggling. The Sydney Morning Herald was my beloved quality broadsheet when I was growing up. I'm afraid it is no more. The Age in my adopted home seemed to be marginally better, but I wouldn't say that anymore.

A vibrant democracy needs a robust press to critique power and keep it accountable, to provide a public record, to report the news but also provide a forum for critical and often uncomfortable debate. I don't believe Fairfax Media Limited are providing it. There are a few bright sparks remaining that I admire (Ross Gittins, John Silvester, Ruby Hamad, Nicole Pederson McKinnon in particular are worth a read). However, it seems to me that the online versions pander to celebrity gossip click bait, middle class status anxieties (private schools, fine dining), diet and nutrition neuroses, Apple product launches and of course Real Estate - home renos and all manner of real estate investment pumping.  It's like Buzz Feed for anxious, aspirational, materialistic, high consumption bourgeoisie. I did have a friend who worked on their online section - they do actively court clickthroughs on the online version, which at time was run separately from the print version. So maybe us online readers who aren't willing to pay for anything are to blame?

Either way, it's not the fault of the journos, but management.  You can't provide quality and comprehensive news coverage, opinion and analysis if you keep on sacking everyone.

I don't necessarily endorse MEAA's strategy, but their campaign page on Fairfax cuts is an interesting take on the decline of some once venerable mastheads.

https://www.meaa.org/campaigns/fair-go-fairfax/

I don't know what a sustainable commercial strategy is to provide decent quality coverage of local and national events. There are better out there that come to mind (The Guardian (Aus + UK), Washington Post) and there are worse (Daily Mail), but it's sad to see once quality print journalism in Australia engage in a race to the bottom.  It's not going to work.

Thanks for the opportunity to explain myself. Anyway, totally off topic. I shall say no more.

Nora

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Re: Australian Investing Thread
« Reply #3482 on: September 05, 2017, 11:25:20 PM »
Anyone with SunSuper, how do you check performance of your investments on their website, can't find anything. :(

I've my wife's super in AustralianSuper and it's super simple.

Sunsupers is in a pdf file somewhere on their site

marty998

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Re: Australian Investing Thread
« Reply #3483 on: September 06, 2017, 04:36:30 AM »
The value of buying private health insurance if you don't earn above the threshold where the surcharge kicks in is debatable.

Here's an article about some of the maths involved in paying insurance, and what's advantageous in certain circumstances.

https://www.choice.com.au/money/insurance/health/articles/how-to-pay-the-lifetime-health-cover-loading-and-save

Thanks MisterHorsey! Has really opened my eyes as to what is not publicised!

No worries. Even Failfax press recently did an article on some of the hidden surprises of private health insurance.

http://www.smh.com.au/money/planning/is-private-health-insurance-worth-it-20170831-gy7uvq.html

Appreciate your contributions misterhorsey, but that's a silly swipe that doesn't belong here.

It was a 'swipe', yes. And it was 'silly', indeed.

But it's not without reason.

The aforementioned news publishing company misjudged the disrupted advent of the interwebs very badly - as many incumbent news orgs did across the world - and as a result is struggling. The Sydney Morning Herald was my beloved quality broadsheet when I was growing up. I'm afraid it is no more. The Age in my adopted home seemed to be marginally better, but I wouldn't say that anymore.

A vibrant democracy needs a robust press to critique power and keep it accountable, to provide a public record, to report the news but also provide a forum for critical and often uncomfortable debate. I don't believe Fairfax Media Limited are providing it. There are a few bright sparks remaining that I admire (Ross Gittins, John Silvester, Ruby Hamad, Nicole Pederson McKinnon in particular are worth a read). However, it seems to me that the online versions pander to celebrity gossip click bait, middle class status anxieties (private schools, fine dining), diet and nutrition neuroses, Apple product launches and of course Real Estate - home renos and all manner of real estate investment pumping.  It's like Buzz Feed for anxious, aspirational, materialistic, high consumption bourgeoisie. I did have a friend who worked on their online section - they do actively court clickthroughs on the online version, which at time was run separately from the print version. So maybe us online readers who aren't willing to pay for anything are to blame?

Either way, it's not the fault of the journos, but management.  You can't provide quality and comprehensive news coverage, opinion and analysis if you keep on sacking everyone.

I don't necessarily endorse MEAA's strategy, but their campaign page on Fairfax cuts is an interesting take on the decline of some once venerable mastheads.

https://www.meaa.org/campaigns/fair-go-fairfax/

I don't know what a sustainable commercial strategy is to provide decent quality coverage of local and national events. There are better out there that come to mind (The Guardian (Aus + UK), Washington Post) and there are worse (Daily Mail), but it's sad to see once quality print journalism in Australia engage in a race to the bottom.  It's not going to work.

Thanks for the opportunity to explain myself. Anyway, totally off topic. I shall say no more.

No no, that's ok... I thought you were saying it in the context of how those rabid conservatives like to describe anything that isn't to the right of Cory Bernardi.

I agree with the sentiments, I too am upset by what has happened to the SMH. There's simply not enough content anymore :(

In addition to those you mentioned I used to always read Hugh Mackay, Alan Ramsay (in his day), Michael West and Adele Horin. And the double spread of letters pages. News Review was a good 20 pages long, now cut to a pamphlet. The sports section is gutted, along with Good Weekend. Adele Ferguson seems to be keeping the business section going (what would she do without CBA?)

Fail is probably right... kodak moment might be an apt way to describe it :(

mjr

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Re: Australian Investing Thread
« Reply #3484 on: September 06, 2017, 11:22:28 AM »
So it's ok to say Failfax if you denigrate the content as vapid clickbait and real estate ads but if you denigrate it for climate change extremism or left-wing social justice and economics content then you're a rabid conservative and it's not ok.

For the record, I don't agree with cheap shots like failfax or fauxfacts and I think news.com.au and co are mindless drivel.

mymatenate

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Re: Australian Investing Thread
« Reply #3485 on: September 06, 2017, 02:19:44 PM »
What you have described is an illiquid asset with a low yield income stream that should increase with inflation.  Its probably reasonably uncorrelated with equities or bonds. 

However, if you look at other illiquid assets with inflation hedged income streams, are you any better or worse?  The obvious comparisons would be commercial property, where 5-10 year lease terms are not uncommon, along with net leases (tenant pays costs).  Rent reviews are usually either a fixed rate or CPI.  Those sorts of assets are usually running 4-8% yield. 

I'd also suggest that the dividend from equities usually increases as fast or faster than inflation, but again with a higher starting point (5.5% gross for AU equities or 3% for world equities, using VGS as a quick metric).  I'd be asking what I'm getting for having my money tied up in an illiquid asset, and if its better or worse than my alternates.

It sounds like you have done well from farmland so far, and are comfortable with it.  I don't know enough about what the risks of this type of asset are - do you lose your tenant with extended drought?  Are you exposed to soft commodities prices with farmers wanting to lease the land?  Are you able to contest the land between multiple parties to create competition, or are you stuck leasing to the neighbor?  What happens in the event of fire/flood/disaster?  I don't know the answer to those questions, and the risk may well be low.  But I suspect its not zero, and I'd want to be adequately compensated for my risks, along with a return on my capital at least equal to the risk free rate.

But, if you are comfortable with the returns, your idea of spending the income as a swr on this land seems reasonable, as long as you are provisioning for any long term costs, such as fencing.

Thanks for bringing it up too - I'd like to see more asset classes discussed on here than just stocks, bonds and resi property.

I just wanted to bump my post on farmland investing once and see if anyone wanted to discuss it further. I answered the questions which were asked (page 69) but no one has followed up. Before we depart the topic if anyone has any other thoughts to share, say even why they don't think it sounds like a good investment. I'm happy to answer any further questions...

Thanks for the thoughtful reply, Chris!

Yes you are right, an extended drought could certainly affect your ability to find a tenant. Prolonged low commodity prices will affect the leasing rates. In many cases you are not restricted to just a neighbor for leasing - In some of the areas I am familiar with, farmers quite commonly farm land all over town. Or you sometimes will see a grazier from another area, perhaps further west, want to lease a "finishing block", i.e. to grow say lucerne and then run their sheep to fatten them for market.

You've given me some food for thought. With such a modest yield, it's a fair point to question whether one is being adequately compensated for the risks.

mustachepungoeshere

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Re: Australian Investing Thread
« Reply #3486 on: September 06, 2017, 02:30:28 PM »
The value of buying private health insurance if you don't earn above the threshold where the surcharge kicks in is debatable.

Here's an article about some of the maths involved in paying insurance, and what's advantageous in certain circumstances.

https://www.choice.com.au/money/insurance/health/articles/how-to-pay-the-lifetime-health-cover-loading-and-save

Thanks MisterHorsey! Has really opened my eyes as to what is not publicised!

No worries. Even Failfax press recently did an article on some of the hidden surprises of private health insurance.

http://www.smh.com.au/money/planning/is-private-health-insurance-worth-it-20170831-gy7uvq.html

Appreciate your contributions misterhorsey, but that's a silly swipe that doesn't belong here.

It was a 'swipe', yes. And it was 'silly', indeed.

But it's not without reason.

The aforementioned news publishing company misjudged the disrupted advent of the interwebs very badly - as many incumbent news orgs did across the world - and as a result is struggling. The Sydney Morning Herald was my beloved quality broadsheet when I was growing up. I'm afraid it is no more. The Age in my adopted home seemed to be marginally better, but I wouldn't say that anymore.

A vibrant democracy needs a robust press to critique power and keep it accountable, to provide a public record, to report the news but also provide a forum for critical and often uncomfortable debate. I don't believe Fairfax Media Limited are providing it. There are a few bright sparks remaining that I admire (Ross Gittins, John Silvester, Ruby Hamad, Nicole Pederson McKinnon in particular are worth a read). However, it seems to me that the online versions pander to celebrity gossip click bait, middle class status anxieties (private schools, fine dining), diet and nutrition neuroses, Apple product launches and of course Real Estate - home renos and all manner of real estate investment pumping.  It's like Buzz Feed for anxious, aspirational, materialistic, high consumption bourgeoisie. I did have a friend who worked on their online section - they do actively court clickthroughs on the online version, which at time was run separately from the print version. So maybe us online readers who aren't willing to pay for anything are to blame?

Either way, it's not the fault of the journos, but management.  You can't provide quality and comprehensive news coverage, opinion and analysis if you keep on sacking everyone.

I don't necessarily endorse MEAA's strategy, but their campaign page on Fairfax cuts is an interesting take on the decline of some once venerable mastheads.

https://www.meaa.org/campaigns/fair-go-fairfax/

I don't know what a sustainable commercial strategy is to provide decent quality coverage of local and national events. There are better out there that come to mind (The Guardian (Aus + UK), Washington Post) and there are worse (Daily Mail), but it's sad to see once quality print journalism in Australia engage in a race to the bottom.  It's not going to work.

Thanks for the opportunity to explain myself. Anyway, totally off topic. I shall say no more.

No no, that's ok... I thought you were saying it in the context of how those rabid conservatives like to describe anything that isn't to the right of Cory Bernardi.

I agree with the sentiments, I too am upset by what has happened to the SMH. There's simply not enough content anymore :(

In addition to those you mentioned I used to always read Hugh Mackay, Alan Ramsay (in his day), Michael West and Adele Horin. And the double spread of letters pages. News Review was a good 20 pages long, now cut to a pamphlet. The sports section is gutted, along with Good Weekend. Adele Ferguson seems to be keeping the business section going (what would she do without CBA?)

Fail is probably right... kodak moment might be an apt way to describe it :(

My response to this is simple: pay for your content. Subscribe.

If you want journalism that is better than the clickbait you get on other sites, the money has to come from somewhere, and the rivers of gold from advertising dried up long ago.

lush

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Re: Australian Investing Thread
« Reply #3487 on: September 10, 2017, 06:00:39 PM »
I have been trying to work out my first tax statement from Vanguard. At the moment I am re-investing all distributions and hope to be able to continue this for at least 2 more yearsÖ. so donít really know what the amount would have been if the funds had gone straight into my bank account. In other words, is this information available on the tax statement? Is it Net Cash Distributions?

Vanguard do not want to answer this question. Which does not make much sense to me at all. Shouldnít they be able to identify this? And my accountant also is reluctant to speak on behalf of Vanguard and has asked me to ask them. Itís all a bit crazy.

I need this information to determine if I was dependent on these funds to live off what that would have been, rather than the re-investing the distributions.

Thanks!

Rowellen

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Re: Australian Investing Thread
« Reply #3488 on: September 10, 2017, 07:21:06 PM »
I have been trying to work out my first tax statement from Vanguard. At the moment I am re-investing all distributions and hope to be able to continue this for at least 2 more yearsÖ. so donít really know what the amount would have been if the funds had gone straight into my bank account. In other words, is this information available on the tax statement? Is it Net Cash Distributions?

Vanguard do not want to answer this question. Which does not make much sense to me at all. Shouldnít they be able to identify this? And my accountant also is reluctant to speak on behalf of Vanguard and has asked me to ask them. Itís all a bit crazy.

I need this information to determine if I was dependent on these funds to live off what that would have been, rather than the re-investing the distributions.

Thanks!


Generally net cash distributions would be cash received/reinvested. I don't have a Vanguard statement in front of me to check but I see a lot of tax statements in my work and this is usually the case.

Rowellen

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Re: Australian Investing Thread
« Reply #3489 on: September 10, 2017, 07:22:14 PM »
Also you can log in to the share registry and see there, if it's for ETFs.

marty998

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Re: Australian Investing Thread
« Reply #3490 on: September 11, 2017, 05:48:56 AM »
Add up all the extra shares you got allocated through DRPs and multiply by $70 (I think that was about the average DRP price for the year for VAS).

Ozstache

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Re: Australian Investing Thread
« Reply #3491 on: September 11, 2017, 03:59:33 PM »
I have been trying to work out my first tax statement from Vanguard. At the moment I am re-investing all distributions and hope to be able to continue this for at least 2 more yearsÖ. so donít really know what the amount would have been if the funds had gone straight into my bank account. In other words, is this information available on the tax statement? Is it Net Cash Distributions?

I just checked mine and the Net Cash Distributions amount is within 1 share value of the amounts I have recorded as DRP purchases for last tax year, so yes. This is within tolerance because there is rarely, if ever, the exact amount in a dividend payment to buy an exact number of DRP shares, so there is a kitty of up to 1 share value that is yet to be reinvested at any given time. 

lush

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Re: Australian Investing Thread
« Reply #3492 on: September 11, 2017, 09:34:31 PM »
Thanks everyone for responding to my question about my Vanguard Tax Statement.  I now have confidence that itís Net Distributions.

yleeinvest

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Re: Australian Investing Thread
« Reply #3493 on: September 13, 2017, 12:13:41 AM »
Im an American who just recently moved to Australia. Before I moved to Aussie I had a plan to get to FIRE mostly involving maxing out my 401k, Roth IRA, and investing in index funds by opening a brokerage account.  Now that I'm in Aussie this plan I had is obsolete esp with 401k and Roth IRA being replaced with a SUPER that cant be touched until 65. 

People of Aussie, need your help getting this American with a better understanding of investing in Australia for FIRE. I am leaning away from investing in real estate because I feel the housing market will decrease in value in the near future. In my opinion it is a matter of time before the highs of the housing market reverses.

Thanks in advance

MajorTom

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Re: Australian Investing Thread
« Reply #3494 on: September 13, 2017, 04:58:39 AM »
Now that I'm in Aussie this plan I had is obsolete esp with 401k and Roth IRA being replaced with a SUPER that cant be touched until 65. 

Anyone born after 1960 can access their super at 60.


yleeinvest

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Re: Australian Investing Thread
« Reply #3495 on: September 13, 2017, 05:08:59 AM »
Now that I'm in Aussie this plan I had is obsolete esp with 401k and Roth IRA being replaced with a SUPER that cant be touched until 65. 

Anyone born after 1960 can access their super at 60.

There is a heavy penalty involved if you access it before 65 right?

Ozstache

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Re: Australian Investing Thread
« Reply #3496 on: September 13, 2017, 05:33:11 AM »
Now that I'm in Aussie this plan I had is obsolete esp with 401k and Roth IRA being replaced with a SUPER that cant be touched until 65. 

Anyone born after 1960 can access their super at 60.

There is a heavy penalty involved if you access it before 65 right?

No, as long as you have reached preservation age (60) and are retired, there is no penalty for accessing your super. See https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/getting-your-super for more details.

marty998

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Re: Australian Investing Thread
« Reply #3497 on: September 13, 2017, 05:41:35 AM »
CBA is bouncing back, might have been a bit of a short squeeze at $73.

VAS has held up really well through the CBA plunge from $80+ down, considering that Bank is over 10% of the market.

Again, shows the benefits of diversification, happier to be holding the market as opposed to too much in single stocks.

cakie

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Re: Australian Investing Thread
« Reply #3498 on: September 13, 2017, 02:16:15 PM »
Now that I'm in Aussie this plan I had is obsolete esp with 401k and Roth IRA being replaced with a SUPER that cant be touched until 65. 

Anyone born after 1960 can access their super at 60.

There is a heavy penalty involved if you access it before 65 right?

No, as long as you have reached preservation age (60) and are retired, there is no penalty for accessing your super. See https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/getting-your-super for more details.
Also, if you leave the country permanently, you can take your super with you...

Itchyfeet

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Re: Australian Investing Thread
« Reply #3499 on: September 13, 2017, 09:57:29 PM »
CBA is bouncing back, might have been a bit of a short squeeze at $73.

VAS has held up really well through the CBA plunge from $80+ down, considering that Bank is over 10% of the market.

Again, shows the benefits of diversification, happier to be holding the market as opposed to too much in single stocks.

I just wish the ASX 200 would hurry up and crack 5,800 and get on it's merry way upwards from there.