Australian Investing Thread

[deborah]

The ASX put out a study a few years ago, and that showed that people with margin loans were about as well off as people who had never taken out loans to invest, and had started with the same amount before the loan. It's a great way to get your fingers burnt though - as a number of people found out during the GFC!

I know, that's why I was looking for a relatively conservative approach with LVR <50%. to avoid margin calls.
The market situations seems not the best one as well, if I decide to do it, I will wait for some kind of correction.

But why? If even the ASX says you're just as well off in the end if you never take out a loan, why bother? You have a lot of extra risk for NO extra return.

[Primm]

That moment when you open the mail after work and there's an envelope which, as Husband described, "must be important because it has your full name and no return address", and it's from Vanguard saying surprise! Here's another ETF share thanks to your dividend reinvestment request.

Gotta love "free" money.

[FFA]

I might be in the way of doing something "not so smart" and I need guidance...

I agree with your opening statement ;) ... Short cuts can end up being long cuts. I'm not saying never do it, and know some in this community have done it successfully, just question the timing now. If you want to diversify, sell some VAS/VGS and buy the EX20/LIC's. Margin loan not required.

[bigchrisb]

Why start margin now?
I've used margin loans for 10 years and overall have been successful.  I had two margin call wipe outs along the way. However I'm currently trying to wind down the leverage, partly because my risk tolerance and life situation has changed, but largely because I'm not seeing the attraction.  I was hearing up in a falling rates environment and panicked stock market.  We currently have rates likely to rise rather than fall, and the market has run hard.  The usual market timing comments, but it would hardly seem the time.

If you do go for margin lending:
Negotiate. My current margin loan rate is 4.15% from one of the major banks. ( approx 500k balance)
Keep leverage very mild. I thought I was being conservative and learned the hard way.
Don't do it for a tax deduction!

I'm sure I'll buy with debt again, but probably not until well into the next crisis

[marty998]

Why start margin now?
I've used margin loans for 10 years and overall have been successful.  I had two margin call wipe outs along the way. However I'm currently trying to wind down the leverage, partly because my risk tolerance and life situation has changed, but largely because I'm not seeing the attraction.  I was hearing up in a falling rates environment and panicked stock market.  We currently have rates likely to rise rather than fall, and the market has run hard.  The usual market timing comments, but it would hardly seem the time.

If you do go for margin lending:
Negotiate. My current margin loan rate is 4.15% from one of the major banks. ( approx 500k balance)
Keep leverage very mild. I thought I was being conservative and learned the hard way.
Don't do it for a tax deduction!

I'm sure I'll buy with debt again, but probably not until well into the next crisis

This is the post I was just about to write.

I will also add 50% gearing is not conservative (from personal experience). You will lose the lot in bear markets with 50% gearing.

[Notch]

Hi all, I haven't been posting for a while but I might be in the way of doing something "not so smart" and I need guidance...

What do you think about margin lending? Anyone into it?

I’ve used margin to buy VHY, using the dividends to more than cover the interest. It was fun to make such large purchases and I never ran into any trouble but once the debt got above $100k it got a bit intimidating.  So I decided to get rid of it and am just about to finish paying it off.
 
To quote Buffet, ‘Stay away from debt. If you’re smart you don’t need it. If you’re dumb you got no business using it.’

[rasics82]

Why start margin now?
I've used margin loans for 10 years and overall have been successful.  I had two margin call wipe outs along the way. However I'm currently trying to wind down the leverage, partly because my risk tolerance and life situation has changed, but largely because I'm not seeing the attraction.  I was hearing up in a falling rates environment and panicked stock market.  We currently have rates likely to rise rather than fall, and the market has run hard.  The usual market timing comments, but it would hardly seem the time.

If you do go for margin lending:
Negotiate. My current margin loan rate is 4.15% from one of the major banks. ( approx 500k balance)
Keep leverage very mild. I thought I was being conservative and learned the hard way.
Don't do it for a tax deduction!

I'm sure I'll buy with debt again, but probably not until well into the next crisis

This is the post I was just about to write.

I will also add 50% gearing is not conservative (from personal experience). You will lose the lot in bear markets with 50% gearing.

Thanks everyone, this is probably the answer I was looking for.  It seems when I have "brilliant ideas" (sarcastic) I'm either a decade too late or XX years too early.

I would have consider a LVR of 50% a pretty safe call with index funds, but I haven't experienced a "good" bear market yet, so probably is better to listen to the most experienced.

To quote Buffet, ‘Stay away from debt. If you’re smart you don’t need it. If you’re dumb you got no business using it.’

I know the quote, better to keep it in mind :-)

I think also I'll be able to diversify more without selling anything, so I'll stick with the simple man approach atm, I might reconsider lending money in the future if the conditions are different.

[Llewellyn2006]

Why start margin now?
I've used margin loans for 10 years and overall have been successful.  I had two margin call wipe outs along the way. However I'm currently trying to wind down the leverage, partly because my risk tolerance and life situation has changed, but largely because I'm not seeing the attraction.  I was hearing up in a falling rates environment and panicked stock market.  We currently have rates likely to rise rather than fall, and the market has run hard.  The usual market timing comments, but it would hardly seem the time.

If you do go for margin lending:
Negotiate. My current margin loan rate is 4.15% from one of the major banks. ( approx 500k balance)
Keep leverage very mild. I thought I was being conservative and learned the hard way.
Don't do it for a tax deduction!

I'm sure I'll buy with debt again, but probably not until well into the next crisis

This is the post I was just about to write.

I will also add 50% gearing is not conservative (from personal experience). You will lose the lot in bear markets with 50% gearing.

Thanks everyone, this is probably the answer I was looking for.  It seems when I have "brilliant ideas" (sarcastic) I'm either a decade too late or XX years too early.

I would have consider a LVR of 50% a pretty safe call with index funds, but I haven't experienced a "good" bear market yet, so probably is better to listen to the most experienced.

To quote Buffet, ‘Stay away from debt. If you’re smart you don’t need it. If you’re dumb you got no business using it.’

I know the quote, better to keep it in mind :-)

I think also I'll be able to diversify more without selling anything, so I'll stick with the simple man approach atm, I might reconsider lending money in the future if the conditions are different.

I recently thought about whether it would be worth borrowing some money to invest if there happened to be a significant correction and any good opportunities presented themselves. But the more I thought about it I realised that all I would be doing is borrowing money to satisfy a short-term itch to buy and I'd spend the next however many years paying off the loan and the interest. I decided it was better to stick to my plan of just investing a certain amount every few months. No money wasted as dead interest payments and I get the benefits of not basically trying to time the market, which is what a margin loan would have been.

[mjr]

I'm of the view that anything I read on news.com.au is utter rubbish, but I look at it on the train.

http://www.news.com.au/finance/economy/australian-economy/australias-economy-is-built-on-shaky-foundations-and-its-about-to-collapse/news-story/d924ef058941e0df3b8e4896e38db882

What is this bloke on ?  I'm the first one to agree that Australia is complacent and needs to pull its socks up to flourish in the global economy, but I've never read such a dump of cherry-picked statistics and down in the mouth perspective as this so-called entrepreneur.

[Notch]

I'm the first one to agree that Australia is complacent and needs to pull its socks up to flourish in the global economy, but I've never read such a dump of cherry-picked statistics and down in the mouth perspective as this so-called entrepreneur.

The article didn't seem that bad to me.  I actually found it quite interesting haha.

[Notch]

This is the full article. It’s fascinating and worth the read.  News.com.au omitted a lot.

http://www.debtdeflation.com/blogs/2017/11/14/australias-economy-is-a-house-of-cards/

[TimCinel]

What is this bloke on ?  I'm the first one to agree that Australia is complacent and needs to pull its socks up to flourish in the global economy, but I've never read such a dump of cherry-picked statistics and down in the mouth perspective as this so-called entrepreneur.

It's a persuasive piece, it's supposed to be biased ;) I think we need more people with public profiles like Matt Barrie and Dick Smith pouring a bucket of cold water over this sleepwalking country. I think Australia's more than complacent, I think it's arrogant.

Which parts did you think were particularly unfair?

Shame about the Zerohedge references. They don't really add to the credibility, but even their (cherry picked and highly editorialised) data are usually accurate.

More bear food from a so-called former Treasurer and former Prime Minister:

Market euphoria could be setting up a Minksy moment, Paul Keating says

[marty998]

Auction clearance rates in Sydney continue to fall. Investors can't get any more credit.

I'd expect prices to start coming off soon... Imagine an average punter who spent $1.0m on a Sydney shack (along with $50k stamp duty.

If prices go backwards by 10% they'll be down $200k easy (including negative gear over say 2 years) Takes a long time for anyone to save that amount of money and if they can't wear the holding costs then it could get ugly very fast.

Prices don't have to fall very far at all in % terms to have a big impact now.

[PDM]

I'm of the view that anything I read on news.com.au is utter rubbish, but I look at it on the train.

http://www.news.com.au/finance/economy/australian-economy/australias-economy-is-built-on-shaky-foundations-and-its-about-to-collapse/news-story/d924ef058941e0df3b8e4896e38db882

What is this bloke on ?  I'm the first one to agree that Australia is complacent and needs to pull its socks up to flourish in the global economy, but I've never read such a dump of cherry-picked statistics and down in the mouth perspective as this so-called entrepreneur.

He hits all the major points on why the Australian economy is dodgy. Sounds like he has been reading macrobuisness.com.au. I would question his motives though and how “freelancing” and a gif economy will offer alternatives or change?
Yes massive housing affordability problems but is job insecurity through freelancing going to help?

[pistolpete]

Just to give you peeps a heads up Vanguard have just launched new ETFs just like the unlisted diversified balanced growth and high growth fund which are now listed in the asx! Check their website out! Happy days

[PDM]

Just to give you peeps a heads up Vanguard have just launched new ETFs just like the unlisted diversified balanced growth and high growth fund which are now listed in the asx! Check their website out! Happy days

I had a bit of a look. Sort of very similar to what most Super funds offer but outside of super. Still a bit too much ASX exposure in there for my liking.

[oysters]

At MER .27% (and hopefully going down in the future as people take up the fund)? Its not bad.

Here's their plan for the High Growth version

"E High Growth Composite Index comprises of (weight/index): 36% S&P/ASX300
Index, 26.5% MSCI World ex-Australia Index (with net dividends reinvested) in
Australian dollars, 16% MSCI World ex-Australia Index (with net dividends
reinvested) hedged to Australian dollars, 6.5% MSCI World ex-Australia Small Cap
Index (with net dividends reinvested) in Australian dollars, 5% MSCI Emerging
Markets Index (with net dividends reinvested) in Australian dollars, 3% Bloomberg
Barclays AusBond Composite 0+ Yr Index, 7% Bloomberg Barclays Global Aggregate
Float Adjusted Index hedged to Australian dollars."

Its interesting that they have MSCI World ex-Australia Small Cap in there. But they don't offer that seperately as an ETF...I don't think anyone does in Aus? I wish they did, the main small-cap options available are only US based, eg IDR S&P Smallcap 600...a good option with a very low 0.07 MER currently.

I agree the Australian weighting on this is a bit too strong, I would have expected that to be more like ~20% and the small cap and emerging markets to be stronger.

Sure simplifies things though... tax, rebalancing, everything, very simple.

Impossible to calculate the average MER of similar funds as some of these options aren't available as seperate ETFs, though .27 is relatively low especially giving the benefits.

[oysters]

Here's the official Vanguard news article for these new ETFs
https://www.vanguardinvestments.com.au/au/portal/articles/insights/mediacentre/new-vanguard-etfs.jsp

There are only a few online news articles on it so far, mostly just terrible copy and paste journalism from the press release offering no actual external insights.

SMSF Super has a couple of points at the bottom of theirs though, which is what I thought of (though I wasn't thinking SMSF):

https://www.smsfadviser.com/news/16095-vanguard-launches-new-suite-of-diversified-etfs

“The Diversified Index ETFs meet all of these criteria, and with a single trade on the ASX provide access to expert portfolio management and automatic rebalancing,” he said.

“While SMSFs by their nature tend to be more self-directed, we see the potential for these diversified ETFs to be used as the index core of a portfolio allowing trustees the freedom to research and select other specific investments, weather that be individual securities, active funds or physical property.”

If one doesn't like the weighting of say the amount of Australian exposure, and say like me would prefer much more small-cap, its easy to have a portfolio of say 80% VDHG and 20% IDR. While keeping portfolio very simple, and lowering overall MER a bit further.

I'm a little dissapointed that there is 10% non-equity in there. That makes it a little hard to have a very aggressive (ie 100%) equity exposure early on, with a pure adjusting glide path just prior to retirement, and a pure glidepath afterwards. But its not the end of the world.

[dbm]

The ASX put out a study a few years ago, and that showed that people with margin loans were about as well off as people who had never taken out loans to invest, and had started with the same amount before the loan. It's a great way to get your fingers burnt though - as a number of people found out during the GFC!

Have you got a source for this, as I can only find balanced or pro-margin lending articles on the asx website?

[FFA]

thanks for the heads up pistol pete. Yes a very much awaited development. Will be interesting to see how much money these ETF's attract. While some have commented too high Oz exposure I thought the opposite, that they'd made a decent tilt to global. Moreso than most diversified Super options. And if they went much further than that, I'm sure it would be a turn off for the franking credit seeking retirees.

[one piece at a time]

New Question!

I'm looking to buy some shares in the listed fund called VAE. The volume of trade seems pretty low but being Asian I guess I could just buy "at market" in the afternoon and it should be pretty fair value. I'm only buying in $15k lots once a month for 6 months or so (a little new savings and some reallocation from cash). First trade will be after I get paid in December. This is to get some more Asian exposure to go with my ARG and VEU holdings.

Anything wrong with my plan? Should I consider buying in $10k lots twice a month instead (I'd have to reduce sooner as the cash would dry up quicker).

[oysters]

New Question!

I'm looking to buy some shares in the listed fund called VAE. The volume of trade seems pretty low but being Asian I guess I could just buy "at market" in the afternoon and it should be pretty fair value. I'm only buying in $15k lots once a month for 6 months or so (a little new savings and some reallocation from cash). First trade will be after I get paid in December. This is to get some more Asian exposure to go with my ARG and VEU holdings.

Anything wrong with my plan? Should I consider buying in $10k lots twice a month instead (I'd have to reduce sooner as the cash would dry up quicker).

I don't hold VAE but its in my plan to aquire sometime in the next couple of years. I think its a good idea, just hopefully the MER will come down a bit over time as people buy into it. Given all the talk about how the world economy is shifting to Asia it (still) makes sense long term to hold this specifically as opposed to just part of a world index.

[FFA]

I started with VGE before VAE existed, so still use VGE instead. I prefer the VAE part of VGE too for the same reasons. I also invested in PAI which is an actively managed LIC about six months ago and it has done very well in the short-term from 1.00 to around 1.30 now.

If VAE is like VGE then yes you need to be a bit careful/patient on execution as the bid/offer can be quite wide. It's much different to VAS, VGS, VTS, VEU.

Just also to note you have VEU which has some embedded emerging markets exposure in it too.

[actionjackson]

Can anyone direct me to a post/thread explaining strategy in Oz with regard to intended FIRE age, and balancing amount in Super funds between then and preservation age?

I'm on highest marginal rate of tax, want to better understand if there would be any benefit to salary sacrificing into super, rather than just pushing my savings into my investment accounts after tax. I'll reach the point where I can FIRE in about 6-7Y, but a chunk of that ~30% will be in super, and I'll have a long time before I can access it.

[mjr]

On the highest marginal rate, you're paying at least $17,100 p.a. into super via the SGC and you can therefore salary sacrifice at most $7,900 p.a.  You'll save at most $2,370 in tax.

It's not a lot of money, but you should definitely take advantage of whatever is on offer and get what tax-advantaged funds you can into super.

Your real question should be how much non-concessional contributions you should be making.

Edit:  These numbers assume that you're not getting hit by Division 293, but even that doesn't change my recommendation.

[marty998]

Can anyone direct me to a post/thread explaining strategy in Oz with regard to intended FIRE age, and balancing amount in Super funds between then and preservation age?

Topic has come up a few times before but is an individual/personal consideration which needs to take into account your age, spending needs, kids, other income sources etc.

Logically outside of super you only need enough to get you to preservation age, and then Super needs to be 25x spending, and even then as you run down super you may qualify for age pension benefits.

This is before you even consider the ability to downsize your house.

Lots of options, lots of variables.

[nora]

Can anyone direct me to a post/thread explaining strategy in Oz with regard to intended FIRE age, and balancing amount in Super funds between then and preservation age?

There is a calculator which might help you.
http://www.aussiefirebug.com/australian-financial-independence-calculator/

[nora]

On the highest marginal rate, you're paying at least $17,100 p.a. into super via the SGC and you can therefore salary sacrifice at most $7,900 p.a.  You'll save at most $2,370 in tax.

For self employed people there won't be any super guarantee so can pay the whole 25000 yourself. I guess this makes it a bigger tax savings but you lose the money until preservation age, and the div 293 tax as you mention makes it all a bit sad. Div 293 tax is coming in earlier this year too at an income of $250000. A good problem to have though, paying more tax.

[oysters]

On the highest marginal rate, you're paying at least $17,100 p.a. into super via the SGC and you can therefore salary sacrifice at most $7,900 p.a.  You'll save at most $2,370 in tax.

For self employed people there won't be any super guarantee so can pay the whole 25000 yourself. I guess this makes it a bigger tax savings but you lose the money until preservation age, and the div 293 tax as you mention makes it all a bit sad. Div 293 tax is coming in earlier this year too at an income of $250000. A good problem to have though, paying more tax.

Yeah, I wish I had this problem...

... If I did I'd FIRE from where I am (just about near scratch after years of "Science") in about 4-5 years.

[actionjackson]

Can anyone direct me to a post/thread explaining strategy in Oz with regard to intended FIRE age, and balancing amount in Super funds between then and preservation age?

There is a calculator which might help you.
http://www.aussiefirebug.com/australian-financial-independence-calculator/

Awesome! This is perfect - thanks. I expected it would be asked a lot, hence the calculator. Appreciate the link.

For $2300 a year saving, I'd rather not have it tied up in Super. I don't trust the government not to move the preservation age again to keep people in the workforce given the aging population issue.

[mjr]

For $2300 a year saving, I'd rather not have it tied up in Super. I don't trust the government not to move the preservation age again to keep people in the workforce given the aging population issue.

I understand this completely and didn't focus on super myself until my late 40s.  However, 2 things to keep in mind:

• Unbelievably, the Government is doing all they can to stop you putting money into super. Paying up to the concessional cap every year now that it's so low is an opportunity lost every year that you don't do it
• Compound interest and the resulting income stream at preservation age being tax free

[oysters]

I don't normally read The Australian, but did this morning in my favourite tea cafe (where I get my green tea leaves to have moustachian tea at home).

Interesting article in there on TIPS. Does anyone on here have any TIPS? Interesting mention of the Sydney Airport 2030 one which guarantees inflation plus ~2.8%pa (from memory).

[DrowsyBee]

For $2300 a year saving, I'd rather not have it tied up in Super. I don't trust the government not to move the preservation age again to keep people in the workforce given the aging population issue.

I understand this completely and didn't focus on super myself until my late 40s.  However, 2 things to keep in mind:

• Unbelievably, the Government is doing all they can to stop you putting money into super. Paying up to the concessional cap every year now that it's so low is an opportunity lost every year that you don't do it
• Compound interest and the resulting income stream at preservation age being tax free

I have always been in the boat of being distrustful of super. But i'm living very comfortably while salary sacrificing 5.5%.

As a first home buyer in a year, though, i'm thinking of starting to pour a lot more in:

http://budget.gov.au/2017-18/content/glossies/factsheets/html/HA_14.htm

First Home Buyer Super Saver Scheme passed the Senate recently. Has anyone had a good look through it? Enjoy the lower taxed super benefits to save for a deposit a bit quicker.

I've only been looking into it this morning.

[Abundant life]

For $2300 a year saving, I'd rather not have it tied up in Super. I don't trust the government not to move the preservation age again to keep people in the workforce given the aging population issue.

I understand this completely and didn't focus on super myself until my late 40s.  However, 2 things to keep in mind:

• Unbelievably, the Government is doing all they can to stop you putting money into super. Paying up to the concessional cap every year now that it's so low is an opportunity lost every year that you don't do it
• Compound interest and the resulting income stream at preservation age being tax free

I have always been in the boat of being distrustful of super. But i'm living very comfortably while salary sacrificing 5.5%.

As a first home buyer in a year, though, i'm thinking of starting to pour a lot more in:

http://budget.gov.au/2017-18/content/glossies/factsheets/html/HA_14.htm

First Home Buyer Super Saver Scheme passed the Senate recently. Has anyone had a good look through it? Enjoy the lower taxed super benefits to save for a deposit a bit quicker.

I've only been looking into it this morning.

I was reading Scott Pape, the Barefoot investor's opinion of it, to quote:

'First home buyers can now divert extra money into their super (maxed at $15,000 per year), and then draw it out as a deposit on their first home. The maximum they can save is $30,000 per person ($60,000 a couple).

For someone earning $65,000 a year, after three years of using the First Home Super Saver Scheme they’ll have $6,314 more than if they’d saved via a standard bank account.

So I’d certainly use the First Home Super Saver Scheme if I knew I was going to buy a home in a couple of years and I’d already saved up a big deposit. For an average-earning couple it’s an extra $12,628. I wouldn’t kick it down a drainpipe if I was walking along the street and saw it. Do it.'

Although he did not recommend it for someone with a 10 year horizon:

' ... I honestly wouldn’t bother. There’s ‘legislative risk’ to doing something 10 years out (i.e. Krusty the Clown could be our PM in 2027).'

[DrowsyBee]

I definitely agree with the long-term hesitance. Way too much tinkering is done to Superannuation.

That being said, I'm locked into a development which will be completed in about 12 months, so I'm thinking it is a good opportunity for me to lock away even more savings and reach the finish line sooner.

I'm still kind of in disbelief because its public policy that is benefiting me for once. Is this how boomers have felt for the last 40 years?

[deborah]

Not for 40 years, but each time something was benefiting me I couldn't believe it. Some of the things that have benefited me I have really strong opinions against, but, if our legislators are so stupid as to offer amazing benefits, I am going to take them up, even if I also complain to them that the benefit is ridiculous.

[Abundant life]

Nope, no first home owners grant for us. 20% mandatory deposit. Banks and building societies wouldn't take all of wife's wages into calculations, consumer debt reduced ability to borrow for home, no alternative lenders ... no mortgage off-sets.

Took us four years to save our deposit working full time and two part-time jobs each. Didn't eat out or holiday for that time. Moved outside of metropolitan area where we could afford housing and built the smallest home (the only one we could afford). Then spent 1.75hr commute each way, ah, the good old days!

Within 6 months of moving in, the market tanked and house prices fell markedly, about a third IIRC. We just had to work our way through it, but it was years before the prices recovered and eventually increased.

[Rowellen]

Not for 40 years, but each time something was benefiting me I couldn't believe it. Some of the things that have benefited me I have really strong opinions against, but, if our legislators are so stupid as to offer amazing benefits, I am going to take them up, even if I also complain to them that the benefit is ridiculous.

I'm still in shock about the superannuation changes from 2006. In particular making everything tax free and removing reporting requirements for over 60's. They have now made the first steps to reversing this madness. I expect by the time I reach 60, pensions will be fully taxable again. In the meantime, the benefits are fantastic if you can get them.

[deborah]

Not for 40 years, but each time something was benefiting me I couldn't believe it. Some of the things that have benefited me I have really strong opinions against, but, if our legislators are so stupid as to offer amazing benefits, I am going to take them up, even if I also complain to them that the benefit is ridiculous.

I'm still in shock about the superannuation changes from 2006. In particular making everything tax free and removing reporting requirements for over 60's. They have now made the first steps to reversing this madness. I expect by the time I reach 60, pensions will be fully taxable again. In the meantime, the benefits are fantastic if you can get them.

That is one of the benefits I was thinking of. A major perception problem is that most younger people think that all boomers have all the advantages (ie. they have taken advantage of them). Many have not taken advantage of the benefits - it is mainly the rich. For example, last week I was at a funeral of a boomer relative who had never accessed her superannuation. I was surprised that, when the topic of superannuation came up, only a couple of  the boomers around the room have ANY superannuation. It came late and most of these people had businesses (such as an electrician who worked for himself and didn't have to put in superannuation, so didn't). Those who had had superannuation, had such small amounts that they had used the $10,000 or whatever to reduce their mortgage when they retired. It would be interesting to find out what percentage of boomers have significant enough levels of superannuation that the tax free pensions are actually giving them anything (I guess that means a superannuation amount of more than about $20,000/.04 (approximate tax free threshold / percentage they need to withdraw to actually be taking advantage of the tax break) = $500,000)

[Rowellen]

That is very true deborah. I work in SMSFs so my perspective is a bit skewed towards the wealthy end of the scale. My parents are boomers. My mum worked from the age of 15 until she was physically unable a couple of years ago. Her super payout was under $100k. The majority of that was a disability insurance payment. My dad was better off because he worked for the government and had a decent defined benefit pension. However it's still a fraction of what most of my clients have. My clients were generally business owners or very high income earners. They are not quite old enough for the age pension and have spent over half their super already. Paid off their mortgage, bought a new caravan and 2nd hand 4x4 plus several extended overseas trips, cruises and home renos. I would not be surprised to find that the majority of couples have both partners in a similar situation to my mum.

[oysters]

ATO finally sorted out my HECS-HELP Benefit today, including fixing up all their mistakes and missing payments since 2009. My HECS debt is now down to 19000, woohoo! It was almost 30k at its highest.

Did some calculations and at my current salary will be paid off four years from now. I can't wait. Did further calculations and the extra money (put into investments prior to FIRE) generally gives me a 15% reduction in SWR failure potential for my plans, or I could retire a couple of years earlier for similar risk. Sweeeeeeeet.

It really is quite amazing how much affect reductions in "spending" have on potential FIRE portfolio success.

[PDM]

ATO finally sorted out my HECS-HELP Benefit today, including fixing up all their mistakes and missing payments since 2009. My HECS debt is now down to 19000, woohoo! It was almost 30k at its highest.

Did some calculations and at my current salary will be paid off four years from now. I can't wait. Did further calculations and the extra money (put into investments prior to FIRE) generally gives me a 15% reduction in SWR failure potential for my plans, or I could retire a couple of years earlier for similar risk. Sweeeeeeeet.

It really is quite amazing how much affect reductions in "spending" have on potential FIRE portfolio success.

Awesome news. There is nothing better than your first full pay cheque without HECS.

[oysters]

[/quote]

Awesome news. There is nothing better than your first full pay cheque without HECS.
[/quote]

I'm definitely looking forward to the day!
I'll be watching it carefully over the next couple of years so that I can put the last grand or two in prior to the indexing date in June and then tell my employer to stop taking it out for the following financial year.

[BattlaP]

I paid my HECS off with a lump sum when I got access to my First Home Savers Account. Back in the days of extra payment discounts.

Feels good man, it's worth the opportunity cost to have the complete peace of mind of debt freedom.

[asosharp]

I need some help with my personal investments as I'm a bit confused. I came across Mr Money Moustache and was fascinated by it but of course a lot of it is not Aussie so I was surprised when I found this link (on another forum!).

Instead of putting all my money in a HISA, I decided that I would invest especially since the interest rate for HISAs keep going down. I came across the concept of ETFs and LICs which sound good for the long term as it's almost set and forget and with any other money I can put it into other investments like property or individual stocks.

My thought was that I would put maybe about $20 - 60k into an ETF or LIC. I have read this - https://www.bogleheads.org/wiki/Investing_in_Australia#VAS_vs_LICs - but as these people are John Bogle fans I don't know if they are biased towards Vanguard.

In regards to the paragraph there:

"The most common LICs for people looking for an alternative to Vanguard Australian Shares Index ETF (VAS) are Australian Foundation Investment Co.Ltd (AFI), Argo Investments (ARG) and Milton Corporation Limited (MLT). These don't generally trade at a deep discount to NTA, so if you can't get them at a fair discount to NTA then stick with VAS. "

1) Is it actually good advice - to put it into VAS if you can't get LIC's at a fair discount?

2) What do they mean by a 'fair discount'? How would you know if it is discounted? Does that mean the share price has dropped and that's why it's a fair discount?

3) It also says:

"Australian companies on average tend to return more to shareholders in the form of dividends than their US counterparts. For example the VAS (ASX300 index tracker) has tended to yield around 5%, whereas VTS (US S&P500 index-tracker) has tended to yield around 2%."

- I thought the ASX was the ASX 200 not the ASX 300? Is this a typo?
- I've read on Mr Money Moustache that holding foreign ETFs are good but why is that so if the yield is less than the Australian one?

4) One thing  that worries me about the long term future is the direction money is headed in the wake of cryptocurrencies, the blockchain, etc. The ASX comprises mostly of banks and mining. So once the digital change hits, does that mean Australian ETFs and LICs would be a really bad invesment in the long term? I am in my 30's and can only imagine the changes that would happen in the next 30 - 60 years when I could still be alive and would need to withdraw from the ETF or LIC for my retirement.

[PDM]

VAS is based on the ASX300. The ASX200 is also a thing. The number is the top 200 companies by capitalisation or top 300.

[Llewellyn2006]

I hold both Argo and AFIC. I hold them to provide me with a steady stream of fully franked dividends and that is their stated investment goal. I don't really hold either share with the expectation of making massive capital gains. My yield for each one is around 3.8% without allowing for the tax impact of the franking credits. Both have long track records and I think they are a good investment for people looking for exposure to a wider range of companies than might be possible with limited funds. I've never really bothered with the "discount to NTA" thing. But of course YMMV.

[JuicyCrab]

I need some help with my personal investments as I'm a bit confused. I came across Mr Money Moustache and was fascinated by it but of course a lot of it is not Aussie so I was surprised when I found this link (on another forum!).

Instead of putting all my money in a HISA, I decided that I would invest especially since the interest rate for HISAs keep going down. I came across the concept of ETFs and LICs which sound good for the long term as it's almost set and forget and with any other money I can put it into other investments like property or individual stocks.

My thought was that I would put maybe about $20 - 60k into an ETF or LIC. I have read this - https://www.bogleheads.org/wiki/Investing_in_Australia#VAS_vs_LICs - but as these people are John Bogle fans I don't know if they are biased towards Vanguard.

In regards to the paragraph there:

"The most common LICs for people looking for an alternative to Vanguard Australian Shares Index ETF (VAS) are Australian Foundation Investment Co.Ltd (AFI), Argo Investments (ARG) and Milton Corporation Limited (MLT). These don't generally trade at a deep discount to NTA, so if you can't get them at a fair discount to NTA then stick with VAS. "

1) Is it actually good advice - to put it into VAS if you can't get LIC's at a fair discount?

2) What do they mean by a 'fair discount'? How would you know if it is discounted? Does that mean the share price has dropped and that's why it's a fair discount?

3) It also says:

"Australian companies on average tend to return more to shareholders in the form of dividends than their US counterparts. For example the VAS (ASX300 index tracker) has tended to yield around 5%, whereas VTS (US S&amp;P500 index-tracker) has tended to yield around 2%."

- I thought the ASX was the ASX 200 not the ASX 300? Is this a typo?
- I've read on Mr Money Moustache that holding foreign ETFs are good but why is that so if the yield is less than the Australian one?

4) One thing  that worries me about the long term future is the direction money is headed in the wake of cryptocurrencies, the blockchain, etc. The ASX comprises mostly of banks and mining. So once the digital change hits, does that mean Australian ETFs and LICs would be a really bad invesment in the long term? I am in my 30's and can only imagine the changes that would happen in the next 30 - 60 years when I could still be alive and would need to withdraw from the ETF or LIC for my retirement.

Part 4 of your question had me concerned a little too, however I think if cryptos really did replace fiat it could really turn the market upset down globally, not just locally.

That is until banks develop their own digital currency products to compete in that space. They are savages and won't let a bit of block chain code hurt their profits...

Sent from my SM-G930F using Tapatalk

[middo]

My concerns about cryptocurrencies are:

1. As an investment they have no inheret earnings.  They are fundamentally like gold in this sense.

2. They are obviously currently in a bubble. They will crash sometime.  Investung now is purely gambling.

3. Block chain is one step away frim a major hack making them wirthless.  This is a fundamental concern I have with them. Currencies value is perceived worth, and these have no country to support them when they crash.

[deborah]

I love the bit by Noel Whittaker today...

In my opinion, Bitcoin fails every investment test. If you buy government bonds, you receive a guaranteed income plus principal repayment at the end of the term. If you buy shares you can make a decision based on the financial statements and profitability of the company. If you buy real estate there should be a nexus between the land value, the cost of improvements, and any potential rental income. In other words, you are making the decision on concrete information.

Bitcoin works on the greater fool theory: a fool buys today in the hope of on-selling to a greater fool tomorrow. It's more like the allegory of the box of strawberries sold from person to person at ever-increasing prices. Finally, the buyer who had paid $100 for a box of strawberries that had cost only $5 a few buyers ago, stopped the cycle by opening the box. To his dismay he found the strawberries were rotten! When he complained, the response was, "but these strawberries were meant to be sold – they were never meant to be eaten". Each buyer had bought with one aim – to resell for a higher price to a fool who still believed in the impossible dream. At least your Bitcoins can't rot. They never really existed.