Author Topic: Australian Investing Thread  (Read 2585430 times)

Notch

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Re: Australian Investing Thread
« Reply #4000 on: May 10, 2018, 11:10:32 PM »
Australia peeps, apologies for a bit off-topic, but Iím thinking of getting a used car. I could either pay cask for something $5-7k or salary package something $10-15k. Iíve got a pretty good job, good pay. Whatís the mustachian view on salary packaging cars?

Pay cash, move on with life. Eliminate the complexity.

Will say that $5k is very low for a car (even if a used car).

Thanks. What would you say would be the right price for a used car? And what car? I want something easy that I can put the bike in and take to some riding trails.

Two months worth of take-home pay is a good rule I think.

middo

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Re: Australian Investing Thread
« Reply #4001 on: May 11, 2018, 03:46:24 AM »
More than $3000 is money wasted.  I have spent $2200 on a commodore 2 years ago, and spent less than $300 servicing and repairs in that time.  Starts every day needed and currently my daughter's ride in another state.

$7000 is wasting money.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4002 on: May 11, 2018, 06:04:32 AM »
Australia peeps, apologies for a bit off-topic, but Iím thinking of getting a used car. I could either pay cask for something $5-7k or salary package something $10-15k. Iíve got a pretty good job, good pay. Whatís the mustachian view on salary packaging cars?

Pay cash, move on with life. Eliminate the complexity.

Will say that $5k is very low for a car (even if a used car).

Thanks. What would you say would be the right price for a used car? And what car? I want something easy that I can put the bike in and take to some riding trails.

Two months worth of take-home pay is a good rule I think.

Umm, thatís a lot

Richmond 2020

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Re: Australian Investing Thread
« Reply #4003 on: May 12, 2018, 04:37:34 PM »


Two months worth of take-home pay is a good rule I think.
[/quote]

Umm, thatís a lot
[/quote]

Depends on your take-home pay I guess lol.

misterhorsey

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Re: Australian Investing Thread
« Reply #4004 on: May 12, 2018, 07:31:38 PM »
Capping a purchase price as a multiple of your income may make sense if you're on a lower income/needing to budget and wanting to maximise what you get for what you pay for, but may not make much sense if you are on a higher income seeking good value, but still wanting to minimise what you pay.

You'll end up potentially overpaying.  I.e. If your on $10k a month, why pay $20k for a car when you might be able to get away with $10k.

Maybe start an Australian car thread here on MMM or look at a car forum for suggestions?

My tips would be to look for a car that has a good reputation for reliability/ has low servicing costs / ready cheap after market for spares / low kms / good mileage / something you wouldn't insure comprehensively if you can get away with it / not the first iteration of it's model .....Toyota Camry anyone? (Yawn...)

Of course, all of the above is just an excuse for me to post a totally off topic top gear comparison between a 1991 Peugeot 205 and a Porsche 911R, which shows you don't need to spend huge $ for a great driving experience:

https://www.youtube.com/watch?v=EfDHULZZjpQ

Of course, no car is the best!  What state are you in Mr Different?  I'm lucky enough to live in Melbourne where there are plenty of bike trails, but I do sometimes wish I had a car as then I'd buy a  MTB and go on some single track.  It's one compromise I've been willing to make to avoid car ownership.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4005 on: May 12, 2018, 11:56:58 PM »
Capping a purchase price as a multiple of your income may make sense if you're on a lower income/needing to budget and wanting to maximise what you get for what you pay for, but may not make much sense if you are on a higher income seeking good value, but still wanting to minimise what you pay.

You'll end up potentially overpaying.  I.e. If your on $10k a month, why pay $20k for a car when you might be able to get away with $10k.

Maybe start an Australian car thread here on MMM or look at a car forum for suggestions?

My tips would be to look for a car that has a good reputation for reliability/ has low servicing costs / ready cheap after market for spares / low kms / good mileage / something you wouldn't insure comprehensively if you can get away with it / not the first iteration of it's model .....Toyota Camry anyone? (Yawn...)

Of course, all of the above is just an excuse for me to post a totally off topic top gear comparison between a 1991 Peugeot 205 and a Porsche 911R, which shows you don't need to spend huge $ for a great driving experience:

https://www.youtube.com/watch?v=EfDHULZZjpQ

Of course, no car is the best!  What state are you in Mr Different?  I'm lucky enough to live in Melbourne where there are plenty of bike trails, but I do sometimes wish I had a car as then I'd buy a  MTB and go on some single track.  It's one compromise I've been willing to make to avoid car ownership.

Yeah, my take home pay is too much to use that rule, defeats the purpose. Iím in Sydney.  I know nothing about cars. Iíd probably use it twice a month on the weekends. I read running costs are about $6k a year, thatís crazy!

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4006 on: May 13, 2018, 12:44:17 AM »
Used your advice Misterhorsey. Car I want is Nissan Pathfinder between 1999-2004. Can get for $3-7k.

misterhorsey

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Re: Australian Investing Thread
« Reply #4007 on: May 13, 2018, 03:22:12 AM »
Used your advice Misterhorsey. Car I want is Nissan Pathfinder between 1999-2004. Can get for $3-7k.

Er, please note I'm no car expert. Unless your able to do your maintenance I'd be wary of an older model 4WD, mainly because there's so much that can wear out and go wrong, and a 4WD  has so much weight to carry compared to a car, and thus petrol to consume.

MMM has some great posts debunking the utility of 4WDs:

http://www.mrmoneymustache.com/2014/12/01/all-wheel-drive-does-not-make-you-safer/
https://www.mrmoneymustache.com/2015/04/28/what-does-your-work-truck-say-about-you/

My actual advice would be not to buy one if you only plan to use it only twice a month.  I'd use a car next door instead - https://www.carnextdoor.com.au/.  2 times a month is 24 times a year.  Different story if you needed a car to commute with, but if you're only using a car for 24 times a year, then let someone else worry about maintenance, servicing, repairs, insurance and rego.  Rent it as you need.

A lot of people seem to rationalise a car purchase by saying they will go camping or hiking on weekends, but often find that life gets in the way and they find they don't get away as much as they can.

Of course if you find renting a car doesn't cover the times you use it, then I'd consider buying one.  But I'd get a mustachian inclined rev head to advise you.

I appreciate being carless in Sydney can be tricky if you aren't near decent PT, which is a shame.  That's one of the reasons why I stayed in Melbourne after moving down here (although apparently more people commute by car in Melbourne than in Sydney - but the inner city is very well serviced with PT and, more importantly, bike paths.)

Good luck!!
« Last Edit: May 13, 2018, 04:19:05 AM by misterhorsey »

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4008 on: May 13, 2018, 04:31:44 AM »
Used your advice Misterhorsey. Car I want is Nissan Pathfinder between 1999-2004. Can get for $3-7k.

Er, please note I'm no car expert. Unless your able to do your maintenance I'd be wary of an older model 4WD, mainly because there's so much that can wear out and go wrong, and a 4WD  has so much weight to carry compared to a car, and thus petrol to consume.

MMM has some great posts debunking the utility of 4WDs:

http://www.mrmoneymustache.com/2014/12/01/all-wheel-drive-does-not-make-you-safer/
https://www.mrmoneymustache.com/2015/04/28/what-does-your-work-truck-say-about-you/

My actual advice would be not to buy one if you only plan to use it only twice a month.  I'd use a car next door instead - https://www.carnextdoor.com.au/.  2 times a month is 24 times a year.  Different story if you needed a car to commute with, but if you're only using a car for 24 times a year, then let someone else worry about maintenance, servicing, repairs, insurance and rego.  Rent it as you need.

A lot of people seem to rationalise a car purchase by saying they will go camping or hiking on weekends, but often find that life gets in the way and they find they don't get away as much as they can.

Of course if you find renting a car doesn't cover the times you use it, then I'd consider buying one.  But I'd get a mustachian inclined rev head to advise you.

I appreciate being carless in Sydney can be tricky if you aren't near decent PT, which is a shame.  That's one of the reasons why I stayed in Melbourne after moving down here (although apparently more people commute by car in Melbourne than in Sydney - but the inner city is very well serviced with PT and, more importantly, bike paths.)

Good luck!!

Thanks. I do ride my bike everywhere. Yeah, car service does make sense. Running costs look to be at least $200/fortnight.

gsp

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Re: Australian Investing Thread
« Reply #4009 on: May 15, 2018, 12:01:48 AM »
Hi All
I want to change my super to low fee industry super. Can you suggest low fee and has  MSCI ACWI - All Country World Index on it ?

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4010 on: May 22, 2018, 03:45:08 PM »
Hi All
I want to change my super to low fee industry super. Can you suggest low fee and has  MSCI ACWI - All Country World Index on it ?

I think Australian Super is awesome and love their app.

Luckyvik

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superannuationfreak

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Re: Australian Investing Thread
« Reply #4012 on: May 23, 2018, 06:10:55 AM »
Hi All
I want to change my super to low fee industry super. Can you suggest low fee and has  MSCI ACWI - All Country World Index on it ?

Many super funds' international shares options use MSCI ACWI ex-Australia as a benchmark (but will often be actively managed, albeit often reasonably priced).  I don't know of a cheap ACWI fund.

However you can proxy it with approximately 90% MSCI World and 10% MSCI EM.  SunSuper offer MSCI World Ex-Australia and MSCI EM (and you can divert 2% into ASX 200 if you don't have Australia elsewhere and wanted it).  No real need to rebalance as it will naturally float close to the relevant market cap weights.

chasingthegoodlife

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Re: Australian Investing Thread
« Reply #4013 on: May 23, 2018, 04:48:52 PM »
Re: used cars: good advice above (don’t knock the Camry!) and renting may be the best option for you.

Our best car buys have been from a friend or relative with a known reliable car that is upgrading. Often they are thrilled to get more than they have been offered as trade in value, and still much cheaper than buying used from a dealer. Have bought two cars second hand from unknown sellers too, one was fantastic (97 pulsar, recently retired) and one was an absolute disaster that has cost us a lot of money. The second cost about twice as much, money paid is no guarantee. In future I will probably stick to common model, cheaper to repair cars (Toyota Camry :) )when buying secondhand and do some prior research on known faults. 

One more thing, if you are planning to take the car out of the city consider if the safety features of slightly newer cars are worth paying for. When I lived in Melbourne any old junk bucket was fine, but now I’m driving long distances on country roads every day with kangaroo hazards, poor road surfaces etc my husband insisted I upgrade to something with ABS and airbags.

Eucalyptus

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Re: Australian Investing Thread
« Reply #4014 on: May 23, 2018, 06:51:10 PM »
I'm inclined to agree with the newer model cars bit:
https://www.youtube.com/watch?v=xidhx_f-ouU


The difference in safety and survive-ability is not that insignificant. Note that most fatalities are really two-car head ons like this, rather single car accidents from dangerous driving, fatigue, alcohol/drugs, inattention, etc. If you control those factors your own chances are much reduced. Doesn't take into account other idiots on the road. Though understanding and being cautious with others, watching your mirrors, defensive driving, etc, reduces the chances again.


Carsales.com.au is a good way to search for cars. You can limit by location, km, ANCAP safety rating eg set to 5 stars, fuel economy, price. This narrows down good options. There are often many reasonably low km Prius that aren't too expensive.


TheEmuSydney

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Re: Australian Investing Thread
« Reply #4015 on: May 23, 2018, 07:52:53 PM »
What do you guys think of https://www.spaceshipinvest.com.au/ ?

PDM

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Re: Australian Investing Thread
« Reply #4016 on: May 23, 2018, 08:42:30 PM »
What do you guys think of https://www.spaceshipinvest.com.au/ ?

I referred to my usual source of proper financial advice - https://www.macrobusiness.com.au/2017/08/spaceship-deemed-space-cowboy/
and ended up here:

https://cuffelinks.com.au/spaceship-stalls-launch-pad/

They seem to give a fairly comprehensive run down.

Seems like more fancy marketing over substance? Targeting millennials?

johnnydoe

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Re: Australian Investing Thread
« Reply #4017 on: May 24, 2018, 02:37:44 AM »
Australia peeps, apologies for a bit off-topic, but Iím thinking of getting a used car. I could either pay cask for something $5-7k or salary package something $10-15k. Iíve got a pretty good job, good pay. Whatís the mustachian view on salary packaging cars?

I'm a fan of using the RACQ guide on car running costs https://www.racq.com.au/cars-and-driving/cars/owning-and-maintaining-a-car/car-running-costs. I used it as a guide for which car would have the lowest on-going costs then bought that second-hand in cash. I've been happy with the decision! I don't think salary sacrificing is worth it as you can generally buy a second-hand car for much cheaper, and if you are handy and do some maintenance yourself you can save more $$s

marty998

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Re: Australian Investing Thread
« Reply #4018 on: May 24, 2018, 05:40:02 AM »
What do you guys think of https://www.spaceshipinvest.com.au/ ?

I referred to my usual source of proper financial advice - https://www.macrobusiness.com.au/2017/08/spaceship-deemed-space-cowboy/
and ended up here:

https://cuffelinks.com.au/spaceship-stalls-launch-pad/

They seem to give a fairly comprehensive run down.

Seems like more fancy marketing over substance? Targeting millennials?

Yep - just a new way of extracting fees - dress it up as high reward investments without making crystal clear it's very high risk and high fee.

FFF

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Re: Australian Investing Thread
« Reply #4019 on: May 24, 2018, 05:51:04 PM »
What do you guys think of https://www.spaceshipinvest.com.au/ ?

I referred to my usual source of proper financial advice - https://www.macrobusiness.com.au/2017/08/spaceship-deemed-space-cowboy/
and ended up here:

https://cuffelinks.com.au/spaceship-stalls-launch-pad/

They seem to give a fairly comprehensive run down.

Seems like more fancy marketing over substance? Targeting millennials?

Yep - just a new way of extracting fees - dress it up as high reward investments without making crystal clear it's very high risk and high fee.

It seems like there are 2 different products being discussed above. I agree that the Spaceship super fund (https://www.spaceship.com.au/) is very high fee at around 1%pa for GrowthX.

However, the general fund (https://www.spaceshipinvest.com.au/) is offering investment in their Spaceship Index Portfolio for MER 0.05% with no buy-sell spreads, no entry-exit or brokerage fees, and the first $5000 invested is fee free. Admittedly, the portfolio details are rather sketchy but I can't help but feel I'm missing something here. What's the catch?

PDM

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Re: Australian Investing Thread
« Reply #4020 on: May 24, 2018, 06:11:32 PM »
Good point. I don't see how they're making any money there at all. Is it a play to build up market share and customers then sell the business?

FFF

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Re: Australian Investing Thread
« Reply #4021 on: May 24, 2018, 06:21:51 PM »
Good point. I don't see how they're making any money there at all. Is it a play to build up market share and customers then sell the business?

Maybe, probably.

Either way, without knowing exactly how the money is invested means I'm not going to touch it. They have a rough breakdown in the PDS that it's 75% global large caps, 20% Aussie large caps, 5% cash, all directly invested (i.e. no ETFs) but that is virtually meaningless without any further details.

limeandpepper

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Re: Australian Investing Thread
« Reply #4022 on: May 25, 2018, 04:43:20 AM »
Either way, without knowing exactly how the money is invested means I'm not going to touch it.

I'm not interested in investing with them but their portfolio breakdown is actually quite informative and I found it quite easily just by clicking on the relevant thing and scrolling? Not only do they tell you exactly which companies are included, but they also provide a blurb on what each company is about. For the Universe one they also tell you why they like the company but tell you the risks as well.

asosharp

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Re: Australian Investing Thread
« Reply #4023 on: May 27, 2018, 04:42:56 AM »
I'm looking for a savings account to be linked to my transaction account. I looked at ME and ING but they require you to actually use your debit card 4 or 5 times a month respectively but I actually rarely use my debit card except to take out cash from the ATM - if that. Can anyone recommend me a good savings account where I won't lose interest for the month if I take money out of the account?

Llewellyn2006

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Re: Australian Investing Thread
« Reply #4024 on: May 27, 2018, 06:58:37 AM »
I'm looking for a savings account to be linked to my transaction account. I looked at ME and ING but they require you to actually use your debit card 4 or 5 times a month respectively but I actually rarely use my debit card except to take out cash from the ATM - if that. Can anyone recommend me a good savings account where I won't lose interest for the month if I take money out of the account?

RAMS Saver account. 1.35% plus a bonus 1.65% each month when you deposit at least $200 and make no withdrawals

FFF

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Re: Australian Investing Thread
« Reply #4025 on: May 27, 2018, 09:25:32 PM »
Either way, without knowing exactly how the money is invested means I'm not going to touch it.

I'm not interested in investing with them but their portfolio breakdown is actually quite informative and I found it quite easily just by clicking on the relevant thing and scrolling? Not only do they tell you exactly which companies are included, but they also provide a blurb on what each company is about. For the Universe one they also tell you why they like the company but tell you the risks as well.

I stand corrected - hadn't seen that!

TheEmuSydney

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Re: Australian Investing Thread
« Reply #4026 on: May 27, 2018, 11:50:34 PM »
Either way, without knowing exactly how the money is invested means I'm not going to touch it.

I'm not interested in investing with them but their portfolio breakdown is actually quite informative and I found it quite easily just by clicking on the relevant thing and scrolling? Not only do they tell you exactly which companies are included, but they also provide a blurb on what each company is about. For the Universe one they also tell you why they like the company but tell you the risks as well.

I stand corrected - hadn't seen that!

Yeah you can see all the portfolio companies on https://www.spaceshipinvest.com.au/invest/universe and https://www.spaceshipinvest.com.au/invest/index

lush

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Re: Australian Investing Thread
« Reply #4027 on: May 28, 2018, 10:57:07 PM »
Hi All Ė does anyone know where I can find a good free online retirement calculator that can do the 4% rule. I have come across a few, but havenít found them very good. Thanks.

mjr

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Re: Australian Investing Thread
« Reply #4028 on: May 30, 2018, 01:47:23 AM »
Woohoo.  Non-super balance touched the million dollar mark today.  It took a dive when I moved the $540k into super 18 months ago.  So  now I have greater than a million in super and outside of it.

Retiring come new financial year.

That is a tonne of money. Do you own your house ?

Great work though and good luck in retirement.

I do own my house, yes.  House is not included in the $2.2m net worth.

Thanks for the congrats, all.

Freaken awesome.

and just to let the group know that sometimes miracles happen, after 6+ months of ground work I've managed to score a $200k redundancy package right at the start of the next financial year.

Investible assets will end up at $2.4 million and some change.  I am a lucky, lucky, bastard.

nnls

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Re: Australian Investing Thread
« Reply #4029 on: May 30, 2018, 03:29:03 AM »
Woohoo.  Non-super balance touched the million dollar mark today.  It took a dive when I moved the $540k into super 18 months ago.  So  now I have greater than a million in super and outside of it.

Retiring come new financial year.


That is a tonne of money. Do you own your house ?

Great work though and good luck in retirement.

I do own my house, yes.  House is not included in the $2.2m net worth.

Thanks for the congrats, all.

Freaken awesome.

and just to let the group know that sometimes miracles happen, after 6+ months of ground work I've managed to score a $200k redundancy package right at the start of the next financial year.

Investible assets will end up at $2.4 million and some change.  I am a lucky, lucky, bastard.

wow thats awesome

Gremlin

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Re: Australian Investing Thread
« Reply #4030 on: May 30, 2018, 03:35:10 AM »
Well done mjr.  The only thing I'd say though is that you deserve more credit to yourself and less to luck than you suggested.  You put yourself into this position, luck just put the cherry on top.

steveo

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Re: Australian Investing Thread
« Reply #4031 on: May 30, 2018, 04:36:23 AM »
Woohoo.  Non-super balance touched the million dollar mark today.  It took a dive when I moved the $540k into super 18 months ago.  So  now I have greater than a million in super and outside of it.

Retiring come new financial year.


That is a tonne of money. Do you own your house ?

Great work though and good luck in retirement.

I do own my house, yes.  House is not included in the $2.2m net worth.

Thanks for the congrats, all.

Freaken awesome.

and just to let the group know that sometimes miracles happen, after 6+ months of ground work I've managed to score a $200k redundancy package right at the start of the next financial year.

Investible assets will end up at $2.4 million and some change.  I am a lucky, lucky, bastard.

wow thats awesome

It is awesome for mjr but I'm more than a little jealous of the retrenchment package post FI. That is a dream of mine.

Primm

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Re: Australian Investing Thread
« Reply #4032 on: May 30, 2018, 05:25:27 AM »
I'm looking for a savings account to be linked to my transaction account. I looked at ME and ING but they require you to actually use your debit card 4 or 5 times a month respectively but I actually rarely use my debit card except to take out cash from the ATM - if that. Can anyone recommend me a good savings account where I won't lose interest for the month if I take money out of the account?

RAMS Saver account. 1.35% plus a bonus 1.65% each month when you deposit at least $200 and make no withdrawals

Ubank. 2.85% for a savings account with a linked transaction account, minimum $200 a month deposits but no restrictions on withdrawals.

Fresh Bread

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Re: Australian Investing Thread
« Reply #4033 on: May 30, 2018, 05:00:44 PM »
I'm looking for a savings account to be linked to my transaction account. I looked at ME and ING but they require you to actually use your debit card 4 or 5 times a month respectively but I actually rarely use my debit card except to take out cash from the ATM - if that. Can anyone recommend me a good savings account where I won't lose interest for the month if I take money out of the account?

RAMS Saver account. 1.35% plus a bonus 1.65% each month when you deposit at least $200 and make no withdrawals

Ubank. 2.85% for a savings account with a linked transaction account, minimum $200 a month deposits but no restrictions on withdrawals.

CUA has a similar deal for its rewards saver - you have to deposit $1000 a month but you can make as many withdrawals as you like. However the rate just dropped to 2.7% and the balance limit for the bonus interest is 100k. They pay 2.75 on another account where you can't make withdrawals.

BRAFRA

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Re: Australian Investing Thread
« Reply #4034 on: June 03, 2018, 08:20:42 PM »
scenario: I want to invest $150k in shares/ETF with dividends reinvested and withdraw part of this money in 4y. Over the 4 years, value goes up.
What is the best way to avoid CGT ? Buy individual shares and sell the individual lines that did not perform well ? Can I group a share that performed -10% with a +10% to avoid any CGT ?

If I forecast that the AUD will struggle due to the future elections (Labour) and the housing bubble, I should invest in products with international exposure like VGS/VTS/VEU. Correct ?

itchyfeet

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Re: Australian Investing Thread
« Reply #4035 on: June 03, 2018, 08:41:45 PM »
scenario: I want to invest $150k in shares/ETF with dividends reinvested and withdraw part of this money in 4y. Over the 4 years, value goes up.
What is the best way to avoid CGT ? Buy individual shares and sell the individual lines that did not perform well ? Can I group a share that performed -10% with a +10% to avoid any CGT ?

If I forecast that the AUD will struggle due to the future elections (Labour) and the housing bubble, I should invest in products with international exposure like VGS/VTS/VEU. Correct ?

I would recommend against backing yourself as a forex punter.

deborah

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Re: Australian Investing Thread
« Reply #4036 on: June 03, 2018, 08:52:29 PM »
scenario: I want to invest $150k in shares/ETF with dividends reinvested and withdraw part of this money in 4y. Over the 4 years, value goes up.
What is the best way to avoid CGT ? Buy individual shares and sell the individual lines that did not perform well ? Can I group a share that performed -10% with a +10% to avoid any CGT ?

If I forecast that the AUD will struggle due to the future elections (Labour) and the housing bubble, I should invest in products with international exposure like VGS/VTS/VEU. Correct ?

Ok. Obviously you are a beginner investor.

Shares should be bought and held for about 10 years - otherwise, because they have a lot of ups and downs (volatility), you are being risky. If you want to invest for a short period, things like bank term deposits are the traditional way to go. Divide the money into longer term and shorter term requirements, and invest it appropriately.

CGT is really not much on what you are investing - it's only on the actual capital gain - not the full amount. If you've had the investments for more than a year the gain is halved, and then your marginal tax rate is applied. And, if you sell at a loss that can be used against years that you sell at a profit.

Why do you want to reinvest dividends? It is the easiest way I can think of to get yourself in a muddle. You have to declare the dividends as income anyway. You have to keep tabs on exactly how many you bought at every dividend and when you sell each individual parcel. If you have more than one investment, dividend reinvestment will skew your portfolio.

The AUD is much more likely to struggle because of other factors - like a world war. We have been pretty lucky. In 1900 we had the one of the highest per capita standard of living - along with Argentina. We are still one of the highest standards of living 118 years later. Most people here are looking at retiring in their 30s and living until they're 100 - a 70 year retirement, so talking about how the world has changed in 118 years is relevant. Of course you need to have world exposure as well as home exposure.

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Re: Australian Investing Thread
« Reply #4037 on: June 03, 2018, 09:54:32 PM »
scenario: I want to invest $150k in shares/ETF with dividends reinvested and withdraw part of this money in 4y. Over the 4 years, value goes up.
What is the best way to avoid CGT ? Buy individual shares and sell the individual lines that did not perform well ? Can I group a share that performed -10% with a +10% to avoid any CGT ?

If I forecast that the AUD will struggle due to the future elections (Labour) and the housing bubble, I should invest in products with international exposure like VGS/VTS/VEU. Correct ?

A sure fire way to avoid CGT is to buy stocks that don't have any capital gain. Pick some real dogs. The downside to that is you don't get the sweet profits of capital growth. Even better if you make a massive loss - you can use that to offset the CGT. Downside is you'll have to make a loss...

I'd say chill and don't worry about it. You'll already get the 50% discount for owning longer than 12 months. Its only a tax on the gains.

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Re: Australian Investing Thread
« Reply #4038 on: June 03, 2018, 10:24:57 PM »
I will add a few things:
-single 29
-Australian resident for tax purposes
-should be in the highest tax bracket in around 4 years
-plan to take a full gap year to travel (and liquidate all the CGT) in 5-6y

Ok. Obviously you are a beginner investor.
Mainly new to the country, completely different rules and investment models.

Shares should be bought and held for about 10 years - otherwise, because they have a lot of ups and downs (volatility), you are being risky. If you want to invest for a short period, things like bank term deposits are the traditional way to go. Divide the money into longer term and shorter term requirements, and invest it appropriately.
I don't mind volatility and keen to take risk.
My tax bracket is 37%, so 39% of the interests on a term deposit goes away, so 3% becomes 1.8%, less than the inflation.

CGT is really not much on what you are investing - it's only on the actual capital gain - not the full amount. If you've had the investments for more than a year the gain is halved, and then your marginal tax rate is applied. And, if you sell at a loss that can be used against years that you sell at a profit.
ATO: Individuals and small businesses (excluding companies) can generally discount a capital gain by 50% if they hold the asset for more than one year.
I will check more on the ATO website how they calculate the CGT and what they consider as an asset.
As I plan to travel during a FY, I want to liquidate all the assets with high CGT during this low income year.

Why do you want to reinvest dividends? It is the easiest way I can think of to get yourself in a muddle. You have to declare the dividends as income anyway. You have to keep tabs on exactly how many you bought at every dividend and when you sell each individual parcel. If you have more than one investment, dividend reinvestment will skew your portfolio.
Where I come from, the reinvested dividends can stay in the "product" and become part of the CGT when you sell the "product".
For example, VGS reinvests the net dividends. Does this mean Vanguard already paid my income tax or only the company tax ?
« Last Edit: June 04, 2018, 03:25:47 AM by BRAFRA »

PDM

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Re: Australian Investing Thread
« Reply #4039 on: June 04, 2018, 12:09:04 AM »
In my basic understanding, in ETFs all distributions (they don't pay dividends) are treated like cash for tax purposes. It doesn't matter if they are reinvested.

If you are on a Distribution Reinvestman Plan (DRP) they will use the distribution to buy 'new' units at the current market rate. I think this is what Deborah is getting at. When you sell, to calculate the CGT you'll have to use the difference between sale price and purchase price. This may be 16 different very small lots. 4 per year - each might be 6 or so units (depending on returns etc).

It isn't the end of the world - and just means you're better off keeping a spreadsheet to track purchase prices.

deborah

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Re: Australian Investing Thread
« Reply #4040 on: June 04, 2018, 11:49:14 AM »
Firstly, with any investment there are two ways to make money - income and capital gain. Shares give you income in the form of dividends, and may go up in value, so that when you sell them you get more money than when you bought them. Similarly, houses bought for investment give you income in the form of rent, and capital gain when you sell them.

In Australia, both the income and the capital gain are taxed separately.

Broadly speaking, any money you get as income is taxed, generally at the source. If you buy a stock and you donít give the company your TFN, they will tax your dividend at the highest marginal tax rate. If they have your TFN, they wonít tax it but theyíll send the tax office information about your dividend payment, and youíll have it already prefilled when you come to do your tax return (unless you fill out your tax return too early).

In Australia we have franking credits - as the company has probably already paid tax on the dividend they give you, you donít have to pay the tax again on that dividend (income). Because you are on a 37% marginal tax rate, and company tax is currently 30% your share dividends will probably mean you get little extra tax from your dividend income. However, some companies donít pay much tax (for instance mining companies setting up mines have a lot of expenses they can claim against their tax) so may give dividends without many franking credits. When you get your dividend statement it will tell you just how much tax has already been paid. The dividend income will be added to your other income, and then the franking credits youíve already paid will be taken off what you need to pay in tax. This is regardless of whether or not you are involved in dividend reinvestment.

If you spent money to earn that income, you can claim it against the income. In the past, your expenses for attending a companyís AGM could be deducted from your income, and if you have a loan for the investment itself, you can claim the interest of that loan as an income deduction. You have to be able to prove to the ATO that your deductions are solely related to the investment (donít take a holiday at the same time as you go to the AGM). I think attendance at an AGM was taken out in the last budget, but I donít go to any, so Iím not sure. Many people with investment property have more deductions than income from the property, so they end up with less income than they received from their job - this is called negative gearing. As you plan to buy shares without a loan, I assume you wonít be negative gearing.

Whenever you buy any investment (including in DRPs), you have a base price for that investment - what you paid. Base prices can be adjusted - for inflation, or if the capital value of the investment has changed in any other way. With shares, this can happen if the company decides to have a share split or various other mechanisms. When you sell your investment, the difference between the price you receive and the current base price is the capital gain. Occasionally, companies give you money other than dividends, and the ATO rules whether you have received a dividend or a capital gain (for instance when a company sells part of itself, like the banks are currently doing with their financial services arms) or something else. When you get the statement from the company, it will advise you where the ATO ruling is, so you can work out how to complete your tax return.

If you sell an investment after less than twelve months, you are considered to be playing the market for a living rather than investing. Because of this, capital gains in the first twelve months are considered income, and after twelve months CGT is halved. So, the capital gain is the actual increase between the pile of money you had originally and the pile you received when you sold it (subject to changes in the base price as above).

This (or half of it) is considered to be income, and is treated similarly to other income. However, if you have a capital loss you can only offset it against capital gains, not against other sources of income. To make things more equitable, the loss can be carried forward, and offset against capital gains in future years.

However, like with negative gearing, itís a bit stupid to want a capital loss. You want your investments to grow, and capital gains are only taxing you for what you have earnt from your investment.

Now, in your particular situation, I donít understand why youíre bothered about capital gains. Surely you will take your gap year from January to December or something, so that you have two years at a very low marginal tax rate. If you continue to pay super during this time, you can virtually set your own marginal rate. Any capital gains on shares you sell during those two years will be taxed at almost nothing.
« Last Edit: June 05, 2018, 01:33:54 AM by deborah »

BRAFRA

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Re: Australian Investing Thread
« Reply #4041 on: June 06, 2018, 08:20:39 AM »
Thanks Deborah for sharing all this information, things are so clear now.

Now, in your particular situation, I donít understand why youíre bothered about capital gains.
Based on the Australian rules you described, there seem to be limited optimisation available around CGT minimisation.
I see one loophole: to get rid of some shares before moving to the next tax bracket and "save" in my case half of 45%-37%= 4% of the capital gain.

If you spent money to earn that income, you can claim it against the income. In the past, your expenses for attending a companyís AGM could be deducted from your income, and if you have a loan for the investment itself, you can claim the interest of that loan as an income deduction. You have to be able to prove to the ATO that your deductions are solely related to the investment (donít take a holiday at the same time as you go to the AGM). I think attendance at an AGM was taken out in the last budget, but I donít go to any, so Iím not sure.
Are the management fees, for example from a Vanguard wholesale fund, deductible ?

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Re: Australian Investing Thread
« Reply #4042 on: June 06, 2018, 08:29:53 PM »
Either way, without knowing exactly how the money is invested means I'm not going to touch it.

I'm not interested in investing with them but their portfolio breakdown is actually quite informative and I found it quite easily just by clicking on the relevant thing and scrolling? Not only do they tell you exactly which companies are included, but they also provide a blurb on what each company is about. For the Universe one they also tell you why they like the company but tell you the risks as well.

I stand corrected - hadn't seen that!

Yeah you can see all the portfolio companies on https://www.spaceshipinvest.com.au/invest/universe and https://www.spaceshipinvest.com.au/invest/index
I was looking at the 'indexed investment' option for this fund and it concerned me that the listed investments under this investment option are picked by spaceship therefore it doesn't seem to reflect a particular index such as the ASX 200 or a worldwide index therefore it seems to me it's not an index fund it's an actively managed fund. I think the name index fund for this investment option is misleading.

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Re: Australian Investing Thread
« Reply #4043 on: June 13, 2018, 05:53:28 PM »
Ok peeps, what would the best scenario be in regards to wanting to open a vanguard wholesale fund with the quoted 100k buy in?

I have around 100k in a issue lics (ago,  Milton,  Whitefield,  similar to vas but higher franking and smoother divs)

Looking to open the vanguard international fund and maybe another fund so 70k in and maybe 30k another wholesale fund.

Instead of using my own money I would borrow from the bank 100k even tho i have around 115k cash at bank and claim the interest at tax time and let the loan tick over and pay it off whilst reinvesting the distributions as well as dividend reinvestment of my lics.

Any feedback to approaches in how to get into the wholesale fund whilst also having my a aussie lics and blue chips???

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Re: Australian Investing Thread
« Reply #4044 on: June 21, 2018, 01:36:47 PM »
Iím curious about peopleís ER strategy. So, say you retire at 50. You canít touch your super for 10 years (presume you donít early withdraw at 55 because you donít want the tax hit). So, then what you can access is cash or investments outside of super. But if you sell your shares you get a CGT hit and then you impact the growth, which will impact what you need to have at 60 to live off 4% for life.

Currently Iím thinking, if I want to live off $40k a year, then take $18k from investments cause itís tax free, and have $22k in cash saved for 50-60. Does that make sense?

What are the rest of you doing? Rental income?

Iím perplexed.

Richmond 2020

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Re: Australian Investing Thread
« Reply #4045 on: June 21, 2018, 02:30:06 PM »
Iím curious about peopleís ER strategy. So, say you retire at 50. You canít touch your super for 10 years (presume you donít early withdraw at 55 because you donít want the tax hit). So, then what you can access is cash or investments outside of super. But if you sell your shares you get a CGT hit and then you impact the growth, which will impact what you need to have at 60 to live off 4% for life.

Currently Iím thinking, if I want to live off $40k a year, then take $18k from investments cause itís tax free, and have $22k in cash saved for 50-60. Does that make sense?

What are the rest of you doing? Rental income?

Iím perplexed.

Good question iím struggling with this one also.

In my case it will likely be a far less than ideal multifaceted strategy. A combination of dividends from stocks, selling some stocks, cash and rental income.

The less than ideal part of this strategy for us will be once weíre both drawing our pensions we may find we have too much money for the later part of our Retirement phase.

First world problem I guess. But the flip side is that if this is the case we have probably spent to much time slaving away 9 to 5. I guess it will come down to finding that sweet spot where we stop accumulating and start selling some shares.


Richmond 2020

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Re: Australian Investing Thread
« Reply #4046 on: June 21, 2018, 02:41:35 PM »
The other thing we are toying with his living OS in a LCOL area for a portion of the time between ER and being able to access our super. We would rent out our place and use the differential in rent to help fund the gap. Lots of potential issues with strategy including capital gains tax implications.

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Re: Australian Investing Thread
« Reply #4047 on: June 21, 2018, 02:45:47 PM »
I was stupid, and had five yearís cash. I then planned to use super, but didnít for long because the cash lasted longer than I thought it would. Why worry about the tax hit - youíre going to be on a much smaller income, so the tax hit is much smaller than it would be now. I guess you could use insurance bonds if you start them soon enough.

The other thing is that tax is not something to be avoided. We get a lot of services for our taxes. Planning a strategy just to avoid tax is silly - you should adopt a strategy that maximises your overall outcome. If youíre going to end up with too much super anyway, why not start accessing it as soon as possible? One advantage of early access is that they are less likely to change the rules for you.

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Re: Australian Investing Thread
« Reply #4048 on: June 22, 2018, 12:33:07 AM »
Does anyone have any insight into why our market is running up at the moment?  I see cheering online, but not explanation.

mrmoonymartian

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Re: Australian Investing Thread
« Reply #4049 on: June 22, 2018, 05:57:11 AM »
Iím curious about peopleís ER strategy. So, say you retire at 50. You canít touch your super for 10 years (presume you donít early withdraw at 55 because you donít want the tax hit). So, then what you can access is cash or investments outside of super. But if you sell your shares you get a CGT hit and then you impact the growth, which will impact what you need to have at 60 to live off 4% for life.

Currently Iím thinking, if I want to live off $40k a year, then take $18k from investments cause itís tax free, and have $22k in cash saved for 50-60. Does that make sense?

What are the rest of you doing? Rental income?

Iím perplexed.
As already noted, CGT is no big deal. If it is a big deal it means you're rich, so shouldn't care about a bit of tax.

I haven't finalised my pre-preservation plan yet. I had been thinking of a base comprising something like cash/certificate of deposit ladder/bonds and stock selling if/when conditions are suitable. Now I'm thinking a home equity loan/line of credit could replace a lot of that cash/bonds stuff for smoothing out the gaps when I don't want to sell stocks. I could live entirely off my home equity for the time between FIRE and preservation if desired.

If youíre going to end up with too much super anyway, why not start accessing it as soon as possible? One advantage of early access is that they are less likely to change the rules for you.
I looked at the eligibility criteria and they seem pretty strict. For example, you have to sell down other assets before you can touch super. Is there something I'm missing?

Does anyone have any insight into why our market is running up at the moment?  I see cheering online, but not explanation.
Trade wars, bears in Asia, Aussies shovelling cash into super before EOFY? This is the first year personal contributions can be claimed back easily...

"From 1 July 2017, most people, regardless of their employment arrangement, will be able to claim a full deduction for personal super contributions they make to their super until they turn 75."

https://www.ato.gov.au/Individuals/Super/Growing-your-super/Adding-to-my-super/Personal-super-contributions/

 

Wow, a phone plan for fifteen bucks!