Author Topic: Australian Investing Thread  (Read 1441346 times)

mjr

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Re: Australian Investing Thread
« Reply #4450 on: March 14, 2019, 02:51:58 PM »

I'm interested to know if mjr has a better economic theory up his sleeve than a Keynesian view of the world.

On a spending to GDP ratio, the last few years of the Howard Government still outspent Rudd too. Abbott, Turnbull and Morrison are all still above Rudd and Gillard era level spending too. It was tax receipts that collapsed in 2008-2012, which is just as bad a problem if there is no plan to deal with a structural change.

Both sides have trouble with the pursestrings, it's not right to only call out the side you don't like.

I don't know what numbers you're looking at.  The first google search I did came back with this: https://tradingeconomics.com/australia/government-spending-to-gdp

It's also irrelevant.  I agree that both parties are profligate spenders and as I have said many time before I in no way say that the Coalition does everything to my satisfaction.  They don't.  But this discussion was about the technical recession and it was the ALP in power at the time.  That's why I said the government of the day instead of calling them out because I wasn't interested in turning it overtly political.

News flash.  It is also my opinion that Keynesian economics is crap.


marty998

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Re: Australian Investing Thread
« Reply #4451 on: March 15, 2019, 01:08:28 AM »

I'm interested to know if mjr has a better economic theory up his sleeve than a Keynesian view of the world.

On a spending to GDP ratio, the last few years of the Howard Government still outspent Rudd too. Abbott, Turnbull and Morrison are all still above Rudd and Gillard era level spending too. It was tax receipts that collapsed in 2008-2012, which is just as bad a problem if there is no plan to deal with a structural change.

Both sides have trouble with the pursestrings, it's not right to only call out the side you don't like.

I don't know what numbers you're looking at.  The first google search I did came back with this: https://tradingeconomics.com/australia/government-spending-to-gdp

It's also irrelevant.  I agree that both parties are profligate spenders and as I have said many time before I in no way say that the Coalition does everything to my satisfaction.  They don't.  But this discussion was about the technical recession and it was the ALP in power at the time.  That's why I said the government of the day instead of calling them out because I wasn't interested in turning it overtly political.

News flash.  It is also my opinion that Keynesian economics is crap.

Your graph is including State Government taxes and spending. Fed Government spending to GDP ratio hovers between 23-26% of GDP if I recall correctly.

BRAFRA

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Re: Australian Investing Thread
« Reply #4452 on: March 16, 2019, 12:39:49 AM »
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.
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.
9 months later, I realise there is no accumulating ETFs in Australia, hence the confusion...
With the accumulating ETFs, the dividends don't end up in your pocket during the distribution time and get directly reinvested. The difference with a DRP is that you don't get extra units, but the unit price increases by the value of the dividend. As a result, you only pay the income tax when you sell (CGT). It is great for tax optimisation if you have FYs with low income and/or keep the ETFs until you retire as the taxman will - hopefully - never get his share of your dividends.
« Last Edit: March 16, 2019, 12:44:04 AM by BRAFRA »

marty998

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Re: Australian Investing Thread
« Reply #4453 on: March 17, 2019, 02:08:33 PM »
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.
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.
9 months later, I realise there is no accumulating ETFs in Australia, hence the confusion...
With the accumulating ETFs, the dividends don't end up in your pocket during the distribution time and get directly reinvested. The difference with a DRP is that you don't get extra units, but the unit price increases by the value of the dividend.
As a result, you only pay the income tax when you sell (CGT). It is great for tax optimisation if you have FYs with low income and/or keep the ETFs until you retire as the taxman will - hopefully - never get his share of your dividends.

For those who don't know why, the reason for this is that most ETF's and managed funds are structured as Trusts, which are required to distribute their income out each year, otherwise the trustee incurs top marginal rate tax.

Your standard listed investment company does not have to pay any dividends, and thus potentially you can defer your tax bill until you sell your shares. Unfortunately for those looking for this option, most LIC's do pay semi-annual dividends. You'll be hard pressed to find one that doesn't.

alsoknownasDean

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Re: Australian Investing Thread
« Reply #4454 on: March 17, 2019, 07:36:27 PM »
https://mobile.abc.net.au/news/2019-03-18/more-income-tax-cuts-could-on-the-cards-in-budget/10904760

I don't know about any of you, but this government has been going on about debt and deficits for a number of years. Surely if now they're forecasting a surplus, it would make sense to use it to help reduce those same debts? Especially as it's due in part to a revenue boost from commodity prices, which are by their very nature cyclical.

Oh wait, election in two months. Of course.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4455 on: March 17, 2019, 07:42:07 PM »
https://mobile.abc.net.au/news/2019-03-18/more-income-tax-cuts-could-on-the-cards-in-budget/10904760

I don't know about any of you, but this government has been going on about debt and deficits for a number of years. Surely if now they're forecasting a surplus, it would make sense to use it to help reduce those same debts? Especially as it's due in part to a revenue boost from commodity prices, which are by their very nature cyclical.

Oh wait, election in two months. Of course.
It's not necessary to reduce the debt all at once. Some of the surplus can go towards the debt whilst some of it can be paid back to the people whose industry helped create our strong economy. The article mentions that our average income tax take has risen to the highest it's been in 14 years (since prior to the last wave of Howard's reforms). This is entirely due to 14 years of bracket creep. So we need some indexation.

It would be great to have some tax cuts especially since investors haven't had much relief since John Howard's era. As long as the debt is manageable I will not lose any sleep over it.

marty998

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Re: Australian Investing Thread
« Reply #4456 on: March 18, 2019, 03:39:48 AM »
https://mobile.abc.net.au/news/2019-03-18/more-income-tax-cuts-could-on-the-cards-in-budget/10904760

I don't know about any of you, but this government has been going on about debt and deficits for a number of years. Surely if now they're forecasting a surplus, it would make sense to use it to help reduce those same debts? Especially as it's due in part to a revenue boost from commodity prices, which are by their very nature cyclical.

Oh wait, election in two months. Of course.
It's not necessary to reduce the debt all at once. Some of the surplus can go towards the debt whilst some of it can be paid back to the people whose industry helped create our strong economy. The article mentions that our average income tax take has risen to the highest it's been in 14 years (since prior to the last wave of Howard's reforms). This is entirely due to 14 years of bracket creep. So we need some indexation.

It would be great to have some tax cuts especially since investors haven't had much relief since John Howard's era. As long as the debt is manageable I will not lose any sleep over it.

I'm just going to politely suggest taxes could be lower if we were not paying $20 billion in interest per year.

So yes, paying off debt is desirable, but I agree - proportion surpluses between modest tax relief and paying off debt.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4457 on: March 18, 2019, 03:54:59 AM »
No disagreement from me there! It would be good to also aim for a sustainable surplus that can be used as a war chest the next time the government needs to do some contingency spending.

Trevor Reznik

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Re: Australian Investing Thread
« Reply #4458 on: March 18, 2019, 01:39:14 PM »
The surplus won't ever actually happen.  Labor are going to be in very shortly and they are already talking about raising welfare, adding dental care to medicare etc.

deborah

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Re: Australian Investing Thread
« Reply #4459 on: March 18, 2019, 02:15:31 PM »
The surplus won't ever actually happen.  Labor are going to be in very shortly and they are already talking about raising welfare, adding dental care to medicare etc.

It's possible, but our best economic reforms almost all happened under the Keeting and Hawke Labor governments, which set us up for surplus for many years. The last Liberal government to do so was Fraser. Unfortunately neither political party has much to recommend in this area, and Howard was a real wrecking bar with his economic reforms.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4460 on: March 18, 2019, 05:15:19 PM »
The surplus won't ever actually happen.  Labor are going to be in very shortly and they are already talking about raising welfare, adding dental care to medicare etc.

It's possible, but our best economic reforms almost all happened under the Keeting and Hawke Labor governments, which set us up for surplus for many years. The last Liberal government to do so was Fraser. Unfortunately neither political party has much to recommend in this area, and Howard was a real wrecking bar with his economic reforms.

Howard's economic reforms led to a lot more money in hand for most of the population due to tax cuts across the board. Imagine how hard it would be to build wealth if we were still paying 48.5% on all income above $62,000, as was the situation prior to his reforms.

His NG/CGT combo was also a huge boom for investors, though sadly I missed out since I was in primary school when it was introduced. I managed to get in a couple of investment properties towards the tail end (2011-2017 boom) but that was it. Still, Howard has been the best thing that ever happened for investors and high income earners.

middo

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Re: Australian Investing Thread
« Reply #4461 on: March 18, 2019, 06:29:44 PM »
The surplus won't ever actually happen.  Labor are going to be in very shortly and they are already talking about raising welfare, adding dental care to medicare etc.

It's possible, but our best economic reforms almost all happened under the Keeting and Hawke Labor governments, which set us up for surplus for many years. The last Liberal government to do so was Fraser. Unfortunately neither political party has much to recommend in this area, and Howard was a real wrecking bar with his economic reforms.

Howard's economic reforms led to a lot more money in hand for most of the population due to tax cuts across the board. Imagine how hard it would be to build wealth if we were still paying 48.5% on all income above $62,000, as was the situation prior to his reforms.

His NG/CGT combo was also a huge boom for investors, though sadly I missed out since I was in primary school when it was introduced. I managed to get in a couple of investment properties towards the tail end (2011-2017 boom) but that was it. Still, Howard has been the best thing that ever happened for investors and high income earners.

It's always interesting reading peoples "take" on liberal vs labor governments and economic reforms and management.  So much of people's views are pre-determined by their "left" vs "right" mindset.

Labor voters tend to lionise how great Keating was, even though he kept wage growth down through the accord, which is worse for the salaried wage earners.  They also tended to follow economic rationalist policies even when they were not necessarily in the majority of the public's interest.  Privatisation of monopolies is one area here.

Liberal voters tend to lionise Howard and Costello even though they had the chance to safeguard Australia for the future with the rivers of gold that flowed into the coffers in the early 2000's.  Instead they grew welfare, particularly to the middle classes that had not needed it before.  Dependence on that welfare grew, and now we have, as a country, unrealistic expectations of handouts from the Government.

The reality is that there does need to be reform on the dividend imputation policy.  It makes no sense to hand out tax raised for no reason.  There is also a case for reform of other areas of taxation, but most of these are not being touched by either side.  Why a flat 10% GST?  Why on only half of the goods and services used?  Why do we not properly tax multinationals?  Why do we not introduce a universal basic income?  These are important questions that are not being discussed.

deborah

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Re: Australian Investing Thread
« Reply #4462 on: March 18, 2019, 06:54:06 PM »
The surplus won't ever actually happen.  Labor are going to be in very shortly and they are already talking about raising welfare, adding dental care to medicare etc.

It's possible, but our best economic reforms almost all happened under the Keeting and Hawke Labor governments, which set us up for surplus for many years. The last Liberal government to do so was Fraser. Unfortunately neither political party has much to recommend in this area, and Howard was a real wrecking bar with his economic reforms.

Howard's economic reforms led to a lot more money in hand for most of the population due to tax cuts across the board. Imagine how hard it would be to build wealth if we were still paying 48.5% on all income above $62,000, as was the situation prior to his reforms.

His NG/CGT combo was also a huge boom for investors, though sadly I missed out since I was in primary school when it was introduced. I managed to get in a couple of investment properties towards the tail end (2011-2017 boom) but that was it. Still, Howard has been the best thing that ever happened for investors and high income earners.

It's always interesting reading peoples "take" on liberal vs labor governments and economic reforms and management.  So much of people's views are pre-determined by their "left" vs "right" mindset.

Labor voters tend to lionise how great Keating was, even though he kept wage growth down through the accord, which is worse for the salaried wage earners.  They also tended to follow economic rationalist policies even when they were not necessarily in the majority of the public's interest.  Privatisation of monopolies is one area here.
No, it's well documented - for instance - https://www.economist.com/special-report/2018/10/27/clever-reforms-30-years-ago-helped-australias-growth

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4463 on: March 18, 2019, 07:55:54 PM »
Most of Keating's policies were excellent. His economic policies showed that you can pursue fairness without necessarily crumbling to the altar of wanting to smooth out disparities in outcomes.

bigchrisb

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Re: Australian Investing Thread
« Reply #4464 on: March 19, 2019, 05:49:43 AM »
Being out of Australia has highlighted to me how farcical our political debates have become.  I'm currently in the Netherlands.  They have a low rate and high rate BTW (GST) here - 21% on most of the things we have Aus GST on, with the low rate on most of the things we have no GST on, such as fresh food.  While I have been here, the low rate was raised from 6% to 9%.  It barely raised a peep in the media or political debate.  Life went on.

Where as suggest any change to the rate of GST in Australia and its as though you are trying to commit genocide, let alone broadening the scope of GST. 

My personal view is that its this kind of political morass and inaction on any kind of economic reform that means as a country we are headed for a very hard recession.  The mild correction in house prices so far, and current bickering about relative inequality will seem like a summer picnic once unemployment picks up and/or interest rates normalise.  It will hurt. I'm preparing myself for it - reducing debt, increasing overseas exposure in investments.  I intend to be in a position of sufficient liquidity to be able to upgrade my house should it occur. 

I love Australia, its lifestyle, its nature.  We have had some excellent luck, and a strong tailwind from past economic reforms. However, we have been an economic policy basket case for the last two decades.  Sooner or later we will have to pay the piper.


Bloop Bloop

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Re: Australian Investing Thread
« Reply #4465 on: March 19, 2019, 06:57:44 AM »
I wouldn't be fussed if we had a recession. Recessions are like forest fires - good for clearing out the dead wood.

As for GST, I would be thrilled if we raised GST to a more sustainable level.

Minion

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Re: Australian Investing Thread
« Reply #4466 on: March 19, 2019, 06:11:26 PM »
Being out of Australia has highlighted to me how farcical our political debates have become.  I'm currently in the Netherlands.  They have a low rate and high rate BTW (GST) here - 21% on most of the things we have Aus GST on, with the low rate on most of the things we have no GST on, such as fresh food.  While I have been here, the low rate was raised from 6% to 9%.  It barely raised a peep in the media or political debate.  Life went on.

Where as suggest any change to the rate of GST in Australia and its as though you are trying to commit genocide, let alone broadening the scope of GST. 

My personal view is that its this kind of political morass and inaction on any kind of economic reform that means as a country we are headed for a very hard recession.  The mild correction in house prices so far, and current bickering about relative inequality will seem like a summer picnic once unemployment picks up and/or interest rates normalise.  It will hurt. I'm preparing myself for it - reducing debt, increasing overseas exposure in investments.  I intend to be in a position of sufficient liquidity to be able to upgrade my house should it occur. 

I love Australia, its lifestyle, its nature.  We have had some excellent luck, and a strong tailwind from past economic reforms. However, we have been an economic policy basket case for the last two decades.  Sooner or later we will have to pay the piper.

Agree, I'm working in Berlin these days. Living in the EU certainly gives you a different perspective in these things.

deborah

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Re: Australian Investing Thread
« Reply #4467 on: March 19, 2019, 06:39:09 PM »
Yes, GST is one of the better forms of tax.

itchyfeet

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Re: Australian Investing Thread
« Reply #4468 on: March 23, 2019, 01:00:05 AM »
Perspective is a funny thing. I live in the UAE, the land of zero income tax, and they introduced a measley 5% VAT here last year and people are crying poor and blaming the tax of the demise of the UAE economy. Of course there is no problem with political malaise here, being an autocracy.

marty998

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Re: Australian Investing Thread
« Reply #4469 on: March 28, 2019, 11:43:43 PM »
VAS March qtr estimated distribution ~91c per unit, payable 16 April.

Comes around so quickly these quarterly dividends!

pistolpete

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Re: Australian Investing Thread
« Reply #4470 on: April 03, 2019, 11:38:04 PM »
I got a query in regards to vanguard mfunds (wholesale). In peoples experiences have they stumbled across any dramas in order to trying to lock in a price during a market blimp or hiccup in trying to bpay funds in but as its a managed fund you only get the close of day price in stead of a mid morning drop (in contrast you can pick up vas pretty much instantly due to market makers etc etc. Is this a big deal for people?

Todge

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Re: Australian Investing Thread
« Reply #4471 on: April 03, 2019, 11:44:27 PM »
Long term - this will not be a big deal. Saying that, I don't use the vanguard wholesale - only etfs. I'm far more price sensitive to the management fee between the two, given I'll hold them long term and don't actively trade.

pistolpete

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Re: Australian Investing Thread
« Reply #4472 on: April 04, 2019, 12:11:14 AM »
Cheers! Mfunds seem easier and less hassle with bpay every month or quarter or what have you but with etf i read time and time again that ppl who save up 5 k then try and time the market and wait for dips and hold out if the market is on the rise etc etc. Looking for a long terms vehicle whilst reinvesting distributions and being able to add around 1 to 2 k a month.

Notch

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Re: Australian Investing Thread
« Reply #4473 on: April 04, 2019, 12:18:09 AM »
I use the wholesale funds - no regrets. 
I don't have to worry about setting buy prices or missing orders or working out how many units I can buy.  Just BPay and done. 
No need to set-up a brokerage account.
No need to set-up a computershare account to register for dividends.
Just one Vanguard log-in with everything on there.

Only downside is to make a withdrawal, you need to post or fax a signed form lol.

pistolpete

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Re: Australian Investing Thread
« Reply #4474 on: April 04, 2019, 12:28:38 AM »
Cheers notch? May i ask is it a diversified fund or individual fund? No major dramas/surprises or higher CGT at tax time or all pretty smooth sailing?

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Re: Australian Investing Thread
« Reply #4475 on: April 04, 2019, 01:54:42 AM »
If you prefer wholesale fund over ETF go for it, you don't need to justify yourself to anyone else IMO.

pistolpete

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Re: Australian Investing Thread
« Reply #4476 on: April 04, 2019, 02:16:55 AM »
Cheers Trevor,

Just trying to sort through the riff raff, and i see many ppl have pros and cons of each method!

BattlaP

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Re: Australian Investing Thread
« Reply #4477 on: April 04, 2019, 05:55:20 PM »
I use the wholesale funds - no regrets. 
I don't have to worry about setting buy prices or missing orders or working out how many units I can buy.  Just BPay and done. 
No need to set-up a brokerage account.
No need to set-up a computershare account to register for dividends.
Just one Vanguard log-in with everything on there.

Only downside is to make a withdrawal, you need to post or fax a signed form lol.

Last time I pig-snorted at the mention of faxing the guy said shamefully that they are currently trying to ‘modernise’ the process, so that could change in the coming years.

Notch

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Re: Australian Investing Thread
« Reply #4478 on: April 04, 2019, 07:31:34 PM »
Cheers notch? May i ask is it a diversified fund or individual fund? No major dramas/surprises or higher CGT at tax time or all pretty smooth sailing?

I'm using five of their wholesale funds currently.  Zero issues with tax - it's all basically the same as the ETFs. 

Aso, just fyi, they say the minimum buy-in is $500,000, but they will let you open a wholesale account with only $100k, spread across as many funds as you want.

Last time I pig-snorted at the mention of faxing the guy said shamefully that they are currently trying to ‘modernise’ the process, so that could change in the coming years.

Oh that will be great!
« Last Edit: April 04, 2019, 07:34:45 PM by Notch »

mspym

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Re: Australian Investing Thread
« Reply #4479 on: April 04, 2019, 08:39:29 PM »
@pistolpete I do wholesale funds - LonerMatt is right, just call up and they will let you open with 100k+. In my case it was transferring from retail to wholesale but still very easy at tax-time. They sent me a statement, as per the retail funds, and there wasn't any issue. I can still even login using my retail id and look at all the transaction history and statements, which is better than my super fund when I rolled over to another provider recently.

My partner does ETFs, I dabbled in them a little but for me there was marginal gains in terms of cost and I didn't find them interesting enough to make it worth the effort.

things happen that way

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Re: Australian Investing Thread
« Reply #4480 on: May 01, 2019, 03:55:30 AM »
Long time reader, first time poster.

I'm about 3 years from FIRE having already moved to a paid of smallish house in a LCOL location. My wife stays at home already as is needed due to some special needs with a kid. We're also looking into some NDIS support given the diagnosis. As we knew she wouldn't be working I've kept our non-super investments in her name. Specifically we've got 210k in Arg, 110k in VAE and 90k in VEU. Part of the attraction of the Arg is the franking credits. Any ideas on how to better manage our Australian local market exposure going forward? I'm on about $140k base with some potential shares coming through an internal bonus scheme at work (depending on eternal good-fortune!).

Thanks!

Andy R

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Re: Australian Investing Thread
« Reply #4481 on: May 01, 2019, 05:09:13 AM »
That is a very unusual portfolio you've got there.

By market cap, the current breakdown is about

55% US
35% Developed ex-US (includes Australia)
10% Emerging market

Ignoring your home country allocation in ARG, you look to have

0% US
52.5% Developed ex-US
47.5% Emerging market

Was this intentional?
If so, what is your reasoning?

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Re: Australian Investing Thread
« Reply #4482 on: May 01, 2019, 07:49:27 PM »
Long time reader, first time poster.

I'm about 3 years from FIRE having already moved to a paid of smallish house in a LCOL location. My wife stays at home already as is needed due to some special needs with a kid. We're also looking into some NDIS support given the diagnosis. As we knew she wouldn't be working I've kept our non-super investments in her name. Specifically we've got 210k in Arg, 110k in VAE and 90k in VEU. Part of the attraction of the Arg is the franking credits. Any ideas on how to better manage our Australian local market exposure going forward? I'm on about $140k base with some potential shares coming through an internal bonus scheme at work (depending on eternal good-fortune!).

Thanks!

I'm unfortunately not someone to answer your question, but I did notice you said you lived in a LCOL location.  Without being too specific, can I ask where in Australia is a LCOL location?  I mean, outside of Melbourne and Sydney the housing prices are lower, but the actual cost of everything else is not a lot different across the country from my experience?

Andy R

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Re: Australian Investing Thread
« Reply #4483 on: May 01, 2019, 08:29:22 PM »
I'm unfortunately not someone to answer your question, but I did notice you said you lived in a LCOL location.  Without being too specific, can I ask where in Australia is a LCOL location?  I mean, outside of Melbourne and Sydney the housing prices are lower, but the actual cost of everything else is not a lot different across the country from my experience?

The extra half a million dollars that is released by selling in Sydney and going to a LCOL area can buy you $15-20,000 of free money every year for the rest of your life to use on other spending.

things happen that way

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Re: Australian Investing Thread
« Reply #4484 on: May 01, 2019, 08:51:03 PM »
Thanks guys,

Asset allocation evolved from some 'high' interest savings over to Argo to get better yield (without stock picking). When I discovered this site I started picking up VEU as my 'gut' told me the ARG holdings were already pretty well coupled to US performance. I started buying VAE based on advice from a relative that I needed to take on more risk....so not the most in-depth assessments undertaken! Super is about another $300k (combined) in 'high growth' funds which have a fair bit of home country bias in them too.

We have a low cost of living due to very short commutes and (for example) meals out would be $30 rather than $45 for a good main course in a good restaurant.  Co-op style sharing of fruit, eggs etc also helps. Coffee from a cafe here is at $3 rather than $4.50 in Sydney/Melbs/Perth. Similar spread on beer etc.


Andy R

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Re: Australian Investing Thread
« Reply #4485 on: May 01, 2019, 09:23:53 PM »
How do you figure ARG is coupled to US performance?
We are talking about ARGO investments, right? The Austrlaian LIC that invests almost exclusively in Australian equities?

If you wanted more risk, I'd prefer a combination of emerging and global or US small caps to increase the risk profile while still limiting the exposure to emerging and keeping it more diversified.

You should be combining your super and taxable for an overall view of your asset allocation.

things happen that way

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Re: Australian Investing Thread
« Reply #4486 on: May 02, 2019, 01:24:54 AM »
Thanks, yes Argo down in Adelaide doing their very dull investment thing with quite low fees. They focus on getting good fully franked dividends to people, which is why I might need to reconsider my holdings if the ALP get elected.

My thinking (at the time) was that the Australian economy was normally coupled to the US economy. There was probably a bit of 'top is in' thinking on my behalf when considering US equities.

I do consider my super when looking at overall allocation, the heavy Australia bias in my chosen fund is is part of why I started looking overseas. As I'm only 40 I'm a bit complacent about my super as I'm expecting the funds I'll need to get a SWR to cover the FIRE - 67 gap will mean I'm working long enough for the super to look after itself. I need to redo the numbers on that as well, we're still trying to lock down a sustainable target income rate which is difficult with changing kids expenses. I know I'll be able to retire before 50 and that I can't retire now, so further precision isn't needed on that topic.

US small caps is a great idea and I'll start reading up on that, thanks.

Andy R

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Re: Australian Investing Thread
« Reply #4487 on: May 02, 2019, 02:04:24 AM »
I don't believe you are at all correct thinking that it is coupled.

You can see the correlation in action on the MSCI site.
https://www.msci.com/end-of-day-data-search

Select Regional or Country tab above the drop downs.
The select Australia or USA or whatever.
It comes up with a box and graph.
Click on Add/Remove Indexes, and get these on there
• USA
• World ex-US
• Australia
• Emerging Markets
• Asia ex-Japan

Then change the date to something longer than the default 4 years.

You will see that
• Australia is not correlated well with USA, which is a strong reason to include it.
• Beyond the Asian crisis in the mid 90's, Australia is highly correlated to EM/Asia-ex-Japan

So at the very least you will get much better diversification with USA than with Emerging markets (VGE) or Asia-ex-Japan (VAE).

The US market is also massively diversified like nowhere else, and in a well developed country with stable political system.

I really can't find a legitimate reason not to hold US market, but lots of reasons to hold it.

things happen that way

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Re: Australian Investing Thread
« Reply #4488 on: May 06, 2019, 01:36:07 AM »
Thanks Andy,

I'm not convinced that I should have 50% US equities but obviously 0% is a bigger call than I had consciously made. I'm going to start re-allocating through future purchases into VTS. I'm still a bit undecided about how suited Argo is to me once I stop getting the benefit of franking dividends.  Depending on that outcome, I may be reallocating that bucket too.

Tyler

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Re: Australian Investing Thread
« Reply #4489 on: May 06, 2019, 08:40:03 PM »
FYI -- Australian portfolio data is back at Portfolio Charts.  I have domestic stocks and bonds, lots of international options, and a few real assets like gold and REITs.  And everything is converted to Australian currency and inflation.  So you should be able to study any popular portfolio in Australia and also create your own.

For anyone new to the site, I recommend checking out the Portfolios section and the Portfolio Matrix.  Just be sure to click the black country box and select the Australia setting.

Enjoy!


mrmoonymartian

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Re: Australian Investing Thread
« Reply #4490 on: May 07, 2019, 05:11:44 AM »
Thanks @Tyler! Appreciate all the work you've put into your site, and it's nice to see Aus return.

I don't know if this is a widespread concern, but one niggle for me at least with the latest update is that countries outside the US can't specify US for the international stocks any more, but are locked into WLD. In an ideal WLD, I would be able to select from more of the investment options you have data for, in a single portfolio (eg. domestic TSM + US SCV + EM + WLD REITS +...). But I would understand completely if the response is: "I'm afraid I can't do that, Dave".

Couple of tiny display bugs:
In the portfolio matrix, the data validation list in AG31:AH32 needs to be widened.
In the my portfolio heatmap, column F doesn't display the tooltip value on mouseover. It does in other heatmaps.

Tyler

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Re: Australian Investing Thread
« Reply #4491 on: May 07, 2019, 08:22:58 AM »
I don't know if this is a widespread concern, but one niggle for me at least with the latest update is that countries outside the US can't specify US for the international stocks any more, but are locked into WLD. In an ideal WLD, I would be able to select from more of the investment options you have data for, in a single portfolio (eg. domestic TSM + US SCV + EM + WLD REITS +...). But I would understand completely if the response is: "I'm afraid I can't do that, Dave".

Yeah, striking the right balance between having enough features that power users are happy but keeping the site simple enough that it appeals to a wide audience is a tricky game to play.  Thanks for the feedback, as it helps me get a feel for what people like to see.  The site is never static, and I'm sure I'll continue to improve things and add new features in the future. 

And thanks for the bug list.  I'm on it. 

Daniel S

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Re: Australian Investing Thread
« Reply #4492 on: May 07, 2019, 09:42:00 PM »

I don't know if this is a widespread concern, but one niggle for me at least with the latest update is that countries outside the US can't specify US for the international stocks any more, but are locked into WLD. In an ideal WLD, I would be able to select from more of the investment options you have data for, in a single portfolio (eg. domestic TSM + US SCV + EM + WLD REITS +...). But I would understand completely if the response is: "I'm afraid I can't do that, Dave".


Thanks for your hard work Tyler.

I agree that it would be great to see some US based assets added, converted back to $AUD. It looks like you've done this for SCV in Canadian portfolios. In Australia we have a reasonable variety of listed US markets ETFs available to choose from, and many people use them in their portfolios. We also have the option of buying NYSE ETFs directly through our local brokers.

lush

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Re: Australian Investing Thread
« Reply #4493 on: May 07, 2019, 09:54:33 PM »
FYI -- Australian portfolio data is back at Portfolio Charts.  I have domestic stocks and bonds, lots of international options, and a few real assets like gold and REITs.  And everything is converted to Australian currency and inflation.  So you should be able to study any popular portfolio in Australia and also create your own.

For anyone new to the site, I recommend checking out the Portfolios section and the Portfolio Matrix.  Just be sure to click the black country box and select the Australia setting.

Enjoy!

Hi Tyler, Great work! Just a question that I can’t seem to work out. In the Portfolio Matrix, for the chart ranking best to worst, why does  ‘Total Stock Market’ sit at 1 for ‘Average Return’ metric, however across all other metrics it has 19 (red). I would have thought that all the red ratings (and I think that 19 is the worst red) would have brought the ranking much lower. Thanks

Tyler

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Re: Australian Investing Thread
« Reply #4494 on: May 07, 2019, 11:52:06 PM »
I agree that it would be great to see some US based assets added, converted back to $AUD. It looks like you've done this for SCV in Canadian portfolios. In Australia we have a reasonable variety of listed US markets ETFs available to choose from, and many people use them in their portfolios. We also have the option of buying NYSE ETFs directly through our local brokers.

Good to know!  Feedback like this will definitely help me improve the usefulness of the tools over time, so thanks for educating me.

Tyler

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Re: Australian Investing Thread
« Reply #4495 on: May 07, 2019, 11:55:22 PM »
Hi Tyler, Great work! Just a question that I can’t seem to work out. In the Portfolio Matrix, for the chart ranking best to worst, why does  ‘Total Stock Market’ sit at 1 for ‘Average Return’ metric, however across all other metrics it has 19 (red). I would have thought that all the red ratings (and I think that 19 is the worst red) would have brought the ranking much lower. Thanks

Good observation.  Long story short, that's simply an indicator that average return is an extremely overrated metric.  There's so much more to picking a portfolio right for you, and navigating those other perspectives is the high-level goal of the site.

lush

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Re: Australian Investing Thread
« Reply #4496 on: May 09, 2019, 12:07:02 AM »
Hi Tyler, Great work! Just a question that I can’t seem to work out. In the Portfolio Matrix, for the chart ranking best to worst, why does  ‘Total Stock Market’ sit at 1 for ‘Average Return’ metric, however across all other metrics it has 19 (red). I would have thought that all the red ratings (and I think that 19 is the worst red) would have brought the ranking much lower. Thanks

Good observation.  Long story short, that's simply an indicator that average return is an extremely overrated metric.  There's so much more to picking a portfolio right for you, and navigating those other perspectives is the high-level goal of the site.
Fascinating! My conclusion based on all the metrics is that the Pinwheel Portfolio has low risk and ok returns. Thanks again for all your work.

Mattystein

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Re: Australian Investing Thread
« Reply #4497 on: May 16, 2019, 06:05:44 AM »
Hi all,

Will try to keep this as short and sweet as possible.
Couple aged 32/28 looking to begin our MMM journey.

We have $25k ready to invest, and ongoing $1200/month to add.

I'm happy with a portfolio of 90%+ shares, will most likely be holding for 20 years+ unless I somehow can become FI earlier.

My questions are:
1) What fund/s? I will go the ETF route. Been looking at VAS, VGS, VTS. Possibly even the diversified VDHG. I would prefer simplicity so keen for a 2 or 3 fund portfolio at most.
2) What's an ideal mix of Aus vs. International shares?
3) What broker? I want cheap and effective. Must be some favourites on here.
4) How often should I invest? With $1200/month what is a good interval to minimise brokerage fees?
5) How big of a concern are unhedged funds like VTS long term?

Hopefully not too much of a bombardment of questions. These are just my last details before I'm ready to get started.

Cheers.

Andy R

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Re: Australian Investing Thread
« Reply #4498 on: May 16, 2019, 10:54:43 AM »
Welcome to the fourm.

VDHG or VGS/VAS combo (optionally VGE with the latter)
First is simpler and stops you from tinkering (ie screwing it up), second is slightly cheaper and more tax efficient in draw down phase.
VTS/VEU combo would replace the VGS/VGE combo (weird to mix and match from the former with the latter) - they are cheaper but they are US domiciled so most avoid them and stick with VGS/VGE.
https://www.bogleheads.org/wiki/Non-US_investor%27s_guide_to_navigating_US_tax_traps
https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles
https://www.bogleheads.org/wiki/Nonresident_alien%27s_ETF_domicile_decision_table

There is no "ideal" ratio of Aus vs Int.
More Aus means more franking credits no currency risk but more concentration risk.
More International means less franking credits, more currency risk, but more diversification.
With such a small amount of money relative to what your retirement goal would be, you could keep it simple at 50/50, but as it grows hopefully you come to realise that 50% in the highly concentrated Australian market is a lot of idiosyncratic country risk. I think 20-30% seems more reasonable. VDHG Vanguard thinks 40% (which is what the diversified funds have), but each to their own.

This link should help with how often to buy.
With 1.2k/month, I would guess every 3 months is about right.

Unhedged is a comment on currency risk.
Again like there is no "ideal", just different risks to trade off each other.
In general, it is less of an issue -
1. When you have property in Australia
2. Have fixed income or cash in AUD
3. Have a lot of human capital (time to earn until retirement) in AUD.
So if you are nearing retirement, renting (own no property), and have a relatively low fixed income allocation, then it is more of a concern, otherwise not much of an issue.


Hopefully deborah drops by to give you some answers to the questions you were not aware you should ask, such as order of investments, emergency fund, super, etc. Or else you can looks through past posts in this thread and probably will find some good info.

Mattystein

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Re: Australian Investing Thread
« Reply #4499 on: May 17, 2019, 05:23:37 AM »
Thanks Andy. That was a great reply and helped plenty.

It confirmed much of what I had read.

I have also read the order of investments set out in another thread (may have been written by Deborah). I do have an emergency fund as well, not included in the $25k.

I like the idea of 2 ETFs to begin with, most likely the VGS and VAS. And I myself was leaning to a 30-40% Australia portion. So it's good to see I was on the right track.

I have been working my way through this thread also, have read about half of it I'd say. Some very helpful Australia based info in amongst it all which is hard to find elsewhere. I also really enjoyed the jlcollinsnh stock series. I'm definitely not diving in before feeling comfortable, so I was happy to see an Aussie forum thread here with some more local info.