Author Topic: Australian Investing Thread  (Read 2588987 times)

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4450 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 #4451 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 #4452 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 #4453 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 #4454 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 #4455 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 #4456 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 #4457 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 #4458 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 #4459 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 #4460 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 #4461 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?

Juan Ponce de León

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Re: Australian Investing Thread
« Reply #4462 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 #4463 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 #4464 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 #4465 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 #4466 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 #4467 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 #4468 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?

middo

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Re: Australian Investing Thread
« Reply #4469 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 #4470 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 #4471 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 #4472 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 #4473 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 #4474 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 #4475 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 #4476 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 #4477 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 #4478 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 #4479 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 #4480 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 #4481 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 #4482 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 #4483 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 #4484 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 #4485 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 #4486 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.


marty998

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Re: Australian Investing Thread
« Reply #4487 on: May 20, 2019, 03:02:00 AM »
Lovely day on the markets today. Can't recall the last time the banks went up 7-9% in a single day!

Obviously this is due to a lower risk of adverse legislation if Labor won. I fully expect the Government to ignore the Royal Commission and Ken Hayne and Rowena Orr will be recalled back in 10 years with another one.

For now I'll say sentiment is the winner. We'll wait and see if it translates to a rebirth of the property market (doubtful, but you never know).

Mattystein

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Re: Australian Investing Thread
« Reply #4488 on: May 21, 2019, 02:25:13 AM »
H all,

Posted a number of days ago and have since been trying to refine my plan towards FIRE. We've got our frugality nailed down to where we are living happily. So moving forward I need to finish my investment plan. As you will see below, we aren't starting with much, but we don't need much.

General Info
Couple, aged 32/28.
Both of us with HECS debt.
Super: $26k + $7k
Savings: ~$16k (cash in Ubank savings account) + ~$9k (lent using RateSetter @ average 8.6% p.a. split over 3 and 5 year terms)

Income
Me: $60k base. Opportunity for ~$5k of overtime (which I will do), but no super guarantee on this as per agreement.
Partner: $20k permanent part-time while studying at Uni. She will be finished in another 4 years, at which point graduate starting salary will be at least $60k, but until then...
Net income (after tax/HECS): ~$69k

Expenses
Yearly: $40k (includes everything, no need to go into too much detail)
This leaves ~$29k to invest each year (~$2,400/month). It seems my earlier estimation of $1,200/month was very conservative. Then when my partner reaches full time work we will be able to up our savings considerably but this plan is just for the next 4 years to set up a great base and get the good habits formed.

Emergency Fund
We will keep $10k as an emergency fund at this stage. According to current living expenses it is only 3 months of living, but realistically it would be 4 months as we'd tighten the belt a bit. I can aim to keep a full 6 months if this is entirely necessary, or add a little bit each week.
Leaves $15k to invest now. Could split it any way though if a bigger emergency fund is definitely required.

Super
Within Super I have just switched to SunSuper.
Fees are $78/year + 0.1% of balance up to $800k + Management fees of allocation.

I have tentatively selected an allocation of:
40% 'Australian Shares - Index' (VAS equivalent) - Fees = 0.11% p.a.
30% 'International Shares - Index (unhedged)' (VGS equivalent) - Fee = 0.09% p.a.
30% 'International Shares - Index (hedged)' (VGAD equivalent) - Fee = 0.09% p.a.
So all up the fees will be $78 + 0.198% p.a. Pretty good I think.

Also possibly interested in the 'Emerging Markets Shares' (0.15% p.a.) which is possibly VGE? Not sure if this warrants a portion of my allocation. I can change my allocations easy enough so that's a plus.

Outside Super
Vanguard ETFs for me using SelfWealth as a broker ($9.50 per trade). Asset allocation starting simple as:
30% VAS (0.14% p.a.)
70% VGS (0.18% p.a.)
I may look at substituting A200 (0.07% p.a.) for VAS (realise its only tracking top 200 not 300 so slightly less diverse Aussie wise) and VTS (0.03% p.a.) for VGS (also realise VTS being US-domiciled has possible ramifications).

Breakdown
Of the $2,400/month we can invest I was thinking of putting 20% ($720) into super and 80% ($1,680) outside.

So how does this all sound? I'd be particularly interested in thoughts relating to my asset allocation, both inside and outside of super.
Honestly, I would love any and all critique/suggestions you can throw my way. All are welcome.
If I have missed anything please let me know.

I am almost about to commit to this strategy with a goal of FIRE in 15 years (aged 47). I believe this will be easily possible with my partner obtaining full-time employment. I am also happy to do part-time work in my early 'retirement' which reduces the risks further. Another final note, is that we will most likely both be inheriting a decent amount (total ~$800k) from our parents which is an extra safety-net although not factored in to my plan.

Andy R

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Re: Australian Investing Thread
« Reply #4489 on: May 21, 2019, 05:09:17 AM »
Really well done, congratulations for getting your finances together and all laid out in a nice clean plan.

I think I like it all.
29k/yr is a good amount, much better than 15k, especially for a slightly late starter (or non-early starter)
Nice to see there is a great upside potential once your partner finishes studying.
I like your allocations. I'd bring your Aussie shares in super down to 30% max, but not a huge deal.
I include Emerging market, it is a nice diversifier, but the difference will be a very tiny fraction of the result of your consistent savings and having the plan, so it's not going to be significant in the grand scheme of things if you leave it out.

Sorry I don't have anything useful. It looks great to me.

marty998

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Re: Australian Investing Thread
« Reply #4490 on: May 21, 2019, 06:15:54 AM »
Plans for a house and/or kids @Mattystein?

Notch

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Re: Australian Investing Thread
« Reply #4491 on: May 21, 2019, 07:54:32 PM »
So how does this all sound? I'd be particularly interested in thoughts relating to my asset allocation, both inside and outside of super.

My advice is that you should decide on your overall asset allocation (VAS/VGS/VGE) then hold as much of the higher yielding component (VAS) in super as possible.  This is so your dividends get taxed at 15% rather than 34.5%.

Mattystein

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Re: Australian Investing Thread
« Reply #4492 on: May 21, 2019, 08:01:45 PM »
Plans for a house and/or kids @Mattystein?

Kid, yes (if possible). My partner has some medical issues which make this difficult. But ideally she would love kids. Maximum of 2.

House, not at this stage. Renting suits us regarding location and lifestyle. However if it is a worthwhile purchase down the track I would look at it, but not if it affects FIRE a lot.

Mattystein

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Re: Australian Investing Thread
« Reply #4493 on: May 21, 2019, 08:03:03 PM »
So how does this all sound? I'd be particularly interested in thoughts relating to my asset allocation, both inside and outside of super.

My advice is that you should decide on your overall asset allocation (VAS/VGS/VGE) then hold as much of the higher yielding component (VAS) in super as possible.  This is so your dividends get taxed at 15% rather than 34.5%.

Great tip, thank you!

Edit: Just to clarify, if I choose a total allocation of 30% VAS, I should hold it all inside Super? This doesn't affect the reliability of the portfolio outside super being enough to get me from ER to preservation age?
« Last Edit: May 21, 2019, 09:25:35 PM by Mattystein »

Mattystein

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Re: Australian Investing Thread
« Reply #4494 on: May 21, 2019, 09:32:00 PM »
I like your allocations. I'd bring your Aussie shares in super down to 30% max, but not a huge deal.
I include Emerging market...
If I include a percentage of emerging markets how does 10% sound? And drop Aussie back to 20%? International 70%?

Notch

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Re: Australian Investing Thread
« Reply #4495 on: May 21, 2019, 10:57:28 PM »
So how does this all sound? I'd be particularly interested in thoughts relating to my asset allocation, both inside and outside of super.

My advice is that you should decide on your overall asset allocation (VAS/VGS/VGE) then hold as much of the higher yielding component (VAS) in super as possible.  This is so your dividends get taxed at 15% rather than 34.5%.

Great tip, thank you!

Edit: Just to clarify, if I choose a total allocation of 30% VAS, I should hold it all inside Super? This doesn't affect the reliability of the portfolio outside super being enough to get me from ER to preservation age?

Yes.

That mostly depends on how much you save and how well the market performs. 

But if, for example, VAS has outperformed and you'd like to spend some of it in early retirement - just sell VGS or whatever you hold outside of super, and convert some of your VAS to VGS in super to rebalance the allocation.


Andy R

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Re: Australian Investing Thread
« Reply #4496 on: May 22, 2019, 12:04:03 AM »
If I include a percentage of emerging markets how does 10% sound? And drop Aussie back to 20%? International 70%?

Looks good to me.

itchyfeet

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Re: Australian Investing Thread
« Reply #4497 on: May 26, 2019, 10:38:16 PM »
With 80% off shore just be prepared that short term currency volatility will cause your stash to bounce around in value a lot.

Andy R

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Re: Australian Investing Thread
« Reply #4498 on: May 27, 2019, 02:51:50 AM »
Yeah I target 50% in AUD based assets, with 25% in VAS and 25% on VGAD. This way if the Australian economy tanks, only 25% of my current capital is exposed to a recession or market crash, but the assets are equally affected by currency movements in either direction to minimise both upside and downside currency risk.

Without VGAD you either pay with concentration risk (too much VAS) or currency risk (too much VGS), but I'm not going to comment much on VGAD because basically everyone writes it off saying that in the long term, currency movements are a wash. When I look at the history it tells a story, but each to their own.

Also Mattystein did say that half their international shares in super are currency hedged, which is essentially VGAD, so that will lower currency risk to some degree also.

itchyfeet

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Re: Australian Investing Thread
« Reply #4499 on: May 27, 2019, 11:25:05 AM »
Yeah I target 50% in AUD based assets, with 25% in VAS and 25% on VGAD. This way if the Australian economy tanks, only 25% of my current capital is exposed to a recession or market crash, but the assets are equally affected by currency movements in either direction to minimise both upside and downside currency risk.

Without VGAD you either pay with concentration risk (too much VAS) or currency risk (too much VGS), but I'm not going to comment much on VGAD because basically everyone writes it off saying that in the long term, currency movements are a wash. When I look at the history it tells a story, but each to their own.

Also Mattystein did say that half their international shares in super are currency hedged, which is essentially VGAD, so that will lower currency risk to some degree also.

Fair comment

 

Wow, a phone plan for fifteen bucks!