Author Topic: Australian Investing Thread  (Read 1930996 times)

lush

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Re: Australian Investing Thread
« Reply #4750 on: January 11, 2020, 09:16:11 PM »
Thanks Misterhorsey and Mrj and others for your responses regarding lower distributions.
Ok I think I am convinced  that I need to look at growth of the portfolio rather than distributions. It does challenge my feeling of security because of having to start to sell part of the portfolio which is scary right now. I hadnít planned to dip into selling for another 5 or more years.

 So now convinced that growth is the key, I keep coming back to that a large part of my funds are in the Balanced wholesale fund whoís performance, compared to higher risk portfolios, like say international funds, is lower. Which is a decision I made that I have been regretting for awhile and I am trying to determine whether It makes sense to sell about 50% of it over the coming months to maximise on its growth then put the funds into International. Anyway something for me to try to weigh up the pros and cons...or whether I just be old fashioned and just stick with what I have and see how it goes because after all it was meant to be a long term commitment. However I  donít want to be non proactive and hold even more regret. I have had the Balanced fund for about 3 years and over the last couple of years added the VAS fund which now sees me with an asset allocation I am happy with (30% defensive 70% growth) but overall it does have a heavy Aussie bias, so would like to change that. Thanks again.
« Last Edit: January 11, 2020, 09:18:47 PM by lush »

mjr

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Re: Australian Investing Thread
« Reply #4751 on: January 11, 2020, 10:04:40 PM »
I'd say that 70% growth assets qualifies as a "growth" portfolio, so you're probably OK there now.

You're just going to have weigh whether paying capital gains tax on 50% of your portfolio will be offset by a move to international funds. 

How much can you add to international funds over the next few years without selling ?

lush

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Re: Australian Investing Thread
« Reply #4752 on: January 11, 2020, 11:39:26 PM »
I'd say that 70% growth assets qualifies as a "growth" portfolio, so you're probably OK there now.

You're just going to have weigh whether paying capital gains tax on 50% of your portfolio will be offset by a move to international funds. 

How much can you add to international funds over the next few years without selling ?

Yes I need to find the time and head space to do the maths. Once I do that (hopefully I get it right!) it should provide me with the next steps to take. In regards to how much I can put in, not very much more, at the very least I will put the distributions from the VAS & Balanced funds which will equal about 20k annually after taxes. And maybe another $100k this year. But then I am done with trying so hard! I really want to unwind to part time work. I am very burnt out.

Andy R

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Re: Australian Investing Thread
« Reply #4753 on: January 12, 2020, 12:43:56 AM »
Ok I think I am convinced  that I need to look at growth of the portfolio rather than distributions.

You're still missing the point.
The point is not to look only at growth as opposed to only dividends.
The point is to ignore the specific return of either and look only at the total return.

deborah

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Re: Australian Investing Thread
« Reply #4754 on: January 12, 2020, 01:15:22 AM »
It appears to me that it might be advisable to have something similar to what we did with the investment order, but for how to invest.

Iíve shied away from this, because everyone is different, and has different knowledge - I think itís better to invest in what you know about. But so many people struggle with it.

Letís say that weíre setting up an investment guide... It might go something like this:

1. To begin: If you have no knowledge about any form of investment, buy the Vanguard index - VAS and VGS.

2. Review your knowledge. Your parents may have been landlords, and invested in some form of property. You may be working in some form of investment, you may be able to participate in employee share plans... Decide whether you know a reasonable amount about these investments. If you donít, read up (the ASX has a lot of courses), talk with your local expert (your parents...) and study this. Read the John Collins stock series...

3. Once you understand the investments you are interested in, work out how you will start to invest that way, and what proportion of your investments will be in them.

4. Review your other investments - youíre bound to have some superannuation, you may have inherited some investments... You need to understand these.

5. Develop an investment strategy.






Notes:
1 VAS gives you an ASX (Australian Stock Exchange) exposure, and VGS gives you the world. It wonít be the very best investment, but it will be better than a lot, and will start you investing and learning.

2 Develop your own understanding of the gambit of investing.



Thereís obviously more. Is this worth pursuing? In a special thread?

lush

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Re: Australian Investing Thread
« Reply #4755 on: January 12, 2020, 02:00:13 AM »
Ok I think I am convinced  that I need to look at growth of the portfolio rather than distributions.

You're still missing the point.
The point is not to look only at growth as opposed to only dividends.
The point is to ignore the specific return of either and look only at the total return.

Got it. Thanks

misterhorsey

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Re: Australian Investing Thread
« Reply #4756 on: January 12, 2020, 10:37:33 PM »
... I keep coming back to that a large part of my funds are in the Balanced wholesale fund whoís performance, compared to higher risk portfolios, like say international funds, is lower. Which is a decision I made that I have been regretting for awhile and I am trying to determine whether It makes sense to sell about 50% of it over the coming months to maximise on its growth then put the funds into International...

I wouldn't beat yourself up for choosing the balanced option 3 years ago.  It's actually not a bad option.
 
One of the really challenging things about investing is making financial decisions for your future self - who is someone you haven't yet met.  You go into it with all the best intentions, but 3 years pass and you're likely much savvier, have a better understanding of financial matter, and perhaps a higher tolerance of risk.  It's pretty hard to get it exactly right.

I dip in and out of this forum quite a bit. But I seem to recall that at the time you were about to invest you were selling a property and had a lot of cash. I don't think you'd invested in shares/index funds at all up to this point. So it was all quite new, and your tolerance of risk and volatility was probably lower than it is now.  At the time I think the balanced option was actually a decent choice.

Three years on the market has kicked on and you're regretting the fact that missed out on the better performance delivered by more growth oriented funds and that's understandable.

But I think it's worth remembering that three years back, no-one knew that the market would perform as it has. (Note that the this period also included the pretty sharp correction at the end of 2018. In fact, some of the stellar performance of 2019 was because it was making up for what was lost at the end of 2018.  VAS did 20% approx in calendar 2019.  But VAS from it's previous high in Oct 2018 to end of 2019increased by only 7% (not including dividends).  Still decent of course, but not the headline figure that you'd feel necessary to beat yourself up about.

But it's also worth remembering that if the market had experienced a sustained contraction over the past 3 years, or we entered into a full recession (something it seems we seem to be continually flirting with since the Great Recession/GFC), it's likely you would have been pretty happy to be in balanced fund as your 'losses' would be significantly less than an equivalent growth fund.

Choosing some degree of stability and lesser volatility with the balanced fund actually is a valuable thing.  The fact is, the market didn't crash - but you chose a strategy that would have put you in good stead if it had.  No-one knows how they'll behave if the market drops 40% again.  Everyone thinks they won't panic but you don't know what your future self might be tempted to do.

But now that you have significant amount in a balanced fund it doesn't need to stay that way forever - something you've already addressed by adding VAS.

You could cash out of your balanced fund and put it in a growth fund, but the CGT hit won't be ideal.  And anyway, there's really no urgency to shift the balance if you're investing for a 10-20-30 year etc time frame. Add the 100k cash you have to VGS/VAS, and opt to receive any future distributions from the fund as cash and put it into VAS/VGS.  If it's still not the allocation you like (growth v income, international v australia), then cash out a bit and buy into something else to rebalance. This is of course messier than if you had started with a high growth fund from that start, rebalancing will be a pain if you don't have a head for it, but that can't be helped.

It will be more volatile of course and if you're in for the long term it doesn't really matter.  As an example, I helped ease my parents into the Conservative vanguard fund.  When my High Growth fund dropped around 12% or so, theirs dropped by about 2%.   This was just a minor blip in the scheme of things but there were definitely people on forums getting jittery.

But perhaps above all, prepare a ideal allocation that you'd be happy with and slowly work towards that.   It took me about 5 years to unravel my legacy investment positions (investment property + no shares, to direct shares and no index funds, to an indexed strategy with a 50/50 international/Australian split). I wish I had bought VGHD ETF at the very beginning. But of course, it didn't exist at the time.

lush

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Re: Australian Investing Thread
« Reply #4757 on: January 14, 2020, 04:24:15 PM »
Misterhorsey thank you for your, accurate, articulate and very thoughtful response. It has provided me with excellent perspective and great food for thought. More than anything it has provided me with a calmer approach to the situation. I have no doubt what you have articulated resonates with many in this forum. Thanks again.

Alchemisst

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Re: Australian Investing Thread
« Reply #4758 on: January 15, 2020, 02:22:14 PM »
I'm currently weighing up whether I should put more money into super (over the 25k) for the tax benefits vs invest in the index outside super, any opinions?

deborah

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Re: Australian Investing Thread
« Reply #4759 on: January 15, 2020, 02:28:37 PM »
I'm currently weighing up whether I should put more money into super (over the 25k) for the tax benefits vs invest in the index outside super, any opinions?
Depends on your age, what age you plan to retire and how much you have inside and outside super.

Alchemisst

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Re: Australian Investing Thread
« Reply #4760 on: January 15, 2020, 04:17:34 PM »
I'm currently weighing up whether I should put more money into super (over the 25k) for the tax benefits vs invest in the index outside super, any opinions?
Depends on your age, what age you plan to retire and how much you have inside and outside super.

Currently early 30's

mjr

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Re: Australian Investing Thread
« Reply #4761 on: January 15, 2020, 06:03:39 PM »
Depends on your age, what age you plan to retire and how much you have inside and outside super.

Currently early 30's

Really can't offer an opinion without the information that Deborah listed.

Other important information would be do you have any major expenditures planned between now and age 60, including early retirement.  House paid off ?  Kids around or planned ? Etc.

I shored my short to mid term plans so that I had an early retirement plan and was protected against job loss, etc and then poured money into super in my late 40s/early 50s.

happy

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Re: Australian Investing Thread
« Reply #4762 on: January 15, 2020, 07:01:29 PM »
Its the question without one right answer I'm afraid. It really does depend on all those factors Deborah and MJR have mentioned, plus what you current income is ( changes the tax advantages) what your annual expenses will be in retirement, plus what you think the government is going to do with super in another 30 odd years time.

I like to think of it in 2 categories: old person money ie money you will need once you can access super, and younger person money - money you need in retirement until you can access super.

I've advised my children in their early 20s to try to build their super early, so that time - another 40 years or so, can do the heavy lifting. Especially as caps etc are more likely to get tighter than looser. As soon as possible, once it looks like a basic level of old person money will be covered, start investing outside.

At the end of the day super is really a tax minimization scheme, so what you do really does depend on your income and marginal tax rate . The main thing is to keep expenses low and save and invest.
« Last Edit: January 16, 2020, 03:47:06 AM by happy »

mjr

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Re: Australian Investing Thread
« Reply #4763 on: January 15, 2020, 07:09:20 PM »
Tax avoidance is illegal.  Super is a tax-minimisation vehicle, design to reward people for locking money away for up to 40 and beyond years in order to less of a burden on taxpayers

happy

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Re: Australian Investing Thread
« Reply #4764 on: January 16, 2020, 03:47:57 AM »
FIFY.

mjr

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Re: Australian Investing Thread
« Reply #4765 on: January 16, 2020, 02:08:06 PM »
Thanks :-)

marty998

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Re: Australian Investing Thread
« Reply #4766 on: January 21, 2020, 11:43:30 PM »
Holy sheeeeeet. How about all that froth in the market at the moment? Up, up and away, the Santa rally is in full force.

mjr

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Re: Australian Investing Thread
« Reply #4767 on: January 22, 2020, 01:51:42 AM »
It's bloody terrifying.  S&P500 futures is up 0.43% at the moment as well.

On the plus side, I'm now within $10k now of the big 3.   I crossed the big 2 in June 2018 !  Holy sheeet.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4768 on: January 30, 2020, 12:24:11 PM »
***Dumb question alert*** Will the Aussie dollar ever get better? During the gfc, it exceeded the USD. Are we ever going to see that again? And if it rises, do any of you do anything to take advantage of the better exchange rate before it drops again? Iím just thinking about how much more money I need if I want to live outside Australia while retired, and want the US and Europe as options not just SE Asia and Central America.

deborah

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Re: Australian Investing Thread
« Reply #4769 on: January 30, 2020, 12:34:09 PM »
***Dumb question alert*** Will the Aussie dollar ever get better? During the gfc, it exceeded the USD. Are we ever going to see that again? And if it rises, do any of you do anything to take advantage of the better exchange rate before it drops again? Iím just thinking about how much more money I need if I want to live outside Australia while retired, and want the US and Europe as options not just SE Asia and Central America.
It will get better. It will also get worse. As I travel overseas each year, I have some money in the money market that I use if it's better value than I can get when I'm traveling. So far, this strategy has paid dividends, but I realise it's market timing. If you plan to live in other places, you should adjust your investments so that your 'home bias' includes those places. That way you should be able to afford all the places you want to live, but will probably be slightly worse off than if you only had one country as your 'home bias'.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4770 on: January 30, 2020, 12:44:04 PM »
***Dumb question alert*** Will the Aussie dollar ever get better? During the gfc, it exceeded the USD. Are we ever going to see that again? And if it rises, do any of you do anything to take advantage of the better exchange rate before it drops again? Iím just thinking about how much more money I need if I want to live outside Australia while retired, and want the US and Europe as options not just SE Asia and Central America.
It will get better. It will also get worse. As I travel overseas each year, I have some money in the money market that I use if it's better value than I can get when I'm traveling. So far, this strategy has paid dividends, but I realise it's market timing. If you plan to live in other places, you should adjust your investments so that your 'home bias' includes those places. That way you should be able to afford all the places you want to live, but will probably be slightly worse off than if you only had one country as your 'home bias'.

Thank you for responding. Iím a bit confused by what you mean. Say I live in Australia but want to move to Portugal to live. So, youíre saying I need European investments in my index portfolio? I use the Vanguard high growth Lifestrategy fund, donít think I can change that. Is home bias Australia?

deborah

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Re: Australian Investing Thread
« Reply #4771 on: January 30, 2020, 02:00:24 PM »
Everyone has home bias, and it is good and bad. Australia has about 1.5% of the world's economy, so in theory, if you had no home bias, you would have 1.5% of your investments in the Australian economy, but many people have a hard time justifying even as low as 40% Australian shares. This can be seen as reasonable because
 
- our companies participate in other economies,
- we get more value from Australian shares because of our taxation rules,
- we need somewhere to live, so buy property here,
- we live in Australia, and are using Australian dollars, so need to have our investments giving us an Australian wage...

BUT it is still home bias.

If you plan to live in Portugal, Australia and the USA, you need to change your home bias to Portugal, Australia and the USA. How you do this is up to you. You can get a European index and an American index, you can buy property in your home countries...

mjr

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Re: Australian Investing Thread
« Reply #4772 on: February 06, 2020, 04:09:12 PM »
On the plus side, I'm now within $10k now of the big 3.   I crossed the big 2 in June 2018 !  Holy sheeet.

Took 16 days and plunged a couple of times, but as of right now the invested assets is north of $3m.  That's a $400k increase in the 18 months since I stopped work.
« Last Edit: February 07, 2020, 04:00:34 PM by mjr »

chevy1956

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Re: Australian Investing Thread
« Reply #4773 on: February 07, 2020, 02:18:44 AM »
On the plus side, I'm now within $10k now of the big 3.   I crossed the big 2 in June 2018 !  Holy sheeet.

Took 16 days and plunged a couple of times, but as of right now the invested assets is north of $3m.  That's a $400k increase in the 18 months since I stopped worked.

That was good timing to retire. I'm worried it's going to come down when I retire. I do have bonds to draw down on at the start though.

mrmoonymartian

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Re: Australian Investing Thread
« Reply #4774 on: February 07, 2020, 06:28:33 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".


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.
@Daniel S check out his latest update...

https://portfoliocharts.com/2020/01/06/the-future-of-portfolio-analysis-has-more-history-than-ever/

Daniel S

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Re: Australian Investing Thread
« Reply #4775 on: February 07, 2020, 07:01:54 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".


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.
@Daniel S check out his latest update...

https://portfoliocharts.com/2020/01/06/the-future-of-portfolio-analysis-has-more-history-than-ever/

Thanks for this mrmoonymartian. Our prayers have been answered!

mjr

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Re: Australian Investing Thread
« Reply #4776 on: February 07, 2020, 04:18:30 PM »
That was good timing to retire. I'm worried it's going to come down when I retire. I do have bonds to draw down on at the start though.

It was, that's for sure.  But even if the share market comes a gutsa in the next couple of years, it's likely that a higher withdrawal rate will be ok on the reduced valuations.

Of course, my skiting at 9:10 resulted in the market turning so my total closed $7k underneath that magic number :-)

I don't plan on my withdrawal rate ever exceeding 3% on my curretn valuation.  For now, I'm puttering along nicely at 1%, but that will change when I get less nervous (fingers crossed)

chevy1956

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Re: Australian Investing Thread
« Reply #4777 on: February 08, 2020, 03:57:56 PM »
I don't plan on my withdrawal rate ever exceeding 3% on my curretn valuation.  For now, I'm puttering along nicely at 1%, but that will change when I get less nervous (fingers crossed)

Once you are at 3% you are good. You will end up filthy rich at this rate at least in terms of wealth to spending needs which to me is what it means to be wealthy. If you want to spend you should spend.

marty998

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Re: Australian Investing Thread
« Reply #4778 on: February 26, 2020, 01:56:32 AM »
Been watching the markets with a wry smile lately. On 30 January I sold substantially all of my equities portfolio in order to fund the purchase of an investment property.

5238 units of VAS @ $88.56, best part of half a million. The market did what it did and continued racing upwards to $91 and I sat there contemplating whether I should have let it run until closer to the property settlement before the red ink spilt this week. If I hadn't sold I'd be shitting bricks right now.

Bird in the hand allows me to sleep at night, have the cash sitting in the bank account staying deathly static while commsec has blood all over every page.

Stay the course and buy more if you can, but this little piggy is happy with his impeccable market timing :D

deborah

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Re: Australian Investing Thread
« Reply #4779 on: February 26, 2020, 02:18:39 AM »
Well done Marty!

marty998

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Re: Australian Investing Thread
« Reply #4780 on: February 26, 2020, 05:38:02 AM »
Well done Marty!

Thanks. Dumb luck more than anything haha. At work we were in disbelief that the markets hadn't reacted to COVID-19 earlier than they did. Like we're supposed to have believed that China had it all under control?

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4781 on: February 26, 2020, 11:07:39 AM »
Well done Marty!

Thanks. Dumb luck more than anything haha. At work we were in disbelief that the markets hadn't reacted to COVID-19 earlier than they did. Like we're supposed to have believed that China had it all under control?

What an interesting move, buying the investment property. Would you be able to walk us through your thinking? Youíre going to get a tax hit for selling right? And then stamp duty and the costs of purchase? Do you believe the investment property will yield more than index funds? Whatís convinced you that active management of property is financially smarter?

Not trying to challenge you, just learn as youíre one of the members whose views I value here.

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Re: Australian Investing Thread
« Reply #4782 on: February 26, 2020, 11:09:11 AM »
Well done Marty!

Thanks. Dumb luck more than anything haha. At work we were in disbelief that the markets hadn't reacted to COVID-19 earlier than they did. Like we're supposed to have believed that China had it all under control?

What an interesting move, buying the investment property. Would you be able to walk us through your thinking? Youíre going to get a tax hit for selling right? And then stamp duty and the costs of purchase? Do you believe the investment property will yield more than index funds? Whatís convinced you that active management of property is financially smarter?

Not trying to challenge you, just learn as youíre one of the members whose views I value here.

Good questions

mjr

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Re: Australian Investing Thread
« Reply #4783 on: February 26, 2020, 12:33:45 PM »
Yes, I'd be keen to know too. 

Good luck with bailing on the markets when you did, but a wholesale shift from equities to (Sydney ?) based investment property is not something I would have considered.

Numerous articles in the Australian in the last week about terrible yield from property at the moment.  Of course, this doesn't preclude capital growth, but then you get into the whole can't-sell-off-pieces for income in retirement when you need to.

That's assuming of course that said IP isn't in an SMSF.

I'm not sure only a 6% drop is worth buying more, but I do have to move some cash into my own SMSF soon, so this may be the time...
« Last Edit: February 26, 2020, 12:35:18 PM by mjr »

deborah

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Re: Australian Investing Thread
« Reply #4784 on: February 26, 2020, 02:42:50 PM »
But Marty has always had some investment property as well as investment in the share market. It's called diversification! I'd also expect that he still has a finger in the share market, in the form of his super. Aren't we all supposed to diversify?

mjr

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Re: Australian Investing Thread
« Reply #4785 on: February 26, 2020, 04:42:29 PM »
Just going off this:

I sold substantially all of my equities portfolio in order to fund the purchase of an investment property.

I'm all for diversification. I have my PPOR and REITs, but a big chunk of physical real estate with mediocre income which will one day be hit with a big capital gain tax bill at the expense of equities is what I am querying.

itchyfeet

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Re: Australian Investing Thread
« Reply #4786 on: February 26, 2020, 07:28:53 PM »
I have Australian properties too. But I canít say I am overly enamoured with the idea of owning more. In fact I am trying to decide when to sell.

I have a very expensive house in Inner Sydney that I just canít believe is worth as much money as it is.  Rent yield is dismal especially after I pay a criminal amount of land tax and I canít see who could possibly pay more for this house in years to come to make it a good capital gains play.

I also own a house in Brisbane that is worth roughly the same in real terms as when I bought it 6 years ago. The rent yield is ok I suppose, but after I take out all costs and allow for the odd weeks of vacancy every few years itís only 3.5% which is less than Aussie dividend yields and comes with the inflexibility of a property investmemt.... This said, I am probably going to hold onto the Brisbane property for the time being as it does give me some diversification and a  3.5% rent yield mathematically means a 4% drawdown will last 40 years. Of course I will need to sell the place at some point when I need to turn the investment into something more liquid. Hopefully that is a ways down the line.

So on this basis I am keen to hear an alternate view on why now is a good time to buy.

marty998

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Re: Australian Investing Thread
« Reply #4787 on: February 27, 2020, 12:21:38 AM »
Well done Marty!

Thanks. Dumb luck more than anything haha. At work we were in disbelief that the markets hadn't reacted to COVID-19 earlier than they did. Like we're supposed to have believed that China had it all under control?

What an interesting move, buying the investment property. Would you be able to walk us through your thinking? Youíre going to get a tax hit for selling right? And then stamp duty and the costs of purchase? Do you believe the investment property will yield more than index funds? Whatís convinced you that active management of property is financially smarter?

Not trying to challenge you, just learn as youíre one of the members whose views I value here.

Good questions

A few answers:

- Yes the equities portfolio generated substantial capital gains, but as chance would have it, I had an equivalent amount of capital losses still carried forward from 2009-2010 (margin lending fucked my life lol). I'll have about $2k in CGT payable, not going to lose sleep over it.
- No getting around stamp duty, its an "inconvenience". You pay it (~$37,500), but consider it over the period I expect to hold this property (20 years or more) it's not so bad. Of course, you don't pay this for shares, so that's a plus in the shares column and a cross against property.
- Yields from property have always been terrible, that's nothing new, I'll be getting around 4.5% gross on this one. The flip side is leveraged capital gains, and leveraged gains that are relatively safer than shares, because it's unlikely I'll be forced to sell. I've bought into a relatively affluent area, that already experienced a 20% fall in value over the past 2 years, but is now on an upswing. Definitely have not paid top of the boom prices. I don't expect any issues with getting it rented - the apartment is a 4 bed unit which is rare and a huge positive, and an equivalent one in the complex was just leased for more than expectations within a week of it being advertised.
- Tax! I have aimed for a neutrally geared outcome on this property, but after capital works deductions I'll come out ahead tax wise. The share portfolio was going to result in a substantial ongoing tax bill with it generating significant dividends (and not all of it franked either). Selling up and buying the property will help a little bit tax wise.
- I still have funds ($250k) in offset on my PPOR. Can easily debt recycle this and put it back into shares if I want to. That money was always set aside as a deposit for a future PPOR, but its unlikely I'm going to buy a new home anytime soon.


I'm planning out the long term. I have 26 years until I can access super. If/when I FIRE, I won't need to sell any of the properties immediately - I'll likely have several years, if not decades worth of funds in offset accounts and well as in equities when I rebuild the share portfolio.

Too often people fall into the trap of thinking its a "bad time to buy now". However, when you look back 30 years you'd definitely wish you bought in 1990. Sure prices could go down in the next 2,3,5 years, but sure as shit they won't be at these "low" levels in 2050.

bigchrisb

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Re: Australian Investing Thread
« Reply #4788 on: February 27, 2020, 02:33:05 AM »
Interesting call Marty!  Good on you for having the conviction to act.  I'm sticking the course - PPOR + equities, plus a small amount of gearing.

I checked my numbers today - the stash is down $200k in a week. That's a steep decline. 
Quick check - is it a bargain and should I start levering up?  The stash is back to where it was at the end of last year (2 months ago).  My journal notes at that point were struggling to comprehend the run-up we were experiencing.  So, its not a bargain yet. 

Looking further back (to drop another 10% from here), and my notes in March 2019 were:
"Not much to report, dividends flowing, reinvestment happening. Values on the rise. Busy hoarding cash and reducing debt at the moment, can't bring myself to purchase right now. Blown away by the quantity of dividends and special dividends at the moment.
"

So, a year ago I thought things 10% lower than today were expensive.  Evidently, I am not yet at lever up and buy levels, and there is still a fair way to go before I will be.

One thing I am thinking about however is exchange rates.  The Aussie dollar has fallen a lot.  I'm currently earning in Euros - I had been keeping my earnings in an EU back account to use as splash money here.  I'm now thinking about starting to repatriate some of it.  I'm also going to change tack on my international shares - thus far I have always bought un-hedged international shares, because I wanted to diversify the currency risk.  However, with the dollar low in my opinion, I'm now going to be buying new international shares in hedged form instead.  I'm doing this via the SMSF due to the potential tax issues of hedged shares.

Interested if anyone else is making adjustments at the moment?

nofriends

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Re: Australian Investing Thread
« Reply #4789 on: February 27, 2020, 09:53:00 AM »
A few answers:

- Yes the equities portfolio generated substantial capital gains, but as chance would have it, I had an equivalent amount of capital losses still carried forward from 2009-2010 (margin lending fucked my life lol). I'll have about $2k in CGT payable, not going to lose sleep over it.


Can you give any insight on the 2009-2010? were you over geared? 2009 was when the markets started to recover or were you in individual stocks back then not indices?

The reason i'm asking is i have a margin which is currently at below 10% LVR and thinking of gradually increasing it to approx 30% if this current correction continues.

itchyfeet

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Re: Australian Investing Thread
« Reply #4790 on: February 27, 2020, 11:57:36 AM »
Interested if anyone else is making adjustments at the moment?

I hear you on the AUD. I have been earning USD for these past 5+ years and I still have 2012-2013 exchange rates in my mind. When I negotiated my salary in 2014 the AUD was already sliding and I used a 3 year average fx rate to support my salary request.

Since then the AUD has been generally weakening v the USD and I have always felt lucky to be earning USD. Consequently I have always been regularly changing a lot of my savings back to AUD. I do have several hundred Thousand in non AUD investments, but am really heavily weighted to AUD. Consequently I donít feel any desire to change more to AUD not withstanding the moves this past month.

I do, however, feel fairly confident saying the USD will weaken once this Coronavirus uncertainty is behind us, so agree with your thinking and strategy.

I am not making any big moves, but the market moves this past week has given me pause for thought heading into FIRE. I do want to have a bit more cash available in my first years of FIRE in case I donít want to sell equities. Hence, I will be focussed on paying down realestate debt and building up a war chest in the redraw facility. I am not too scared of short term interest hikes at the moment, so will stay somewhat leveraged. But not the $1M I have in debt today.

My big move will come when I finally sell out of Sydney, but honestly I am still a few years away from that.
« Last Edit: February 27, 2020, 12:00:15 PM by itchyfeet »

marty998

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Re: Australian Investing Thread
« Reply #4791 on: February 27, 2020, 01:42:58 PM »
A few answers:

- Yes the equities portfolio generated substantial capital gains, but as chance would have it, I had an equivalent amount of capital losses still carried forward from 2009-2010 (margin lending fucked my life lol). I'll have about $2k in CGT payable, not going to lose sleep over it.


Can you give any insight on the 2009-2010? were you over geared? 2009 was when the markets started to recover or were you in individual stocks back then not indices?

The reason i'm asking is i have a margin which is currently at below 10% LVR and thinking of gradually increasing it to approx 30% if this current correction continues.

I was 50% geared going into November 2007. In individual stocks.... VAS wasn't around back then I don't remember... STW was the main index fund but I wasn't familiar with it. I was mostly in banks and a few REITS, which fell more than 50%, i some case 75% pretty quickly. The ones I was still in didn't rebound as much through 2009, and by early 2010 I only had a parcel of Westpac shares left.

Even when the gearing was reduced to 30%, you'd still be looking at a 4.0%+ loss every day the market fell 3%. Enough of those strung together and you start getting in strife very quickly.

My 2c, don't do it on margin - do it on a secured property loan.

mjr

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Re: Australian Investing Thread
« Reply #4792 on: February 27, 2020, 10:58:03 PM »
-$250k for the week.  Stings a bit :-)

How'd others do ?

deborah

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Re: Australian Investing Thread
« Reply #4793 on: February 27, 2020, 11:03:03 PM »
-$250k for the week.  Stings a bit :-)

How'd others do ?

You must have an awful lot of money in the stock exchange!

mjr

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Re: Australian Investing Thread
« Reply #4794 on: February 27, 2020, 11:48:34 PM »
A bit.  $2.1m now.

Less than I had on Monday...

Mate of mine had all of his dough + a big chunk of house equity in the market - $6m worth.

I bet he's smarting a bit too.  I'd ask him, but he's on holidays at the moment - in China...

Winner

marty998

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Re: Australian Investing Thread
« Reply #4795 on: February 28, 2020, 12:34:29 AM »
A bit.  $2.1m now.

Less than I had on Monday...

Mate of mine had all of his dough + a big chunk of house equity in the market - $6m worth.

I bet he's smarting a bit too.  I'd ask him, but he's on holidays at the moment - in China...

Winner

Eh... but 6 months ago he would've had the same amount that he has today. 

mjr

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Re: Australian Investing Thread
« Reply #4796 on: February 28, 2020, 12:44:57 AM »
Agreed - given the performance of the market over the last couple of years, no one should be in strife or complaining... yet.

bigchrisb

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Re: Australian Investing Thread
« Reply #4797 on: February 28, 2020, 03:47:17 AM »
A bit.  $2.1m now.

Less than I had on Monday...

Mate of mine had all of his dough + a big chunk of house equity in the market - $6m worth.

I bet he's smarting a bit too.  I'd ask him, but he's on holidays at the moment - in China...

Winner

Eh... but 6 months ago he would've had the same amount that he has today.
Exactly! I suspect we now have enough of a drop for people to start panicking and flip the momentum and sentiment in the market. I'm not doing much, converting some euros and will buy some vgad in the super fund,  but really only catching up on regular contributions.

Given I'm living and working overseas at the moment, I'm as interested in the exchange rate movements as anything else!

happy

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Re: Australian Investing Thread
« Reply #4798 on: February 28, 2020, 04:01:08 PM »
I've carrying too much in cash for a while now, so my super balance remains steady since Dec 2019. I'm not going to "lever up" but like Bigchris, I'm not buying yet either and waiting for maybe another 10% to come off the market.


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Re: Australian Investing Thread
« Reply #4799 on: February 29, 2020, 03:35:33 AM »
However, with the dollar low in my opinion, I'm now going to be buying new international shares in hedged form instead.  I'm doing this via the SMSF due to the potential tax issues of hedged shares.

Could you elaborate on the tax implications of hedged shares? Iíve not heard this mentioned anywhere before.