Author Topic: Australian Investing Thread  (Read 2167901 times)

marty998

  • Walrus Stache
  • *******
  • Posts: 7298
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #4950 on: May 04, 2020, 02:32:19 AM »

Over the same time, my rates have increased from $2300 to $4300 ($2k increase) and my land tax (currently rented out) from $4200 to $6700 ($2.5k increase).   So, the increase in annual costs has been $4500.  i.e. the reduction in stamp duty in my situation is equivalent to 1.5 years of the additional taxes.  I don't intend to sell my house every 18 months, so for me, the change stinks.  As an economist, I support it - its efficient and hard to avoid.  Much better than transaction taxes or company taxes.

If they implemented the land tax on all properties, not just investment and commercial, then it wouldn't have to be so high...

MrThatsDifferent

  • Handlebar Stache
  • *****
  • Posts: 2187
Re: Australian Investing Thread
« Reply #4951 on: May 04, 2020, 05:39:53 AM »
Thanks for sharing that @bigchrisb!

bigchrisb

  • Handlebar Stache
  • *****
  • Posts: 1237
Re: Australian Investing Thread
« Reply #4952 on: May 05, 2020, 12:54:35 AM »
I see ME Bank is the first to freeze mortgage re-draws.
https://www.abc.net.au/news/2020-05-04/westpac-will-not-take-cash-from-home-loan-accounts/12213408
Also a good AFR writeup, but its behind a paywall, so I haven't linked it.

A timely reminder that there is cash and there is "cash".  I wouldn't be surprised to see more of this happening, particularly from second tier lenders.

People haven't lost money, as its been applied to the principal.  But they have lost access to it, which hurts.  If your emergency fund, or your dry powder was being kept in a redraw with ME, you have just been screwed. 

I took action a while ago and made sure that my investable cash was in genuine offset accounts (as opposed to redraw accounts).  And for good measure, I've got 12 months spend in real bank accounts, spread over a couple of different banks.  In the past, I was happy for this to sit in my offset account, but  but now I'm prepared to give up a couple of percent interest for better security of access to my emergency fund.

Hope none of you have been adversely impacted by this. 

marty998

  • Walrus Stache
  • *******
  • Posts: 7298
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #4953 on: May 05, 2020, 05:34:24 AM »
I see ME Bank is the first to freeze mortgage re-draws.
https://www.abc.net.au/news/2020-05-04/westpac-will-not-take-cash-from-home-loan-accounts/12213408
Also a good AFR writeup, but its behind a paywall, so I haven't linked it.

A timely reminder that there is cash and there is "cash".  I wouldn't be surprised to see more of this happening, particularly from second tier lenders.

People haven't lost money, as its been applied to the principal.  But they have lost access to it, which hurts.  If your emergency fund, or your dry powder was being kept in a redraw with ME, you have just been screwed. 

I took action a while ago and made sure that my investable cash was in genuine offset accounts (as opposed to redraw accounts).  And for good measure, I've got 12 months spend in real bank accounts, spread over a couple of different banks.  In the past, I was happy for this to sit in my offset account, but  but now I'm prepared to give up a couple of percent interest for better security of access to my emergency fund.

Hope none of you have been adversely impacted by this.

My understanding of this was that they've swept redraws into the mortgage to the extent of how far ahead of the normal mortgage payoff you were.

For example, if you were 29 years into a 30 year loan, and you have $300,000 in re-draw, they've now stopped you from re-borrowing $300,000 (because then your repayments would be over $25,000 a month, and that would be irresponsible).

Call it a bug in the legacy IT systems that the available re-draw didn't reduce in line with the normal pay-off schedule. Commbank fixed it 2 years ago (to similar outcry of "bad bank stealing people's money").

It wasn't true then and it isn't true now.

DrowsyBee

  • Bristles
  • ***
  • Posts: 300
  • Location: Canberra, Australia
Re: Australian Investing Thread
« Reply #4954 on: May 05, 2020, 07:06:34 PM »
Has anyone used mFund to purchase shares in unlisted funds? Is it as easy as it looks or am I missing something?

Andy R

  • Bristles
  • ***
  • Posts: 336
Re: Australian Investing Thread
« Reply #4955 on: May 05, 2020, 09:07:10 PM »
Just because something is easy to purchase doesn't make it a good idea.

DrowsyBee

  • Bristles
  • ***
  • Posts: 300
  • Location: Canberra, Australia
Re: Australian Investing Thread
« Reply #4956 on: May 05, 2020, 09:28:25 PM »
Great and valued contribution that didn't even attempt to answer my query. Thanks.

bigchrisb

  • Handlebar Stache
  • *****
  • Posts: 1237
Re: Australian Investing Thread
« Reply #4957 on: May 06, 2020, 06:34:16 AM »
Anyone else looking at the NAB share purchase plan?  I have some NAB shares with  a capital loss.  I've sold them at about 20% over the SPP price, and booked the capital loss.  Will apply for the full $30k of spp shares.

To get my holding back, I need to be allocated $12k under the spp, so can handle a scaleback to 40%.  I'll buy the balance back on market after any scaleback is announced.

Will be interesting to see where it lands.  Anyone have any view on the ATOs treatment of share purchase plans under the wash sale rules for capital losses?

sirdeets

  • 5 O'Clock Shadow
  • *
  • Posts: 85
Re: Australian Investing Thread
« Reply #4958 on: May 07, 2020, 05:33:14 PM »
After being rejected from Westpac for a margin loan late march, went to NAB Equity Builder and have to report its been great so far. The interest rate even dropped down to 3.9% from 4.05% when I applied.


middo

  • Handlebar Stache
  • *****
  • Posts: 1439
  • Location: Stuck in Melbourne still. Dreaming of WA
  • Learning.
Re: Australian Investing Thread
« Reply #4959 on: May 07, 2020, 08:17:32 PM »
I see ME Bank is the first to freeze mortgage re-draws.
https://www.abc.net.au/news/2020-05-04/westpac-will-not-take-cash-from-home-loan-accounts/12213408
Also a good AFR writeup, but its behind a paywall, so I haven't linked it.

A timely reminder that there is cash and there is "cash".  I wouldn't be surprised to see more of this happening, particularly from second tier lenders.

People haven't lost money, as its been applied to the principal.  But they have lost access to it, which hurts.  If your emergency fund, or your dry powder was being kept in a redraw with ME, you have just been screwed. 

I took action a while ago and made sure that my investable cash was in genuine offset accounts (as opposed to redraw accounts).  And for good measure, I've got 12 months spend in real bank accounts, spread over a couple of different banks.  In the past, I was happy for this to sit in my offset account, but  but now I'm prepared to give up a couple of percent interest for better security of access to my emergency fund.

Hope none of you have been adversely impacted by this.

My understanding of this was that they've swept redraws into the mortgage to the extent of how far ahead of the normal mortgage payoff you were.

For example, if you were 29 years into a 30 year loan, and you have $300,000 in re-draw, they've now stopped you from re-borrowing $300,000 (because then your repayments would be over $25,000 a month, and that would be irresponsible).

Call it a bug in the legacy IT systems that the available re-draw didn't reduce in line with the normal pay-off schedule. Commbank fixed it 2 years ago (to similar outcry of "bad bank stealing people's money").

It wasn't true then and it isn't true now.

There is a report in The Age that ME Bank has reversed this decision.

MrThatsDifferent

  • Handlebar Stache
  • *****
  • Posts: 2187
Re: Australian Investing Thread
« Reply #4960 on: May 07, 2020, 10:50:27 PM »
I see ME Bank is the first to freeze mortgage re-draws.
https://www.abc.net.au/news/2020-05-04/westpac-will-not-take-cash-from-home-loan-accounts/12213408
Also a good AFR writeup, but its behind a paywall, so I haven't linked it.

A timely reminder that there is cash and there is "cash".  I wouldn't be surprised to see more of this happening, particularly from second tier lenders.

People haven't lost money, as its been applied to the principal.  But they have lost access to it, which hurts.  If your emergency fund, or your dry powder was being kept in a redraw with ME, you have just been screwed. 

I took action a while ago and made sure that my investable cash was in genuine offset accounts (as opposed to redraw accounts).  And for good measure, I've got 12 months spend in real bank accounts, spread over a couple of different banks.  In the past, I was happy for this to sit in my offset account, but  but now I'm prepared to give up a couple of percent interest for better security of access to my emergency fund.

Hope none of you have been adversely impacted by this.

My understanding of this was that they've swept redraws into the mortgage to the extent of how far ahead of the normal mortgage payoff you were.

For example, if you were 29 years into a 30 year loan, and you have $300,000 in re-draw, they've now stopped you from re-borrowing $300,000 (because then your repayments would be over $25,000 a month, and that would be irresponsible).

Call it a bug in the legacy IT systems that the available re-draw didn't reduce in line with the normal pay-off schedule. Commbank fixed it 2 years ago (to similar outcry of "bad bank stealing people's money").

It wasn't true then and it isn't true now.

There is a report in The Age that ME Bank has reversed this decision.

What a betrayal of trust, Iíll never use them.

Wadiman

  • Stubble
  • **
  • Posts: 182
Re: Australian Investing Thread
« Reply #4961 on: May 18, 2020, 05:46:14 AM »
Hi all - havenít been round these parts for a while! 

Wondering if anyone has read and digested this: https://www.amazon.com.au/Living-Off-Your-Money-Retirement/dp/0997403403

Iím about two years out from FIREing and am starting to think about the mechanics of withdrawing living expenses - he makes some very interesting points and outlines strategies worth looking into (in my view).  I havenít purchased the book yet but plan to do so.

Bestest

mrmoonymartian

  • Bristles
  • ***
  • Posts: 287
  • Age: 39
  • Location: Brisbane
Re: Australian Investing Thread
« Reply #4962 on: May 18, 2020, 06:13:02 AM »
Living off your money - anyone can do it with these simple steps:
1. Write book about living off your money
2. Sell book for $60 per paperback and $86 per hardback on amazon
3. Profit!

Andy R

  • Bristles
  • ***
  • Posts: 336
Re: Australian Investing Thread
« Reply #4963 on: May 18, 2020, 07:38:33 AM »
@Wadiman

There's a thread on bogleheads about it and I believe the author has even posted on that site (not sure about if in that thread or not). Do a search on bogleheads for "mcclung" and you should find more information.

Wadiman

  • Stubble
  • **
  • Posts: 182
Re: Australian Investing Thread
« Reply #4964 on: May 20, 2020, 07:45:30 PM »
Thanks Andy - shall check it out

Eucalyptus

  • Bristles
  • ***
  • Posts: 369
  • Location: South Australia
Re: Australian Investing Thread
« Reply #4965 on: May 22, 2020, 08:21:52 AM »
Just reading the first post of this thread on bogleheads
https://www.bogleheads.org/forum/viewtopic.php?t=277543


...it seems like its basically a form of a rising equity glidepath? Michael Kitces has done some analyses and writes about this. Essentially, draw down the bonds right from the start of retirement and leave the stocks. The bonds eventually trend to or toward zero %, the stocks towards 100%. It works as when you look at how portfolios fail (to last the distance in retirement) its usually a series of up to a few years of negative returns in the stock market in the first few years or so of retirement that kills the portfolio. A big crash in the first few years is bad. If you don't have a crash early, your stocks will perform well and when a crash comes later it just doesn't matter as you are way ahead. Eating up the bonds early protects the stocks if they suffer a crash.
...is that basically what the book kind of gets at? The 1.2 increase in stock number may well be a good advance on that theory... ie you can start selling stocks if you like as long as they've had decent period of rise. Otherwise you keep selling bonds.

chevy1956

  • Stubble
  • **
  • Posts: 175
Re: Australian Investing Thread
« Reply #4966 on: May 22, 2020, 04:38:16 PM »
@Eucalyptus - that is exactly what I intend to do. I'm working but I will retire later this year. I will be on leave from my job so I can always go back. I intend to just spend my leave and cash/bonds for a while. Maybe I will go back to work part time or something just to get through the sequence of return risk phase depending on what the market does.

Andy R

  • Bristles
  • ***
  • Posts: 336
Re: Australian Investing Thread
« Reply #4967 on: May 22, 2020, 07:58:42 PM »
@Eucalyptus

I haven't read the book, only comments from others, but from what I understand, it's not aimed at the idea of a rising equity glidepath. From what I've read, you note down your equities value at the start of retirement, and leave stocks alone living off bonds, and whenever stocks are at least 20% over the starting value (after inflation adjustment), you would sell down that appreciated 20% of equities. If I have this right, then the equity amount would go up and down over time but the main point would be to avoid ever selling stocks when they are below their inflation adjusted initial amount.

The one problem I read was that, what if you started retirement at the peak of a massive boom or the bottum of a bust, and your somewhat arbitrary starting point was at a point where whatever other measure of the stock markets value (such as CAPE) was far from any kind of long running mean.

Hope I have that right, as I said I've only read comments about it.

chevy1956

  • Stubble
  • **
  • Posts: 175
Re: Australian Investing Thread
« Reply #4968 on: May 24, 2020, 03:31:40 AM »
@Eucalyptus - I have read the McLung book. It's good. I'm intending to follow pretty close to that idea. I think the posts about WR's on ERN are better. Big ERN likes that method as well.

https://earlyretirementnow.com/

Little Aussie Battler

  • Stubble
  • **
  • Posts: 229
Re: Australian Investing Thread
« Reply #4969 on: May 26, 2020, 10:09:20 PM »
And the ASX200 is back above 5800.

This is why I'm not a trader.  All I see right now is short-term downside risk followed by a slow, uncertain, difficult recovery. Even on a forward earnings basis I struggle to see any value at these levels. 

Am I just too pessimistic, or is this a reflection of the wave of money sloshing around the system and the lack of alternatives?

mrmoonymartian

  • Bristles
  • ***
  • Posts: 287
  • Age: 39
  • Location: Brisbane
Re: Australian Investing Thread
« Reply #4970 on: May 27, 2020, 02:03:54 AM »
Am I just too pessimistic, or is this a reflection of the wave of money sloshing around the system and the lack of alternatives?
What's the difference between a duck?

Spoiler: show
One of its legs is both the same



5800? Basically you are mistaking random noise for a meaningful signal. What you have to do is wait for that signal to be in prime numbers. Then you know there was some intelligence involved and it's not just a random process.

middo

  • Handlebar Stache
  • *****
  • Posts: 1439
  • Location: Stuck in Melbourne still. Dreaming of WA
  • Learning.
Re: Australian Investing Thread
« Reply #4971 on: May 27, 2020, 02:13:06 AM »
Am I just too pessimistic, or is this a reflection of the wave of money sloshing around the system and the lack of alternatives?
What's the difference between a duck?

Spoiler: show
One of its legs is both the same



5800? Basically you are mistaking random noise for a meaningful signal. What you have to do is wait for that signal to be in prime numbers. Then you know there was some intelligence involved and it's not just a random process.

If we landed on 5881 or 5897 then its all systems go?   I'm expecting 5903 tomorrow, then the signal is clear.

mrmoonymartian

  • Bristles
  • ***
  • Posts: 287
  • Age: 39
  • Location: Brisbane
Re: Australian Investing Thread
« Reply #4972 on: May 27, 2020, 02:50:25 AM »
Am I just too pessimistic, or is this a reflection of the wave of money sloshing around the system and the lack of alternatives?
What's the difference between a duck?

Spoiler: show
One of its legs is both the same



5800? Basically you are mistaking random noise for a meaningful signal. What you have to do is wait for that signal to be in prime numbers. Then you know there was some intelligence involved and it's not just a random process.

If we landed on 5881 or 5897 then its all systems go?   I'm expecting 5903 tomorrow, then the signal is clear.
Definitely. That's the aliens saying the intergallactic highway has been diverted away from Earth, so we'll make lots of money if we invest now.

marty998

  • Walrus Stache
  • *******
  • Posts: 7298
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #4973 on: May 27, 2020, 05:44:54 AM »
Am I just too pessimistic, or is this a reflection of the wave of money sloshing around the system and the lack of alternatives?
What's the difference between a duck?

Spoiler: show
One of its legs is both the same



5800? Basically you are mistaking random noise for a meaningful signal. What you have to do is wait for that signal to be in prime numbers. Then you know there was some intelligence involved and it's not just a random process.

If we landed on 5881 or 5897 then its all systems go?   I'm expecting 5903 tomorrow, then the signal is clear.
Definitely. That's the aliens saying the intergallactic highway has been diverted away from Earth, so we'll make lots of money if we invest now.

I'm confused. I mean, more so than usual.

I'd pulled most of my money from Ratesetter last week and bought 1428 units of VAS @ 69.93 (~$100k). Totally shocked to see it up over $73 now.

I too expect the market to drop again, at which point I'll buy some more.

middo

  • Handlebar Stache
  • *****
  • Posts: 1439
  • Location: Stuck in Melbourne still. Dreaming of WA
  • Learning.
Re: Australian Investing Thread
« Reply #4974 on: May 27, 2020, 06:26:45 AM »
Am I just too pessimistic, or is this a reflection of the wave of money sloshing around the system and the lack of alternatives?
What's the difference between a duck?

Spoiler: show
One of its legs is both the same



5800? Basically you are mistaking random noise for a meaningful signal. What you have to do is wait for that signal to be in prime numbers. Then you know there was some intelligence involved and it's not just a random process.

If we landed on 5881 or 5897 then its all systems go?   I'm expecting 5903 tomorrow, then the signal is clear.
Definitely. That's the aliens saying the intergallactic highway has been diverted away from Earth, so we'll make lots of money if we invest now.

I'm confused. I mean, more so than usual.

I'd pulled most of my money from Ratesetter last week and bought 1428 units of VAS @ 69.93 (~$100k). Totally shocked to see it up over $73 now.

I too expect the market to drop again, at which point I'll buy some more.

73 is a prime number.  You're set!

mrmoonymartian

  • Bristles
  • ***
  • Posts: 287
  • Age: 39
  • Location: Brisbane
Re: Australian Investing Thread
« Reply #4975 on: May 27, 2020, 06:35:52 AM »
Am I just too pessimistic, or is this a reflection of the wave of money sloshing around the system and the lack of alternatives?
What's the difference between a duck?

Spoiler: show
One of its legs is both the same



5800? Basically you are mistaking random noise for a meaningful signal. What you have to do is wait for that signal to be in prime numbers. Then you know there was some intelligence involved and it's not just a random process.

If we landed on 5881 or 5897 then its all systems go?   I'm expecting 5903 tomorrow, then the signal is clear.
Definitely. That's the aliens saying the intergallactic highway has been diverted away from Earth, so we'll make lots of money if we invest now.

I'm confused. I mean, more so than usual.

I'd pulled most of my money from Ratesetter last week and bought 1428 units of VAS @ 69.93 (~$100k). Totally shocked to see it up over $73 now.

I too expect the market to drop again, at which point I'll buy some more.

73 is a prime number.  You're set!
Quick, buy Virgin Aerospace Services! It's going to go ballistic!

Alchemisst

  • Stubble
  • **
  • Posts: 199
Re: Australian Investing Thread
« Reply #4976 on: May 28, 2020, 08:05:41 PM »
Just wondering if anyone knows why VGS/VGAD doesn't contain China but VEU does?

Andy R

  • Bristles
  • ***
  • Posts: 336
Re: Australian Investing Thread
« Reply #4977 on: May 28, 2020, 09:54:24 PM »
Many funds split into pieces so you can customise.
ē VGS, is developed markets (ex Australia) large and mid caps.
ē VISM is developed markets small caps ex Australia
ē EM is emerging markets
ē VAS is Australia

You then can can customise if you want more or less of any segments.

It is frustrating that there isn't a single global cap weighted fund that contains everything. In the US they have it. They also have the more popular (for them) home country and international (non-US) funds split up which happen to be cross listed on the ASX as VTS and VEU, and they decided to break it down to home country and everything else, where everything else contains emerging markets unlike they did here for whatever reason.

As for VGAD, hedging costs more with emerging currencies so I suspect that's a big reason you seldom see emerging market equities hedged. Same thing with IHWL which hedges only developed countries. This wisdom tree paper goes into it on page 6

Alchemisst

  • Stubble
  • **
  • Posts: 199
Re: Australian Investing Thread
« Reply #4978 on: May 28, 2020, 10:49:52 PM »
Thanks, yes its frustrating I was originally going with VTS/VEU however there's no hedged version so wanted to add some VGAD, but like you said that leaves out small cap and emerging market...

Andy R

  • Bristles
  • ***
  • Posts: 336
Re: Australian Investing Thread
« Reply #4979 on: May 28, 2020, 11:05:56 PM »
It doesn't need to be perfect.

For instance, if you had say something like below, you would have 60% of your investment in AUD and 40% in global currencies. While VGAD means you will be only holding 2/3 of the SC and EM segments than you would if there was an AWAC (all world all caps) fund that was AUD-hedged, I don't think it's such big problem to be worth worrying about.

20% VAS (AUD)
40% VTS/VEU (non-AUD)
20% VGAD (AUD)
20% Bonds (AUD)

marty998

  • Walrus Stache
  • *******
  • Posts: 7298
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #4980 on: June 05, 2020, 05:40:16 AM »
I had a discussion with my young cousin in late March about Afterpay. She said a lot of her friends would buy clothes and handbags and shit via it. We talked about how Afterpay makes its revenue and how it has never turned a profit, indeed the losses are getting bigger so itís fundamentally a bad investment. We set up a CommSec account and I said Iíd walk her through her first trade.

APT was about $12 at the time :D

Instead we bought $30k of VAS last month and sheís up about $3000 on that.

Sheís a sweetheart. She didnít swear at me for missing out on about $90 grand of gains.

marty998

  • Walrus Stache
  • *******
  • Posts: 7298
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #4981 on: June 08, 2020, 07:14:14 PM »
Market going bonkers again today. Iron ore saving the country one more time lol.

mjr

  • Bristles
  • ***
  • Posts: 474
  • Age: 55
  • Location: Brisbane, Qld
  • Retired at 52
VAS dividends
« Reply #4982 on: June 25, 2020, 10:06:04 PM »
I knew they'd take a hit, but next month's (VAS) dividends are down about 80%.  20 cents.  Ouch
« Last Edit: June 29, 2020, 02:32:27 PM by mjr »

bigchrisb

  • Handlebar Stache
  • *****
  • Posts: 1237
Re: Australian Investing Thread
« Reply #4983 on: June 26, 2020, 07:05:34 AM »
Yeah, I've been surprised how much VAS dropped relative to VGS. 

I'm viewing July as the first month of covid-era dividends.  Earlier than that were announced before it had flowed through to earnings.  My July dividends are down 50% on last year - so a pretty big hit, but still above our expenses. 

Rob_S

  • Stubble
  • **
  • Posts: 145
  • Location: Melbourne, Australia
Re: Australian Investing Thread
« Reply #4984 on: June 27, 2020, 03:21:45 AM »
June 2020's dividends have blown a big hole in the plan. I can't say everyone didn't warn me against dividend investing. I pulled the pin on a 100% VHY portfolio last August. The lesson or takeaway is that I believed dividends would only be cut 30% or so in a recession. Banks 'deferring' their dividends has gutted the quarters return. VHY's cut is more in the region of 70%. We have a cash buffer and will ride out the next 12 months but after that a return to work could be on the cards.

marty998

  • Walrus Stache
  • *******
  • Posts: 7298
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #4985 on: June 27, 2020, 05:25:10 PM »
Yeah, I've been surprised how much VAS dropped relative to VGS. 

I'm viewing July as the first month of covid-era dividends.  Earlier than that were announced before it had flowed through to earnings.  My July dividends are down 50% on last year - so a pretty big hit, but still above our expenses.

Yeah... Divs are getting slaughtered... Iím waiting for the LIC industry to start spouting the benefits of their model because many of those older LICs will be able to smooth dividends using prior year earnings.

Iím expecting CBA to be able to hold its usual  $2.31 dividend in September (using proceeds from the sales of CFSGAM, PT Indo Life and CMLA). BHP, RIO, WOW, COL, CSL, FMG should all hold up pretty well too.

The rest of the market, probably not so much.

Richmond 2020

  • 5 O'Clock Shadow
  • *
  • Posts: 33
  • Location: East coast - Australia
Re: Australian Investing Thread
« Reply #4986 on: July 01, 2020, 03:56:45 PM »
Hopefully the VAS dividend bounces back quickly. I guess it largely depends on the performance of the banks.

annsie

  • 5 O'Clock Shadow
  • *
  • Posts: 14
Re: Australian Investing Thread
« Reply #4987 on: July 09, 2020, 08:24:06 PM »
Hi everyone,
Iím trying to follow the steps to get out of debt and get investing for beginners that Deborah put up ages ago with the sequence to follow. (Thank you Deborah!). Can anyone please remind me where it is?
Iíve maxed out my $25k Super and wondering if I should contribute more super after tax or keep buying VAS and VGS. Any tips from you wise ones please? No debt. Mortgage paid off. Single, 50year old, no dependents.
Thank you and enjoy your day 😊

annsie

  • 5 O'Clock Shadow
  • *
  • Posts: 14
Re: Australian Investing Thread
« Reply #4988 on: July 09, 2020, 08:42:19 PM »
I found the investment order.
I think Iím at step 7, so I need to work out how much I want outside and inside super. 300k now in super. What process should I follow to decide where to put excess money please?

mspym

  • Walrus Stache
  • *******
  • Posts: 5242
  • Location: Downunder
Re: Australian Investing Thread
« Reply #4989 on: July 09, 2020, 08:44:39 PM »
I found the investment order.
I think Iím at step 7, so I need to work out how much I want outside and inside super. 300k now in super. What process should I follow to decide where to put excess money please?
At this point, I would recommend checking out Aussie Firebug's FI calc spreadsheet. It's on his site and I think you need to sign up to access it, but I've never been spammed as a result. It's very easy to complete and will give you a breakdown of what to invest inside and outside Super given your age.

mrmoonymartian

  • Bristles
  • ***
  • Posts: 287
  • Age: 39
  • Location: Brisbane
Re: Australian Investing Thread
« Reply #4990 on: July 09, 2020, 11:23:57 PM »
Hi everyone,
Iím trying to follow the steps to get out of debt and get investing for beginners that Deborah put up ages ago with the sequence to follow. (Thank you Deborah!). Can anyone please remind me where it is?
Iíve maxed out my $25k Super and wondering if I should contribute more super after tax or keep buying VAS and VGS. Any tips from you wise ones please? No debt. Mortgage paid off. Single, 50year old, no dependents.
Thank you and enjoy your day 😊

Are you planning on working for the next 10 years until you can access super? If so then it may make sense for you to make non-concessional contributions. Otherwise early retirees should generally build up a stash outside of super with the surplus so you have enough to live on until you reach pickling age.

annsie

  • 5 O'Clock Shadow
  • *
  • Posts: 14
Re: Australian Investing Thread
« Reply #4991 on: July 10, 2020, 05:45:49 PM »
Thank you both- much appreciated!

Arapiles

  • 5 O'Clock Shadow
  • *
  • Posts: 13
Re: Australian Investing Thread
« Reply #4992 on: July 13, 2020, 10:43:52 PM »
This is a terrific thread.  I also have a question about super which was hoping to hear thoughts on.

We have set an overall asset allocation of 70% (equities) and 30% (bonds) for our family's investment portfolio (both within and outside superannuation).  For my super, I have a conventional (accumulation) account with UniSuper and can accurately allocate holdings in line with our asset allocation.  My wife is a Commonwealth public servant and has a defined benefit superannuation account with PSS.  My question is about her defined benefit account.  Given the security of the PSS, would it be accurate to treat her defined benefit account as a close equivalent to a bond holding?  Or is there some better way for me to understand her superannuation?  Much looking forward to hearing people's thoughts.  Thanks in advance!

marty998

  • Walrus Stache
  • *******
  • Posts: 7298
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #4993 on: July 14, 2020, 03:40:42 AM »
This is a terrific thread.  I also have a question about super which was hoping to hear thoughts on.

We have set an overall asset allocation of 70% (equities) and 30% (bonds) for our family's investment portfolio (both within and outside superannuation).  For my super, I have a conventional (accumulation) account with UniSuper and can accurately allocate holdings in line with our asset allocation.  My wife is a Commonwealth public servant and has a defined benefit superannuation account with PSS.  My question is about her defined benefit account.  Given the security of the PSS, would it be accurate to treat her defined benefit account as a close equivalent to a bond holding?  Or is there some better way for me to understand her superannuation?  Much looking forward to hearing people's thoughts.  Thanks in advance!

You could almost treat it as cash. It's safer than bonds.

(Corporate) Bonds are not risk free. We've just had a relatively benign period of 28 years with relatively few major corporate blowups. They can and will happen in the future.

Juan Ponce de Leůn

  • Stubble
  • **
  • Posts: 163
Re: Australian Investing Thread
« Reply #4994 on: July 14, 2020, 04:11:39 AM »
I feel like all this talk of 'bonds' comes from American literature which people read and then try to apply to Australia and it just doesn't apply here.  Our bonds are not like US bonds and the same assumptions can't be made.

marty998

  • Walrus Stache
  • *******
  • Posts: 7298
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #4995 on: July 14, 2020, 04:46:22 AM »
I feel like all this talk of 'bonds' comes from American literature which people read and then try to apply to Australia and it just doesn't apply here.  Our bonds are not like US bonds and the same assumptions can't be made.

Soon enough there will be a trillion of government bonds on issue and then we will have a bigger market here. But you're right... the corporate bond market isn't that large because our banks are big enough to fund them all.

Probably reflects poorly on us that the banks are the biggest corporates in Australia than other industries.

Arapiles

  • 5 O'Clock Shadow
  • *
  • Posts: 13
Re: Australian Investing Thread
« Reply #4996 on: July 14, 2020, 05:15:23 PM »
Thanks, Marty, for the helpful reply.  It certainly makes things easier in aligning our portfolio against our preferred risk profile.  Thanks again.

Richmond 2020

  • 5 O'Clock Shadow
  • *
  • Posts: 33
  • Location: East coast - Australia
Re: Australian Investing Thread
« Reply #4997 on: July 14, 2020, 08:15:05 PM »
I also have a defined benefit PSS account and can confirm that we treat this kind of like cash. It essentially means all other investments are held in equities (VAS and VGS) Or property with limited cash reserves and no bonds.

When we require additional cash that canít be covered through normal fortnightly pays we either redraw off our home loan, or draw down off our investment loan which is secured against our property if it is for investment purposes.

For those interested, we took out an investment loan for $200k some time ago when we wanted to buy an investment property. We used a small amount to finance the 20% deposit and stamp duty for property and then took out a seperate loan for the other 80% of the purchase price. This allowed us to get into an investment property with no money down. A high risk strategy but has worked out well for us to-date.

It also gives us flexibility to draw down further (technically a redraw) against the $200k investment loan when we need to. We have done this now on 2 subsequent occasions. Once to fund the deposit for another investment property, and more recently to pick up some additional equityís when the market was on sale.

A word of caution though with the $200k loan. If set up as interest only the monthly repayments Are super low as they are based on the outstanding loan balance. But we are now on int and principal and the monthly repayments are based on the whole $200k. This suits us and we are happy to take the lower interest rate offered for this type of loan. It could however create a bit of a cashflow Issue if you are not careful.

We are happy to except the cash flow restriction in return for the flexibility to draw down more funds for future investment opportunities without having to save up cash or go back to the bank each time.
« Last Edit: August 29, 2020, 05:23:51 PM by Richmond 2020 »

Andy R

  • Bristles
  • ***
  • Posts: 336
Re: Australian Investing Thread
« Reply #4998 on: July 14, 2020, 10:32:45 PM »
Totally agree with Richmond's idea of using pulled equity in an offset account and just having it available as a (potentially very large if possible) emergency fund. Firstly it is generally not callable (from what I understand, banks don't really call in loans unless payments are missed), secondly it costs you nothing to just have it sitting there. Thirdly, you can avoid drawing down on equity for potentially years (if you pull enough), allowing time for the market to recover.

Without this, I don't think I would consider defined benefit a direct 1-to-1 translation with bonds. For example, if I had enough from the defined benefit to make up the 30% of your 70/30 portfolio, I would not think 100% equities is suitable for myself. I do think you can go more aggressive, I just don't think there's necessarily a 1-to-1 translation.

Arapiles

  • 5 O'Clock Shadow
  • *
  • Posts: 13
Re: Australian Investing Thread
« Reply #4999 on: July 15, 2020, 03:20:27 AM »
Thanks Richmond2020.  That is very useful.

Andy R, can you expand a bit on your reservations?  I donít entirely understand why drawing down on an offset account (or not) would impact the risk profile of holding (separate) funds in a defined benefit superannuation account.   There might be a simple reason - I just canít figure out.  Many thanks in advance!