Author Topic: Australian Investing Thread  (Read 1942018 times)

lazycow

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Re: Australian Investing Thread
« Reply #5050 on: August 25, 2020, 10:47:39 PM »
I'm also curious as to his reservations.

Probably believes the nonsense about the government “raiding” super accounts and changing the rules all the time* and blah blah blah.

The current government certainly hasn’t done anything to support or promote community understanding of what superannuation is and why it is important.

Even if they have no policies on it, or are ideologically opposed to it, they should not leave it to providers with vested interests to ‘educate’ the public.

Such are the times. Not many places you can go for unbiased facts., and the websites that you can go to are not well known.

*The really ridiculous trope I hate is the belief that people “need certainty” to invest / contribute to super. Two things wrong with that view. The world doesn’t owe anyone a guaranteed return, and since when has anything in life ever been certain (see 2020 lol).
I should have checked with my husband before posting, as he actually does not have anything against Super, just leery of putting every available cent into it. Anyway, interesting replies, thank you. I will continue to educate myself in any case.

@marty998 I would love to be directed to reputable sites where I can get unbiased facts!


marty998

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Re: Australian Investing Thread
« Reply #5051 on: August 26, 2020, 02:56:58 PM »
https://moneysmart.gov.au/

This is a good place to start 🙂

annsie

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Re: Australian Investing Thread
« Reply #5052 on: September 20, 2020, 03:11:15 AM »
Hi,
Can I back up a bit please to better understand the thinking of having trauma instead of personal income insurance? I’m a SINK, no debt. Thank you!

mrmoonymartian

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Re: Australian Investing Thread
« Reply #5053 on: September 20, 2020, 04:04:14 PM »
Hi,
Can I back up a bit please to better understand the thinking of having trauma instead of personal income insurance? I’m a SINK, no debt. Thank you!

If you lose your job you can get back on your feet straight away. If you lose a leg that's going to be a lot harder to do.

TassieFI

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Re: Australian Investing Thread
« Reply #5054 on: September 20, 2020, 08:19:03 PM »
Being single income as well, you don't have anyone to potentially help out from a financial perspective if you were to become sick/injured/disabled, so I guess potentially you have a bit more risk as well if something were to happen to you. 

Andy R

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Re: Australian Investing Thread
« Reply #5055 on: September 20, 2020, 10:43:14 PM »
Hi,
Can I back up a bit please to better understand the thinking of having trauma instead of personal income insurance? I’m a SINK, no debt. Thank you!

If you lose your job you can get back on your feet straight away. If you lose a leg that's going to be a lot harder to do.

You're mixing up TPD and IP

Insurance Insights: The difference & overlap between TPD, Trauma and Income Protection cover

Income protection
Temporary income replacement for when you lose your job
Temporary income replacement for when you're unable to work due to partial or total disability.

Total and Permanent Disability
Lump sum (to replace money you are unable to ever earn again)

Trauma insurance
Lump sum, designed to cover out-of-pocket medical expenses above those rebated by Medicare & individuals health insurance. Most often claimed for cancer (highest), stroke, cardiac arrest and bypass surgery.


Term life insurance is the 4th type of life insurance, which people without dependants may not need.
And thankfully we don't have 'whole of life' insurance in Australia.
« Last Edit: September 23, 2020, 01:22:48 AM by Andy R »

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5056 on: September 21, 2020, 10:11:31 PM »
Income protection doesn’t generally cover redundancy though or being terminated.

Andy R

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Re: Australian Investing Thread
« Reply #5057 on: September 23, 2020, 01:23:29 AM »
Income protection doesn’t generally cover redundancy though or being terminated.

You're right. Edited the above.
Cheers.

annsie

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Re: Australian Investing Thread
« Reply #5058 on: September 23, 2020, 03:54:49 AM »
Thanks everyone. Seems to be a pretty hazy subject to make informed decisions about. So if one has an emergency fund of a certain amount and no mortgage it seems that that it is a scaled decision as to which type you need/want. I feel like I need a tool similar to the Australian FIRE calculator to be able to decide?

TassieFI

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Re: Australian Investing Thread
« Reply #5059 on: September 23, 2020, 06:56:38 AM »
Hey Annsie, not sure if this will help you make a decision but just my own personal thoughts regarding the various types of insurance for someone in your position (just regarding being a SINK with no debt).

Life-would not consider this unless for some reason you had a dependent that you needed to provide for.

Income protection-would not consider this as there is always benefits you would probably be able to access through Centrelink if you lose your job.  Plus if you have a robust emergency fund, this is when you would deploy that.

Trauma/Disability-Definitely look into this.  Sadly the chance of suffering from a disease or trauma that would mean months off work to properly treat things like cancer, injury or other conditions covered in these policies is relatively high.  You could also think of it as a form of health insurance. For example in the case of a cancer diagnosis, a trauma policy payout could be used to pay for out of pocket costs not covered by the public system or private insurers (and this can be substantial). 

For me even though I’m FI and very semi-retired, I’ve still got a smaller trauma policy. I look at it not so much to cover lost income, but as a back up to cover costs that could be incurred due to a trauma or illness as it’s a cash payout (home modifications, healthcare aids, home help, surgical reconstruction, etc.).  Partly due to life experience, my profession and just my conservative nature I’m a firm believer in a good trauma/disability policy.

Good luck in whatever you decide 🙂

middo

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Re: Australian Investing Thread
« Reply #5060 on: September 23, 2020, 06:56:59 AM »
So my daughter at 23 is about to start her first full time job, on 80+K per year. She has asked me for advice about investing, salary sacrifice and all things money.  My first thought is the 25K super max out, then what?

mjr

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Re: Australian Investing Thread
« Reply #5061 on: September 23, 2020, 02:42:58 PM »
She's young and just starting out. She'll need capital to get her start in life.  I wouldn't be advocating maxing out super to save $2600 a year in tax but lose access to the money for 40 years.

My advice to her would be to save as much as she can - she'll have plenty of need to spend money to set herself up in the next 5 years - too short a time horizon for any risky investments.

mspym

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Re: Australian Investing Thread
« Reply #5062 on: September 23, 2020, 03:04:20 PM »
So my daughter at 23 is about to start her first full time job, on 80+K per year. She has asked me for advice about investing, salary sacrifice and all things money.  My first thought is the 25K super max out, then what?
She's probably in the right spot for The Barefoot Investor approach.

marty998

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Re: Australian Investing Thread
« Reply #5063 on: September 25, 2020, 02:20:59 PM »
So my daughter at 23 is about to start her first full time job, on 80+K per year. She has asked me for advice about investing, salary sacrifice and all things money.  My first thought is the 25K super max out, then what?

I agree with mjr that she needs capital.

For better or worse, such is life. It’s gives options that are simply unavailable to those without it.

Having said that, I would still advise her maxing out her super up to $25k (to an industry fund, AusSuper, SunSuper, AwareSuper.... doesn’t really matter which to be honest, they all invest similarly) and if you have the means to do so, top up her wages with a cash gift to compensate as an incentive, that goes into a savings account for a property.

An early start with Super will make up for the years when she is not working due to children etc. It’s so important for women to have a decent level of super... the stats on older women in poverty are horrendous. Her future self will be grateful.
« Last Edit: September 25, 2020, 02:22:37 PM by marty998 »

dondon

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Re: Australian Investing Thread
« Reply #5064 on: September 28, 2020, 11:31:52 PM »
So my daughter at 23 is about to start her first full time job, on 80+K per year. She has asked me for advice about investing, salary sacrifice and all things money.  My first thought is the 25K super max out, then what?
Having said that, I would still advise her maxing out her super up to $25k (to an industry fund, AusSuper, SunSuper, AwareSuper.... doesn’t really matter which to be honest, they all invest similarly) and if you have the means to do so, top up her wages with a cash gift to compensate as an incentive, that goes into a savings account for a property.

Maxing out supper at early age should have disproportionally larger effect than anything else - assuming decent compounding over very long period of time

mspym

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Re: Australian Investing Thread
« Reply #5065 on: September 29, 2020, 01:13:20 AM »
So my daughter at 23 is about to start her first full time job, on 80+K per year. She has asked me for advice about investing, salary sacrifice and all things money.  My first thought is the 25K super max out, then what?
Having said that, I would still advise her maxing out her super up to $25k (to an industry fund, AusSuper, SunSuper, AwareSuper.... doesn’t really matter which to be honest, they all invest similarly) and if you have the means to do so, top up her wages with a cash gift to compensate as an incentive, that goes into a savings account for a property.

Maxing out supper at early age should have disproportionally larger effect than anything else - assuming decent compounding over very long period of time
I've been told off om here before for recommending maxing out Super at this age but yeah, this is one of those things that could really counteract the effect of any time off for children/slowly widening wage gap due to structural and unconscious bias.

Andy R

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Re: Australian Investing Thread
« Reply #5066 on: September 29, 2020, 04:59:45 AM »
I've been told off om here before for recommending maxing out Super at this age

Based on what?

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #5067 on: September 29, 2020, 02:11:58 PM »
I’d agree that maxing our super at her age will be the best way forward. She probably wouldn’t even need to do much else than that. She can then learn to live off what’s left. Also, she’ll be be able to withdraw some for a home if she wants to. I second the Barefoot Investor boo, it’s a good one for young people. Also, if you get her to stick to paying off credit cards every month and avoiding after pay, she’ll be set.

middo

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Re: Australian Investing Thread
« Reply #5068 on: September 29, 2020, 02:51:39 PM »
I’d agree that maxing our super at her age will be the best way forward. She probably wouldn’t even need to do much else than that. She can then learn to live off what’s left. Also, she’ll be be able to withdraw some for a home if she wants to. I second the Barefoot Investor boo, it’s a good one for young people. Also, if you get her to stick to paying off credit cards every month and avoiding after pay, she’ll be set.

Thanks everyone for your advice.  She has always been good with money, only has a debit card, no debt and a bit of cash in the bank as a student, so is doing OK.

I will look into the super for home deposit scheme as it mat make locking up her money more palatable.

Murdoch

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Re: Australian Investing Thread
« Reply #5069 on: October 04, 2020, 08:05:50 PM »
Hi all,

Couldn't find it posted elsewhere, so please re-direct me if it this is already discussed.
I've just caught up on the changes to Vanguard in Australia.

The move to this new platform will incur a 0.2% AUM fee. This is on top of the fee from whatever fund you are invested in.
For the lower cost funds, this essentially doubles your management costs.
I've just been advised that I can still make Wholesale BPay purchases into funds I don't current have money within, but only until the 16th October.
After that to open any new fund it'll need to be through the new platform/software.

I don't think this is in keeping with Vanguards stated ethos of lowest cost investing.
Is anyone else a bit put out by this?

Murdoch

chevy1956

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Re: Australian Investing Thread
« Reply #5070 on: October 04, 2020, 08:24:53 PM »
Hey Murdoch - I didn't know about the new personal investor option. I just checked it out. It sounds exactly like what you state. It sounds to me like I'd be getting charged .3% management fees on my VAS ETF if I moved it under the Vanguard banner. If I just leave my etf's outside of the personal investor approach I retain a .1% fee.

I assume this just makes the ETF option a better option.

It doesn't sound like the best low fee option to me.

Murdoch

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Re: Australian Investing Thread
« Reply #5071 on: October 04, 2020, 08:34:47 PM »
Hi Chevy,

Agreed. I've previously been happy with the slightly raised management fee for ease of use.
They are now enforcing the $100k in any single Wholesale fund option, so you can't split your money across several.
Minimum investment goes up to $5k, so BPay of $100 aliquots is now gone. Many will need to save a lump sum now.
AUM goes up.

On the plus side, you aren't automatically transitioned across.
If you currently hold Wholesale funds the current arrangements continue.
I've only got the International Shares fund, so can thankfully just keep BPay'ing into that unless I'm forced over in the future.
I'll retain the current management fee of the fund only and won't incur the new platform fees as I'll just sit on the legacy system.

Bit of a bummer.
I have previously been a fan of the simplicity and low purchase options, which in my view made up for the very slightly higher management fee.
With both those now gone and the managed funds having a 0.2% premium, I would no longer advocate starting this option with them as I don't think it stacks up.

Disappointing.


Andy R

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Re: Australian Investing Thread
« Reply #5072 on: October 05, 2020, 01:54:19 AM »
One thing to note is that on the Vanguard FB group, someone mentioned that they spoke to a Vanguard representative on the phone who said the fee is likely to come down.

Nevertheless, I'd stick with ETFs. The main advantage of VPI over ETFs is that you can put in very small amounts, but you can't even set it up in an automated way.

For putting in very small amounts, have you had a look at OpenTrader? They offer $5 brokerage for up to $2,500. They are the retail arm of the wholesale broker (OpenMarkets) that SelfWealth, Riaz, and Six Park use, so I expect it to be ok, although they said their web interface is still being improved.

For set-and-forget (the main advantage of Vanguard's wholesale/retail funds while they were available), might be worth looking at a new brokerage under beta testing called Pearler. You can setup auto direct credit to auto take your money out periodically, and you can set your ETF allocation and have it auto purchase the most underweight to your allocation. So that is the closest thing to a real set and forget (and you get the tax efficiency of ETFs over managed funds). Although as I said, they are still under beta testing.