Author Topic: Australian Investing Thread  (Read 2600764 times)

mjr

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Re: Australian Investing Thread
« Reply #4200 on: September 23, 2018, 07:57:15 PM »
Vanguard pre-fills are in.

steveo

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Re: Australian Investing Thread
« Reply #4201 on: September 23, 2018, 10:48:55 PM »
Vanguard pre-fills are in.

Thanks for the update. Off to complete my tax returns.

BattlaP

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Re: Australian Investing Thread
« Reply #4202 on: September 24, 2018, 12:31:08 AM »
Vanguard pre-fills are in.

Some of my ETFs are there, but my wholesale funds aren't showing up yet. Had a go at doing it myself but its pretty confusing. The tax guide on the Vanguard site has barely any relation to my AMMA Tax statement and it's not clear what goes where in the mygov tax return process. I'm dumb.

steveo

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Re: Australian Investing Thread
« Reply #4203 on: September 24, 2018, 03:18:44 AM »
Vanguard pre-fills are in.

Some of my ETFs are there, but my wholesale funds aren't showing up yet. Had a go at doing it myself but its pretty confusing. The tax guide on the Vanguard site has barely any relation to my AMMA Tax statement and it's not clear what goes where in the mygov tax return process. I'm dumb.

I checked and I have 2 out of my 3 funds there. I'm not even going to try to fill it in correctly. I'll just wait a week or two.

NotSure

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Re: Australian Investing Thread
« Reply #4204 on: September 24, 2018, 10:43:07 PM »
Sorry if was already answered.

In myGov tax return there is no pre-fill data from VGS, only VAS, is this normal? Will it be later or should I fill details myself?

Thanks in advance.

BRAFRA

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Re: Australian Investing Thread
« Reply #4205 on: September 28, 2018, 11:29:29 PM »
Happy owner of VTS and VEU ETFs here. Without a W8 form, the dividends get taxed at 30% by the US. I initially did not see the point of filling a W8 form as my marginal tax rate is above 30% and would not benefit a tax return through a tax offset.
I now read that if you don't provide computershare (or whoever) with a W8 form and tax was withheld at 30%, you can only claim tax withheld at 15%. Can you confirm?



marty998

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Re: Australian Investing Thread
« Reply #4206 on: September 29, 2018, 02:57:54 AM »
Very happy with the VAS estimated September Qtr distribution - $1.1274.

Cha ching! +$3150 to the kitty :D


mjr

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Re: Australian Investing Thread
« Reply #4207 on: September 29, 2018, 05:45:28 PM »
Indeed.  Looks like a record.  Presumably a chuck of franking credits on top as well.

marty998

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Re: Australian Investing Thread
« Reply #4208 on: October 02, 2018, 02:58:47 AM »
Ouch... financial stocks copping a barrage today, and the market has definitely turned. A lot of sectors are being re-priced and downgraded lately.

The banks are still falling. 30 September is year-end for Westpac, ANZ and NAB, results will be out at the start of November.

Some further implications from the Royal Commission are sinking in.... ASIC finally awaking after being told to act more like an angry Cerberus rather than a scared Scooby Doo. AMP the first to be put in the dock.

Richmond 2020

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Re: Australian Investing Thread
« Reply #4209 on: October 11, 2018, 02:48:26 AM »
I’ve got a lazy $20k sitting in an offset account against my mortgage. Leave it there or buy some Vanguard on the cheap?

Andy R

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Re: Australian Investing Thread
« Reply #4210 on: October 11, 2018, 03:17:19 AM »
I’ve got a lazy $20k sitting in an offset account against my mortgage. Leave it there or buy some Vanguard on the cheap?

What was the purpose of the 20k?
If it was earmarked for anything such as an emergency fund then don't see why the change.
If it was not, why hasn't it been invested already?

Richmond 2020

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Re: Australian Investing Thread
« Reply #4211 on: October 11, 2018, 04:07:22 PM »
The “Purpose” is to offset some of the interest costs 4.06% on our home loan. The decision point for moving this money to shares is whether the drop in the share market will shift the odds in favour of getting a better return in shares (noting this will incur tax).

Andy R

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Re: Australian Investing Thread
« Reply #4212 on: October 11, 2018, 08:18:36 PM »
The “Purpose” is to offset some of the interest costs 4.06% on our home loan. The decision point for moving this money to shares is whether the drop in the share market will shift the odds in favour of getting a better return in shares (noting this will incur tax).

If I had money that was not earmarked for anything except to pay off the property while having money available for some particularly great opportunity, I wouldn't consider a 5% drop all that great. I'd ether be investing it sooner without waiting for some particularity good opportunity, or I would be waiting for quite a lot more of a drop, but that's just an opinion.
Anyone who says they have an answer to this is full of it. It could recover quickly and go up a lot more or it could continue to drop another 5, 10, 20, 30, or 50%.

bigchrisb

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Re: Australian Investing Thread
« Reply #4213 on: October 12, 2018, 04:52:54 AM »
The “Purpose” is to offset some of the interest costs 4.06% on our home loan. The decision point for moving this money to shares is whether the drop in the share market will shift the odds in favour of getting a better return in shares (noting this will incur tax).

If I had money that was not earmarked for anything except to pay off the property while having money available for some particularly great opportunity, I wouldn't consider a 5% drop all that great. I'd ether be investing it sooner without waiting for some particularity good opportunity, or I would be waiting for quite a lot more of a drop, but that's just an opinion.
Anyone who says they have an answer to this is full of it. It could recover quickly and go up a lot more or it could continue to drop another 5, 10, 20, 30, or 50%.


+1 on this.  While the last week is reported as dire, even after this drop anyone who invested a year ago is doing just fine...  Including distributions, VAS is up 6%, VGS about 14%, VEU 3.5% and VTS 19%.  All pretty healthy returns.  If it wasn't a screaming buy to you 12 months ago, its less of a screaming buy now. 

As for me, I'm sticking the course.  I sold off a couple of things a few weeks ago to pay down some debt (see journal if you want the details).   After a little wobble, I'm sticking the course - a bit of reinvestment, and chipping away with accumulation in my super fund.  No real news here...

mjr

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Re: Australian Investing Thread
« Reply #4214 on: October 12, 2018, 05:10:56 AM »
I agree if it wasn't a screaming buy a year ago, then it's not now.

I do think it's still more of a buy situation though.  It's now been higher.  It's not unchartered territory anymore, there are likely to be investors who aren't keen to sell at a loss providing upwards pressure.

It certainly hasn't been anything to write home about, though.  Hardly moved the needle.

superannuationfreak

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Re: Australian Investing Thread
« Reply #4215 on: October 13, 2018, 08:55:57 PM »
Has anyone in Vanguard International Shares Index Fund (Wholesale) seen pre-filled data in MyTax?

We've only received an AMMA tax statement which doesn't have the helpful tax return labels.

It also looks wrong (The entire Net Cash Distribution is attributed to "Other non-attributable amounts", even though there is a foreign tax paid amount which should logically have Assessable Foreign Income > $0 attached)

For comparison, VAS had the more familiar Member Tax Statement while another Vanguard Wholesale Fund had the same as International but at least looked properly attributed to Foreign Income, etc.

Thanks!

BattlaP

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Re: Australian Investing Thread
« Reply #4216 on: October 13, 2018, 09:23:17 PM »
I'm in the same situation. Tried to put the info in myself, couldn't make heads or tails. I'm gonna call Vanguard tomorrow and see if the pre-fill is actually going to come before October end.

steveo

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Re: Australian Investing Thread
« Reply #4217 on: October 14, 2018, 01:14:12 AM »
I just manually entered the VGS details in the tax return. It's not that hard and I avoided it for as long as possible.

PDM

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Re: Australian Investing Thread
« Reply #4218 on: October 14, 2018, 02:00:16 AM »
I just manually entered the VGS details in the tax return. It's not that hard and I avoided it for as long as possible.

It was fairly straightforward. The order of the items didn't match up but the tax code letter and numbers I could easily match.

BattlaP

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Re: Australian Investing Thread
« Reply #4219 on: October 14, 2018, 10:03:13 PM »
They've assured me that the managed funds should be coming before the tax cutoff, but couldn't give me an exact date. ETFs should all be in now. I'll just wait.

superannuationfreak

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Re: Australian Investing Thread
« Reply #4220 on: October 15, 2018, 01:51:14 AM »
Called Vanguard too. They did note they don't include the tax codes (e.g. 13U) for wholesale funds but we should be able to match the entries to our ETF statements anyway. I didn't ask about pre fill but am having doubts that wholesale fund customers will get it. Hopefully your rep was right.

lush

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Re: Australian Investing Thread
« Reply #4221 on: October 15, 2018, 09:58:46 PM »
Hi All,  I have been reviewing a lot of blogs, books and experts in the Financial field and many of them have the same advice about the asset allocation of a portfolio. In summary, about 80% Stocks (Growth) & 20% Cash (Defensive), with the understanding that past trends over 10 year periods suggest there are about 3-4 years of a depressed market, followed by about 6 years of generally good returns. I have also looked into 10 years of data across the Vanguard Managed Fund Portfolios and without question over a 10 year time frame the VAS has generated about 30-40% better distribution returns compared to Balanced, International and High Growth funds. For the record, I am mainly focused on distributions not necessarily growth. In addition, the VAS does provide a good tax benefit due to franking credits.

Originally we put all our eggs into one basket an put all we had into into the Vanguard Balanced Fund Portfolio as we considered it be very safe (later we invested in the VAS). This was at a time that we really didn’t know very much at all about the world of shares etc. So it gave us some comfort. Over 2 years down the track and we have become very comfortable with the stock market and anticipate several highs and lows in our lifetime and have come to an understanding that actually the real risk maybe in being too conservative, meaning reduced growth and distributions if we remain predominately within the Balanced Portfolio.

Below is a breakdown of what we have currently and please keep in mind that we hope to FIRE within 1-2 years (current ages 47 /44) – however may continue to work part-time a few more years, meaning that we can let the distributions reinvest into VAS for hopefully the next 5 years.

Balanced Fund = $1.02M  (20% VAS+ 30% International Shares = 50% Growth) + (35% Bonds + 15% Cash = 50% Defensive )

VAS = $225k

Over the next year we intend to top up VAS with another $150 – 200k (ambitious target). This would mean our asset allocation would be approx. 33% Defensive + 67% Growth (VAS would make up about 47% across the both portfolios)

In order to increase the Growth/VAS asset allocation of the Portfolio, I have been contemplating selling down about $300k out of the Balanced fund  (I know there will be CGT impacts but intend to sell over 1-3  years to limit impacts) to top up the our VAS in order to help future proof the portfolio. The thinking is - better to do this now early into our portfolio / asset building strategy, rather than years into the future, if at all. The additional $300k would see the portfolio asset allocation to:

25% Defensive/ 75% Growth (VAS making up 60%)

As Vanguard control the VAS allocation in the Balanced fund this could change over time if they increase or decrease it, however something tells me they will leave it at about that 20%.

I am sharing my thoughts in this forum to see what people think or could advise. I am somewhat concerned about the CGT impacts of selling part of Balanced Portfolio, but think it may be short  term pain for long term gain.  I also have come to believe we need to drop the cash / bonds down (Defensive) to at least 30% of our portfolio asset allocation...if we are going to live until about 100 years old!

Oh and if you are thinking about our super  - my partner and I have about $200k each in Balanced Portfolio in Host Plus – which is about 60% Growth/40% Defensive ( I think).

Thanks!
« Last Edit: October 15, 2018, 10:14:38 PM by lush »

one piece at a time

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Re: Australian Investing Thread
« Reply #4222 on: October 15, 2018, 10:13:24 PM »
I can't see why you need defensive funds in super that you can't touch for 20 years. Is there a reason for that allocation?

Andy R

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Re: Australian Investing Thread
« Reply #4223 on: October 15, 2018, 11:23:24 PM »
Suggest you decide on an asset allocation first (Fixed interest/Aussie equities/International equities). Then after that you can find the funds quite easily. Don't do it the other way around, it will just confuse you.

PDM

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Re: Australian Investing Thread
« Reply #4224 on: October 15, 2018, 11:23:57 PM »
Seems like a lot of VAS. I'm not a huge fan of it myself.
Here is the VAS top 10 - 43% of the fund. Banks and super markets with a sprinkling of mining.

You're missing the huge opportunities for diversification and international exposure provided by etfs.

The ASX is a backwater stock exchange in a backwater country that flogs houses to itself for inflated prices and digs up some stuff to sell to China.

marty998

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Re: Australian Investing Thread
« Reply #4225 on: October 16, 2018, 12:33:39 AM »
Seems like a lot of VAS. I'm not a huge fan of it myself.
Here is the VAS top 10 - 43% of the fund. Banks and super markets with a sprinkling of mining.

You're missing the huge opportunities for diversification and international exposure provided by etfs.

The ASX is a backwater stock exchange in a backwater country that flogs houses to itself for inflated prices and digs up some stuff to sell to China.

But but but... we have.... errrr..... umm.... franking credits!!!

Yes yes... invest here because of that....

/s

So ridiculous that SMSFs are up in arms because of the proposed policy from the opposition. Perhaps it's about time the small proportion of the population who hold $700 billion in assets might start to pay just a teensy little bit of tax on their incomes?


bigchrisb

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Re: Australian Investing Thread
« Reply #4226 on: October 16, 2018, 03:57:45 AM »
Seems like a lot of VAS. I'm not a huge fan of it myself.
Here is the VAS top 10 - 43% of the fund. Banks and super markets with a sprinkling of mining.

You're missing the huge opportunities for diversification and international exposure provided by etfs.

The ASX is a backwater stock exchange in a backwater country that flogs houses to itself for inflated prices and digs up some stuff to sell to China.

But but but... we have.... errrr..... umm.... franking credits!!!

Yes yes... invest here because of that....

/s

So ridiculous that SMSFs are up in arms because of the proposed policy from the opposition. Perhaps it's about time the small proportion of the population who hold $700 billion in assets might start to pay just a teensy little bit of tax on their incomes?

Indeed.  However, that is a problem with having 0% tax rates on super funds in pension mode, as opposed to a problem with the franking system.  Wish both sides would address the actual issue of taxing super pensions rather than looking for work-arounds that cause collateral damage.

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Re: Australian Investing Thread
« Reply #4227 on: October 16, 2018, 02:46:07 PM »
Seems like a lot of VAS. I'm not a huge fan of it myself.
Here is the VAS top 10 - 43% of the fund. Banks and super markets with a sprinkling of mining.

You're missing the huge opportunities for diversification and international exposure provided by etfs.

The ASX is a backwater stock exchange in a backwater country that flogs houses to itself for inflated prices and digs up some stuff to sell to China.

I get my ASX exposure with Argo. They cost 0.15% which is a bit higher than the 0.14% of VAS, but they are focused on dividends rather than index tracking so I think it is worth it. Their top 20 is https://www.argoinvestments.com.au/assets/docs/monthly-nta/ARG-NTA-0918.pdf

High (enough) volume traded through Argo to make the transactions pretty easy -- compared to some of the more boutique Vanguard funds that heavily rely on market makers. The volume makes dipping into shares to fund life cash flow crunches a little easier. Having said that I stopped buying new Argo shares shortly after finding this site and have been adding VEU and VAE.   

mjr

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Re: Australian Investing Thread
« Reply #4228 on: October 16, 2018, 09:25:37 PM »
Indeed.  However, that is a problem with having 0% tax rates on super funds in pension mode, as opposed to a problem with the franking system.  Wish both sides would address the actual issue of taxing super pensions rather than looking for work-arounds that cause collateral damage.

Indeed.  Although my SMSF is not yet in pension mode, I'll continue to go right off at the ALP distorting the playing field in an unabashed attack on SMSFs to get people to move to union industry funds.

These people are only playing by the rules.  They shouldn't be penalised for playing by the rules.

mjr

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Re: Australian Investing Thread
« Reply #4229 on: October 16, 2018, 10:05:06 PM »
You're missing the huge opportunities for diversification and international exposure provided by etfs.

The ASX is a backwater stock exchange in a backwater country that flogs houses to itself for inflated prices and digs up some stuff to sell to China.

It's true that Australia is not exactly an economic powerhouse.  But it's where we live (no currency volatility) and there's not much danger of foreign banks and miners coming in and taking significant market share away. 

Plus we are a nice, stable country and there aren't that many in the world.  I wont put a cent into Europe, for example.

Despite sarcastic comments as to their value, there are the franking credits which are worth real money to Australian investors.  If solely invested overseas, you don't get the benefits of the foreign tax offsets.

Note that even Peter Thornhill is an advocate of Australian Industrials, which is a lot of banks and supermarkets.

VAS has its place and 60% doesn't sounds too bad.
« Last Edit: October 16, 2018, 10:11:21 PM by mjr »

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Re: Australian Investing Thread
« Reply #4230 on: October 16, 2018, 10:56:02 PM »
Note that even Peter Thornhill is an advocate of Australian Industrials, which is a lot of banks and supermarkets.

Peter Thornhill advocates no mining, no REITs, no bonds, no international, no index funds, and touts the catch-phrase "di-worse-ification" that people repeat because it's catchy and they are too brain dead to comprehend the insanity advocating against diversification in investing. His arguments for each of those are based on half-truths, which is why they appear to be true to someone who is unaware of the part he leaves out.

mjr

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Re: Australian Investing Thread
« Reply #4231 on: October 16, 2018, 11:03:45 PM »
I'd be quite happy to be half as successful as Peter Thornhill has been.

Luckily, having a brain myself, I have REITs, index funds (and hence mining) and a very significant exposure to the US.  I don't follow Thornhill's exact strategy, I was merely pointing out that there are plenty of worse places to invest as an Aussie than the ASX.
« Last Edit: October 16, 2018, 11:19:06 PM by mjr »

lush

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Re: Australian Investing Thread
« Reply #4232 on: October 16, 2018, 11:36:25 PM »
Thanks to everyone that responded to my post, always good thoughts from all differing perspectives. I really thought there would be more reaction to reducing the defensive part of our portfolio as I thought there might be some strong supporters of cash/bonds. I also thought there would a wave of responses to not "fiddle" with our portfolio and leave it as is and just keep building on it.

I understand the reactions to VAS, but tend to think that Australia is not a bad country to invest in.

marty998

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Re: Australian Investing Thread
« Reply #4233 on: October 18, 2018, 12:51:39 AM »
Profit warning from the Reject Shop this week (share price down well over 65% from it's peak six months ago), and also Roger David collapsed - a business that has survived 76 years of change and disruption until now.

Two not so great indicators of the health of the economy (can you tell I'm bearish?)

Shopping centre landlords are going to struggle to fill the empty space, but to be frank, the crazy high rents contribute to sending businesses broke too.

Not a great week for retailers or REITS.

I was in the David Jones flagship store earlier this week at lunchtime..... apart from the basement food court there was very very little foot traffic browsing for merchandise. The rest of Westfield was pretty quiet too, though that has always been the case with those stores chasing the HNW tourist dollar.


potm

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Re: Australian Investing Thread
« Reply #4234 on: October 18, 2018, 06:16:03 AM »
Businesses come and go and get replaced by others. I don't think that it's a sign of a weak economy.
Especially when it's TRS and Roger David. I can see why they are struggling.
I use to buy some clothes from Roger David back in my uni days. There was no where near as much choice and options as there are now.

I actually think the Australian economy is doing very well, despite all the doom and gloom talk that has been persistently around since the GFC.
GDP growth is strong, population growth is still going strong, jobs growth is great. Per capita growth is not as great due to weak wage growth but the overall pie is still growing strongly. Commodity prices in AUD are very high. Coal and LNG exports are booming to join iron ore in creating strong trade surpluses. International students and tourism keeps notching up year after year of strong growth. The numbers show that Australia is in the best shape it's been in a long time.

House prices are coming off after some significant gains. There's lots of infrastructure spending which will help cushion any impact on construction.

There's lots of risks overseas though and if others sneeze, Australia could easily catch a cold.
« Last Edit: October 18, 2018, 06:17:46 AM by potm »

BRAFRA

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Re: Australian Investing Thread
« Reply #4235 on: October 20, 2018, 07:25:30 PM »
Are you or did you think of becoming a business partner in a small business like a cafe, restaurant or cleaning company?
What are the reasons behind your choice of investing or not investing in this type of opportunities?

Andy R

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Re: Australian Investing Thread
« Reply #4236 on: October 20, 2018, 08:08:07 PM »
Are you or did you think of becoming a business partner in a small business like a cafe, restaurant or cleaning company?
What are the reasons behind your choice of investing or not investing in this type of opportunities?

For me it it is too high risk/return. For others I think it is the want for a passive income.

I would be ok with long working hours involved in a business, and I would like to be a partner in a business if I felt I had any ability to contribute and succeed, but I don't and the thought of working up to 100 hours a week for up to 5 years only to end up with nothing when businesses fail like 90% of the time stops me. So for me the risk/return is too high. When there is such a high risk of having nothing at the end of it, that's beyond my risk tolerance. Maybe if I was financially independent and could still be ok if it ended up flat on it's face, or if I had some information indicating the business had a higher chance of being viable, that would be another thing.
Other reason is the passive nature of index investing. Many don't want the long hours and prefer to just get their money working for them instead of them working for money.
« Last Edit: October 20, 2018, 10:59:01 PM by Andy R »

limeandpepper

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Re: Australian Investing Thread
« Reply #4237 on: November 07, 2018, 03:26:21 AM »
Hey everyone, today I found out a friend is interested in investing, which is great! However, she doesn't seem to be ready for substantial chunks of investing (e.g. buying a few thousand dollars' worth each trade) so I suggested that she could look into those micro-investing apps. I haven't actually asked how much she saves regularly and how much she has in savings, but does that sound like a reasonable course of action to begin with? If so which micro-investing apps are best? I know of Raiz and Spaceship Voyager, which one is preferable, or is there something else better?

Andy R

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Re: Australian Investing Thread
« Reply #4238 on: November 07, 2018, 06:04:40 AM »
Investing bits of money into some random fund doesn't make you learn about the stock market. Learning about the stock market helps you learn about the stock market. Why not give her some learning resources to that she can take responsibility for her actions and own the results, by learning and make a decision for herself?

https://jlcollinsnh.com/stock-series/
https://www.bogleheads.org/forum/index.php
https://forum.mrmoneymustache.com/investor-alley/
https://www.amazon.com/Million-Life-Make-Manage-Maximise-ebook/dp/B007DIAENU

Actually putting money in should be the last step and only when she has a reasonable fundamental understanding about the nature of the stock market, can decide an equities to bonds allocation, and a home country to international allocation, and have reasons listed for each decision and why she chose it over other options. Just my 2c.

marty998

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Re: Australian Investing Thread
« Reply #4239 on: November 07, 2018, 01:35:45 PM »
Investing bits of money into some random fund doesn't make you learn about the stock market. Learning about the stock market helps you learn about the stock market. Why not give her some learning resources to that she can take responsibility for her actions and own the results, by learning and make a decision for herself?

https://jlcollinsnh.com/stock-series/
https://www.bogleheads.org/forum/index.php
https://forum.mrmoneymustache.com/investor-alley/
https://www.amazon.com/Million-Life-Make-Manage-Maximise-ebook/dp/B007DIAENU

Actually putting money in should be the last step and only when she has a reasonable fundamental understanding about the nature of the stock market, can decide an equities to bonds allocation, and a home country to international allocation, and have reasons listed for each decision and why she chose it over other options. Just my 2c.

Andy - this is too much even for me. If you expect people to know this before they invest then I'd hazard a guess only 1% of people should ever buy equities.

For most people a financial plan that involves a simple allocation to VAS and IVV, while paying down the mortgage and contributing a little extra to super, over 25 years, would be more than sufficient and generate a wonderful outcome, with absolutely no research at all.

steveo

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Re: Australian Investing Thread
« Reply #4240 on: November 07, 2018, 04:01:26 PM »
Investing bits of money into some random fund doesn't make you learn about the stock market. Learning about the stock market helps you learn about the stock market. Why not give her some learning resources to that she can take responsibility for her actions and own the results, by learning and make a decision for herself?

https://jlcollinsnh.com/stock-series/
https://www.bogleheads.org/forum/index.php
https://forum.mrmoneymustache.com/investor-alley/
https://www.amazon.com/Million-Life-Make-Manage-Maximise-ebook/dp/B007DIAENU

Actually putting money in should be the last step and only when she has a reasonable fundamental understanding about the nature of the stock market, can decide an equities to bonds allocation, and a home country to international allocation, and have reasons listed for each decision and why she chose it over other options. Just my 2c.

Andy - this is too much even for me. If you expect people to know this before they invest then I'd hazard a guess only 1% of people should ever buy equities.

For most people a financial plan that involves a simple allocation to VAS and IVV, while paying down the mortgage and contributing a little extra to super, over 25 years, would be more than sufficient and generate a wonderful outcome, with absolutely no research at all.

It's good to read a bunch of information and I think those are really good links but I still think an allocation should be simple. Personally I think everyone should use VGS or something similar. The diversification is a lot more than using VAS.

You could even just do something like 50/50 VGS/VAS & save up a buffer in your savings account. That would work out great for money that is outside Super and assuming the mortgage is being paid down or paid off.

Andy R

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Re: Australian Investing Thread
« Reply #4241 on: November 07, 2018, 06:19:58 PM »
Investing bits of money into some random fund doesn't make you learn about the stock market. Learning about the stock market helps you learn about the stock market. Why not give her some learning resources to that she can take responsibility for her actions and own the results, by learning and make a decision for herself?

https://jlcollinsnh.com/stock-series/
https://www.bogleheads.org/forum/index.php
https://forum.mrmoneymustache.com/investor-alley/
https://www.amazon.com/Million-Life-Make-Manage-Maximise-ebook/dp/B007DIAENU

Actually putting money in should be the last step and only when she has a reasonable fundamental understanding about the nature of the stock market, can decide an equities to bonds allocation, and a home country to international allocation, and have reasons listed for each decision and why she chose it over other options. Just my 2c.

Andy - this is too much even for me. If you expect people to know this before they invest then I'd hazard a guess only 1% of people should ever buy equities.

For most people a financial plan that involves a simple allocation to VAS and IVV, while paying down the mortgage and contributing a little extra to super, over 25 years, would be more than sufficient and generate a wonderful outcome, with absolutely no research at all.

Those links are not learning about stock picking or complex modelling. They explain very basic fundamental concepts like
• The market can go anywhere in the short term and it's normal to do so, and if you can't handle a 10% 30% or even a 50% drop then you need to adjust your AA
• Nobody knows where the market will go and anyone who does is worth walking away from
• Indexing lets you accept that nobody knows which way it will go and still get the market return

These aren't complex topics, they're fundamental and very basic. They are also "need to know" pieces of the puzzle otherwise you could really end up suffering. I don't want to jump on the bandwagon of "warren says" but the reality is that you shouldn't invest in anything you don't understand, whether shares or property. It takes a little time to learn but honestly not that much. We're talking about half an hour a day over a few months. Just going out and buying some VAS is not the answer and it can get you into serious trouble imo. Say you buy some, after a year it moves up and down slightly, over the next years you keep adding but never learned about it and you see it as a "black box" of where you park money to invest a bit like a bank account, and one day the all over the media they are saying the market is crashing, it's in ever media article, on FB, everywhere you look, and in complete ignorance  you panic and sell at a time when the market is (only) at a 30% loss. If by then you had a few hundred k (not an unreasonable amount), you have just lost a hundred grand. How long does it take most people to recover a hundred grand in savings? 5 years you have been set back. This could have been so very easily avoided by just spending 20-30 minutes a day reading for a few months in the beginning.

limeandpepper

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Re: Australian Investing Thread
« Reply #4242 on: November 07, 2018, 08:38:58 PM »
Thanks everyone for the input!

It's good to read a bunch of information and I think those are really good links but I still think an allocation should be simple. Personally I think everyone should use VGS or something similar. The diversification is a lot more than using VAS.

You could even just do something like 50/50 VGS/VAS & save up a buffer in your savings account. That would work out great for money that is outside Super and assuming the mortgage is being paid down or paid off.

This was also my first thought (a combo of VGS and VAS). I mentioned that brokerage platforms are around $10/trade so she needs to invest a significant amount, like a few thousand, to make the brokerage fees worthwhile and she balked a little at that, hence why I suggested possibly looking into the micro-investing apps instead if she doesn't have that kind of substantial outlay, and she warmed more to that idea.

It takes a little time to learn but honestly not that much. We're talking about half an hour a day over a few months. Just going out and buying some VAS is not the answer and it can get you into serious trouble imo. Say you buy some, after a year it moves up and down slightly, over the next years you keep adding but never learned about it and you see it as a "black box" of where you park money to invest a bit like a bank account, and one day the all over the media they are saying the market is crashing, it's in ever media article, on FB, everywhere you look, and in complete ignorance  you panic and sell at a time when the market is (only) at a 30% loss. If by then you had a few hundred k (not an unreasonable amount), you have just lost a hundred grand. How long does it take most people to recover a hundred grand in savings? 5 years you have been set back. This could have been so very easily avoided by just spending 20-30 minutes a day reading for a few months in the beginning.

I also acknowledge that reading more about investing will help her in the long run, but agree with Marty in the sense that I have the feeling that reading half an hour a day over a few months is going to be more than she wants to take on. I'm thinking maybe just a few really short and simple articles that provides the basics of what to do and what to expect and how to stay the course and make the right decisions especially when the market gets shaky, if there's anything like that?

Andy R

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Re: Australian Investing Thread
« Reply #4243 on: November 07, 2018, 08:47:16 PM »
I also acknowledge that reading more about investing will help her in the long run, but agree with Marty in the sense that I have the feeling that reading half an hour a day over a few months is going to be more than she wants to take on. I'm thinking maybe just a few really short and simple articles that provides the basics of what to do and what to expect and how to stay the course and make the right decisions especially when the market gets shaky, if there's anything like that?

The jlcollinsnh (first) link I posted, though it's a series of articles not just one. I doubt a single article is going to have a meaningful impact.

mjr

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Re: Australian Investing Thread
« Reply #4244 on: November 07, 2018, 09:46:01 PM »
It is so important that she have some idea of into what she is getting, otherwise you can pretty much guarantee she'll blame you for "losing her money" at the next crash.

limeandpepper

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Re: Australian Investing Thread
« Reply #4245 on: November 08, 2018, 01:13:01 AM »
The jlcollinsnh (first) link I posted, though it's a series of articles not just one. I doubt a single article is going to have a meaningful impact.

Thanks, yeah that link seems to at least have everything in a list so she doesn't have to sift through threads in forums.

It is so important that she have some idea of into what she is getting, otherwise you can pretty much guarantee she'll blame you for "losing her money" at the next crash.

Yes I'm trying to be careful... I told her what I was personally doing (buying ETFs via an online brokerage platform) and I said that I hadn't used the micro-investing apps myself, only heard of them, and said that she should check the fees etc. before choosing one. I told her about diversifying with index funds and ETFs. We catch up reasonably regularly so I'll check in with her again soon and see where she's at.

flaky

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Re: Australian Investing Thread
« Reply #4246 on: November 08, 2018, 08:05:13 PM »
Hello,

Having read the stock series and some other financial self-help stuff like Barefoot and If You Can, I have recently bought a bunch of VTS shares. This seemed like the best bet for Australians wanting to replicate the strategy in jlcollinsnh Stock Series posts. I am looking to continue to invest a significant percent of my total income over the next 10 years, along with the quarterly dividend (there is no DRIP for this ETF). Is this a sensible strategy that wont really require adjustment until I retire? Are there any likely hurdles I should be aware of with regard to dividends or tax? There seems to be a preference for the Australian market ETF rather than US in this thread. Why is this?

Kind regards,
« Last Edit: November 08, 2018, 08:07:18 PM by flaky »

TJEH

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Re: Australian Investing Thread
« Reply #4247 on: November 09, 2018, 06:29:43 AM »
Hello,

Having read the stock series and some other financial self-help stuff like Barefoot and If You Can, I have recently bought a bunch of VTS shares. This seemed like the best bet for Australians wanting to replicate the strategy in jlcollinsnh Stock Series posts. I am looking to continue to invest a significant percent of my total income over the next 10 years, along with the quarterly dividend (there is no DRIP for this ETF). Is this a sensible strategy that wont really require adjustment until I retire? Are there any likely hurdles I should be aware of with regard to dividends or tax? There seems to be a preference for the Australian market ETF rather than US in this thread. Why is this?

Kind regards,

flaky, here are a couple of articles on ETF's and tax:

https://www.nestegg.com.au/tax/10332-how-are-etfs-taxed
https://www.nestegg.com.au/investing/10471-when-it-comes-to-your-etf-location-matters

VTS is domiciled in the US. Distributions are taxed at 30%, but if you fill out a W-8BEN form this can be reduced to 15%. This 15% can then be used as a tax offset when completing your tax return. There is also some uncertainty around estate taxes on US investments (i.e. a death tax).

As for whether it's a sensible strategy, you need to decide your level of Aus vs International exposure, and how you will achieve it. Many have gone for a combo of VTS and VEU in the past, however VGS is now favoured by many (it is domiciled in Aus).

TJEH

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Re: Australian Investing Thread
« Reply #4248 on: November 09, 2018, 06:33:01 AM »
I currently actively invest in VAS\VGS\MVW (I also hold VTS and VEU). I'm looking at investing for my kids, so I've taken another look at the options.

I will be setting up an account for each of them (in my name) and was hoping to keep it relatively simple. I looked at VDHG (Diversified High Growth Index Fund), it does tick a few boxes. For me, it would be better if it was 100% growth, but mostly I don't like the ~16% hedged component of VGS (performance quite a bit lower than non hedged component). I could go VAS\VGS\MVW, but don't know if I can be bothered with the admin across an additional two portfolios. Lazy of me....

Any better ideas?

I also occasionally wonder about just holding VTS (or perhaps IVV, being domiciled in AUS) instead of VGS or VEU for international exposure. VTS seems to have better long term returns.

mjr

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Re: Australian Investing Thread
« Reply #4249 on: November 09, 2018, 01:58:50 PM »
I consider the EU to be a basket case for business and put no money into it, so I stay away from VGS.  All my international exposure comes from VTS.

You need many millions in VTS to have to worry about death tax.  That said, if I have the luxury (?) of seeing death approach I'll be unwinding the VTS position because it'll be easier for me to do it than my heirs.

If Shorten's removal of franking credit refunds gets passed into legislation, a lot of money will be heading from ASX shares into VTS and VGS.