Author Topic: Australian Investing Thread  (Read 1557553 times)

Evasion

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Re: Australian Investing Thread
« Reply #4300 on: January 02, 2019, 03:51:44 PM »
Thanks for the comment on the secondary market mjr, was only partially aware of this.
I know me switching index fund for my next 500k isn't much, but if everyone does it it might have an impact, and like I said  its an ethical consideration for me, not an impact or cost benefit analysis.

As per my "opinion", and I won't argue further as not really the point of this thread, 99% of scientists and most people on the planet (everyone except the 5 countries brainwashed by a very powerful fossil fuel industry) agree that phasing coal out is the right thing to do for humans, animals, the economy and the future of the whole planet.
If you don't agree with this, you need to read more, do your research or look at yourself in the mirror because if we don't phase it out our grandchildren are in big big trouble.
For that matter I have decided to not have children because of climate change in part.
I recommend a start with "race of our lives" Jeremy Grantham. He's the founder of GMO Asset Management so can hardly be accused of being a delusional hipster like me.

Thank you everyone for your response, in any case. Will probably go VGSE next bundle and then balance with something capturing aus market + some bonds later this year.

mjr

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Re: Australian Investing Thread
« Reply #4301 on: January 03, 2019, 04:42:43 PM »
Gee, thanks for the reading advice and the "look at yourself in the mirror" advice, but I decline.

Evasion

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Re: Australian Investing Thread
« Reply #4302 on: January 03, 2019, 09:12:41 PM »
Initially I felt bad for saying that, then I looked at your other posts. Didn't know there would be climate change denial people here. You need to have another read at MMM blog.
Enjoy retirement because it won't be so pleasant for future generations..

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4303 on: January 03, 2019, 10:45:08 PM »
Hey Aussies, need some help here. Iím considering having a kid and working on the budget so I can figure out how that impacts what I have to invest and FIRE.  Iím looking at the numbers going, that canít be right, how could Aussie families survive? I donít have a car but when I added it in (I think you need a car if you have a baby), the numbers have skyrocketed. And thatís me using an au pair instead of childcare. Iíd love to know what a typical budget should be from you folks or any advice on mine?

This is for a fortnight:
 Baby budget

Rent $1100
Electric/gas $20
Optus $65 (phone & Internet)
Health $100
Hobby $40
Netflix: $10
Skype: $10
Food $170
Travel $384
Household $15
Personal $90
Au pair $140
Baby accessories: $50
Diapers: $50
Car: $850
Gifts: $50

Grand Total: $3144
« Last Edit: January 03, 2019, 10:46:53 PM by MrThatsDifferent »

Trevor Reznik

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Re: Australian Investing Thread
« Reply #4304 on: January 03, 2019, 11:48:39 PM »
Hey Aussies, need some help here. I’m considering having a kid and working on the budget so I can figure out how that impacts what I have to invest and FIRE.  I’m looking at the numbers going, that can’t be right, how could Aussie families survive? I don’t have a car but when I added it in (I think you need a car if you have a baby), the numbers have skyrocketed. And that’s me using an au pair instead of childcare. I’d love to know what a typical budget should be from you folks or any advice on mine?

This is for a fortnight:
 Baby budget

Rent $1100
Electric/gas $20
Optus $65 (phone & Internet)
Health $100
Hobby $40
Netflix: $10
Skype: $10
Food $170
Travel $384
Household $15
Personal $90
Au pair $140
Baby accessories: $50
Diapers: $50
Car: $850
Gifts: $50

Grand Total: $3144

So a car costs you $850 a f/n and an Au pair $140?  Cars don't have to cost a lot.  Get a 6 grand Corolla and just put Petrol and oil in it.  Mine costs me per fortnight probably $150.
« Last Edit: January 03, 2019, 11:50:29 PM by Trevor Reznik »

Little Aussie Battler

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Re: Australian Investing Thread
« Reply #4305 on: January 03, 2019, 11:51:28 PM »
It would probably be better for you to post your current expenses/budget, and then discuss and seek input on the expected incremental costs of adding a baby to your household.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4306 on: January 03, 2019, 11:56:15 PM »
Hey Aussies, need some help here. Iím considering having a kid and working on the budget so I can figure out how that impacts what I have to invest and FIRE.  Iím looking at the numbers going, that canít be right, how could Aussie families survive? I donít have a car but when I added it in (I think you need a car if you have a baby), the numbers have skyrocketed. And thatís me using an au pair instead of childcare. Iíd love to know what a typical budget should be from you folks or any advice on mine?

This is for a fortnight:
 Baby budget

Rent $1100
Electric/gas $20
Optus $65 (phone & Internet)
Health $100
Hobby $40
Netflix: $10
Skype: $10
Food $170
Travel $384
Household $15
Personal $90
Au pair $140
Baby accessories: $50
Diapers: $50
Car: $850
Gifts: $50

Grand Total: $3144

So a car costs you $850 a f/n and an Au pair $140?  Cars don't have to cost a lot.  Get a 6 grand Corolla and just put Petrol and oil in it.  Mine costs me per fortnight probably $150.

I donít have a car and looked up what the average cost was and it said $425/week in Sydney, which seemed extreme but I have no idea. Thatís not even buying the car, thatís maintenance, gas, Insuranceís, rego.  What do your car budgets look like?

Trevor Reznik

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Re: Australian Investing Thread
« Reply #4307 on: January 04, 2019, 12:04:16 AM »
Hey Aussies, need some help here. Iím considering having a kid and working on the budget so I can figure out how that impacts what I have to invest and FIRE.  Iím looking at the numbers going, that canít be right, how could Aussie families survive? I donít have a car but when I added it in (I think you need a car if you have a baby), the numbers have skyrocketed. And thatís me using an au pair instead of childcare. Iíd love to know what a typical budget should be from you folks or any advice on mine?

This is for a fortnight:
 Baby budget

Rent $1100
Electric/gas $20
Optus $65 (phone & Internet)
Health $100
Hobby $40
Netflix: $10
Skype: $10
Food $170
Travel $384
Household $15
Personal $90
Au pair $140
Baby accessories: $50
Diapers: $50
Car: $850
Gifts: $50

Grand Total: $3144

So a car costs you $850 a f/n and an Au pair $140?  Cars don't have to cost a lot.  Get a 6 grand Corolla and just put Petrol and oil in it.  Mine costs me per fortnight probably $150.

I donít have a car and looked up what the average cost was and it said $425/week in Sydney, which seemed extreme but I have no idea. Thatís not even buying the car, thatís maintenance, gas, Insuranceís, rego.  What do your car budgets look like?

That average cost of a car would likely be a new car with all of its scheduled services and costs.  You don't have to buy one of those to have a car.  My car expenses are roughly

Petrol $80 f/n
Servicing (done myself) $6 f/n?
Rego $27 f/n
Insurance $15 f/n

That's $128 f/n.  Occasionally other things might come up.  I'll need new tyres soon.  Brakes I'll do when they are wearing out, other repairs if/when they come up.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4308 on: January 04, 2019, 12:14:01 AM »
Hey Aussies, need some help here. Iím considering having a kid and working on the budget so I can figure out how that impacts what I have to invest and FIRE.  Iím looking at the numbers going, that canít be right, how could Aussie families survive? I donít have a car but when I added it in (I think you need a car if you have a baby), the numbers have skyrocketed. And thatís me using an au pair instead of childcare. Iíd love to know what a typical budget should be from you folks or any advice on mine?

This is for a fortnight:
 Baby budget

Rent $1100
Electric/gas $20
Optus $65 (phone & Internet)
Health $100
Hobby $40
Netflix: $10
Skype: $10
Food $170
Travel $384
Household $15
Personal $90
Au pair $140
Baby accessories: $50
Diapers: $50
Car: $850
Gifts: $50

Grand Total: $3144

So a car costs you $850 a f/n and an Au pair $140?  Cars don't have to cost a lot.  Get a 6 grand Corolla and just put Petrol and oil in it.  Mine costs me per fortnight probably $150.

I donít have a car and looked up what the average cost was and it said $425/week in Sydney, which seemed extreme but I have no idea. Thatís not even buying the car, thatís maintenance, gas, Insuranceís, rego.  What do your car budgets look like?

That average cost of a car would likely be a new car with all of its scheduled services and costs.  You don't have to buy one of those to have a car.  My car expenses are roughly

Petrol $80 f/n
Servicing (done myself) $6 f/n?
Rego $27 f/n
Insurance $15 f/n

That's $128 f/n.  Occasionally other things might come up.  I'll need new tyres soon.  Brakes I'll do when they are wearing out, other repairs if/when they come up.

Well thatís much better. I couldnít do the servicing so I could factor $200 a fortnight to cover service and extras?

Notch

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Re: Australian Investing Thread
« Reply #4309 on: January 04, 2019, 12:31:16 AM »
Hey Aussies, need some help here. Iím considering having a kid and working on the budget so I can figure out how that impacts what I have to invest and FIRE.  Iím looking at the numbers going, that canít be right, how could Aussie families survive? I donít have a car but when I added it in (I think you need a car if you have a baby), the numbers have skyrocketed. And thatís me using an au pair instead of childcare. Iíd love to know what a typical budget should be from you folks or any advice on mine?

Grand Total: $3144

So a car costs you $850 a f/n and an Au pair $140?  Cars don't have to cost a lot.  Get a 6 grand Corolla and just put Petrol and oil in it.  Mine costs me per fortnight probably $150.

I donít have a car and looked up what the average cost was and it said $425/week in Sydney, which seemed extreme but I have no idea. Thatís not even buying the car, thatís maintenance, gas, Insuranceís, rego.  What do your car budgets look like?

That average cost of a car would likely be a new car with all of its scheduled services and costs.  You don't have to buy one of those to have a car.  My car expenses are roughly

Petrol $80 f/n
Servicing (done myself) $6 f/n?
Rego $27 f/n
Insurance $15 f/n

That's $128 f/n.  Occasionally other things might come up.  I'll need new tyres soon.  Brakes I'll do when they are wearing out, other repairs if/when they come up.

Well thatís much better. I couldnít do the servicing so I could factor $200 a fortnight to cover service and extras?

My all-in vehicle operating costs for a 2006 Kia Rio and a Yamaha 250 dirtbike over the past 4.5 years of tracking is $176 per month :)

This includes everything bar depreciation.  So registration for both, maintenance (mostly done by me), tyres, 3rd party prop insurance for car, licence renewal, motorbike training and gear (2nd hand), tolls and fuel.


MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4310 on: January 04, 2019, 03:17:43 PM »
Hey Aussies, need some help here. Iím considering having a kid and working on the budget so I can figure out how that impacts what I have to invest and FIRE.  Iím looking at the numbers going, that canít be right, how could Aussie families survive? I donít have a car but when I added it in (I think you need a car if you have a baby), the numbers have skyrocketed. And thatís me using an au pair instead of childcare. Iíd love to know what a typical budget should be from you folks or any advice on mine?

Grand Total: $3144

So a car costs you $850 a f/n and an Au pair $140?  Cars don't have to cost a lot.  Get a 6 grand Corolla and just put Petrol and oil in it.  Mine costs me per fortnight probably $150.

I donít have a car and looked up what the average cost was and it said $425/week in Sydney, which seemed extreme but I have no idea. Thatís not even buying the car, thatís maintenance, gas, Insuranceís, rego.  What do your car budgets look like?

That average cost of a car would likely be a new car with all of its scheduled services and costs.  You don't have to buy one of those to have a car.  My car expenses are roughly

Petrol $80 f/n
Servicing (done myself) $6 f/n?
Rego $27 f/n
Insurance $15 f/n

That's $128 f/n.  Occasionally other things might come up.  I'll need new tyres soon.  Brakes I'll do when they are wearing out, other repairs if/when they come up.

Well thatís much better. I couldnít do the servicing so I could factor $200 a fortnight to cover service and extras?

My all-in vehicle operating costs for a 2006 Kia Rio and a Yamaha 250 dirtbike over the past 4.5 years of tracking is $176 per month :)

This includes everything bar depreciation.  So registration for both, maintenance (mostly done by me), tyres, 3rd party prop insurance for car, licence renewal, motorbike training and gear (2nd hand), tolls and fuel.

So $200 is reasonable as I canít do maintenance myself.

deborah

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Re: Australian Investing Thread
« Reply #4311 on: January 04, 2019, 03:26:55 PM »
Most of the estimates include depreciation of the car.

FFF

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Re: Australian Investing Thread
« Reply #4312 on: January 04, 2019, 07:37:09 PM »
Hey Aussies, need some help here. Iím considering having a kid and working on the budget so I can figure out how that impacts what I have to invest and FIRE.  Iím looking at the numbers going, that canít be right, how could Aussie families survive? I donít have a car but when I added it in (I think you need a car if you have a baby), the numbers have skyrocketed. And thatís me using an au pair instead of childcare. Iíd love to know what a typical budget should be from you folks or any advice on mine?

This is for a fortnight:
 Baby budget

Rent $1100
Electric/gas $20
Optus $65 (phone & Internet)
Health $100
Hobby $40
Netflix: $10
Skype: $10
Food $170
Travel $384
Household $15
Personal $90
Au pair $140
Baby accessories: $50
Diapers: $50
Car: $850
Gifts: $50

Grand Total: $3144

Hi, I'd add a couple of points here. Agree with the estimates of about $200 on car depending on car you buy. On a 20 year old Corolla we spent approx $140, which includes all petrol (about 12000km driven), servicing (including $700 replacing something with the clutch), rego and insurance.

I'd say your estimates on nappies are pretty high too. Aldi do nappies at about 20c a nappy, so you're budgeting 250 nappies a fortnight which is almost 18 a day. I don't know anyone that's used that much! We probably use a low end number of nappies but our best benchmark year was last year and we spent $350 total for our daughter who is now 18months. I reckon you can at least halve your number to $25 a fortnight.

Baby accessories also is hard to say and hard to track what we spent as there is a lot of second hand recycling we have done and hand-me-downs from older kids. I would say though, don't get sucked into the hype with a lot of the baby specific stuff - think long and hard about whether you need/want additional stuff in your house beyond the basics of cot, car seat, bassinet, change mat, high chair. Most of it is just marketing that preys on you while you are sleep deprived! If you want any more specifics on kid stuff, send me a message as I think we have done things pretty frugally with our 2 (18 months and 4 currently). In fact, if you're in Melbourne you can have some free/cheap stuff in the not too distant future!

Evasion

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Re: Australian Investing Thread
« Reply #4313 on: January 04, 2019, 09:33:16 PM »
Could you please start a case study?
This is an investing thread.
Or if a mod could relocate posts.
Thanks

PDM

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Re: Australian Investing Thread
« Reply #4314 on: January 04, 2019, 09:39:08 PM »
Could you please start a case study?
This is an investing thread.
Or if a mod could relocate posts.
Thanks

18 posts and he is running the place. Jeeze. First all the nonsense around climate change now this.
It seems a reasonable question. And this thread is ideal to get the Australian perspective on a blog that is predominantly American with different cars and considerations.
« Last Edit: January 04, 2019, 09:44:19 PM by PDM »

PDM

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Re: Australian Investing Thread
« Reply #4315 on: January 04, 2019, 09:54:10 PM »
Hey Aussies, need some help here. Iím considering having a kid and working on the budget so I can figure out how that impacts what I have to invest and FIRE.  Iím looking at the numbers going, that canít be right, how could Aussie families survive? I donít have a car but when I added it in (I think you need a car if you have a baby), the numbers have skyrocketed. And thatís me using an au pair instead of childcare. Iíd love to know what a typical budget should be from you folks or any advice on mine?

This is for a fortnight:
 Baby budget

Grand Total: $3144

The overall number seems about right, we budget $1650 a fortnight plus $1100 rent. Sydney a bit pricier than Brisbane. As others have said, probably look into that car costs as it is the most dubious number and  biggest impact after rent.

The bigger question is maternity leave and how that will impact on your income. How much does your partner want to take? Will they go back full time?

The inclusion of an Au pair is interesting. Is this totally replacing childcare? At what age of the child?

Are you currently dual income? Usually the day to day budget isn't the issue, it is the single income for a potentially long period.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4316 on: January 04, 2019, 11:48:20 PM »
Hey Aussies, need some help here. Iím considering having a kid and working on the budget so I can figure out how that impacts what I have to invest and FIRE.  Iím looking at the numbers going, that canít be right, how could Aussie families survive? I donít have a car but when I added it in (I think you need a car if you have a baby), the numbers have skyrocketed. And thatís me using an au pair instead of childcare. Iíd love to know what a typical budget should be from you folks or any advice on mine?

This is for a fortnight:
 Baby budget

Grand Total: $3144

The overall number seems about right, we budget $1650 a fortnight plus $1100 rent. Sydney a bit pricier than Brisbane. As others have said, probably look into that car costs as it is the most dubious number and  biggest impact after rent.

The bigger question is maternity leave and how that will impact on your income. How much does your partner want to take? Will they go back full time?

The inclusion of an Au pair is interesting. Is this totally replacing childcare? At what age of the child?

Are you currently dual income? Usually the day to day budget isn't the issue, it is the single income for a potentially long period.

Itíll be me as a single dad. Iíll take a year off on family leave and then work a couple days from home. Iíll need a plan for pre-school and childcare. Itíll only be a single income.

PDM

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Re: Australian Investing Thread
« Reply #4317 on: January 04, 2019, 11:53:54 PM »
Ah cool, sorry for making assumptions. Yeah it seems tough on a single salary.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4318 on: January 05, 2019, 12:13:19 AM »
Ah cool, sorry for making assumptions. Yeah it seems tough on a single salary.

Fortunately Iíve got a good one.

marty998

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Re: Australian Investing Thread
« Reply #4319 on: January 05, 2019, 12:43:55 AM »

I'm not really interested in debating whether coal should be phased out (as it is obvious it should) but rather about the best way to do so.


Quite apart from the hide of stating your opinion as objective and uncontestable fact, from an investment point of view the purchase of stocks on the secondary market does not affect the business operations of the companies you don't like a jot.

There are many, many companies on the Australian and US stock markets that I don't care for personally, but my having money in them makes no difference either way and keeping it simple with a broad index is what index investing is all about.

Marty, you mention many things there about which I know nothing and am happy to admit I know nothing, but regardless of how much of a raw deal we're getting, mining's contribution to our economy and balance of payments is huge.  Saying that we're being screwed over and it should be contributing is a whole other argument.

It's all about how you measure it. I don't deny the gross numbers are large, and that in the good times up to 2007 and then from 2012 to 2015 the boom did have an effect on the mainstream economy (see Perth for all the evidence you need).

But, it takes a gigantic boom in extractive industries for something like that to have an effect. With other industries, banking retail, construction, a 1 or 2% wobble can be noticed in the GDP numbers.

And yes - local populations do benefit, and benefit quite well (and kudos to all those who take advantage for the time they can). But Australia at large has done an incredibly poor job of banking the benefits of it.

marty998

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Re: Australian Investing Thread
« Reply #4320 on: January 05, 2019, 12:55:47 AM »
Thanks for the comment on the secondary market mjr, was only partially aware of this.
I know me switching index fund for my next 500k isn't much, but if everyone does it it might have an impact, and like I said  its an ethical consideration for me, not an impact or cost benefit analysis.

As per my "opinion", and I won't argue further as not really the point of this thread, 99% of scientists and most people on the planet (everyone except the 5 countries brainwashed by a very powerful fossil fuel industry) agree that phasing coal out is the right thing to do for humans, animals, the economy and the future of the whole planet.
If you don't agree with this, you need to read more, do your research or look at yourself in the mirror because if we don't phase it out our grandchildren are in big big trouble.
For that matter I have decided to not have children because of climate change in part.
I recommend a start with "race of our lives" Jeremy Grantham. He's the founder of GMO Asset Management so can hardly be accused of being a delusional hipster like me.

Thank you everyone for your response, in any case. Will probably go VGSE next bundle and then balance with something capturing aus market + some bonds later this year.

Yes coal needs to be phased out - I would like to think humanity has reached a stage where we have the technology and ingenuity to not need this 19th Century resource anymore.

The bold I take issue with. Saying it's all too hard and humanity is fucked and therefore not having children I disagree with (I appreciate you said in part).

Have kids. Have confidence your kids will make the world better than you have left it.

If you chose not to have kids for personal reasons then fine fair enough. But because you think we are doomed? Then what the fuck is the point of it all.

Forgive the off topic post. I feel strongly about this.

mjr

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Re: Australian Investing Thread
« Reply #4321 on: January 05, 2019, 01:14:31 AM »
I also would love coal to be phased out.  I am 100% behind the development and implementation of technologies that relieve us from dependence on a finite resource and yes, burning things is pretty bloody primitive.

What I am vehemently against is the climate change religion which results in galahs driving stupid policies which are ridiculously expensive and don't achieve the goal.

I am an electrical engineer.  Anyone wants to talk nuclear and hydrogen and fuel cells as part of a base load power system and I'm all ears.  Anyone who talk windmills and solar and climate change as an the imperative and the tonnes of fairy dust you'd need for base load at this stage of the game and you're talking blind, impractical ideology and I'll call it out where I see it.

alsoknownasDean

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Re: Australian Investing Thread
« Reply #4322 on: January 05, 2019, 02:00:32 AM »
I guess the issue with finding ethical investments is that everyone's idea of what is ethical is different. I can understand that people wouldn't want to be invested in industries/companies that they feel strongly against, as through their shareholding, they'd have an interest in the ongoing growth/continuation of that industry/company.

There seems to be a few ETFs (I saw a couple through BetaShares for one) that cater to ethical investing (although of course do your own diligence with each of these funds), and sector-specific ETFs for one to build their own portfolio around these ETFs rather than buying into VAS/etc. Then of course there's taking a more active approach and buying a bunch of individual companies.

Oh, and my calculations of the cost of owning my car used to be about $300-400 per month, but it's less now as it doesn't have much further to depreciate :)

10,000km a year at 8L/100km with fuel at $1.50 a litre is $1200pa, $800pa for registration, maybe $600pa for maintenance ($400 for normal servicing and the rest for tyres etc) and $550 for insurance? Obviously add depreciation (and opportunity cost on capital if you want to get really in-depth) and vary those numbers where applicable, but even a cheap car can be $300 a month or so to run. If you've got some car that uses 15L/100km doing 25,000km a year that depreciates by $4000pa, then obviously the numbers would change some.

Dyna$ty

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Re: Australian Investing Thread
« Reply #4323 on: January 09, 2019, 04:19:49 PM »
I've posted this earlier but I guess it was a wrong forum. I got all USA related advise.
Posting it again under Australian Investing Thread.


Hi,

Working on saving for my First home.
Goal: $100,000
Saved so far: $12000
I would like some ideas as to where can I invest those $12000 (Plus $2000 every month) to reach my goal quicker?

Thank you

P.S: I am a total noob at investing. Currently reading the Barefoot investor to learn about financial planning.

PDM

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Re: Australian Investing Thread
« Reply #4324 on: January 09, 2019, 04:32:08 PM »
The advice from your near identical whirlpool post is solid.
1. Consider timeframe for wanting to use the deposit.
2. Decide if the risk of short term losses in the stock market is worth the potential greater gains than high interest saver account.
3. Consider if the FHSS Scheme is of benefit to you (it is a bit shit and can be hard to access when you want to buy - timing wise).

TLDR: high interest saving account if wanting to use money within next few years.
« Last Edit: January 09, 2019, 07:21:23 PM by PDM »

Andy R

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Re: Australian Investing Thread
« Reply #4325 on: January 09, 2019, 07:17:59 PM »
TLDR: high interest saving account if wanting to use money without next few years.
+1

mrmoonymartian

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Re: Australian Investing Thread
« Reply #4326 on: January 10, 2019, 12:12:47 AM »
I've posted this earlier but I guess it was a wrong forum. I got all USA related advise.
Posting it again under Australian Investing Thread.


Hi,

Working on saving for my First home.
Goal: $100,000
Saved so far: $12000
I would like some ideas as to where can I invest those $12000 (Plus $2000 every month) to reach my goal quicker?

Thank you

P.S: I am a total noob at investing. Currently reading the Barefoot investor to learn about financial planning.
Are you already maxing out your concessional super contributions? If not, then FHSS could be worthwhile.

JimmyMac

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Re: Australian Investing Thread
« Reply #4327 on: January 10, 2019, 04:30:30 AM »
I've posted this earlier but I guess it was a wrong forum. I got all USA related advise.
Posting it again under Australian Investing Thread.


Hi,

Working on saving for my First home.
Goal: $100,000
Saved so far: $12000
I would like some ideas as to where can I invest those $12000 (Plus $2000 every month) to reach my goal quicker?

Thank you

P.S: I am a total noob at investing. Currently reading the Barefoot investor to learn about financial planning.

As someone who was recently in your same position I can say the best thing you can do is keep your cash in a savings account.

Good returns will have an immaterial effect on the time it takes to reach your goal. Bad returns will cause you stress and set you back months.
Saving more will have the greatest impact, if at all possible.
« Last Edit: January 10, 2019, 04:32:33 AM by JimmyMac »

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4328 on: January 10, 2019, 06:47:15 AM »
Stupid question: if you withdraw your dividends during retirement, does that impact the 7% expected growth of invested money? And how does that impact your 4% withdrawal?

For example, assume I have $1m invested, and say my withdrawal target is $40k/yr. If my invested money generates $20k/yr in dividends and I take that out and donít reinvest it, does that mean I only have to withdrawal 2% from my invested stache to get the $40k? Or does what you remove from dividends count towards the 4%? Does it make sense what Iím asking? Lol

I guess the other thing Iím wondering is, when you retire should you let your dividends reinvest or should you have them continually distributed and then just top up the remainder?

I donít think the FIRE movement is very clear on how to get out and manage money during the retire phase, so Iím a bit confused.

Andy R

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Re: Australian Investing Thread
« Reply #4329 on: January 10, 2019, 07:48:03 AM »
Stupid question: if you withdraw your dividends during retirement, does that impact the 7% expected growth of invested money? And how does that impact your 4% withdrawal?

For example, assume I have $1m invested, and say my withdrawal target is $40k/yr. If my invested money generates $20k/yr in dividends and I take that out and donít reinvest it, does that mean I only have to withdrawal 2% from my invested stache to get the $40k? Or does what you remove from dividends count towards the 4%? Does it make sense what Iím asking? Lol

Dividends are not free seperate money, they come out of the total return.
https://www.cnbc.com/2016/12/08/dont-buy-in-to-the-dividend-fallacy-new-academic-paper-warns.html
https://www.bogleheads.org/wiki/Why_did_my_fund_unexpectedly_drop_in_value
https://www.bogleheads.org/forum/viewtopic.php?f=1&t=258311

If a company has earnings of 10% and pays out 2% or 4% or 8% dividends, your growth is 10% minus the dividend, so the dividend has nothing to do with your total return. Ignore it.

The 4% rule comes out of the total return.
If your dividends are 6%, then if you follow the 4% rule, you should re-invest the extra 2%, and if your dividends are 2%, then you would be selling down the other 2% to get your 4% out.

I know someone who has a 6% dividend and lives off all of that. He is already suffering the consequences, and things are only going to get worse.

I guess the other thing Iím wondering is, when you retire should you let your dividends reinvest or should you have them continually distributed and then just top up the remainder?

I donít think the FIRE movement is very clear on how to get out and manage money during the retire phase, so Iím a bit confused.

In retirement you generally do not auto-reinvest dividends since you usually need it to live off. However if your dividends are more than 4%, then yes re-invest the rest.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4330 on: January 10, 2019, 01:38:48 PM »
Stupid question: if you withdraw your dividends during retirement, does that impact the 7% expected growth of invested money? And how does that impact your 4% withdrawal?

For example, assume I have $1m invested, and say my withdrawal target is $40k/yr. If my invested money generates $20k/yr in dividends and I take that out and donít reinvest it, does that mean I only have to withdrawal 2% from my invested stache to get the $40k? Or does what you remove from dividends count towards the 4%? Does it make sense what Iím asking? Lol

Dividends are not free seperate money, they come out of the total return.
https://www.cnbc.com/2016/12/08/dont-buy-in-to-the-dividend-fallacy-new-academic-paper-warns.html
https://www.bogleheads.org/wiki/Why_did_my_fund_unexpectedly_drop_in_value
https://www.bogleheads.org/forum/viewtopic.php?f=1&t=258311

If a company has earnings of 10% and pays out 2% or 4% or 8% dividends, your growth is 10% minus the dividend, so the dividend has nothing to do with your total return. Ignore it.

The 4% rule comes out of the total return.
If your dividends are 6%, then if you follow the 4% rule, you should re-invest the extra 2%, and if your dividends are 2%, then you would be selling down the other 2% to get your 4% out.

I know someone who has a 6% dividend and lives off all of that. He is already suffering the consequences, and things are only going to get worse.

I guess the other thing Iím wondering is, when you retire should you let your dividends reinvest or should you have them continually distributed and then just top up the remainder?

I donít think the FIRE movement is very clear on how to get out and manage money during the retire phase, so Iím a bit confused.

In retirement you generally do not auto-reinvest dividends since you usually need it to live off. However if your dividends are more than 4%, then yes re-invest the rest.

Ok, thanks for that, it makes sense. So it does seem right that I identify what my 4% is, take out as much of the dividends up to the 4% and if that falls short, top by cashing out shares or using cash.

Ok, hereís something else Iím wondering. Say my 4% is $40k. My investments distribute $20k and I have $120k cash. Does it make more sense to use the $20k distribution plus $20k cash for 6 years, or use the cash for 3 years, and let the distributions reinvest to grow the invested stache, or will the end result be the same however you do it?

And apologies for these dumb questions, this stuff doesnít click with me well.

deborah

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Re: Australian Investing Thread
« Reply #4331 on: January 10, 2019, 03:08:54 PM »
Dividend reinvestment doesn't really work (unless you only have one investment) because you need to keep your investment portfolio in alignment with your aims. The investment with lower % dividends will end up with less in it than your planned distribution. You can counter this by using your savings to even your investments up (while working) or using the sale of your investments to do so (in retirement).

You need to plan why you are doing things in retirement. If you have only a few years until super becomes available to you, you may decide to use your cash first, topping it up with dividends and (if necessary) selling shares, reducing taxable income and not generating capital gains. If you retire many years before super is available, you could have a completely different strategy, retaining a certain amount of cash at all times, to ride market fluctuations or to gradually reduce your share holdings over time so that you have almost no taxable income.

Andy R

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Re: Australian Investing Thread
« Reply #4332 on: January 10, 2019, 06:49:17 PM »
Ok, hereís something else Iím wondering. Say my 4% is $40k. My investments distribute $20k and I have $120k cash. Does it make more sense to use the $20k distribution plus $20k cash for 6 years, or use the cash for 3 years, and let the distributions reinvest to grow the invested stache, or will the end result be the same however you do it?

Firstly you should have decided on an asset allocation (AA) of stocks to fixed income.

Each year, you would have a plan, such as:
1. Have distributions not reinvested and instead put into a separate account to use
2. Anything that not enough for the withdrawal rate, take out of the allocation that has performed the best to bring the proportions closer to your target AA
3. If you are out of our pre-decided percentage bands, then rebalance to bring it back


Here is a simple example

Assumptions
1 mil
4% withdrawal rate
70/30 AA
Rebalance bands of 5%

After one year say you have gotten 30k in distributions
And say stocks grew to 805k and fixed income grew to 305k
Your AA is now 72.5/27.5, so your equities portion has grown more, so you take out the other 10k from your equities.
That leaves you with 795k equities, 305k fixed income and your AA is now 72.25/27.25
Since it is not outside of your balancing bands of 5% (65/35 and 75/25) you do nothing more

After another year or two, you might end up with an AA of 76/24, in which case you would sell down 6% of the 76 to bring it back in line with your original allocation.

You need to determine these and put it into an investment policy statement (IPS) so you are not guessing and instead have a set of steps laid out in advance that you follow each year.
- An appropriate AA for yourself
- A withdrawal rate you are comfortable with
- Rebalancing bands

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4333 on: January 10, 2019, 11:20:35 PM »
Ok, hereís something else Iím wondering. Say my 4% is $40k. My investments distribute $20k and I have $120k cash. Does it make more sense to use the $20k distribution plus $20k cash for 6 years, or use the cash for 3 years, and let the distributions reinvest to grow the invested stache, or will the end result be the same however you do it?

Firstly you should have decided on an asset allocation (AA) of stocks to fixed income.

Each year, you would have a plan, such as:
1. Have distributions not reinvested and instead put into a separate account to use
2. Anything that not enough for the withdrawal rate, take out of the allocation that has performed the best to bring the proportions closer to your target AA
3. If you are out of our pre-decided percentage bands, then rebalance to bring it back


Here is a simple example

Assumptions
1 mil
4% withdrawal rate
70/30 AA
Rebalance bands of 5%

After one year say you have gotten 30k in distributions
And say stocks grew to 805k and fixed income grew to 305k
Your AA is now 72.5/27.5, so your equities portion has grown more, so you take out the other 10k from your equities.
That leaves you with 795k equities, 305k fixed income and your AA is now 72.25/27.25
Since it is not outside of your balancing bands of 5% (65/35 and 75/25) you do nothing more

After another year or two, you might end up with an AA of 76/24, in which case you would sell down 6% of the 76 to bring it back in line with your original allocation.

You need to determine these and put it into an investment policy statement (IPS) so you are not guessing and instead have a set of steps laid out in advance that you follow each year.
- An appropriate AA for yourself
- A withdrawal rate you are comfortable with
- Rebalancing bands

I use a life strategy fund, so I donít think I control the allocation. I donít rebalance.

Andy R

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Re: Australian Investing Thread
« Reply #4334 on: January 10, 2019, 11:50:45 PM »
I use a life strategy fund, so I donít think I control the allocation. I donít rebalance.

Ok if they rebalance it for you, then just take out enough to make up the withdrawal rate you plan on that the dividends did not cover.

What is the purpose of the 120k cash then if your fund already has fixed income in there for you?


MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4335 on: January 11, 2019, 02:15:17 AM »
I use a life strategy fund, so I donít think I control the allocation. I donít rebalance.

Ok if they rebalance it for you, then just take out enough to make up the withdrawal rate you plan on that the dividends did not cover.

What is the purpose of the 120k cash then if your fund already has fixed income in there for you?

Well, I had seen someone else post that as their strategy, so I thought it was good and that if I used the cash first, it would let my money grow. But I guess what youíre saying is the life strategy fund has a cash component.  Honestly this bit is all confusing. Hmmmm

Andy R

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Re: Australian Investing Thread
« Reply #4336 on: January 11, 2019, 03:42:04 AM »
Well, I had seen someone else post that as their strategy, so I thought it was good and that if I used the cash first, it would let my money grow. But I guess what youíre saying is the life strategy fund has a cash component.  Honestly this bit is all confusing. Hmmmm

Stick with it, it will make more and more sense the longer you read. Or rather, the stuff that is flat out wrong becomes more obviously wrong rather than you wondering who was right.
Anyway, I would question the reason for holding cash. If you have a life strategy fund, you have fixed income in there already.

It looks like you also have not selected the life strategy fund based on AA and done so on age or something else?
I would suggest learning what and AA is and how to go about figuring one out. It is really the pinacle of investing. Once you have that, the rest is just following a set of simple steps.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4337 on: January 11, 2019, 11:12:27 AM »
Well, I had seen someone else post that as their strategy, so I thought it was good and that if I used the cash first, it would let my money grow. But I guess what youíre saying is the life strategy fund has a cash component.  Honestly this bit is all confusing. Hmmmm

Stick with it, it will make more and more sense the longer you read. Or rather, the stuff that is flat out wrong becomes more obviously wrong rather than you wondering who was right.
Anyway, I would question the reason for holding cash. If you have a life strategy fund, you have fixed income in there already.

It looks like you also have not selected the life strategy fund based on AA and done so on age or something else?
I would suggest learning what and AA is and how to go about figuring one out. It is really the pinacle of investing. Once you have that, the rest is just following a set of simple steps.

I picked it because of simplicity. I wanted something I could set and forget and not have to actively manage or think about in any way. This stuff doesnít come naturally to me so I donít want to overly complicate things and I want my energy on some other things. I get what youíre saying though and that makes sense to me. Iíll look at keeping less cash, but using it for emergency purposes predominantly.

Thanks for your advice.

lush

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Re: Australian Investing Thread
« Reply #4338 on: January 11, 2019, 03:37:04 PM »
Well, I had seen someone else post that as their strategy, so I thought it was good and that if I used the cash first, it would let my money grow. But I guess what youíre saying is the life strategy fund has a cash component.  Honestly this bit is all confusing. Hmmmm

Stick with it, it will make more and more sense the longer you read. Or rather, the stuff that is flat out wrong becomes more obviously wrong rather than you wondering who was right.
Anyway, I would question the reason for holding cash. If you have a life strategy fund, you have fixed income in there already.

It looks like you also have not selected the life strategy fund based on AA and done so on age or something else?
I would suggest learning what and AA is and how to go about figuring one out. It is really the pinacle of investing. Once you have that, the rest is just following a set of simple steps.

I picked it because of simplicity. I wanted something I could set and forget and not have to actively manage or think about in any way. This stuff doesnít come naturally to me so I donít want to overly complicate things and I want my energy on some other things. I get what youíre saying though and that makes sense to me. Iíll look at keeping less cash, but using it for emergency purposes predominantly.

Thanks for your advice.

Mr Diff. I can relate to your situation. Initially I too choose the Balanced ( I think similar to Life Strategy) Vanguard fund as to me it seemed rather "secure" and they did all the hard work of re-balancing. However I then learnt through this forum and others the importance of playing a little bit more of an active role in your asset allocation. If I had my time over I would not have chosen such a conservative fund (Balanced). Consequently this has meant I am now re-setting the AA to what I would like it to be, by investing in more equities to bring the AA up to 70/30. But still have a long way to go since the Balanced fund has most of my money in it now and it has a 50/50 allocation.

 In regards to savings my approach matches yours. I have about $120k for emergencies. I also see it as that if I need the cash I am not forced to sell out of my portfolio if the market is very low (selling at a loss). I am sure others may see it differently. I guess you can put this down to my lack of experience and confidence it putting everything into the portfolio. Maybe in the future I may get more experience under my belt and feel comfortable putting almost everything in it.

Good luck with it all.

chasingthegoodlife

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Re: Australian Investing Thread
« Reply #4339 on: January 11, 2019, 05:42:08 PM »
When deciding how much cash to keep on hand, don't forget to consider how much is available to you through a mortgage offset or redraw. For homeowners that's probably the most efficient way to keep an emergency fund.

Wondering if anyone has been affected by the recent Interactive Brokers problems?
 https://www.smh.com.au/business/markets/stock-broker-collapse-traps-200-million-from-thousands-of-investors-20190111-p50qr8.html 

I remember it being popular with some here for buying overseas ETFs.

potm

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Re: Australian Investing Thread
« Reply #4340 on: January 12, 2019, 01:50:08 AM »
When deciding how much cash to keep on hand, don't forget to consider how much is available to you through a mortgage offset or redraw. For homeowners that's probably the most efficient way to keep an emergency fund.

Wondering if anyone has been affected by the recent Interactive Brokers problems?
 https://www.smh.com.au/business/markets/stock-broker-collapse-traps-200-million-from-thousands-of-investors-20190111-p50qr8.html 

I remember it being popular with some here for buying overseas ETFs.

I don't believe it was interactive brokers that collapsed. Seems like it is Halifax but they may have used the IB platform.

chasingthegoodlife

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Re: Australian Investing Thread
« Reply #4341 on: January 12, 2019, 03:27:02 AM »
Ah. I interpreted that to mean they owned IB, but your explanation makes sense :)

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4342 on: January 12, 2019, 01:24:01 PM »
Well, I had seen someone else post that as their strategy, so I thought it was good and that if I used the cash first, it would let my money grow. But I guess what youíre saying is the life strategy fund has a cash component.  Honestly this bit is all confusing. Hmmmm

Stick with it, it will make more and more sense the longer you read. Or rather, the stuff that is flat out wrong becomes more obviously wrong rather than you wondering who was right.
Anyway, I would question the reason for holding cash. If you have a life strategy fund, you have fixed income in there already.

It looks like you also have not selected the life strategy fund based on AA and done so on age or something else?
I would suggest learning what and AA is and how to go about figuring one out. It is really the pinacle of investing. Once you have that, the rest is just following a set of simple steps.

I picked it because of simplicity. I wanted something I could set and forget and not have to actively manage or think about in any way. This stuff doesnít come naturally to me so I donít want to overly complicate things and I want my energy on some other things. I get what youíre saying though and that makes sense to me. Iíll look at keeping less cash, but using it for emergency purposes predominantly.

Thanks for your advice.

Mr Diff. I can relate to your situation. Initially I too choose the Balanced ( I think similar to Life Strategy) Vanguard fund as to me it seemed rather "secure" and they did all the hard work of re-balancing. However I then learnt through this forum and others the importance of playing a little bit more of an active role in your asset allocation. If I had my time over I would not have chosen such a conservative fund (Balanced). Consequently this has meant I am now re-setting the AA to what I would like it to be, by investing in more equities to bring the AA up to 70/30. But still have a long way to go since the Balanced fund has most of my money in it now and it has a 50/50 allocation.

 In regards to savings my approach matches yours. I have about $120k for emergencies. I also see it as that if I need the cash I am not forced to sell out of my portfolio if the market is very low (selling at a loss). I am sure others may see it differently. I guess you can put this down to my lack of experience and confidence it putting everything into the portfolio. Maybe in the future I may get more experience under my belt and feel comfortable putting almost everything in it.

Good luck with it all.

Ok, I guess I donít understand what the advantages of the manual AA vs Lifestrategy? I mean, the only thing really would be that you all are saying Iíd have more money under the manual AA plan than what Iím doing right? Can anyone calculate how much better someone would be? Other posters have told me that the Lifestrategy direction was perfectly fine, low fees, no hassles, and a good set up.

The other thing would be, if I was to do manual AA, what does that look like in the optimum sense thatís better than Lifestrategy? What products do I buy from Vanguard?

deborah

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Re: Australian Investing Thread
« Reply #4343 on: January 12, 2019, 02:10:33 PM »
Your Asset Allocation (AA) is what youíre comfortable with. This can include having a certain amount of money in the bank. You decide what you want, and stay with it. What you appear to currently have as your AA is $100,000 in cash in the bank, and everything else in Lifestrategy. For the purpose of discussion, I will assume you have $900,000 in this and itís the balanced option. This option has 35% bonds, 50% shares and 15% cash, if my cursory reading is correct. Letís also assume youíre renting and have no real estate.

This means your current AA is 31% bonds, 45% shares and 24% cash, as your $100,000 is counted as cash. This seems to be very underweight in real estate and shares, which tend to be where growth occurs. As a result, you will be more likely to have problems with your stash giving you a sustainable income in retirement.

People are suggesting that you think about what you really want your AA to look like, and get a product (or more than one, if necessary) to match.

Your circumstances can give you different investment strategies. For instance, I own a house, and have a small defined benefit pension. I treat the pension as bonds and my house as real estate, so my actual investments are 100% shares, but this makes my overall asset allocation reasonable. If the shares go pear shaped, I still have my pension. Thinking about how different scenarios affect you is part of deciding what a reasonable personal asset allocation is.

Andy R

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Re: Australian Investing Thread
« Reply #4344 on: January 12, 2019, 06:17:59 PM »
Agree with everything deborah said.

It boils down to the fact that everyone has a different AA and you need to know what your AA is first, and then select funds to suit it. You are doing it backwards by picking a fund and then you have no say in your AA.

For instance, in my current circumstances, I may find 70/30 most appropriate, so then I may pick a fund such as VDGR which is 70/30. Another person may prefer 80/20 and then may pick VDHG/VAF 90/10 (VDHG is 90/10 and VAF is the extra 10 for bonds).

If both of these people picked VDGR because "it is a good fund", then they are mistakenly letting the fund choose their allocation instead of choosing their allocation and selecting the funds to meet their allocation.

MrThatsDifferent

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Re: Australian Investing Thread
« Reply #4345 on: January 13, 2019, 01:45:48 AM »
Your Asset Allocation (AA) is what youíre comfortable with. This can include having a certain amount of money in the bank. You decide what you want, and stay with it. What you appear to currently have as your AA is $100,000 in cash in the bank, and everything else in Lifestrategy. For the purpose of discussion, I will assume you have $900,000 in this and itís the balanced option. This option has 35% bonds, 50% shares and 15% cash, if my cursory reading is correct. Letís also assume youíre renting and have no real estate.

This means your current AA is 31% bonds, 45% shares and 24% cash, as your $100,000 is counted as cash. This seems to be very underweight in real estate and shares, which tend to be where growth occurs. As a result, you will be more likely to have problems with your stash giving you a sustainable income in retirement.

People are suggesting that you think about what you really want your AA to look like, and get a product (or more than one, if necessary) to match.

Your circumstances can give you different investment strategies. For instance, I own a house, and have a small defined benefit pension. I treat the pension as bonds and my house as real estate, so my actual investments are 100% shares, but this makes my overall asset allocation reasonable. If the shares go pear shaped, I still have my pension. Thinking about how different scenarios affect you is part of deciding what a reasonable personal asset allocation is.

I only have the Lifestrategy account, not the cash yet. I wasnít going to have the cash until retirement. No property, no pension. Just Lifestrategy and super. The Lifestrategy has a nice balance for someone in my position and itís dead simple. Not quite sure I understand the problem?

lush

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Re: Australian Investing Thread
« Reply #4346 on: January 13, 2019, 07:56:02 PM »
Your Asset Allocation (AA) is what youíre comfortable with. This can include having a certain amount of money in the bank. You decide what you want, and stay with it. What you appear to currently have as your AA is $100,000 in cash in the bank, and everything else in Lifestrategy. For the purpose of discussion, I will assume you have $900,000 in this and itís the balanced option. This option has 35% bonds, 50% shares and 15% cash, if my cursory reading is correct. Letís also assume youíre renting and have no real estate.

This means your current AA is 31% bonds, 45% shares and 24% cash, as your $100,000 is counted as cash. This seems to be very underweight in real estate and shares, which tend to be where growth occurs. As a result, you will be more likely to have problems with your stash giving you a sustainable income in retirement.

People are suggesting that you think about what you really want your AA to look like, and get a product (or more than one, if necessary) to match.

Your circumstances can give you different investment strategies. For instance, I own a house, and have a small defined benefit pension. I treat the pension as bonds and my house as real estate, so my actual investments are 100% shares, but this makes my overall asset allocation reasonable. If the shares go pear shaped, I still have my pension. Thinking about how different scenarios affect you is part of deciding what a reasonable personal asset allocation is.

I only have the Lifestrategy account, not the cash yet. I wasnít going to have the cash until retirement. No property, no pension. Just Lifestrategy and super. The Lifestrategy has a nice balance for someone in my position and itís dead simple. Not quite sure I understand the problem?

You sound like you are on top of it and are happy with your set up. I don't think anyone is suggesting there is a problem, it was more about if you had thought about your AA. I think you have done a bit of research across this topic so you have set yourself up that suites your FIRE needs.

Kgoose

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Re: Australian Investing Thread
« Reply #4347 on: January 16, 2019, 12:26:44 AM »

I know someone who has a 6% dividend and lives off all of that. He is already suffering the consequences, and things are only going to get worse.

Hi Andy R,
Serious question trying to learn
Apart from the whole 4% rule can you please explain why he is suffering the consequences already.
Dividend payouts haven't really dropped
Thanks

deborah

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Re: Australian Investing Thread
« Reply #4348 on: January 16, 2019, 12:49:52 AM »
Your investments need to grow, especially now, since we havenít had a recession for a long time - one is past due. Otherwise youíre gradually needing to live on less and less. The reserve bank has kept inflation down, but itís still there, and someday we will have high inflation again.

Your investments have fees - income tax, management fees, brokerage fees... If youíre living on the entire dividend, you need to sell something to pay the fees. This, of course, attracts other fees, like CGT.

When people have calculated the withdrawal rate for countries based on their history, Australiaís has been 3.8% rather than the 4% we tend to assume. 4% is based on the US history, and is much better than just about anywhere else. Since the future is just a guess, the best guess is past performance.

Andy R

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Re: Australian Investing Thread
« Reply #4349 on: January 16, 2019, 01:51:59 AM »
Kgoose

The point is that dividends are not free separate money. They come out of the total return. If you have only high dividend stocks and spend down the whole dividend, then that extra money is coming out of what would have gone into the growth return.

As Deborah said, when accounting for returns, 4% (from the total return) has been shown to be about what will get you through retirement. If you pick the companies that payout higher dividends and spend it all, then that will mean it is actually growing less and you are living off a higher withdrawal rate and you are eating into the growth, so over time as inflation devalues your dollar, your dollar amount of investment might stay the same but be lower in it's purchasing power amount (ie its inflation adjusted amount)