Living the dream mortgage free
Jun 14th 2004, 10:02 pm
#61
Bitter and twisted
Joined: Dec 2003
Location: Upmarket
Posts: 17,503
Originally posted by ABCDiamond
It's not sheltered from the Australian Tax Office though is it ? They will want their share.
It's not sheltered from the Australian Tax Office though is it ? They will want their share.
If you were moving to Australia with say half a million dollars earmarked to buy a house. Is this better invested and then a mortgage taken out or indeed simply rent.
G
Jun 14th 2004, 10:06 pm
#62
Banned
Joined: Mar 2003
Posts: 4,432
Originally posted by Herman
We had spare cash that we could have used to reduce our mortgage or to invest. Our mortgage is fixed at 4.29% for another 3 years so that was the target rate of return. We invested some in tax free ISAs and put the money in a mix of risk profile invesments from index trackers to managed global funds, which over the long term should generate somewhere around 6% tax free. We also bought some 1 and 2 year bonds in my wife's name (she will not pay tax on the income for various reasons!) which pay around 5.5%. We also have some money invested via a Jersey trust which is tax sheltered and generates various returns from 1% in one year to 11% last year.
I am no investment guru, but do work with some clued up people who share ideas. Overall, we've done better than to reduce the mortgage. The key is finding tax efficient investments and taking some risks.
We had spare cash that we could have used to reduce our mortgage or to invest. Our mortgage is fixed at 4.29% for another 3 years so that was the target rate of return. We invested some in tax free ISAs and put the money in a mix of risk profile invesments from index trackers to managed global funds, which over the long term should generate somewhere around 6% tax free. We also bought some 1 and 2 year bonds in my wife's name (she will not pay tax on the income for various reasons!) which pay around 5.5%. We also have some money invested via a Jersey trust which is tax sheltered and generates various returns from 1% in one year to 11% last year.
I am no investment guru, but do work with some clued up people who share ideas. Overall, we've done better than to reduce the mortgage. The key is finding tax efficient investments and taking some risks.
Longer dated Aus mortgage rates are about 7.5% shorter about 6.5%.
The nearest risk matched fixed interest investment which yields more is:
Nexus Portfolio Linked Floating Rate Notes
- currently paying 8.7517%.
S&P rated as BBB - bottom investment grade - but probably similar risk to a house.
The Notes are held by my self managed superannuation fund so the tax rate is 15% of earnings.
Not a lot of difference between the mortgage outgoings and investment incomings. But it is ((0.85*8.75%) - 6.5%) = 0.938%or $9,375 per 1M. Basically, it is a carry trade - the brokerage on the Notes is around 0.5% buying & selling so no significant profit in under one year.
Of course, there are fiddles to do with qualifying for the old age pension or part thereof but that is tiddly-winks stuff for people around age 65.
Jun 14th 2004, 10:18 pm
#63
Banned
Joined: Mar 2003
Posts: 4,432
Originally posted by Grayling
Ok A hypothetical.
If you were moving to Australia with say half a million dollars earmarked to buy a house. Is this better invested and then a mortgage taken out or indeed simply rent.
G
Ok A hypothetical.
If you were moving to Australia with say half a million dollars earmarked to buy a house. Is this better invested and then a mortgage taken out or indeed simply rent.
G
Jun 14th 2004, 10:18 pm
#64
Rocket Scientist
Joined: Aug 2003
Location: Dreamland AKA Brisbane which is a different country to the UK
Posts: 6,911
Originally posted by Grayling
Ok A hypothetical.
If you were moving to Australia with say half a million dollars earmarked to buy a house. Is this better invested and then a mortgage taken out or indeed simply rent.
G
Ok A hypothetical.
If you were moving to Australia with say half a million dollars earmarked to buy a house. Is this better invested and then a mortgage taken out or indeed simply rent.
G
Make it a million aussie dollars & see what the answers are as well
.
Jun 14th 2004, 10:20 pm
#65
Rocket Scientist
Joined: Aug 2003
Location: Dreamland AKA Brisbane which is a different country to the UK
Posts: 6,911
Originally posted by Megalania
First look at your marginal tax rate = 47.5%? Then work on.
First look at your marginal tax rate = 47.5%? Then work on.
Jun 14th 2004, 10:23 pm
#66
Bitter and twisted
Joined: Dec 2003
Location: Upmarket
Posts: 17,503
Originally posted by Megalania
First look at your marginal tax rate = 47.5%? Then work on.
First look at your marginal tax rate = 47.5%? Then work on.
G
Jun 14th 2004, 10:58 pm
#67
Banned
Joined: Mar 2003
Posts: 4,432
Originally posted by MrsDagboy
No, come on Megs, I want some hard facts & figures on different ideas & different investments.
No, come on Megs, I want some hard facts & figures on different ideas & different investments.
It has been said that shares have out performed property and fixed interest over some years. I say the out performance is relatively trivial.
Global Asset Prices' Common Principle: Required Yield Theory
Analysts are punch drunk with "random walk".
