Australians check in?

Say hello!!
Stark
Posts: 23
Joined: Fri Jul 01, 2011 1:10 pm

Post by Stark »

I'm not sure if this is the right area, but I am wondering if any Australians on the forum would like to check in on this thread?
It would be good to talk to other Aussies on this path, perhaps one day we could organise a meet up.
I am 26 and in NSW, near enough to Sydney, though not in Sydney. Fairly new to ERE.


Fiddle
Posts: 80
Joined: Tue Aug 02, 2011 11:14 pm

Post by Fiddle »

Hi Stark,
I'm a 32 year old brit guy who's been living in Sydney for nearly 3 years now. I don't know if that counts.
I havent decided where i will eventually spend most of my ERE time, Aus, UK or somewhere else but i have been keeping my expenses low for some time now as i have cranked up my efforts to achieve ERE. or at least semi ERE ASAP.
If there is a meet up i would definitely try to come along.


LonerMatt
Posts: 239
Joined: Tue Sep 20, 2011 3:49 am

Post by LonerMatt »

Melbourne, right here.


Stark
Posts: 23
Joined: Fri Jul 01, 2011 1:10 pm

Post by Stark »

Three amigos, eh? :)


LonerMatt
Posts: 239
Joined: Tue Sep 20, 2011 3:49 am

Post by LonerMatt »

I'd post something more substantive, but I'm in a serious transition period before writing my own journal.
However, do you guys often find that advice/opinions/strategies from the US are hard to apply here? I mean, we've got government-guaranteed banks offering 6.51% interest, for a lot of investors, 6% growth is pretty good, I think.
Also, I found this ( http://www.australianpublictrustees.com.au/index.html), this morning. What do you guys think, risky? 7-8.75 interest is pretty good!


ADD
Posts: 12
Joined: Wed Oct 05, 2011 1:49 am

Post by ADD »

Make that four amigos! - Aussie from Canberra/Sydney here.
"However, do you guys often find that advice/opinions/strategies from the US are hard to apply here?"
Totally agree, LonerMatt. Australia is the 'last man standing' of the western economies. As such, our ERE environment is totally different to that of the US.
Bank deposits there earn near zero. Bank deposits here earn 6.5.
Property there has tanked and rental yields are strong. Sydney property is second most expensive in the world after Hong Kong. And rental yields are crap (but ok ish if you are negative gearing and pick the right property).
They don't have compulsory super. We have our employers chucking in at least 9% pa toward retirement without even thinking about ERE. 15%+ if you are in the public service or university sector.
They have 9% unemployment. We have 5%.
Those are the biggest differences I can think of for now.


ADD
Posts: 12
Joined: Wed Oct 05, 2011 1:49 am

Post by ADD »

As for Australian Public Trustees, this would be a property play. Australian property is the one asset class I wouldn't be in right now.


LonerMatt
Posts: 239
Joined: Tue Sep 20, 2011 3:49 am

Post by LonerMatt »

Those differences are profound. So for people like myself, I can grasp the overall process of ERE, or the Permanent Portfolio, for example, the implementation is currently doing my head in.
...and then comparing any investments against those bank interest rates and the opportunity cost of NOT having money there is obnoxious. I could buy bonds, for example, but 4/5% is still 1.5% off what I could be getting!
In any case, I'll steer clear of the APT, although I'm personally hoping the property bubble busts (I'm 22 ;)).


ADD
Posts: 12
Joined: Wed Oct 05, 2011 1:49 am

Post by ADD »

Yeah, I have wanted to pull the trigger on the PP also, but the implementation is a bitch.
Sounds like we are on the same page right now - I have all of my savings in a Ubank account paying 6.51% pa (the effective annual rate is more like 6.7% before tax when you take account of the fact that interest is paid monthly on this account).
Arguments in favour of holding cash instead of the PP:
* The Australian govt has one of the best bank deposit guarantees in the world - any bank deposit up to $250k is guaranteed.
* Our yields on cash are high (6.7%)
* Cash is liquid. You can deploy capital quickly if the all ords falls to 3500 and you want to get into equities dirt cheap.
* The enemy of holding cash is inflation. The RBA (in my opinion) have their heads screwed on better than their US counterparts. They aren't printing cash left right and centre. Inflation risk is lower here.
* If we move into a deflationary period, cash would have been a smart move.
Arguments against holding cash:
* Missing the boat on gold (If gold suddenly rallies, it could hit $2500 by the time you have set up a bullion account and received approval to trade).
* You are not protected against higher than expected inflation.
* You could miss out on 30-40% returns in equities if the all ords has found a bottom and equity markets perform a post GFC style rebound (unlikely in my opinion)
* The AUD could be on the way (further) down. Buying gold would lock in AUD strength.


LonerMatt
Posts: 239
Joined: Tue Sep 20, 2011 3:49 am

Post by LonerMatt »

Exactly.
...and the bonds part, we don't have 30 year bonds (though there is a 20/25 year one offered at the moment), so that needs to be modified.
It seems, basically, as soon as modification starts, things need to be altered to re-balance the portfolio's aim (to minimse potential loss, and gain conservatively, IMO).
One other thing that affects Australia more is the international market. For example, we hold reserves in AUD (we being you and I), but international situations can cause the AUD to lose power, which shouldn't matter, except that it correlates to the ASX as well. Dollar's down, so are shares, shares are up, so is the dollar.
At least, that's been my observation in the past few months.
Hence, I'm thinking about holding some currency in a non-AUD figure (Swiss Francs, or the USD, or the Yuan) - but then, that only protects me from smaller problems, and doesn't let me get the 6.5-6.7% growth I could achieve.
Personally, I'm unsure of how to move on gold. I can see there's a solid argument for holding some gold, but at the moment it doesn't seem to be a great time to buy. I don't have the capital (nor will I for a year or two) to implement the PP, so I'm considering waiting for gold to drop (if it does) before buying. At the moment, though, the price of entry is quite high!
Then trying to work out how to fit super in is ungodly. Should I treat it separately? Should I go for SMSF? Should I treat it as part of the stocks portfolio? Gah!
Honestly, the past year (really the only time I've been paying attention) has been doing my head in. Growth has slowed, but most sectors are still growing, yet everyone's acting like the Australian economy is on the brink of complete collapse! Housing is still strong, the mining boom is predicted to last another decade, or more, the agricultural sector has had some problems this year (floods and cyclones), but all in all things seem 'fine'.
Although, my girlfriend tells me Westpac offers her 7% or so interest, so there might be a better vessel.


LonerMatt
Posts: 239
Joined: Tue Sep 20, 2011 3:49 am

Post by LonerMatt »

Are there any blogs, forums, or people you guys read about (apart from ERE?). The ASX forum is a joke, anyone whose been there will understand why!


ADD
Posts: 12
Joined: Wed Oct 05, 2011 1:49 am

Post by ADD »

This is great LonerMatt - it sounds like you have been thinking about the exact same issues that I have been mulling over for the last year or so.
"Personally, I'm unsure of how to move on gold. I can see there's a solid argument for holding some gold, but at the moment it doesn't seem to be a great time to buy."
On the brink of recession, I think it's a great time to buy gold. In nominal terms, gold seems to be hovering near all time highs. In real terms and in various ratio terms, it is not at an all time high. For example, the Dow/Gold ratio is currently at 6.6 (http://www.sharelynx.com/chartstemp/DowGoldRatio.php). At the very least, hold some gold as an insurance policy against a possible global recession/(depression?)
I count superannuation in my ERE calculations. Why? If I was to ERE and somehow exhausted my (early) retirement fund, the Aust government would let me use superannuation funds under the 'hardship' provisions.
It is possible to hold gold through superannuation without setting up a SMSF. If you don't feel good about buying gold with your hard earned non-super cash, then consider buying gold with your 'deferred' superannuation capital.
"Growth has slowed, but most sectors are still growing, yet everyone's acting like the Australian economy is on the brink of complete collapse!"
Interesting. The people I meet seem to be acting like everything is completely fine. That said, I do live in Canberra :p


LonerMatt
Posts: 239
Joined: Tue Sep 20, 2011 3:49 am

Post by LonerMatt »

Public Service?


Surio
Posts: 602
Joined: Sat Dec 25, 2010 11:58 am
Contact:

Post by Surio »

@LonerMatt and others,

> However, do you guys often find that

> advice/opinions/strategies from the US are

> hard to apply here?
I am an Indian, but I am so glad you brought it up here! I am having similar difficulties. The devil, as they say, is definitely in the details. I am actually in the 6th re-write of a blog post on this difference between strategy and implementation. My excuse: I've got only 24 hours and there is only so much of it I can spare ;-)
@ADD, LonerMAtt,

I was having a similar discussion on PP with JAcob elsewhere.... I too feel the PP is somewhat US-centric.
Just wanted to pitch in with these thoughts for now. Anyway, we will compare notes in detail later on after I've read the points in detail.
And a big Hello to all you aussies. :-)


bluepearl
Posts: 80
Joined: Sat Sep 10, 2011 6:54 pm

Post by bluepearl »

@stark, @fiddle, @ADD @lonermatt:
hey, could you guys tell me what are the larger banks in Australia? Thanks a ton!
You know, what they say... about AUD being the closest to gold backed currency b/c the gold is on the ground :)
In Canada there are the "big 5" such as CIBC, RBC, SBC, TD, BMO... Wondering if there are similarities in Austrialia. I only know of perth mint and the perth mint certificate hehehe...
Yup, agreed that no real estates until the bubble bursts, unless you have a real need for it...!


Stark
Posts: 23
Joined: Fri Jul 01, 2011 1:10 pm

Post by Stark »

You guys are on another level of knowledge to me.
@bluepearl
I would say National Australia Bank, the Commonwealth Bank, St George, ANZ and Westpac are the major ones...
Someone jump in if they disagree or think of more...


Stark
Posts: 23
Joined: Fri Jul 01, 2011 1:10 pm

Post by Stark »

On buying gold - I have seen it referred to as paying a premium price for insurance. If you can afford it, good, but if you do not have enough cash it may be better to keep your assets liquid. This is in the context of deflation... not something I know a lot about.


ADD
Posts: 12
Joined: Wed Oct 05, 2011 1:49 am

Post by ADD »

@Surio
Mmm, if you are an Indian residing in India, then something that approximates the PP without being expensive is going to be tough on an ERE amount of capital. The 30 year US treasury will be tricky. I remember reading somewhere that you need to be a non resident Indian to legally invest in Indian bonds.
I am going to compromise and initiate an 'Australian Edition' of the PP that has a suitably low expense ratio and a correlation matrix as close as possible to the 'true' permanent portfolio.
@ LonerMatt
Higher education
@ Stark
Gold is actually quite liquid. You can have it converted into cash within hours!


LonerMatt
Posts: 239
Joined: Tue Sep 20, 2011 3:49 am

Post by LonerMatt »

@ Surio: cool. We should start a 'non-US investing' thread! Link us to your blog, mate, let's have a read?
@bluepearl: your journal says you're from Hong Kong, ever been down Australia way?
Those banks Stark mentioned are spot on, the higher interest rate we're (ADD and I) talking about is from Ubank (which is National Australia Bank's 'youth' marketed online only bank). The Australian branch of HSBC (I'm assuming you know what that stands for) also has higher-than-US-by-lots interest rates, although probably around 4.75%.
FWIW, Non-Australians can own and maintain bank accounts in Australia, and I think (I don't know) that the government backs all finances up to $250,000. By that I mean, if a bank collapses, the government steps in to make sure that, up to 250k, people keep their cash.
@ ADD: only non-Indians can buy Indian bonds? That would SUCK, and it's not like there's an ever-more-emergent Indian middle/upper class to invest in them either ;).
In the sharing mood about the adjustments you're making to the PP?
Any of you Australians read Steven Keen's stuff?


ademac
Posts: 6
Joined: Thu Sep 09, 2010 12:48 am

Post by ademac »

make that 5. I live up in Townsville.
Not a regular visitor to ERE since Jacob stopped posting original articles and had the reposting of old articles automated.
Loved his book. is a good read for anyone planing ERE.
Spend most of my time reading http://www.mrmoneymustache.com/

like Jacob but just not as extreme.
Enjoy

Ademac


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