The planning of a portfolio

[BossMan.]

Hi all,

A little about me - I am in my early 20s earning ~$100k a year and am seeking feedback on what people thing of my plan.

The Plan:

I was originally looking at potentially negatively gearing some shares i.e. $20k of a safe blue chip stock however came to realize that I am likely better off just reducing my taxable income by meeting the maximum super contribution ($27,500 atm due to increase to $30,000 next fin year) and claiming study expenses/work expenses set to be ~$3.5k for this financial year in turn reducing my gross income by ~$30.5k.

What do you guys think of maximizing my super contributions is my best bet for minimizing my tax and getting the most out of my income (while I'm in a stage where I don't have lots of assets/liabilities)? I figure if I make these concessions consecutively for the next few years I will be able to build up ~$120k in my super prior to turning 25 (in just straight contributions ignoring growth) setting me up well for my later years in life.

However my additional problem is I have a lot of liquid cash in the bank, to much for me to be comfortable with especially given the the low interest rate I get on my savings accounts. What do you guys think of my idea to invest in ETF's?

Cash (Percentage)	Cash Allocation
80% of Cash	Invested in to index funds (85% into safe growth ETFs (well as safe as they get)) then 15% invested in to australian commercial property based ETF's (more speculative - however investment is based off of recent WFH rulings by the Fair Work Commission - I personally am speculating on a return to the office movement happening in the next 12 - 24 months.)
20% of Cash	Remain as liquid cash will be able to cover ~4 months of living expenses if everything goes upside down in my life.

I really welcome any feedback on my plan.

 

[BossMan.]

**to be clear just seeking feedback on my idea - not advice on what to do**

 

[Sean K]

Early 20s? Just buy a faster car.

Maybe take a year off and do an around the world backpacking trip.

I'm sure someone more responsible will give you better tips.

 

[BossMan.]

Early 20s? Just buy a faster car.

Maybe take a year off and do an around the world backpacking trip.

I'm sure someone more responsible will give you better tips.

Just got back from 5 week holiday in Europe... but maybe the fast car is an idea bahahah

 

[qldfrog]

Early 20s? Just buy a faster car.

Maybe take a year off and do an around the world backpacking trip.

I'm sure someone more responsible will give you better tips.

Actually not that financially irresponsible:
Travel various countries and check living , work and investment opportunities outside Australia , and then decide if you are better off here dumping your cash into a retirement scheme you may not be able to touch for 40y , or consider alternative such as places where your 3 bedroom house will cost 1/3 : saving you 800k AUD.. so what 15 to 20y savings....
Just want you to take a step back, think about where you want to go and think maybe outside the box.it served me well, and I wish more youngsters had a pause before they end up in a mortgage belt,with kids and car leases.

 

[monkton]

You could google 'fire community australia', while your aim might not be to retire early, you might get some good ideas from varius bloggers about long term investing.

 

[Dona Ferentes]

@Boss man you're doing something, which is more than most people.

FirstLinks is a good long-running resource for diverse views on strategy and asset allocation.

"Fail to plan, plan to fail"​

 

[BossMan.]

Actually not that financially irresponsible:
Travel various countries and check living , work and investment opportunities outside Australia , and then decide if you are better off here dumping your cash into a retirement scheme you may not be able to touch for 40y , or consider alternative such as places where your 3 bedroom house will cost 1/3 : saving you 800k AUD.. so what 15 to 20y savings....
Just want you to take a step back, think about where you want to go and think maybe outside the box.it served me well, and I wish more youngsters had a pause before they end up in a mortgage belt,with kids and car leases.

It's tough - I am in a job I actually enjoy. I am probably one in a million where I see the workplace as a big video game and genuinely don't hate it, that probably makes me weird .

But I just hold concerns with leaving cash as well cash... and don't worry I just ticked off Europe, planning to do Asia, South America and more of Europe in the next two years.

EDIT* its also worth noting that I want to pay as little tax as possible - purely on principal.

 

[So_Cynical]

Feedback on plan - yep agree, max out concessional super and cash into index ETF and com prop ETF, wait 30 years and laughing.

 

[rcw1]

Just got back from 5 week holiday in Europe... but maybe the fast car is an idea bahahah

fast horse better

 

[Value Collector]

Hi all,

A little about me - I am in my early 20s earning ~$100k a year and am seeking feedback on what people thing of my plan.

The Plan:

I was originally looking at potentially negatively gearing some shares i.e. $20k of a safe blue chip stock however came to realize that I am likely better off just reducing my taxable income by meeting the maximum super contribution ($27,500 atm due to increase to $30,000 next fin year) and claiming study expenses/work expenses set to be ~$3.5k for this financial year in turn reducing my gross income by ~$30.5k.

What do you guys think of maximizing my super contributions is my best bet for minimizing my tax and getting the most out of my income (while I'm in a stage where I don't have lots of assets/liabilities)? I figure if I make these concessions consecutively for the next few years I will be able to build up ~$120k in my super prior to turning 25 (in just straight contributions ignoring growth) setting me up well for my later years in life.

However my additional problem is I have a lot of liquid cash in the bank, to much for me to be comfortable with especially given the the low interest rate I get on my savings accounts. What do you guys think of my idea to invest in ETF's?

Cash (Percentage)	Cash Allocation
80% of Cash	Invested in to index funds (85% into safe growth ETFs (well as safe as they get)) then 15% invested in to australian commercial property based ETF's (more speculative - however investment is based off of recent WFH rulings by the Fair Work Commission - I personally am speculating on a return to the office movement happening in the next 12 - 24 months.)
20% of Cash	Remain as liquid cash will be able to cover ~4 months of living expenses if everything goes upside down in my life.

I really welcome any feedback on my plan.

Super is a great place to invest because you only get taxed at 15% on the earnings you make in super, and then 0% when you finally start drawing a pension from it.

However, the money is locked away until you are 60, if you want to retire earlier say in your 40’s or even just cut back on your work your super can’t help you until you are much older.

Also, you have to make sure your super it’s set up right, eg no unneeded insurances and in the correct investments.

if you do want insurance in your super, pay the amount of the insurance as additional payments, don’t let it eat into your regular contributions.

 

[BossMan.]

fast horse better

Have one of those

 

[rcw1]

Have one of those

excellent BossMan, rcw1 likes you already....

 

[macca]

You are only in your twenties, far too soon to be locking your spare cash away for 50 years.

You could be sacked tomorrow, your employer may go bust, your industry may collapse, you may get sick, etc etc

If tax is a worry then negative gear property Somewhere, does not need to be in Sydney but somewhere that has a growing population that is not reliant on one industry.

Or you could also negative gear some ETF s on indexes around the world, mix it up a bit.

If you find the love of your life and have twin babies, 50k in a super fund is not going to help buy baby food.

I would be allowing for at least one minor catastrophe in my life and Super laws change every year so don't expect todays rules to apply in 50 years time.

 

[rcw1]

@bossman, for mine, reckon priority is to own your own digs, do everything and everything that is humanly possible to pay off that debt. A start point ... a security a hedge to borrow hard earned... onto discovery and wealth.

Your youth holds you in good stead, if you possess the virtue of belief and are patient. Study the stock market paradigm to learn how to trade and invest in that arena, to earn ... watch, research and practice ... over and over again and don't be swayed by any particular voice, make the calls yourself, make you own mind up which way to go.
then and only then will be that pot of gold at the end of the rainbow
Enjoy the ride.


Kind regards
rcw1

Hi all,

A little about me - I am in my early 20s earning ~$100k a year and am seeking feedback on what people thing of my plan.

The Plan:

I was originally looking at potentially negatively gearing some shares i.e. $20k of a safe blue chip stock however came to realize that I am likely better off just reducing my taxable income by meeting the maximum super contribution ($27,500 atm due to increase to $30,000 next fin year) and claiming study expenses/work expenses set to be ~$3.5k for this financial year in turn reducing my gross income by ~$30.5k.

What do you guys think of maximizing my super contributions is my best bet for minimizing my tax and getting the most out of my income (while I'm in a stage where I don't have lots of assets/liabilities)? I figure if I make these concessions consecutively for the next few years I will be able to build up ~$120k in my super prior to turning 25 (in just straight contributions ignoring growth) setting me up well for my later years in life.

However my additional problem is I have a lot of liquid cash in the bank, to much for me to be comfortable with especially given the the low interest rate I get on my savings accounts. What do you guys think of my idea to invest in ETF's?

Cash (Percentage)	Cash Allocation
80% of Cash	Invested in to index funds (85% into safe growth ETFs (well as safe as they get)) then 15% invested in to australian commercial property based ETF's (more speculative - however investment is based off of recent WFH rulings by the Fair Work Commission - I personally am speculating on a return to the office movement happening in the next 12 - 24 months.)
20% of Cash	Remain as liquid cash will be able to cover ~4 months of living expenses if everything goes upside down in my life.

I really welcome any feedback on my plan.

 

[farmerge]

It's tough - I am in a job I actually enjoy. I am probably one in a million where I see the workplace as a big video game and genuinely don't hate it, that probably makes me weird .

But I just hold concerns with leaving cash as well cash... and don't worry I just ticked off Europe, planning to do Asia, South America and more of Europe in the next two years.

EDIT* its also worth noting that I want to pay as little tax as possible - purely on principal.

@BossMan. Love that last sentence. Kerry Packer was the greatest. Look up his Senate inquiry interrogation Put them all back on their heels.

 

[farmerge]

Have one of those

@BossMan. When it comes to investing only one thing is a certainty.
The money you invest is yours, not your best mates, or some financial adviser etc.
You make the decisions and if it is a good or bad result then only you can wear it.
Plenty of sharks out there wanting to help you invest.
Stay clear of them.
With whatever you decide to park the money in always DYOR and then do it all over again.
I hope that you can come out on top. All the best.
Keep posting.

 

[tech/a]

@BossMan. When it comes to investing only one thing is a certainty.
The money you invest is yours, not your best mates, or some financial adviser etc.
You make the decisions and if it is a good or bad result then only you can wear it.
Plenty of sharks out there wanting to help you invest.
Stay clear of them.
With whatever you decide to park the money in always DYOR and then do it all over again.
I hope that you can come out on top. All the best.
Keep posting.

wise words
look into side hassles
invest in business as a silent or not so silent partner
a 30% share in the right business ( small business )
can give excellent reliable returns while creating an
increasing equity.

 

[dyna]

Early 20s? Just buy a faster car.

Maybe take a year off and do an around the world backpacking trip.

Now , don't laugh but I really think that's not bad advice . Except for the fast car bit . ( But, I've done worse .) Fast bikes. After 40 years , riding every day ,in all weathers , I'm now off them , forever. Lucky to still be in one piece . But it was great fun . Just very risky , especially in third world countries . I would not dare try it now.

Don't like the income tax laws , here ? Get a green card and work for the real dollar , in the land of the free . I guarantee you will never complain about their insignificant income taxes . I could have stayed on there , but I came back for ......a soft , easy life. ( Strolling around a building site with a drawing under my arm , pretending to be busy ) . Aussies have no idea how tough those yanks really are. I never had to work so hard in my life . No unions . No smoko's . It's go , go , go , all day long , for just a couple of weeks annual vacation . And god help you if your firm doesn't pay your health insurance .

I heartily agree with what Qld Frog has to say . You are only young once . Glad I got the travel bug outta my system , long ago . Today it would be a nightmare .

 

[Dona Ferentes]

good one @dyna

.
Back on the narrower request, about an investment plan,
... you're young, so the above comments on super are pertinent esp the reality of multiple decades to enjoy.
.. you want to save (good !), invest (even better !) and minimise tax (fair enough, it cripples returns, esp if compounding).

Do you know about Investment Bonds? useful as there's flexibility and with a 10 year timeline to optimise outcomes. Negatives are the managed funds are fee-heavy. They suit some people.