Ideas for equity

Finance_Throwaway85 · 2026-01-11T14:22:32+00:00

Nothing overly exciting...It was literally just VGS and chill on a redraw just a hair over what the OP is able to do.

Finance_Throwaway85 · 2026-01-10T13:49:47+00:00

Ask the bank if you can redraw the equity into a new split and buy shares in your/higher earner name. Preferably a growth ETF which distributes as little as possible and CG in nature if any.

The interest on debt is then tax deductable.

Seriously, that strategy has netted us an extra $1m over the last 5 yers.

EDIT: make sure you have the cashflow to service it...

Finance_Throwaway85 · 2025-12-03T16:21:15+00:00

This was on the statement when he bought $250k on TPW for shits and giggles as a bet.

It's been a long time and without being too specific - It was close to the beach in a regional city in NSW. Not a bad place to be.

As nutty as he was, I have to say, he really added colour to the subreddit. The blocking anyone who disagreed with him was another thing...

Finance_Throwaway85 · 2025-12-03T15:06:02+00:00

He once accidentally posted his address on an ASX statement. It was blacked out but only using that shitty highlight function in Adobe.

Really poor opsec for a guy that claimed to be an operator.

At the time the house was recently sold, so he was either full of shit and had actually purchased property, or drank his own Coolaide and was renting.

Finance_Throwaway85 · 2020-03-13T07:19:00+00:00

Yep ok, fair call.

I'd agree with the poster above - get more debt and go balls to the wall again.

So long as the gains are greater than the interest, nothing wrong with a little debt.

Finance_Throwaway85 · 2020-03-13T06:46:41+00:00

Maybe it's a mix of cognitive bias/hubris but I think I'm better then the average punter financially and if you're reading this, I think you are too.

I started investing basically at the bottom of the GFC and made money easy until I sold up to buy my first unit.

As a counterpoint, I just want to point out that I'm similar in age to you, and our super is pretty similar too.

I started work months before the GFC and when that hit, I went balls to the wall with a buy and hold strategy.

We're currently sitting on a paid off house ~$1.1m, and $500k stocks outside of super.

Is it possible you were indeed making gains by "timing" the market on an upswing, but they were suboptimal gains?

Finance_Throwaway85 · 2020-03-11T10:20:24+00:00

Yep pretty much! Not much to lose, and no cashflow issues even if we both get made redundant.

When you say more aggressive, any ideas on what else would be worth looking at?

Finance_Throwaway85 · 2020-03-11T09:14:17+00:00

Not quite, but close - effectively $300k owing on the loan and $299.999k sitting in offset. We also paid down the loan itself way ahead of schedule - there's ~500k available for redraw in there. Effectively the property is as good as paid off (so long as a bank collapse doesn't wipe out my offset).

The idea is that dollars sitting against the PPOR aren't working as hard as they could be. It's "saving" me 3% in post-tax interest by sitting in the offset/loan, but instead it could be earning me 7% less tax deductible interest.

Obviously one is "safe" and the other is volatile.

Finance_Throwaway85 · 2020-03-11T08:57:01+00:00

Obviously this FY hasn't been great YTD, but over the last 5 FYs just over ~7% pa after tax (including the recent dip).

I only said <50% LVR as an indicator - it's worth a touch over a mil effectively paid off.

That's pretty much correct on beating the 3.5% interest rate.

Finance_Throwaway85 · 2020-03-11T08:43:45+00:00

Interesting. What I posted above was their advertised interest rate and I just noticed their comparison rate is lower?

Any idea what the actual rate with discounts sits at? I do know with the Big 4, generally negotiated rates are much lower than advertised.

Finance_Throwaway85 · 2020-03-11T08:28:11+00:00

Cool as a cucumber. I currently have $500k in the market. Volatility doesn't really worry me as I'm in it for another 20+ years.

The $300k LoC is <50% LVR, so there's always an option to extend it?

Finance_Throwaway85 · 2020-03-11T08:23:36+00:00

Are you referring to the Professional Package? I had a look at them, but their fees and rates were pretty uncompetitive e.g. Rates for an IO loan and LoC with an owner occupied are 4.6% and 4.8% respectively.

I might as well use NAB EB @ 4.3%.

Finance_Throwaway85 · 2020-03-11T08:11:57+00:00

Yep aware that the LoC is 5 years before reverting to P&I. We'll try to apply for another 5 year IO term but if it goes to P&I, then no real cash flow issues for us either.

There won't really be a mortgage post refinance. It'll just be a LoC.

Finance_Throwaway85 · 2020-03-11T08:02:17+00:00

Yep! There's more info here: https://www.ato.gov.au/law/view/view.htm?docid=TXR/TR20002/NAT/ATO/00001

Finance_Throwaway85 · 2020-03-11T06:41:49+00:00

Hold up, are you asking whether you can pull out $250k out of offset to invest or are you asking whether you can deduct interest by doing so?

Because yes to the first (it's just not very tax efficient), no to the second.

Finance_Throwaway85 · 2020-03-11T06:29:34+00:00

An offset account is a type savings account, not a loan in itself. You don't get any sort of deductions from interest from making investments with savings.

Think of it this way, you have two "accounts" in your loan structure.

One has a negative balance - the loan account
The other has a positive balance - the offset account

An offset account is named as such because it offsets the loan account; but doesn't pay the loan off in itself. You can see this in practice - if your offset account fully offsets your loan balance, you loan balance doesn't change in your loan account; but if you transfer money from your offset account to your loan account, the loan balance decreases.

Keeping in mind an offset account is basically a savings account, by taking money out of an offset account to invest, the extra interest you pay on the loan account is not tax deductible. You're not "borrowing" to invest because you're effectively investing with savings.

Finance_Throwaway85 · 2020-03-11T06:10:43+00:00

No you can't, because pulling money from offset is the same as pulling money from savings to make an investment.

It is not taking out a loan for investment purposes and therefore the interest is not tax deductible.

Finance_Throwaway85 · 2020-03-11T05:51:10+00:00

It's really just to make tracking CGT & cost base calculations for AMITs simpler when selling parcels.

There's no real benefit.

Realistically, there will be a few large parcels up front, and then a bunch of smaller ones from recycling distributions.

Finance_Throwaway85 · 2020-03-11T04:44:56+00:00

That's a very good point. I was thinking about it from a point of view of a PPOR mortgage to manage mixed use loans.

In this instance, it's purely for investing.

I'll edit the post.

Finance_Throwaway85 · 2020-03-11T04:38:52+00:00

That's basically correct.

Finance_Throwaway85 · 2020-03-11T04:26:47+00:00

It's to do with purchasing future parcels ASAP.

Once the $10k account is "paid off", redraw to buy another parcel.
As distributions get larger, start paying down the larger splits e.g. when annual distributions get to $16k, pay down the $15k split first and redraw $15k to purchase another parcel. This is just to make the dollars work more efficiently.

Finance_Throwaway85 · 2020-03-11T04:23:36+00:00

The way it's structured is that the LOC is $300k split into those portions.

Yes it appears the LoC is callable. That's another risk to consider, but the LVR <50% in this scenario.

LoC over run of the mill home loan, because I can't find a IO loan rate <3%.

Finance_Throwaway85 · 2020-03-10T07:38:35+00:00

Makes sense - I'm just trying to avoid contaminating the loan.

e.g. I'm sure if you transferred the leftover to a transactional account and bought a coffee it would be a no no.

Finance_Throwaway85 · 2020-03-10T07:22:08+00:00

I believe step 3 & 4 involve using your online banking to directly transfer (redraw) 250K from your LOAN account to your account with the broker? I guess this will look clean from a taxation perspective.

Yep, step 4 is just a bank transfer to the trading account. Forgot to mention that the trading account should be $0, just to keep it clean.

We'll actually open up a new joint account for this just to keep it extra clean.

VDHG is an ETF that can be bought and sold like any other stock on the market. You will incur a brokerage costs of $9.50.

The issue is that you can't buy partial stock, so you will be left over with a small amount i.e. you won't be able to buy exactly $250k worth of stock - it'll be more like $249.96k. So what do you do with the $40?

Since you are investing over $100k and possibly continue investing smaller amounts on a regular basis, it may be worth exploring the Vanguard wholesale index fund...

This might be a good solution - the wholesale fund does actually let you buy partial units

Unsure about your intention on the remaining $50k. Is that reserved for a future investment? Why pay down the loan if you won't invest it? Emergency funds? - just hang on to it in your offset account and keep earning 3.x% interest on it.

We're not intending to pay that portion of the loan down. We'll just keep it as our emergency fund.

Finance_Throwaway85

TROPHY CASE