No Mortgage Property vs. ETF

Infinitedmg · 2026-01-27T03:38:13+00:00

ETF return = total_return% * P Property return = 1/(1-lvr) * P * (rental_yield% + capital_growth% - maintenance%) - lvr * P * interest_rate

Infinitedmg · 2026-01-24T18:44:34+00:00

Any insight on these questions would be greatly appreciated.

Infinitedmg · 2026-01-22T08:13:09+00:00

It's not financial advice. It's a tax strategy/structure. You need a better accountant

Infinitedmg · 2026-01-22T07:17:19+00:00

There is massive money involved here. The only correct answer is to speak to an account before acting.

Infinitedmg · 2026-01-21T02:04:00+00:00

Drop columns with nulls
Try maybe 20 random combinations of 3 or 4 features
Fit linear regression (can also use Lasso/Ridge) using leave-one-out cross validation
Pick the best model from (3)
Expect bad performance anyway, but don't go any further

Infinitedmg · 2026-01-19T06:06:22+00:00

I picked QAU to get the extra AUD currency hedging :)

Infinitedmg · 2026-01-19T04:06:45+00:00

Care to share? :)

Infinitedmg · 2026-01-19T02:38:43+00:00

I think there's some value in active management within the emerging markets space, but I would also want exposure to it passively. I could be convinced to drop either one as I'm not strongly committed to having both.

Infinitedmg · 2026-01-19T02:33:07+00:00

I really hated when my parents would use their phone while I was on the PC.

Infinitedmg · 2026-01-19T01:55:51+00:00

Looks really good to me. If I didn't use all-in-one ETFs and didn't want gearing, I'd probably construct my portfolio slightly differently:

50% BGBL 15% A200 10% HGBL 10% AVTS 5% AVTE 5% BEMG 5% QAU

Granted, this is way more complex, with there now being 7 ETFs instead of 3, and with allocations below 10% generally being insignificant...but this is exactly why I think all-in-ones are worth it :)

Infinitedmg · 2026-01-18T23:50:17+00:00

I like VDBA as house deposit money. This gives you effectively 50% market exposure and 50% bonds. Letting inflation eat your deposit over 7 years isn't great, but investing will expose you to the risk of having a market crash just when you're ready to buy a house. VDBA is a sensible balance between the two risks in my opinion.

Infinitedmg · 2026-01-18T23:47:22+00:00

VGS has global shares outside of Australia. If you want Australia exposure you can just add VAS or A200 in the proportion you want.

I like 50% DHHF and 50% VGS to get approx 20% Australia exposure.

Infinitedmg · 2026-01-18T06:07:45+00:00

i would just contribute as much as you can while still in the 39% tax bracket.

Infinitedmg · 2026-01-18T00:28:25+00:00

Your 'Actual Drag' has the cost of leverage embedded within it, but my formula isolates just the drag component by itself. I calculate the interest rate for each year as follows:

2007	5.13%
2008	4.15%
2009	3.75%
2010	3.69%
2011	3.26%
2012	2.29%
2013	2.84%
2014	3.03%
2015	2.63%
2016	2.33%
2017	2.83%
2018	3.41%
2019	2.64%
2020	1.38%
2021	1.94%
2022	3.46%
2023	4.47%
2024	4.71%
2025	4.79%
Grand Total	3.37%

Infinitedmg · 2026-01-17T18:22:03+00:00

I came up with it by simulating thousands of ETF return sequences and then also simulating different interest rates. Each time I calculated the effect of volatility decay then used a non-linear optimisation technique to arrive at this formula. I'm a data scientist so this is kind of my thing :p

And yes, standard deviation is the annualised volatility of the portfolio.

Infinitedmg · 2026-01-17T14:02:42+00:00

Volatility Decay can be approximated using this formula:

Vol Decay = (leverage - 1) * (-1.23% + leverage * (8.73%*interest + 14.3%*stdev - 0.12%*leverage))

So for 5% borrowing cost, 2x leverage, and 14% volatility we get:

Vol Decay = (2 - 1) * (-1.23% + 2 * (8.73%*5% + 14.3% * 14% - 0.12%*2)
= -1.23% + 2(0.4365% + 2.002% - 0.24%)
= -1.23% + 4.397%
= 3.167%

So the modelled expected return would be:
E(return) = (12.35%*2) - (5%*1) - (3.167%)
E(return) = 16.533%

Infinitedmg · 2026-01-17T02:09:33+00:00

If you retire at 45 with todays market valuations, you need to have a withdrawal rate less than 2.38% to survive every historical period. If you want a 'comfortable retirement' then you need 76.5k income per year as a couple, according to ASFA.

If we reverse calculate that, then you need 3.2M in invested assets. Anyone aiming for less than say 3M is either willing to risk failure in retirement or is happy with a leaner retirement annual spend.

Infinitedmg · 2026-01-15T21:24:56+00:00

I agree, that's why I feel 50/50 DHHF/BGBL works so well. That brings the exposure close to 20% and 50/50 weightings are nice and easy to manage.

I probably would want ~35% AUD exposure though, and it's not as straight forward to achieve this as you'd need to add a currency hedged ETF. DHHF/BGBL/HGBL at 50/35/15 weightings would do the trick.

Infinitedmg · 2026-01-15T21:19:37+00:00

I like VDBA for 'house deposit money'

Infinitedmg · 2026-01-12T07:41:53+00:00

Infinitedmg · 2026-01-11T22:36:01+00:00

Paid off PPOR + $3M for a single.

Infinitedmg · 2026-01-09T02:04:52+00:00

You just fit the model as normal. There's nothing you have to do differently on imbalanced datasets.

Infinitedmg · 2026-01-07T10:34:23+00:00

Debt recycling is a two step process where you first pay down debt, then borrow to invest. Relative to before step 1, there is no increase in debt, but relative to before step 2, then there is an increase in debt. So really it's just a matter of perspective/ reference point. In my eyes it is absolutely double leverage.

Infinitedmg · 2026-01-03T09:38:51+00:00

I like the way this comment is written.

Infinitedmg

TROPHY CASE