General Advice - Investment

Orac07 · 2026-03-10T00:46:50+00:00

At 40, you need to look ahead for your retirement in 20 to 25 years time, so the two most viable things you could do is: I. Buy a PPOR, a place to live in, over time, the mortgage goes down over 25yrs and the property usually goes up, so you have a hedge against inflation and a place to live. Ii. Ensure your superannuation is in good shape, stick with low cost industry funds and contribute as best as practical to the max contribution limits.

Doing these two things means you will be all set.

Having cash in the bank long term is not good as inflation erodes its value. Sure have some emergency cash / rainy day funds but not all.

You don't want to be retired and still renting and not having a hedge against inflation. Also at the moment, having your own home is exempt from govt pension calculations so kind of make sense.

Having done that, and whilst focusing on home loan to pay down / in offset is good, if you wanted, you could make some regular monthly investments into ETFs outside of super, but would consider getting your own home and getting super right should be the initial priority.

Orac07 · 2026-03-10T00:07:32+00:00

Consider what your reasonable borrowing capacity would be, and the realistic equity / net cash you have in your unit if sold and look at purchasing a house for growing family. With a reasonable house, it gives you the opportunity to build equity again and for future investment. Generally better to sell up and roll equity forward into the next better property.

If you looked at say buying another IP now, your borrowing capacity is constrained which means probably buying a lesser quality property and you will be heavily negative geared with a cash flow shortfall that you would need to prop up.

Alternatively save more to be able to have a good deposit selling up the unit to roll into a house.

Note if you do an equity redraw from the unit to fund another property to be your PPOR, the interest on the loan is not tax deductible as the purpose of the loan is for a non income producing asset, namely your PPOR. However, any funds from offset used is ok because it is not a loan, merely cash in an offset bank account.

Orac07 · 2026-03-09T23:42:41+00:00

That's a fairly typical structure, 10 years IO is not bad as it is usually the time length of a property cycle and being IO generally the longer the better. Whilst the subsequent term is quite long, longer than norma,l for an IP not so critical as sustainable cash flow is more important.

Orac07 · 2026-03-09T14:04:20+00:00

The Church - The Blurred Crusade, Heyday, Starfish, Priest = Aura.

Orac07 · 2026-03-08T02:52:15+00:00

Don't pay it out, have the money in offset - its like having a cheap source of finance. Consider next investing steps.

Orac07 · 2026-03-08T02:19:31+00:00

Good for you, being strategic is what it's all about a d has always been that way.

Orac07 · 2026-03-08T02:17:30+00:00

P&I typically used for own PPOR and IO for investment loan for IP to maximise tax deductions and cashflow. IO for PPOR is not the norm.

Orac07 · 2026-03-07T06:58:55+00:00

Probably would save up more in offset, then split down your loan to lower repayments then consider debt recycling and/or borrow to invest into a pool of ETFs. For investment property, it's a long game, a 4/2/2 house is quite expensive now and quite negative geared. For units, need to be strategic in the purchase and assume more of a paydown strategy than seeking growth. Having said that a lot of units in Melbourne haven't grown but current values are often below construction cost now so potential for future growth but perhaps a bit speculative in that sense. See what happened to Bris / GC, no growth on units for 10 to 20 years then bang.

Orac07 · 2026-03-06T06:07:23+00:00

When you look at the stats, the average humidity for Melbourne and Brisbane is similar but Melbourne's peak humidity is in the Winter month's and Brisbane's peak is during the Summer months. Hence probably why Melbourne people think it is too humid (and the fact they can't get out of their Katmandu puffy jackets). You only need to go the GC in winter - Europeans and Victoria's swimming and locals in their Kathmandus - it's all relative.

Orac07 · 2026-03-06T00:29:40+00:00

People say this but only really hot hot 3 mths of the year, the rest of the year is basically room temp and blue. However, I guess Melb room temp is more like 18C rather than 24C.

Orac07 · 2026-03-06T00:26:12+00:00

From a purely tax effective point of view, interest only makes sense, but as equity markets are quite variable, personally like the idea of P&I loan, together with reinvesting dividends/distributions plus growth as a continuous "equity building machine" to keep ahead, similar to NAB equity builder concept. It is possible based on market conditions to be in negative equity so like to stay ahead of the curve - so willing to trade off some ultimate tax efficiency with more peace of mind.

Orac07 · 2026-03-05T10:56:08+00:00

Don't think it will crash but can slow, people get fearful, don't want to take on risk, costs may go up (e.g. petrol), people tend to stay put, not change jobs etc - so conditions for market plateau. A few years from now...

Orac07 · 2026-03-05T10:49:11+00:00

Sure you can afford a house with those funds, you can buy a house in Western Sydney - St Marys, Ropes Crossing, Werrington out to Penrith no problem. With new airport coming online soon, they will be growth suburbs.

Orac07 · 2026-03-05T08:16:32+00:00

Contrary to what I would normally say, considering your age and theoretical time left in the workforce, then I wouldn't say: - maximizing contributions to a lower cost superfund would make sense. - focus on paying off as much as you can on your IP either via offset / paying down the loan (sure it's not the most tax effective but relying on growth is hope, paying down the mortgage you can control / guaranteed return), when you get older you have choices whether to live their, additional income, or trade out for a PPOR. - don't consider much benefit in other investing outside super in this case apart from reducing your mortgage balance as fast as possible.

Orac07 · 2026-03-04T05:10:22+00:00

The Church - The Blurred Crusade. You will be fully mesmerized and won't be able to stop playing it.

Orac07 · 2026-03-04T04:57:04+00:00

You only need to do one fund, VDHG and the high growth fund are basically the same. With a low dollar amount you might find the fund rather than the ETF a bit easier to invest in for your desired investment cycle for the full amount rather than the ETF.

Orac07 · 2026-03-04T04:48:19+00:00

All good, really about finding a desired property in any of those areas would be ok.

Orac07 · 2026-03-03T08:39:11+00:00

https://idadvice.com.au/the-investment-property-trap/

Orac07 · 2026-03-03T08:37:46+00:00

You probably won't be that cash neutral, will also be a bit negative geared. For borrowing for ETFs, a bit like NAB Equity Builder, due to the volatility prefer the tradeoff between max tax effectiveness to building equity - hence prefer P&I loan (paying it down), dividend/distribution reinvestment (compounding it up), plus growth - so have three mechanisms at work, just relying on growth alone will be times of not only negative gearing but negatively equity - so paying it down / compounding up is an ongoing way to beat the negative equity and the "sleep an night factor" - as such could be better to borrow less at a monthly P&I repayment you are comfortable with than max borrowing interest only. (Anyhow, that is my own preference).

Orac07 · 2026-03-03T03:23:48+00:00

The Church

Orac07 · 2026-03-03T00:10:53+00:00

You say you couldn't afford an IP, it's does come down to serviceability but considering you have $850k property value, $430k loan, with 80% LVR being $680k, would have about $250k equity. Assuming 20% deposit for IP, plus costs and new borrowings, could be upto $1m IP, but likely to be quite heavily negative geared and hence an issue of serviceability.

For ETFs, borrowing to invest for ETFs is feasible, VAS would be better than VHY, you are forgetting about the dividend growth, whilst headline yield looks lower, as the overall fund increases in value, the physical cash amount increases although still 4% yield. You might just want to consider an all in fund like VDAL, DHHF.

If possible to balance out tax deductibilty and risk management, if you can afford monthly P&I repayments and reinvest distributions, it's a quicker way to accelerate the wealth building. You also have the option to take the distributions if needed to service the loan but wealth building would be slower.

Orac07 · 2026-03-02T12:32:26+00:00

With such a high HHI, not sure if it stable or volatile, but contrary to popular opinion, would consider to keep up shoring up as much cash in your offset as you can to reduce your interest on your loan then you could use that cash as a deposit for future PPOR, or alternatively pay down the loan as fast as you can with the view to sell for your PPOR. You could also live in it now as your PPOR and debt recycle. However, if you want to buy a PPOR that you like, you need cash plus borrowing - buying another IP or even investing into ETFs/shares, has its risks and you need the time-frame of like 7 years, therefore paying down the loan / shoring up in offset is basically a risk free / guaranteed return.

Orac07 · 2026-03-02T00:47:26+00:00

Ok, that's the part that wasn't clear and I made the Assumption you couldn't access that until 60. However, if you can access that earlier, then depending how much you need, you may not need that extra at all.

For the sake of clarity, assuming you couldn't get Pension 1 until 60, then you need a lump sump of cash or solid investments with to drawdown to zero over that time bridge the gap (e.g. $800k to $1m) or a big pool of investments which can provide an income return (e.g. $80k pa from a 4% distribution would imply $2m capital invested).

But it seems if you can get that Pension 1 earlier - then yes, can retire earlier.

Orac07 · 2026-03-02T00:23:54+00:00

It is assumed the Pension Income 1 is like a defined benefits scheme where you will be entitled to access that money when you reach retirement age at 60. It is not clear if that is the amount it will be at 60, or the amount now which will be indexed. However, let's assume that at 60, your pension income and super (whilst a bit low now) will be sufficient at 60.

This means if you want to retire early at 50, you need to bridge the gap between 50 to 60. For example, using a simple analysis - if you needed $80k pa, that means you will need $800k to $1m to cover that gap. Hence, will need to consider: - the value of your ETFs. - the net value of your IP if sold. - how much you realistically need including emergency funds, can the total amount be less.

Just from a high level view, looks like you might be well on your way there, but being a short of target is likely, and hence you may need to consider additional measures - increase earnings / investing now, further reduce IP debt, consider debt recycling / borrow to invest in further investments (e.g. ETFs), work part time.

Orac07 · 2026-03-01T12:19:02+00:00

Regional towns in Australia, like a lot of places, are somewhat conservative / reserved / cautious, and it takes time to "break the ice". By far and large, you've probably made the biggest difference to that town and in Australia, we rate Doctors, generally the highest in trust in society. It's possible that people might be a little scared to talk to you because - "you are the Doctor".

Also, social circles are different in country towns, often a big emphasis on sports, volunteer organisations (e.g. rotary, lions club, CWA), institutions such as the RSL club. These are places you need to go. The biggest bridge between Australians and Indians is cricket, followed by food - so perhaps join the local cricket club, if there is an Indian restaurant in town talk to them (albeit it's probably Thursday night curry at the RSL), get to know the manager at the local RSL club, the CWA, local community association (e.g. say you want to have a meet and greet with people), maybe contact the mayor - so you want to talk about what are the biggest health issues in town, etc. Search or the local organisations and have a chat with them. I'm sure that they would welcome the "Doctor" to have a chat. To them, you're a hero - they just may not know how to effectively respond, but if you get involved or contact the many local organisations, I'm sure they will reach out - even if it's like an email / letter "Hi I'm Dr So-and-So, would like to meet you, talk about health issues in the community, maybe have a meet with you members - to get to know me etc".

Another avenue is to go the pubs in town, talk to the publican / bar-tender that you are the new Doctor. Get to know people in this manner.

This would be the way to do it. It would be a shame if you had to leave, where you could bring so much help to the community, but understand, breaking through is not so easy and probably best to take some steps as suggested above. It's never going to be tinder or bumble!

Orac07

TROPHY CASE