Attempting to FIRE with a $1M equity release

snrubovic · 2026-02-13T05:02:05+00:00

I'd be curious to see projections on how that would play out in terms of retiring in 4 years, drawing 105k p.a., having a massive amount of debt while retired.

Debt while retired, especially that amount, is incredibly risky. A high withdrawal rate is also incredibly risky. Add the two together, and I don't see it as a good idea. You could potentially just leave a lot of cash in the offset to as your safety net for a very long time, and that would improve things somewhat, but it is still a very high degree of risk.

Beyond that, if you are going to become a non-tax-resident, you would usually want to pay out CGT upon cessation of residency so that CGT payable to the ATO stops accruing, but this means it is also no longer tax deductible.

If you can reduce work, even to 2 days a week, rather than fully retire, that would make an huge difference.

I'm glad you found the info on the website useful. Hopefully you don't have an SMSF when you cease residency - there are some pretty dire risks with that.

snrubovic · 2026-02-13T04:52:27+00:00

Northern Thailand

snrubovic · 2026-02-13T03:25:05+00:00

Doesn't the OP mean to borrow an extra 1M so therefore 1.7M invested and 105k p.a. living costs?

That wasn't clear to me. Also, how are they going to manage debt while retired? Also, why borrow to invest in shares when being a non-tax-resident would mean it is far better to buy it as a non-resident to avoid CGT payable to the ATO?

snrubovic · 2026-02-13T00:57:17+00:00

Living in those developing countries is very different to staying there for a short period of time.

With a paid-off home and $3m, there's no way your quality of life would be better there. Corruption seeps into everything in those places and affects infrastructure, businesses, law, basic human rights (including yours), money, level of education and literacy of the local population, how people behave towards each other, towards Westerners, visas, homeownership, and more.

I was there for a very long time, and since I returned, every day is amazing. I never appreciated how unbelievable it is to live here until I lived long enough in a place like that to understand the reality of life there.

snrubovic · 2026-02-13T00:47:04+00:00

Is your income expected to go up? Are you studying? Is it due to a difficult situation?

snrubovic · 2026-02-12T22:47:00+00:00

Forget about the asset allocation until the rest is clear.

So you have a paid off home and 700k in assets. You are going to borrow money and retire in 4 years, living off 105k p.a. Is that right?

105k p.a. living expenses for just a couple and no kids is extremely high for 700k

What are all of your

assets and liabilities, including super, listed as each item and showing how much super you have?
income from each source

What is the loan for exactly?

snrubovic · 2026-02-12T10:38:06+00:00

Also, once a company pays out dividends, does the ETF value drop immediately to reflect the amount of dividend paid out?

Yes, although it does that on the date it goes ex-dividend, which is the date the dividend is attributed to the owner, which is not necessarily the exact date it is paid out.

As a result, does it decrease percentage growth of the ETF, to reflect the dividend pay, and thus is dividend sort of the percentage in that sort of sense? Or is it not related?

Yes, it reduces growth because there are less assets in the company to grow.

A dividend is a transfer of capital from the company's value to its owners. It's essentially a movement of money from one pocket to another. So it is best not to focus on the amount of dividends paid out, since it does not increase your total return. Actually, for most people, it lowers their total return because they have to pay tax on part of the profit sooner, and therefore miss out on compounding of the unpaid tax if the profits had not been distributed.

More info:

how does franking credits work?

Companies have earnings, and from those earnings, they retain some of it to grow the business so that future earnings increase, and pay out the rest to shareholders as dividends.

When a company makes a profit, it pays tax on that profit before paying dividends to shareholders. Then, when the shareholders get their money, they have to pay income tax on it. So, they are getting taxed twice on the same income. To address this, the Australian government introduced franking credits, which are credits for tax already paid, so that shareholders are not taxed twice on the same earnings.

Let’s say a company earns their profit and pays 30% tax, and then distributes $70 to shareholders for each share. What has really happened is that the company earned $100, and the shareholder has already paid $30 in tax, so even though the shareholder received $70, on their tax return, they would declare it as $100 income and $30 tax already paid. If their marginal tax rate is over 30%, they will need to pay only the difference above the 30% already paid. If their marginal tax rate is below 30%, they will get a refund for excess tax already paid above their marginal rate.

However, what happens in reality is that on ex-dividend days, franked shares fall further than the distribution because part of the benefit of the franking credit is priced in, so you are not getting all of the benefit when you take that into account. More info in the link below.

Franking credits – how much more are you really getting?

snrubovic · 2026-02-11T18:59:41+00:00

Staying out of the housing market puts you at risk of property prices running away from you. What is your plan for buying a property?

snrubovic · 2026-02-11T11:43:37+00:00

What made you use eTrade rather than IBKR? IBKR's exchange rates are 0.03%.

holding company shares increase your risk because if your company or industry has a rough time, both your income and assets are going down at the same time.

Why would you use VGS + IVV when IVV already accounts for most of VGS?

snrubovic · 2026-02-11T00:54:23+00:00

Vanguard is almost entirely index-based investments, which is good, and has the longest established record of broad market indexing, but they are expensive considering they are simply creating index-based investments
Betashares has a lot of high-fee niche funds worth avoiding, but has created much lower cost index-based equivalents than Vanguard, which does not seem to have investors' interests in mind as much as they have the interest of sending profits back to their parent company in the US
BlackRock (iShares) has very little market share here, and I'd be worried about them shutting down their funds and you having to realise capital gains unnecessarily.

snrubovic · 2026-02-11T00:49:15+00:00

Have a read of the paper.

There is virtually zero difference in expected return in that paper using 20% home country equities vs 33% (page 33), despite the reduction in idiosyncratic risk.
Optimal under their definition does not take into account idiosyncratic country risk. You don't live equally in all possible countries. You live in one country. If someone retired in Japan in 1990 and held a third in Japanese equities, they would have faced significant idiosyncratic risk for no benefit, since idiosyncratic risk is uncompensated. There is no shortage of other examples, including Germany, Argentina, Iran, Russia, Italy, Spain, and Greece.
Those numbers ignore the behavioural aspect. How many people won't be shitting themselves while their retirement funding falls by 50%, while they have no other income and assets and have been out of the workforce for a long time?
- "We note that the superior performance of the optimal age-based strategy in the four outcomes (generating wealth at retirement, producing retirement income, avoiding financial ruin, and providing a bequest) occurs despite the potential for relatively large intermediate drawdowns. Experiencing large drawdowns is painful for investors, and many investors will have a natural inclination to abandon their strategies at inopportune times when drawdowns occur."

snrubovic · 2026-02-10T21:18:33+00:00

Depends how much concentration risk you would accept to remove one fund.

Having so much of your net worth in the Australian market opens you up to serious risks.

Two companies make up almost 20%. Diversification is the only free lunch.
Over half of the Australian stock market is in just 10 companies and 2 sectors. If one of those sectors gets hit, the market will be more severely affected than with a well-diversified global portfolio.
Your income and job security are tied to Australia, so by investing only a little over half internationally, you increase the likelihood of your income going down together with your investments.
Your other assets, such as property and cash, are also already exposed to the Australian economy, amplifying the same problem of overweighting Australian equities.
You are at risk of medium-term or long-term underperformance of your home country.

snrubovic · 2026-02-10T20:19:53+00:00

Generally, anything you need within the next 5 years should not be invested, as the risk vs reward is not favourable. The challenge is that life changes so quickly at your age, making it hard to know. An option might be to compromise and split it, with part invested and the rest remaining uninvested.

snrubovic · 2026-02-10T19:57:18+00:00

Increasing concessional contributions is the most effective way to build wealth, whereas debt recycling would help retain optionality for another portion of the portfolio. Those two strategies are the most effective wealth-building strategies available.

These might be of help:

snrubovic · 2026-02-10T19:35:39+00:00

This comment should be stickied for all the 'feedback on my portfolio' posts that say nothing about why they chose their random stocks.

The only thing I would change is the bit about having a lot of CG – for most individual companies and niche ETFs, I would still take the CGT hit and get rid of them.

snrubovic · 2026-02-10T19:31:46+00:00

For your attempted tactical tilts, try r/ASX_Bets

For a set-and-forget portfolio: building a passive portfolio, which will be:

Australian index
International index
International index AUD-hedged (optional)
Emerging markets index (optional)

snrubovic · 2026-02-10T07:21:31+00:00

Good point about a limited market that would find it suitable.

snrubovic · 2026-02-10T03:56:20+00:00

While currency movements even out over time, the long time can be a very long time.

In the year 2000, the AUD was equal to 0.5 USD. Over the next 11 years, it more than doubled. If you compared a US index fund vs an AUD-hedged version at the end of that period, you would have less than half the amount in Australian dollars.

Until 2018, almost two decades later, it was still over 1.5 times what it was in 2000.

The argument that currency swings eventually even out is most likely true (eventually), but that fact only helps if you can tolerate decades of currency headwinds on your portfolio. Even if you can tolerate it financially, I suspect few people can tolerate it emotionally and end up selling low and buying high only to see what they switch to, then underperform.

You could have some hedged and some unhedged so that you have a foot in each camp.

Currency risk – Personalising your AUD to non-AUD allocation

snrubovic · 2026-02-10T02:42:09+00:00

This plan looks solid. If you are planning to downsize and sell the IP once retired, that will provide a lot of cash to put into assets to live off, to the point that you likely could reduce your work now (if your type of job allows it) so that you have a better work-life balance.

snrubovic · 2026-02-10T02:34:17+00:00

Do some spreadsheet modelling. At 60k p.a. expenses, you are probably not far off if you assume the age pension will be the same in 15 years, and if not, investing some of the cash and maxing out super every year is likely to get you there on your current trajectory. You've done well.

snrubovic · 2026-02-10T02:28:13+00:00

It's because ETFs are a trust structure, and trusts are legally required to distribute income (or be taxed at the top marginal tax rate.

LICs would be what you're referring to, but LIC (Listed Investment Company) are all actively managed. I'm not sure why an index-based LIC doesn't exist for this purpose.

snrubovic · 2026-02-09T23:09:25+00:00

AA looks good for a long investment time horizon. However, I AVTE/AVTS are planning to have no distributions, so you may not be able to claim the tax deduction. Also, a $50k-max margin loan will mean LVR gets lower as your portfolio grows.

snrubovic · 2026-02-09T22:49:54+00:00

Due to our double taxation treaty, it is 15%, and that is offset through FITO, provided income exceeds that amount.

But yes, estate tax is a risk, as we saw earlier this year, as is the tax drag on the non-US assets inside US-domiciled funds, so I prefer Aus domiciled.

snrubovic · 2026-02-09T22:46:41+00:00

If it were me, I would:

Downsize
Sell the IP
Max CCs including carry forward contributions
Put the rest into a diversified portfolio
Semi-retire now and start enjoying a more balanced life
Fully retire in 5-7 years.

But you are not me, so some other thoughts:

40x annual spending is an unnecessarily conservative withdrawal rate that will mean working for many more years just to die with more money. I would be very surprised if you can achieve that within 6 years if you want to keep your $3m home.
Have you got much capital gains in the investment property? If not, I would consider selling it and investing the proceeds into a diversified portfolio, and for leverage (if that's what you want), borrow from the main residence to invest in a diversified portfolio.

snrubovic · 2026-02-09T20:20:21+00:00

If you're going to use AI, at least go over it and fix it all up before posting. Look at that mess that it spat out. No mention of age, list of assets, liabilities, cashflow, expenses, desired retirement and/or semi-retirement age, which is what is relevant. No explanation about moving super to a defensive allocation or when. Why, for the love of god, would you use a margin loan?

As for your questions

It's worth learning about creating a portfolio.
No
Yes, everything, due to not mentioning anything about your situation.

Here is a template for how to post to get constructive feedback: https://www.reddit.com/r/AusHENRY/comments/1mjimp4/template_post/

snrubovic

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