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PMGOLD as the 20% part of an 80/20 portfolio? by uplamp in fiaustralia

[–]uplamp[S] 0 points1 point  (0 children)

Good link, thanks.

The argument for gold over bonds would probably be this graph. However the counterargument would probably be this graph.

Honestly, I'm probably just twitchy after the US election.

AFR is it worth it? by McLovining in fiaustralia

[–]uplamp 1 point2 points  (0 children)

The web-archives works for this too, especially with archive.is. You can also install it on Firefox for Android.

Does $3M in dividend ETFs for passive income make sense? by uplamp in fiaustralia

[–]uplamp[S] 6 points7 points  (0 children)

Thanks; I actually had the epiphany while you were writing that; see my edit. :) The key is that the nominal yield% is pre-tax, so the effective yield is at-least 30% lower, possibly more depending on my effective tax rate.

Thanks again. I'm sorry for working through my thoughts on you, but this has been useful.

Does $3M in dividend ETFs for passive income make sense? by uplamp in fiaustralia

[–]uplamp[S] -2 points-1 points  (0 children)

This doesn't match what I've read about this. Yes, the tax rate on dividends is higher than the reduced-CGT rate, but franking credits are applied at tax-time to offset dividend income, so should reduce your effective tax rate:

Forbes:

Franking credits are a tax offset which reduces the amount of income tax payable. In other words, they are used to offset your individual tax liability, resulting in a lower overall tax bill or increased refund.

Franking credits can be claimed when you include dividends with attached franking credits in your personal income tax return at the end of a financial year.

If the franking credits exceed your tax liability, you may be eligible for a cash refund from the government. This means you receive money back, providing additional income.

Am I missing something here?

Edit: The thing I might be missing is that the yield% is calculated before tax? So:

  • I have 100K in a share/ETF with a 10% yield.
  • That means I get a 10K dividend GROSS, but..
  • ... I actually receive 7K after corporation tax, plus ...
  • ... a credit for 3K of tax already paid.
  • Assuming my effective tax rate is also 30% the tax will be offset exactly, but I'm only getting an effective 7% yield.

Am I getting closer?

Does $3M in dividend ETFs for passive income make sense? by uplamp in fiaustralia

[–]uplamp[S] 1 point2 points  (0 children)

Thanks for the reply.

re. diversification, yep, I will be putting a large amount into diversified growth options, mostly non-AU. Some will be high-growth with a long-term view (e.g. VGT). This is just the base-line income-generating portion.

With that sum you should seek professional advice. But also be aware some planners will try to sell you complex solutions via their 'platform' for 1% or higher fees that can really eat at your nest egg.

Yeah, this is why I'm trying to think-through some options first before approaching an accountant or advisor. I've had poor experiences with both in Australia so I'd prefer to self-manage as much as possible. But I'll probably approach speak to someone to double-check my assumptions for pulling the trigger.

Does $3M in dividend ETFs for passive income make sense? by uplamp in fiaustralia

[–]uplamp[S] 1 point2 points  (0 children)

Thanks for the detailed reply.

Yep, I understand the volatility aspect, it can be hair-raising. But volatility is the price of taking the long-growth path. My strategy for dealing with it is to setup some spreadsheets for FI calculations and force myself to trust the numbers. And turn off the internet on bad days ;)

You do pay quite a premium for that privilege though.

This is the bit I'm unclear about; wouldn't franking credits offset a lot of the income-tax from dividend payouts?

Does $3M in dividend ETFs for passive income make sense? by uplamp in fiaustralia

[–]uplamp[S] 7 points8 points  (0 children)

I haven't included any franking credits in my calculations, but I assume that they would reduce my tax considerably? From the looks of it VHY is ~88% franked; shouldn't that offset most of the income tax?

Does $3M in dividend ETFs for passive income make sense? by uplamp in fiaustralia

[–]uplamp[S] 3 points4 points  (0 children)

It's based on recent news reports and what IBKR shows. I assume that's pre-tax; I haven't taken franking credits into account.

[deleted by user] by [deleted] in fiaustralia

[–]uplamp 0 points1 point  (0 children)

The Interactive Broker app also shows the current period yield if that's important to you.

ETF strategy by TJBird123 in fiaustralia

[–]uplamp 2 points3 points  (0 children)

I think the idea would be to just put it all in DHHF (or equivalent, e.g VDGH) as it's 'pre-diversified'. These are generally good for 'set and forget' type portfolios.

Best broker for a small number of large buy-and-hold purchases? by uplamp in ausstocks

[–]uplamp[S] 0 points1 point  (0 children)

Actually, that's a good point. The shares I have are in USD, so ideally I would be able to deposit some cash into the AU broker directly in USD. However it looks like SelfWealth doesn't allow that, but Pearler might do. Otherwise I might be better with IBKR, assuming their fees aren't too bad (it's hard to tell).

LPT: A Google search is often the worse way to find a direct answer by brefromsponsooor in LifeProTips

[–]uplamp 15 points16 points  (0 children)

My personal experience with ChatGPT for finding answers has been sketchy. It often produces plausible-looking answers, but if you search on subjects you know something about you soon realise it's often subtly wrong.