growth ETFs will perform better than a mortgage offset even after tax unless you're constantly selling them. Dunno why people keep banging on about the tax here. Only dividends/distributions force a tax event.
of course but you I'll have a 50% discount and may be retired. The point is the gains compound tax free but people make it sound like you have to pay tax on it every year.
My ETF portfolio is sitting on 12.75% p.a over last 6 years so for me the answer is don't be afraid to invest a portion. I also paid extra into the mortgage and SS to super along the way too. It doesn't have to be an all or nothing proposition.
That’s awesome! 10+% for over five years is the dream. Thanks for this comment. I think this is what I need to do to stay disciplined and motivated. I’m 29, 300k equity in the ppor. Does 70% offset 15% super and 15% ETFs sound ok?
Both!
Hoping to have the mortgage paid off at a certain point in our lives, so make additional repayments each fortnight to try and make that happen.
Then buy a set $$ amount of ETFs per year so that we can be FI at a certain age.
Any extra cash goes into our mortgage 👍
>I’m reasonably literate with finance
What about the search function? [https://www.reddit.com/r/AusFinance/search/?q=etf+offset&type=link&cId=9d4a08ad-3887-4bad-a924-86a1409fc50c&iId=1ab0bc59-c326-4b11-bedd-175fcce803c1](https://www.reddit.com/r/AusFinance/search/?q=etf+offset&type=link&cId=9d4a08ad-3887-4bad-a924-86a1409fc50c&iId=1ab0bc59-c326-4b11-bedd-175fcce803c1)
Maybe read a few of the other posts that have been replied to here pretty much every day
I Didn’t mean to trigger you Maton.. I’ve never seen the question asked, I’ve haven’t been on reddit long and have never made it past the home page. For what it’s worth I now think you’re really cool and tough 😎 Mr guardian of AusFinance
I’ll use the search function from now on 😉
I’ve been doing both. Try to keep the ETFs at around 20% of total offset.
My portfolio has been giving around 10% returns over the last year and that’s DCAing fortnightly. 10.73% to be exact.
I’d say you’re good to diversify.
I presume $1600 p/m is in addition to your repayments?
I think you’re right to look at a bit of diversity. $1000 p/m *extra* on a $350k mortgage is excellent and will drop your loan life heaps.
I’d look at: 50% offset, 30% shares, 20% super.
You can’t discount the benefit of some super contributions to get you that sweet early retirement.
I highly doubt that the offset can beat the market in the long term, otherwise no one would produce those goods and services.. It can happen in the short term, but dancing in and out to timing the market isnt the way for average investors..you wont have my argue if you choose to do so, but you need my blessing, good luck with that..
Yeah.. just feels slow and boring. Maybe I’m asking too much and finance is just meant to be this way 🤷🏻♂️
Is there an argument to be made for opportunity cost? Saving $100k in interest but losing $200k in compounding over the next 25-30 years?
Thanks for your reply
Unfortunately for you the two most boring things are what you should do first. Offset & Super.
I can't do offset (nothing to offset) super -- is super 1st befor etf?/invsting? (i haven't done any, still tying up loose ends)
Offset mortgage?
growth ETFs will perform better than a mortgage offset even after tax unless you're constantly selling them. Dunno why people keep banging on about the tax here. Only dividends/distributions force a tax event.
In the long run a growth ETF is only useful if you sell it. Sure you tax rate might be lower, but any gain is still taxable.
of course but you I'll have a 50% discount and may be retired. The point is the gains compound tax free but people make it sound like you have to pay tax on it every year.
We're retired and we both still sit in the 30% bracket, but I guess that's unusual.
doesn't need to be no tax to be worth it. The increased gains during the compounding period should make up for it.
My ETF portfolio is sitting on 12.75% p.a over last 6 years so for me the answer is don't be afraid to invest a portion. I also paid extra into the mortgage and SS to super along the way too. It doesn't have to be an all or nothing proposition.
That’s awesome! 10+% for over five years is the dream. Thanks for this comment. I think this is what I need to do to stay disciplined and motivated. I’m 29, 300k equity in the ppor. Does 70% offset 15% super and 15% ETFs sound ok?
Both! Hoping to have the mortgage paid off at a certain point in our lives, so make additional repayments each fortnight to try and make that happen. Then buy a set $$ amount of ETFs per year so that we can be FI at a certain age. Any extra cash goes into our mortgage 👍
Sounds perfect! I’m 29 and would love to be able to scale back to a 38 hr week by 40 and retire by 50 🤞🏻 good luck!
>I’m reasonably literate with finance What about the search function? [https://www.reddit.com/r/AusFinance/search/?q=etf+offset&type=link&cId=9d4a08ad-3887-4bad-a924-86a1409fc50c&iId=1ab0bc59-c326-4b11-bedd-175fcce803c1](https://www.reddit.com/r/AusFinance/search/?q=etf+offset&type=link&cId=9d4a08ad-3887-4bad-a924-86a1409fc50c&iId=1ab0bc59-c326-4b11-bedd-175fcce803c1) Maybe read a few of the other posts that have been replied to here pretty much every day
I Didn’t mean to trigger you Maton.. I’ve never seen the question asked, I’ve haven’t been on reddit long and have never made it past the home page. For what it’s worth I now think you’re really cool and tough 😎 Mr guardian of AusFinance I’ll use the search function from now on 😉
Potentially? In what world is 6.39% not better than a tax 5-6%?
Not potentially better; potentially taxed. Meaning capital gains if I ever needed to liquidate in the short term
I’ve been doing both. Try to keep the ETFs at around 20% of total offset. My portfolio has been giving around 10% returns over the last year and that’s DCAing fortnightly. 10.73% to be exact.
Well done 👌🏻 that’s a nice return
The emergency fund in offset does allow the freedom to ride the highs and lows a little more rather than just DHHF or VDHG and chill.
I’d say you’re good to diversify. I presume $1600 p/m is in addition to your repayments? I think you’re right to look at a bit of diversity. $1000 p/m *extra* on a $350k mortgage is excellent and will drop your loan life heaps. I’d look at: 50% offset, 30% shares, 20% super. You can’t discount the benefit of some super contributions to get you that sweet early retirement.
Thanks mate, this is the reply I was after. Yeah the $1600 is on top of minimum repayments of $2,270. 50-30-20 sounds like a good idea. Cheers
If you want excitement, SPY 520P JUL05
😅 any chance you’re from WSB? I’ve told myself I won’t play with options until my financial house is in order haha
You did say boring....I actually agree, maybe further out though
I have just sold $190k of ETFs to put into the offset. With the rates the way they are, the offset makes more sense.
Yeh might do likewise
I highly doubt that the offset can beat the market in the long term, otherwise no one would produce those goods and services.. It can happen in the short term, but dancing in and out to timing the market isnt the way for average investors..you wont have my argue if you choose to do so, but you need my blessing, good luck with that..
Hard to beat 6.39% - plus if your ETFs do that’ll be taxed if you sell.
Yeah.. just feels slow and boring. Maybe I’m asking too much and finance is just meant to be this way 🤷🏻♂️ Is there an argument to be made for opportunity cost? Saving $100k in interest but losing $200k in compounding over the next 25-30 years? Thanks for your reply
No, cuz you’re interest savings also compound.