Worth Cashing out on My ETFs?

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  Kongzi on 02/04/2024 - 22:37

  -4

  Invest in BAT

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  CodeXD on 02/04/2024 - 22:38

  +1

  Yes

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  donga100 on 02/04/2024 - 22:49

  +2

  3: An accountant

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  Worf on 02/04/2024 - 23:07

  +2

  The underlying composition of this etf is pretty muddy apart from Australian index, international wholesale and hedged, international smalls and emerging. Makes it a bit hard to predict future performance.

  I don’t know enough about this product but I’d say there’s a fair bit of risk/volatility in line with a presumably aggressive strategy (diversified high growth). S&P 500 and Nasdaq has done amazingly well over the past 6 months, I imagine there should be some regression to the mean, but unsure where that’s going to come from when the fed has been giving doveish signals.

  Locally, the xjo has been a bit underwhelming (compared to the s&p and nasdaq, bit of a channel with resistance around the all time high of 8000. Large caps look a bit extended so smalls might have to do the heavy lifting.

  As for closing your position. you’ll get 12month discount (50% of cap gains) which will get added to your marginal tax rate… so for simplicity, if you made a gain of $6,000 and purchased that parcel >12 months, then, half of that gain, I.e., 3,000 would be added to your marginal tax rate and taxed accordingly. The actual amount may be apportioned if there were some parcels purchased <12 months and the gain/loss made during that time. I agree you did well on a percentage basis, however, I’d respectfully suggest the absolute dollar amount and (associated tax) is relatively small in the context of recycling capital into property.

  Re first home buyer, I imagine the criteria would say it would have to be your first property and if your partner wanted to be on the title, then, her previous property purchase would make her ineligible, which would raise other issues (can you purchase solo, how well do you trust each other, etc). I’ve not researched the criteria so do your research.

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  livealoha on 02/04/2024 - 23:08

  +3

  You can't claim first home buyer incentives if you are buying with a partner that has already purchased a property unfortunately

  • 

    AustriaBargain on 03/04/2024 - 04:47

    Makes sense. Couples usually live in the same house.

  • 

    blonky on 03/04/2024 - 10:34

    No incentives such as FHOG/Stamp Duty reduction but you can still use FHSS if your partner owns/has owned property; it's a per person basis

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  Scope on 03/04/2024 - 01:05

  +3

  Should I begin diversifying my portfolio

  VDHG already covers everything. The point of it is so you don't have to buy anything else. If you buy another ETF, you're not adding diversification. You would just be increasing the weighting of a certain sector or market

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  HardQuiz on 03/04/2024 - 02:35

  https://www.ozbargain.com.au/node/835547

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  Dollar General on 03/04/2024 - 06:43

  +1

  IMO once you purchase a property, the best financial advice is to pay down the mortgage as quick as you can, unless this is not your forever home you are purchasing

  • 

    wannagrababargain on 04/04/2024 - 14:36

    I wouldn't say that is financial advice, more a statement of "conventional wisdom." Proper financial advice on weather one should pay down mortgage vs invest is highly depending on personal life stage, financial situation, financial goals and risk appetite.

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  poboy on 03/04/2024 - 07:25

  +3

  What was the objective of investing in the ETF? Have you reached that objective? Perhaps it is a good day to sell? Good luck.

  • 

    DingoBilly on 03/04/2024 - 08:46

    Exactly this.

    That being said, if you bought less than 2 years ago and you're already thinking of selling, I don't think you've come into ETF buying with the right mindset.

    The idea is to hold for years and ideally decades to let the amount of money compound and keep growing.

    Having said that, your life changes, and maybe buying a home is more important for you now so go for it if it will help with that.

    Some general thoughts are:
    - That there's no point diversifying as VDHG is already diversified. If anything, it's too diversified.
    - You'll be eligible for a cgt discount of 50% since you've held for more than a year so that's good, noting that dividends you received as part of that would not be eligible though.
    - Look up the rules per state but from what I've read neither you nor your partner can own a property beforehand or else you will lose the first home owners grant.

    • 

      tobyjc3 on 03/04/2024 - 22:24

      Hey Dingo, thanks for the advice.

      My intentions where to look at it like superannuation. Chip away over a long period and reap the benefits later in life.

      It was only really a spur of the moment that if i was to ever cash out of them, this would make the most sense if it was going directly to a house deposit.

      Reasons being my lower income, which i thought might mean I dont lose as much to CGT, as well as the relative unexpected highish growth they have already gained.

      If I do take them out, its 100% my intentions to get back to contributing to them on a monthly basis like I was.

      Thanks again

  • 

    avoidfullprice on 03/04/2024 - 08:50

    Came here to say this too

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  Ozbar Gain on 03/04/2024 - 08:55

  "Partner" means different things to different people,so hard to say if you shod buy with your partner, that's a personal decision.

  If you have made additional contributions to your super you can withdraw from super in the First Home Super Saver scheme if buying a PPOR, regardless of whether you buy with your partner or solo. This is what I would've done instead of buying Etfs if the goal was to use that money for buying a hone

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  MITM on 03/04/2024 - 10:36

  You may have to pay income tax on the overseas earnings if you elected Australia as your country of residence for taxation purposes.

  "Certain foreign employment income is exempt from tax in Australia, but they may still need to include it in their tax returns. If they paid foreign tax in another country on income they received, they may be entitled to an Australian foreign income tax offset that stops them paying tax twice."

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  blonky on 03/04/2024 - 10:47

  If you've been out of the country for most of the (tax) year then would you still be considered a resident for tax purposes - in which case maybe foreign tax rates would apply?

  Otherwise if you absolutely need the cash for the house, you could withdraw and move into super and withdraw under the First Home Super Saver scheme to get those tax deductions. You can use FHSS if you've never owned property, even if you buy with a partner who has owned/currently owns property

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  Daniel Plainview on 04/04/2024 - 12:28

  In response to the questions posed:
  1. If you feel your taxable income for the assessable period will be less than normal, there is a motivation to incur any CGT events you're wanting or needing to incur, rather than delaying them to when the next period when you expect your assesable income to be higher.
  2. No, thats the definition of 'timing the market' - which even highly paid pro investors have been shown not to be able to do. That it went 'up does not mean it's due to go 'down', could well go up for much longer. So your logic here is flawed.

  That said if your risk appetite says to 'take profits' or move to different investment - thats your call. As others have said pulling out completely from investments thats SHOULD have had a minimum timeframe of 5yrs is concerning & you should review your practices on this - as that it went up is purely luck and not due to your skill as investor etc. If things went differently you could be sitting on a 10% loss, & so would you stil want to pull that out?

  I say this as someone who made such mistakes in the past - so review your practice & learn from it.
  3. Likely whoever does your tax returns - but really this is stuff you need to self-educate on & discuss with your partner.
  4. Again this is a concerning question as you seem unsure of your plan. You say you thought of this as being a 'superannuation like' investment but in barely 2yrs are questioning it entirely? Review your process, you're either going into things half cocked or are being too easily swayed by results oriented thinking i.e if it made money it was a GOOD idea, if not it was a BAD idea - which is flawed.

  VDHG is excellent, no 'need' to diversify further but there's no negative to doing so - other than making records keeping a tad more PITA - make sure with ETFs you are keeping good records. You know how to do the AMIT cost base adjustments etc?
  There's a Buffet quote that I'm paraphrasing which states that diversifying is how you combat risk but concentration is how you make $$$. VDHG will be solid and safe performer but it'll never give you returns that will blow socks off - but I htink your risk appetite is not suited for that approach - so I say stick with VDHG. Could transition to buying DHHF if you want similar but slightly more aggressive approach as it does not have the ~10% bonds VDHG does.

  5.If your partner owns already pretty sure most places will NOT allow anyone on the property buyers to use 1st HBers. Not the end of the world. But DYOR for your area. :-)