Looking to buy property in 4 - 5 years

[silencedogwood]

Hey AusFinance, mostly lurk around here, post on the occasion, and this is one of those occasions.

I'm trying to get a place to live as soon as possible, so in the next 4 to 5 years preferably. I currently mostly invest in individual stocks (US through Stake, ASX through Superhero, as you can see I'm cost-conscious).

Would you be mostly investing in individual stocks or building a dollar-cost average ETF portfolio? I'm wary that by selling all my positions to go full ETF, I'll incur a bunch of CGT, but I guess that'll eventually happen anyways.

Personally, I don't believe I'll be able to reach a 20% deposit or so on a 2 bedroom apartment without investing (something like in Rhodes, those are $800-$900k rn, haven't move in the past 2 years).

If you need deets of my assets and income, comment below. Trying to avoid this post sounding like asking for personal financial advice.

 

[folkwire]

@silencedogwood Yeah you are in the how do I grow my deposit vortex. No value in savings rate and share market is too risky in a short timeframe.

Added bonus is that the property market is rising to fast for you to save. Governments position is that you yolo and go into debt quicker.

Only advice is that you keep savings your pennies and hope you get yourself into a good position to have a choice as to whether you want to buy property

 

[rockif]

@folkwire Government got it wrong

 

[symphony4him]

@rockif Houses going up = slam dunk re-election

 

[rockif]

@symphony4him Unfortunate. Need longer terms perhaps so they don't think so short term. Heck half the time we don't don't get the leaders we democratically vote in.

 

[symphony4him]

@rockif “Democracy is the best” is constantly mentioned at school. It’s glaringly obvious now it’s not as simple as the best candidate wins, and all this flip flopping can add up to a real a drag, compared to countries that simply make long term plans and execute them.

Exhibit A: The NBN

 

[rockif]

@symphony4him Some of the Nordic nations got it right.

 

[sendy123]

@rockif Obligatory:

The Australian system dictates you vote for the party, and not the person. This was essentially to stop any cult of personality and allow parties to toss any bad eggs without having to go through a by-election. This is why nasty people like Ted Cruz in the US are elected and hang on like barnacles - they DO vote for the person.

 

[rockif]

@sendy123 Fair counter argument lots of personal gain with thr back stabbing. Eg. Rudd was great and capable and yet is outed.

 

[sendy123]

@rockif Of course. Not every system is perfect - but hats off to the writers of our constitution for anticipating a lot of things.

 

[rockif]

@sendy123 I am always open minded and happy for my view to be changed. Appreciate that point of view. You do have a good point. What I would like to see is more transparency. Eg. The biggest wealth creation in AU has been housing. How many politicians have IPs? I often thought there was a great conflict of interest here.
Cheer

 

[sendy123]

@rockif Here ya go.

I completely agree about there being a massive conflict of interest with regards to property.

 

[rockif]

@sendy123 I could use this for some great essay writing for Uni (Masters). I am doing Social Work and I've often argued the negative impacts of houses being treated as speculative assets.

 

[please]

@silencedogwood First home Super Saver.

You can withdraw up to 30k of voluntary super contributions at a much nicer tax rate than regular income.

So voluntarily contribute about $100 a week over 5 years.

 

[wwwhhh]

@please It's now 50k FYI!

 

[please]

@wwwhhh I wonder how many people have actually used it. Started in FY 2017, takes at least 2 years to max out, now increased to need 4 years to fully max it out.

 

[dbg]

@please I used it across 3 years, withdrew and bought a house in October last year. Saved a heap in tax, about 5k at a guess.

 

[silencedogwood]

@dbg This is actually really interesting. $5k is a pretty large saving on tax, how much did you save up all together across those 3 years if you remember?

 

[wwwhhh]

@silencedogwood I also used it last, and this financial year too. It's awesome. I've not yet withdrawn the money though.

I basically salary sacrificed $14k in concessional contributions across 6 months (Jan - Jun) of around $1200 a fortnight. These are taxed at 15%. This is the best way to do it as your take home pay is also more as you're essentially paying less tax on your income. Then when July hit (new FY), I made a non-concessional contribution of $14k as I plan to buy in the next month or two so could no longer salary sacrifice (lol I wish I got paid 14k a month to sacrifice). With any non-concessional contributions, the full amount comes back out of your super but you log an 'intent to claim' form with the ATO where you'll claim the tax difference back of your marginal tax rate as you'll only pay 15% on any money contributed to super for FHSS. So in my case 32.5% - 15% =17.5% tax refund which is around $2450. Hope this helps

Edit: TL;DR, 28k contributed across 7 months. Tax saving of around $5k.

 

[silencedogwood]

@wwwhhh This helps heaps thanks! I think, because I'm still in the 19% tax bracket, that I'll hold out until I am in the 32.5% (or 30% once the tax reforms come in) bracket before using this, the tax-saving seems minimal otherwise and I'd rather have the cash liquid at that point.