My lessons on Investment Options in Australia

[Kenfrapin]

It will be 3 years this Christmas since we moved over, what a ride its been so far! I thought of sharing some experiences when it came to investment options and how it went for us. It will be great to hear from others too so I too can learn and improve

• I used to invest a lot in Investment Trusts back home but out here there are only a very few available. I looked into Managed Funds, and there are a lot of those around, but it isnt as smooth or linked up everywhere as the UK. Some of the well known ones are here too like Fidelity, First Colonial etc but most feel they are still stuck in the middle ages in terms of technology. Paper forms have to be filled for literally everything and online websites arent great either. There is a huge initial investment of $10k to $20k AUD and above, very rare to find lower initial deposits followed by systematic investment plans
• There doesnt exist a provider similar to Hargreaves & Lansdowne or others back home where you can invest in Managed funds, Investment Trusts, Shares etc under on umbrella, and that really made things more difficult for me
• The common choice here are standard trading houses and well known ones with good Apps tend to be CommBank (CBA), IG Trading and even AG Bell. Most trading platforms only come with Australian trading as standard, buying overseas shares is an additional feature with its own rules, delays and charges. Futures and commodities trading seems to be a big thing here
• A lot of the common person's money goes into their pension, which is called super out here, with 9.5% being the standard amount deducted, and we can add more if needed. The choice of Super providers is mind boggling but very interesting to read up as there is a lot of material. You have a few flashy, expensive ones with phone apps and good online systems and then the simple no nonsense ones that lets you chose from a small set of investment choices. Supers mainly invest into funds which are not available to retail. And once your Super balance goes above a certain threshold, you can switch to a Self Managed Super Fund which lets you invest directly into shares, funds and properties as well. Oh, and many people tend to buy life and permanent disability insurance from their super itself. We have done that too and its at a really good rate compared to going to a normal provider outside of your super
• Some of the trading platforms have tied up with Managed Funds to provide an mFund settlement service. This allows you to buy a fund through the trader rather than contacting the fund house and doing the paper work. But once you dig deeper you find out that they only let you buy so its under the one trading account. Any changes you need to make have to be discussed directly with the Fund house! So you still end up with the same amount of paper work in the long run

So, what did we end up doing?

• We started a monthly investment plan into Spaceship, an online only fund investing in technology companies across the globe. Its going great and their app is brilliant, so also are their weekly articles - returns of 13% to date
• Another online one is Stockspot but they literally have a mix of few options (balanced, growth, equity etc) thats made up of ETFs. I can do it directly through a share trading site but decided to use them. Very impressed with their app and experience too - returns of 10% to date
• There is InvestSmart but they need a minimum of $10k to get started so I've held back but will jump in soon
• We opened a trading account with IG Trading and have a very small amount in few American stocks
• Property investment is way easier to get into here compared to back home. We have just started to dabble into that and purchased our first investment property. When I say purchased, its an empty block of land in the sticks yet to title/register in our names followed by actual construction of the house to rent out. So its a while away but good to get our basics in place
• We still have our pensions and SIPP invested with H&L back home, and wont be touching that for a long long time :-)

How have others fared with their investment plans out here? Disclaimer, I am not an expert in trading or the markets, and have mainly been a systematic investor in funds and ITs to grow our wealth gradually over the years

Cheers

KnK

[shaundennis]

Thanks KNK,

 

I started investing with Spaceship and I find it is excellent so echo your points above - if anyone wants to try it they have restarted their referral program as per link below:

"Hey. Start investing with Spaceship Voyager today! Get $5 in your account when you enter this code S8G4XO8J21 within 14 days of signing up and invest at least $5 in your chosen portfolio within 90 days of signing up. T&Cs apply. Spaceship Voyager issued by Spaceship Capital Ltd AFSL 501605. General advice only. Consider the PDS on our website before making a decision to invest with Spaceship Voyager. http://spaceshipinvest.com.au/refer"

 

Cheers

 

Shaun

[jul2019]

I looked at Investsmart but I'm too scared to invest with them. Can't seem to find any reviews anywhere online.

[Marisawright]

How did I miss this post? I need to look into other investments. I have some money in Ratesetter and am happy with them

[Kenfrapin]

20 hours ago, jul2019 said:

I looked at Investsmart but I'm too scared to invest with them. Can't seem to find any reviews anywhere online.

They have been around the longest and are actually quite good so you wont go wrong with them. I've been a member of their UK website for many years.

Also, Investsmart dont hold anything. Everything is bought and registered in your name and with a custodian trader so if Investsmart goes bust, your entire savings are left alone and you can easily access it. Never invest in anything where the units arent in your name, if you want to avoid the riskier, unknown investment firms

Best of luck

KnK

[Marisawright]

10 minutes ago, Kenfrapin said:

They have been around the longest and are actually quite good so you wont go wrong with them. I've been a member of their UK website for many years.

This might be why he was worried - I must say, it put me off:

https://www.investordaily.com.au/markets/45598-investsmart-posts-1-7m-loss

I am looking into Stockspot, so thanks for that tip.

Edited December 3, 2019 by Marisawright

[Kenfrapin]

1 minute ago, Marisawright said:

This might be why he was worried - I must say, it put me off:

https://www.investordaily.com.au/markets/45598-investsmart-posts-1-7m-loss

I am looking into Stockspot, so thanks for that tip.

Thanks for that, doesnt look at all. And agree that a new investor is better staying away. We all know we can never trust any company these days so if in doubt look elsewhere

Really hope they dont go under as they do produce nice articles and tips and research

Stockspot operates the same way as Investsmart does. You can chose one of their portfolios but we pay them for active rebalancing based on market trends. On another forum, people slated Stockspot because they essentially invest in trackers which we can do ourselves and avoid paying their management fee. However, over the last 12 months, they invested a bigger portion in gold and AU trackers, and each of it returned 18%, while global stocks, emerging stocks and bonds/others were in single digits. So I am very happy to pay their fees and sit on a 12% return overall in 1 year

KnK

[Paul1Perth]

If your UK investments were doing so well and you knew them why move to Aussie ones? With the internet you can invest in anything anywhere.

 

[Bridgeman]

20 hours ago, Paul1Perth said:

If your UK investments were doing so well and you knew them why move to Aussie ones? With the internet you can invest in anything anywhere.

 

Actually, you can't.  You can't open a savings account in the UK for example unless you are resident there.  Also Australia doesn't like anyone to invest their money out of the country.   I tried to open an investment in the Channel Islands, only to be told by them that I couldn't as I was resident in Australia and Australia doesn't allow it.

[Toots]

3 minutes ago, Bridgeman said:

Actually, you can't.  You can't open a savings account in the UK for example unless you are resident there.  Also Australia doesn't like anyone to invest their money out of the country.   I tried to open an investment in the Channel Islands, only to be told by them that I couldn't as I was resident in Australia and Australia doesn't allow it.

That's really strange.  I'm sure many very wealthy Australians invest their money out of the country.  

Read this:  https://www.moneysmart.gov.au/investing/international-investments

 

[Marisawright]

21 minutes ago, Bridgeman said:

Actually, you can't.  You can't open a savings account in the UK for example unless you are resident there.  Also Australia doesn't like anyone to invest their money out of the country.   I tried to open an investment in the Channel Islands, only to be told by them that I couldn't as I was resident in Australia and Australia doesn't allow it.

Paul1Perth was talking about investments that you already have before you leave the UK.   Usually there's nothing to prevent you holding on to them.  For instance, you can't open an ISA in the UK if you're living in Australia, but you can keep any that you already have. 

One of the downsides of keeping your overseas investments is that you're at the mercy of the exchange rate (which can also be a benefit of course, depending which way the exchange rate goes).    The other thing you need to look at is tax, not so much because you'll pay more, but it can mean having to submit tax returns in two countries which is a pain.

 

[Marisawright]

On 22/10/2019 at 13:26, Kenfrapin said:

• A lot of the common person's money goes into their pension, which is called super out here, with 9.5% being the standard amount deducted, and we can add more if needed. The choice of Super providers is mind boggling but very interesting to read up as there is a lot of material. You have a few flashy, expensive ones with phone apps and good online systems and then the simple no nonsense ones that lets you chose from a small set of investment choices. Supers mainly invest into funds which are not available to retail. And once your Super balance goes above a certain threshold, you can switch to a Self Managed Super Fund which lets you invest directly into shares, funds and properties as well. Oh, and many people tend to buy life and permanent disability insurance from their super itself. We have done that too and its at a really good rate compared to going to a normal provider outside of your super

To add to this info on Superannuation:  a lot of people find the idea of a SMSF (self managed super fund) attractive, especially if they're accustomed to managing their own investments.  However, they are a huge trap for the unwary!   On the whole, unless you have a LOT of money, a SMSF will be less profitable, and a lot more hassle, than putting your money in one of the industry super funds.   The administrative burden and auditing costs for a SMSF just aren't worth it for a small investor. Unfortunately there's a lot of financial advisers who will tell you how great they are because they make their money out of setting it up for you.

There's a growing trend for the super funds to offer options to choose your own investments within their fund instead of having to DIY.

[Kenfrapin]

23 hours ago, Paul1Perth said:

If your UK investments were doing so well and you knew them why move to Aussie ones? With the internet you can invest in anything anywhere.

 

Never said I was moving them across. UK investments are in older ISAs and we are allowed to just leave even if no longer UK resident. Starting new ones in Australia, the more we diversify plus throw in forex as a component, the better we will fare

[Kenfrapin]

One of the ways to open international accounts, in banking terms, is via local banks here. Citibank and HSBC both let residents open a foreign account and keep money in any of the openly traded currencies. This is only useful if you are playing the currency fluctuation market or keeping money aside to make a property investment in that currency. Still, for most people, say 99% of us, I dont think the fees involved for such accounts is even worth considering it, as fees far outstrip traditional returns from any country

If you want to invest in the global markets then thats readily available from most traders in Aus, and thats exactly what we are doing

I am pretty sure you can open a standard investment account in the UK through companies like AJ Bell or Hargreaves but no clue what the tax implications are. These companies wont know either and expect the investor to understand all tax laws applicable to them

Cheers

KnK

[Kenfrapin]

2 hours ago, Marisawright said:

To add to this info on Superannuation:  a lot of people find the idea of a SMSF (self managed super fund) attractive, especially if they're accustomed to managing their own investments.  However, they are a huge trap for the unwary!   On the whole, unless you have a LOT of money, a SMSF will be less profitable, and a lot more hassle, than putting your money in one of the industry super funds.   The administrative burden and auditing costs for a SMSF just aren't worth it for a small investor. Unfortunately there's a lot of financial advisers who will tell you how great they are because they make their money out of setting it up for you.

There's a growing trend for the super funds to offer options to choose your own investments within their fund instead of having to DIY.

UK are far more mature in that manner. Very easy to start your own SIPP and invest in whatever you like, in terms of equities. The paperwork isnt complicated either as its all centralised. I read a little about SMSF here and man, there is a lot of hoops to get through plus the few providers who give this option charge a lot. We'd need to be an expert and make good investment bets to make it worthy going down this route. For now, the two of us have stuck to some of the top super providers, maybe in a few years will venture into SMSF

KnK

[Paul1Perth]

3 hours ago, Bridgeman said:

Actually, you can't.  You can't open a savings account in the UK for example unless you are resident there.  Also Australia doesn't like anyone to invest their money out of the country.   I tried to open an investment in the Channel Islands, only to be told by them that I couldn't as I was resident in Australia and Australia doesn't allow it.

If you have UK bank accounts when you leave though, don't close them and keep enough cash in to use if you're visiting. If you know the investment market in the UK well you can carry on with that from anywhere with the internet.

[Ken]

On 04/12/2019 at 13:43, Marisawright said:

Paul1Perth was talking about investments that you already have before you leave the UK.   Usually there's nothing to prevent you holding on to them.  For instance, you can't open an ISA in the UK if you're living in Australia, but you can keep any that you already have. 

One of the downsides of keeping your overseas investments is that you're at the mercy of the exchange rate (which can also be a benefit of course, depending which way the exchange rate goes).    The other thing you need to look at is tax, not so much because you'll pay more, but it can mean having to submit tax returns in two countries which is a pain.

 

You will pay more tax if your investments are in an ISA. They're not tax free in Australia.