ING Offset (JUN24 Prep)
As I’m preparing to finalize the ING Offset for JUN24 year end, just wanted to write some notes down.
Everything that we’re doing now is contingent on one action after another. It’s great as we have a good and solid account reconciliation and that we are able to separate them into different buckets. Each of the main categories are independent and distinct. Only the subcategories under Net Prop are associated as we plan to zero out the balances and allocate to PPM. I’ve also decided to create a new category called PPM 3Y, separating our funds from PPM Initial. PPM Initial intent is to fund 100K over 2 years from JAN24-DEC25, and 50K of 12.5K each of its half years. These funds are from EFI. Since our variable mortgage interest rate is at 6.79% to-date, savings on interest payables is more important than the potential of market returns in the market as it’s currently still hot within the 52WH, especially banks. I’ve decided to focus on a few of our core positions, and any positions that have a higher assessed risk, we’ll leave in the ING Offset account until the dividend capture periods.
For US-Inv, we finished at 63.1K. We had a strong market performance this year, and decided now is the best time for us to fully liquidate our US-Inv positions and allocate the funds into our ING Offset. I’ll finish off reporting US-Inv and FX Rates as of JUN24. We’ve fully liquidated our Fidelity accounts and Chase will remain at the minimum deposit. We’ll only transfer back to our US account when we do our US tax filing around Q1/2. As the US-Inv will no longer be funded, we will be reallocating 12.5K/25K annually to PPM 3Y.
KSuper changed it’s methodology this year as her employer will be paying bonuses end of JUN24, so the Super won’t be reflected until JUL. Due to this change, I had to recalculate her YTD contributions for salary sacrifice, and allocate for the following year as well. Due to these changes, I’ve calculated KSuper salary sacrifice to be at 15K. Since Kathy’s at the 30% marginal tax rate, and all bonuses fixed tax rate is at 50%, salary sacrificing 15K will save us an additional 20% x 15K = 3K of tax cost savings. However, it also true-up her KSuper by an additional 7.5K early in the year, so our % allocations are now off. The contributions to KSuper also throws off ESuper % allocations as we have 60%/40%. For now, I’ll hold off on contributing to ESuper and will defer it to Q2 and will determine of the market volatilty has adjusted by Q1.
Target PPM is 150K by JUN25. Target PPM 3Y is 175K by DEC26. Total PPM is 150K+175K=325K. That would save us about 22K annually in mortgage interest at the current mortgage interest of 6.79%. Our current repayments are about 43K annually, so the goal is to focus and pay down our principal, and have the interest payables to be under 15K by 2025, and decrease it by 5K annually until 0 by 2027.
Our kicker variables are twofold: the market and mortgage interest rate. If the market corrects or if the market interest rates decreases closer to 3%, then we’ll consider utilizing our EFI-Holding funds to DCA our purchases. Otherwise, we’ll continue to fund our ING Offset.
