Kathy AU Comp Assessment
We’ve consolidated Kathy’s AU Compensation by Year from 2018 (1 Year after relocating to Australia). We won’t be including Year 2017 as we’ve relocated in MAR17, so that’s about 3 months in. Based on our assessment (after including Super Guarantee and Bonus Contributions), our Net of 1M makes up about 67%, so the effective tax rate is about 32%. Our Net Savings is 632K, averaging NSR% of 63%. That’s impressive. This year alone, we’re targeting for 73%. As Kathy’s total comp increases, our NSR% increases by about the same amount, which means we’ve managed to keep our lifestyle costs about the same, so no lifestyle creep there.
Let’s assess our Net Savings-to-Investment Allocations more in depth.
// KSuper: 185K [25%] // ESuper: 92K [13%] // EFI: 106K [11%]
// Property: 169K [32%] // Offset: 45K [14%] // KBInvT: 35K [5%]
Property makes up 32%. As of to-date, our Mortgage Interest rate is 6.79%. That’s sick. Our repayments are now at about 1.6K fortnightly, or about 41.6K/annually. STRATA makes up 6K. Rest is Water/Council/Levy, etc which is minimal. We prefer for our Mortgage Interest to not accrue by more than 25K, so we’ve put in 100K into the Offset, and made extra contributions of 100K (utilizing EFI Cash Inv). I’ve managed to hit the 18.2K tax free cap annually for the past 5 years, so about accumulated 91K tax free in realized cap gains, so now I’ll be utilizing those funds in the Offset Acct to lower our mortgage interest. We’ll be saving about 91K x 6.79%= 6.2K annually. In addition, since the ASX is currently trading near it’s 52WH, we’ll be utilizing another 100K of Cash Investments, so 100Kx6.79%=6.8K annually. Total about 13K annually in mortgage interest savings. EFI has 116K allocated, so by MAR24, I plan to true-up our investments to about 25% invested, or 30K to Dollar Cost Average (DCA) the BUYs. By JUN24 after ex-dividends, another 25%, or about 58K. We’ve already reached our Target of tax free capital gains by JAN24, and considering that the ASX market is trading at its highs, we’ve lowered our risk exposure and utilize the funds to our Offset Acct to lower the mortgage interest. Any further gains at this point upto JUN24 is just icing on the cake. We do anticipate for the Banks to pay a nice chunk in DFC by JUN24, so we’ll continue to monitor the stock positions more closely between now until APR24.
Our Property increased its equity by 100K in 2 Years since purchasing. That’s high. We’ve purchased at 700K, it’s now about 800K. That’s about 12.5% increase, or 6.25% annually. That’s high. I prefer for it to be closer to the 4% rate annually as the Property is making our % allocations fluctuating. I’m estimating to be closer to the 30K-to-35K run rate, not at 50K. A method that we have considered using is to keep the Purchase Price the same, instead of it’s Current Market Value (CMV). However, if we use this method, then we wouldn’t necessarily be tracking the actual property value, and we’ll need it to determine the LVR% for our next investment property purchase (once the interest rates and home prices become more reasonable). Off topic is that Brandon will be attending primary school here, so we won’t be selling in the next 5 years. We can consider making this Property and convert it into an investment property instead, or purchase an investment property within the next 5 years instead. Until the interest rates become more reasonable and manageable, we’re not in a rush to purchase as we’ll be utilizing either EFI or the Offset Acct for the downpayment.
Regarding Investments, we’ve revamped our Investments Allocations for EFI and EKSuper. We’ll need to look into KSuper more closely as its now at 150K+. Need to ensure that the % Allocations are reasonable, and that the DFC% are doing what it’s supposed to. ESuper is at 100K, so associating about 65% of KSuper is sufficient. Our LPP’s, TPP’s, and TAP’s shouldn’t be too different and we’ll keep the same funds. We’ll target at DFC% at 6%, 8% Income and 4% ETFs, so 250K x 6% = 15K in DFC. Franking credits will be imputed since it’s inside Super. We’ll also target 500K in EKSuper within 3 years, so 500K x 6% = 30K in DFC. Let EKSuper compound and grow overtime with the dividend snowball effect.
