Capital Growth Property, Passive Shares and Tax Arbitrage – Aussie Doc Freedom

Aussie Doc Freedom is not a financial advisor and can offer no advice. This website aims to provide accessible, understandable information to help readers make informed decisions with professional help

Each week, I have asked a finance blogger or podcaster to share their personal wealth building strategies. I am hoping these will be useful to compare lots of different strategies and perspectives to provide ideas and insight in your own investing journey.

Money management for doctors

This is the Aussie Doc Freedom strategy. We are a household of a high income earner, stay at home spouse (working a few hours to break up the week) and two small kids.

I am a doctor 7 years post specialization, almost 4 years into getting serious about investing after returning from extended parental leave/ mini retirement.

To see all the wealth building strategies shared with Aussie doc freedom, check out the Ultimate Step by Step guide to Wealth building, with wealth building strategies.

Name/ Online identity:

Aussie Doc @

Aussie Doc Freedom is a money management and investing site for doctors and higher income individuals.

What are Your Investing Goals?

We are aiming to be financially independent by 2035. I would like to choose when, where and whether to work from age 55.

We are saving for the kids future. Aim to have money invested specifically for their university tuition fees, or to help towards a home deposit or 1st investment if they choose not to attend tertiary education.

I greatly value freedom and flexibility over my time. Currently I work part-time and plan to continue this long-term. I like to save enough to cover half pay long service leave to allow more holidays while our kids are young.

What Is Your Investing Time Frame?  How Far Along Are You?

We are around 1/3 of the way to financial independence.

What is the Most Powerful Wealth Building Tool Available to You?

Income, borrowing capacity, mindset and interest in finance.

What wealth building habits are you utilizing to reach your goals?

Automation is the most important. Money directed automatically into an account for investing.

Mortgage on investment properties are forced savings. I can’t not make the repayment!

Not caring about keeping up with the Jones’s

What is your Strategy to Achieve This?

With a high and low income earner in the house, there is a good opportunity to utilize some tax arbitrage to improve income returns.

We do not need more income now, but will need it in ~15 years time. As a result, a capital gains strategy in property a good fit for us.

The high income earner buys property (carefully, with professional help) that is expected to perform well for capital growth.

The properties will be negatively geared due to relatively low yield, but around the 20 year mark income will finally outpace income from an equivalent value high yield property.

The growth in property value will out grow the return we could get on the stock market due to carefully utilized leverage (with risk well examined!).

With our planned properties brought, we will pivot to passive investing in the stock market in the low income earners name, and also in superannuation. This will provide money we can withdraw until the properties start producing adequate income.

How Long Have You Been Using this Strategy?

Strategy developed slowly over the past 4 years. Until recently, we planned to buy a property each with a higher income property in the lower income earner’s name.

We realized we really needed the capital growth and it would be far more affordable in the higher income earners name due to a 47% tax deduction.

We will eventually have to pay more tax once the properties start producing income, but this way worked out slightly better over the long term based on assumptions. It also puts us in a less vulnerable situation if interest rates increase significantly (due to tax break).

Were there other strategies before?  If so, what made you pivot?

For years our strategy (when we were both working and earning more even income) was to pay the mortgage down and salary sacrifice into superannuation.

Interest rates were higher then, and we would have both paid tax on any investment income.

We did not want to commit to investment mortgages until I returned to work after having our last child

What makes your strategy suit your personal situation?

Leverage increases risk and potential rewards. However, negative gearing is a strategy suited to higher income earners with plenty of surplus.

Having a very low income/ long term stay at home spouse makes investing outside superannuation potentially even better. Not only is it more accessible, but we will pay 0% tax instead of 15%.

Where Do You Stand on Home Ownership vs Renting?  Why?

I was certainly taught, like many, that “Rent money is dead money”. After buying our principal place of residence 12 years ago, and it providing no growth outside inflation I have learned first hand that not all property goes up.

I do think owning your own home outright by the time of retirement is important. Nobody wants to move house in their 80s because the landlord is selling surely!

If you want to live in an area with good capital growth potential, buying a home (if you can afford it!) is the best of both worlds. Otherwise, seriously consider renting and investing in better quality property or the share market

Where Do You Stand On The Great Property vs Shares Debate? Why?

Like most subjects there is regular heated debate over, there is not a clear winner. There are pros and cons of both. I like utilizing the leverage that comes with property investment, but realize this comes with extra risk.

I prefer to have some rental income in retirement. After watching the horrors of the GFC as a young doctor, I feel having my entire retirement portfolio in the stock market could be extremely stressful.

Where Do You Stand on Investing for Capital Growth vs Income?  Why?

If you can afford it, capital growth will pay out bigger over the long term and tends to be more tax efficient. Capital gains tax is discounted by 50% once assets are held for a year. The downside of capital growth is that it is a long term play. Particularly with property, you ideally want to start 20 years in advance.

Do You Have Any Financial Regrets

I’ve made plenty of financial errors, like most people. But generally, I have been conservative with my income, utilizing it to pay down debt.

Of course, I wish I had brought a Sydney property ahead of the latest boom, but at the time, I wouldn’t have had the knowledge of which professionals to help me choose carefully. Better to not have brought than to have brought a lemon which has ended up in negative equity!

Any final suggestions?

Spend less than you earn, read regularly, start a regular investment and stick to it.

To see all the wealth building strategies shared with Aussie doc freedom, check out the Ultimate Step by Step guide to Wealth building, with wealth building strategies.

Aussie Doc Freedom is not a financial adviser and does need offer any advise.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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