If you had one million to invest

[buggerlugs]

Originally Posted by 99AUXR

Okay OP is a self funded retiree? . . .

I wish ..............

[buggerlugs]

Originally Posted by neptune blue

You have absolutely no idea about how my super fund is performing yet you make assumptions
I'm with AON and they have given me dividends between 11-14% when the market is good
If you read my post I said that given the uncertainty of the ASX you should transfer your money out of shares into cash till it stabilises, this way you don't loose money when the market crashes - and it will a soon as china don't need as much iron, gas or oil

Now Donald Trump - I have a number of very wealthy friends ,one of which is worth around $400 million. They all " dabble" in the share market but next to their primary business interestes they all have very significant property investments - Why would that be ?

I'm 55 and for me to retire on an income of $50,000 PA - which the "experts" say we will need to live some sort of a life, I need a million dollars invested at 5%
To do that I need to find around $20,000 PA on top of my employer contribution to put into super so that I reach that figure. I cant afford to do that as my children are sill at school and living at home and I have a mortgage.

Without the need to salary sacrifice I can set up my own managed fund using my super and my wife's super and buy a $500k house , borrowing about $200K
Rent it for $1500 a month ( average rental return in the area we are looking at) covering the interest and principle payment

Our employer super contributions go straight on the principle meaning that in about 13 years the house will be paid out or very little left to pay

The house I live in based on current trends will be paid of and worth around $1.6 million. So I sell up tax free, move into my rental and I get a salary of around $70k per year and I have no others debts - improved capital value of the second property and all this without having to find one additional dollar out of my own pocket .
If I was really smart I'd use the equity in my home to purchase a third propery and use the tax break to pay off the home I'm living in

The problem with super is that the government keeps changing the rules and that we are living in a global economy so if **** goes down on the other side of the world we cop it

Finally no matter what happens to your super the super company's always make money and always charge you regardless of how your personal investments are traveling

I've lived through the resession in the 90's and seen all the ups and downs. The one thing that has always performed consistently is property

I have simply decided to take charge of my own destiny instead of relying on a company that has its own profits as its primary objective , not mine.

Sticking your head in the sand and relying on people you don't even know, managing your money that can disappear in a day are deciding whether you live pension cheque to pension cheque.

There are also plenty of other problems with the ASX relating to franking ( they way it's done) and our lack of export manufacturing but that is a discussion for another thread

What I'm doing may not suit you or many other people but I've crunched the numbers and sort advise from successful people and from where I sit at the moment this is the best and easiest option.

Could you get 5% on a million dollars at the moment ?

[neptune blue]

I think you could get close. My super fund paid a dividend of 4% from memory

[Franco Cozzo]

Originally Posted by wodahs

Damo you forgot the hookers , every marijuana and ice party needs the hookers

I give crap advice but at least its free

[graphicgoose]

I would have bought $1mill worth of my companies shares when they were $0.07 a few months back...they're now at $1.335...gutted!

[Robos F6]

Most bank shares pay 6% in dividends

[Feathers]

Another vote for property here.
My Grandmother got into that game in her 30's, and by the time she passed, her personal portfolio was worth over $5 million.
Along with my Grandfather she set up a couple of companies which owned and leased industrial/retail properties, and which are still going now.
Of course Dad has also been collecting properties along the way.
Moved away from houses, due to land tax in NSW, and into apartments.

We actually can't keep them empty, even when we try! We've asked the leasing agents to leave them off their listings, as various tenants have left, so we can go through and clean/paint/repair, but they've already got another tenant signed up to move in!

Sydney apartments are going nuts right now. 36,000 new ones being built along the inner-west rail corridor alone! I'd never want to live in one, but to rent out they'd be fine (If you could swallow paying over half a million for a 1/2 bedroom apartment on a main road, next to a rail way line. No thanks!).

The residential side is good, industrial/retail not so much. We've been struggling for a couple of years, to find suitable tenants for a factory building my Grandfather built in the 70's, but I believe it's now fully leased.
Just sold one retail property to developers as part of a group, where the whole lot will be demolished for apartments.
I don't have the same business brain as either my Father or Grandmother, but Dad is coaching me. Eventually I will have to manage it all on my own.

So in answer to the question of investing a million bucks?
I'd buy a couple of older apartments in Sydney and then rent them out.

[Franco Cozzo]

I guess you have to be careful with industrial land and buildings, the factory I'm renting is a new building just built a few months ago but there are currently 6 other factories up for lease in the industrial estate and probably 10 properties for sale.

Its probably relying on new business starting up or coming into the area, much lower chance than residential properties/housing.

[DoreSlamR]

Originally Posted by neptune blue

Bull ****
I've been in super since 1994 and have $260,000 to show for it
The first house I built was in 1994 and cost $178,000 and it just sold for $580,000
The house that I'm in cost $700,000 to build in 2007 ( including land) it was valued at $1.1 million last year

Property values double pretty much very 7 to 10 years . Sure there are down turns but it always and has always recovered The GFC in 2009 cost me $50k in share devaluation

Have a look at the share market recently , as soon as China coughs the share market ***** its self

My accountant is in the middle of setting up a company's and trust so I can buy property with my super before the market crashes yet again. For those of you that have super put your money into cash - only going to pay 3-5% but at least you won't loose money , then when the market stabilises transfer back into shares

Good for you brother.

I bought a unit nearly 9 years ago now, I'll be lucky to sell it for what I paid for it.

[b0son]

Most super funds let you change your investment strategy ... be it low growth/stable, or high growth/riskier. You can also move your super from one fund to another easily.

IME, the people the whine about super are those that are utterly apathetic about it - they've never shopped around, and they've never changed their investment strategy depending on what was going on in the market. You explain to them to do so, and they just shrug and respond with some sort of 'meh, whats the point'

These people also tend to be the ones that swear black and blue that bricks and mortar are infallible. Just ask the bricks and mortar investors in Perth or the mining towns how their property portfolios are doing....

[Yellow_Festiva]

This is such a loaded question and the answer is often very different for most people.

Shares can be great and they can tank, as can property.

Bank interest is somewhat secure but boring and the returns are on the lower side.

If I had a $mil to invest I would diversify actually.

30% property, 30% cash, 15% shares, 15% antiques / collectibles and 10% in a managed fund.

That is what I would do now. In 10 years that answer will be different and in a further 10 years it will be different again.

Also, this is assuming I have paid off all my cards and primary residence.

[Peuty]

I hope the market does crash personally, so my super contributions will be buying at a nice low unit price. The only way is up.

Also, I'd suggest reading up about industry super funds. Are you concerned that AON is listed on the stock exchange? Did you even realise that?

Shav, you mentioned above that super funds are bailing out banks with members money? That's the first I've heard of that happening - The SIS Act 1993 would prohibit that from ever happening.

Originally Posted by neptune blue

You have absolutely no idea about how my super fund is performing yet you make assumptions
I'm with AON and they have given me dividends between 11-14% when the market is good
If you read my post I said that given the uncertainty of the ASX you should transfer your money out of shares into cash till it stabilises, this way you don't loose money when the market crashes - and it will a soon as china don't need as much iron, gas or oil

Now Donald Trump - I have a number of very wealthy friends ,one of which is worth around $400 million. They all " dabble" in the share market but next to their primary business interestes they all have very significant property investments - Why would that be ?

I'm 55 and for me to retire on an income of $50,000 PA - which the "experts" say we will need to live some sort of a life, I need a million dollars invested at 5%
To do that I need to find around $20,000 PA on top of my employer contribution to put into super so that I reach that figure. I cant afford to do that as my children are sill at school and living at home and I have a mortgage.

Without the need to salary sacrifice I can set up my own managed fund using my super and my wife's super and buy a $500k house , borrowing about $200K
Rent it for $1500 a month ( average rental return in the area we are looking at) covering the interest and principle payment

Our employer super contributions go straight on the principle meaning that in about 13 years the house will be paid out or very little left to pay

The house I live in based on current trends will be paid of and worth around $1.6 million. So I sell up tax free, move into my rental and I get a salary of around $70k per year and I have no others debts - improved capital value of the second property and all this without having to find one additional dollar out of my own pocket .
If I was really smart I'd use the equity in my home to purchase a third propery and use the tax break to pay off the home I'm living in

The problem with super is that the government keeps changing the rules and that we are living in a global economy so if **** goes down on the other side of the world we cop it

Finally no matter what happens to your super the super company's always make money and always charge you regardless of how your personal investments are traveling

I've lived through the resession in the 90's and seen all the ups and downs. The one thing that has always performed consistently is property

I have simply decided to take charge of my own destiny instead of relying on a company that has its own profits as its primary objective , not mine.

Sticking your head in the sand and relying on people you don't even know, managing your money that can disappear in a day are deciding whether you live pension cheque to pension cheque.

There are also plenty of other problems with the ASX relating to franking ( they way it's done) and our lack of export manufacturing but that is a discussion for another thread

What I'm doing may not suit you or many other people but I've crunched the numbers and sort advise from successful people and from where I sit at the moment this is the best and easiest option.

[ebxr8240]

In my case rolled over super as its tax deductible when you retire, over 60..
This will depend on your age ? Keep in mind how much you can salary sacrifice ..BTW I have retired .. With redundancy and long service leave I had many options .. Super is getting just over 12% .. I take 50k to live on..
Plus rental money..

The rest in real estate .. I like real estate as it can't be spent by another party ...
Insurance pretty much cover bad tennants. Just have malicious damage on your policy..

[ebxr8240]

Keep the conversation going guys .. I'm 62 and very lucky I bought real estate in early 90's .. 60k / 100k back then property is worth over 600k now .. The main thing is to have some plan ..

[blueoval]

Originally Posted by Peuty

Shav, you mentioned above that super funds are bailing out banks with members money? That's the first I've heard of that happening - The SIS Act 1993 would prohibit that from ever happening.

Maybe I have it wrong. I knew of a family who had 400k sitting in their super. The GFC came and wiped out 300k of it. Maybe they had it in a risk setup? But they were 5years off retiring and now have to continue to work for as long as it takes to make up for it. Where did that money all go then?

[ebxr8240]

There's swings in shares ..Yes money can be wiped overnight ( if you sold ) BUT given time it comes back big time .. Money on term deposit hardly keeps up with inflation ., better to have shares in the bank .. I get on well with my accountant .. He's a Ford car guy. He books me in at the end of day. Often don't leave till way past 10 .. Having a good communication with accountant or financial adviser is important .. Knowing TAX laws and financial laws through gov .. Things change big time as you get older .. Hope some younger guys on take this as advice ..

[Peuty]

So super is like shares - your money buys a certain number of units at a certain unit price. For example, if you put $100 into super and the unit price was $1.00 then you would have 100 units. As the market fluctuates, these fluctuations are reflected in the unit price.

So, let’s say the GFC came along and the unit price above was reduced to $0.50. You would still hold 100 units, but their value would only be $50, instead of the $100 it was before.

Now this is where a lot of people ran into trouble with the GFC. They saw the total value of their investment decreasing and instead of "riding the storm out", so to speak; they switched into something less aggressive, like cash. What this did was crystallise their investment loss - they sold their 100 units at a low price, in this case for $50, which meant that they only bought $50 of the new investment option, which means that there would be no chance of making back their money, even if they switched into the investment option they were in before switching. (Remember, they will only have $50 to invest).

Statistics show that in the majority of cases, the unit price MORE than recovered, which meant that if people held of switching, they would still have 100 units which would still be worth more. I mentioned above, the QSuper Balanced option has trebled in value since inception (1998), so that would mean in my above scenario, the unit price could be $3.00 - meaning that $3.00 x 100 units = 300.

I hope that makes sense.

[ebxr8240]

Another example .. We had shares in property investment company .. ( Hanover) it went belly up .. Our own lawyer at the time offered 20c a share . It was bought out by another company ., Now these shares are worth much more than the ones . Let alone 20c a share .. Even your own legal guys are after your hard earned .. Look at the 5 to 10 year profile .. Where the dips on the way are smoothed out .,

[blueoval]

Originally Posted by Peuty

So super is like shares - your money buys a certain number of units at a certain unit price. For example, if you put $100 into super and the unit price was $1.00 then you would have 100 units. As the market fluctuates, these fluctuations are reflected in the unit price.

So, let’s say the GFC came along and the unit price above was reduced to $0.50. You would still hold 100 units, but their value would only be $50, instead of the $100 it was before.

Now this is where a lot of people ran into trouble with the GFC. They saw the total value of their investment decreasing and instead of "riding the storm out", so to speak; they switched into something less aggressive, like cash. What this did was crystallise their investment loss - they sold their 100 units at a low price, in this case for $50, which meant that they only bought $50 of the new investment option, which means that there would be no chance of making back their money, even if they switched into the investment option they were in before switching. (Remember, they will only have $50 to invest).

Statistics show that in the majority of cases, the unit price MORE than recovered, which meant that if people held of switching, they would still have 100 units which would still be worth more. I mentioned above, the QSuper Balanced option has trebled in value since inception (1998), so that would mean in my above scenario, the unit price could be $3.00 - meaning that $3.00 x 100 units = 300.

I hope that makes sense.

Thanks for that explanation. It makes more sense now. Still, it is risky. Like it's been said, it's better to buy cheap shares with the prospect that they will increase in price later on. The issue is know which ones to buy and how long to hold onto them for and if they do plummet in value to ride it out.

I've never dabbled in the stock/share market. I know super is based on the similar principles though. That said, I prefer tangible assets. Something I can see or touch rather than a computer print out of what might be.

[Trump]

For me, quite easy:

- half in cash sitting in a time-release safe dispensing $750 a week (good for 26 years, but doesn't account for inflation).
- half in bullion (silver and gold) to preserve purchasing power.

The banks and all of the other instruments of the rat race can get stuffed.

[blueoval]

Originally Posted by Loud_Noises

For me, quite easy:

- half in cash sitting in a time-release safe dispensing $750 a week (good for 26 years, but doesn't account for inflation).
- half in bullion (silver and gold) to preserve purchasing power.

The banks and all of the other instruments of the rat race can get stuffed.

Probably the smartest post yet. Although the elite want the price of silver and gold to go to nought for this reason alone.

[something wrong]

Originally Posted by neptune blue

Bull ****

My accountant is in the middle of setting up a company's and trust so I can buy property with my super before the market crashes yet again.

This doesn't make sense, i would set up a company with my super to buy after the crash not before the crash, then ride the upswing?

But i do agree if you do your research and know your area, property is a great way of making cash, which if you flip the coin and do the same for shares you can also make some great returns.

The more you know the less the risk, but it all is a gamble

I only have one property my PPOR, but we have been getting our finances in order to make us less at risk of the possible recession next year and then be in a position to captialise, if the recession / downturn doesn't happen then we will be no worse off as we will have little debt and plenty of options.

P.s A good accountant is great but a great accountant/ planner is a gold mine, but they don't work for $80/h in a cubicle in Westfields, you have to spend a little more, but not so much that you have to take a loan out.

[mik]

If I had a million to invest, I would not bother going on a wing and a prayer guessing where best to put it , I would give to someone that knows how to make a buck investing money, in my case that would be the blokes looking after my super(runs on the board).

[snowcone]

Having lost money in property, shares and super, I would wack the lot straight into an established Bank or Building Society and take the $50,000 to $60,000 in interest every year and leave the capital untouched.
Any other way and you can guarantee the market or the government will screw you over

[Peuty]

What bank are you with that pays 5-6% interest on cash? I wanna sign up! not even term deposits pay that much.

The biggest thing will be ensuring your investment earns more than inflation, which leaving it as cash in the bank most certainly will not.

[Peuty]

Oh and don't forget income tax!

[buggerlugs]

Originally Posted by Peuty

What bank are you with that pays 5-6% interest on cash? I wanna sign up! not even term deposits pay that much.

The biggest thing will be ensuring your investment earns more than inflation, which leaving it as cash in the bank most certainly will not.

Just thinking the same thing. I think if you get 3% at the moment, your doing well..........

[Matty4]

I'd be looking for an investment property that I could subdivide to put say 4-6 units/townhouses on.
If you owned the property you could easily borrow the funds for the construction of the dwellings. Once built, sell 4, keep 2, and the proceeds of the sale of the 4 completed dwellings would most likely pay off the construction debt. You then have 2 properties with rental income and virtually no debt.

Rinse, repeat..

[Trump]

Certain account holders are offered rates above and beyond the standard market rates...

[ebxr8240]

I prefer houses .. Work out loan and rental income ? Quite often cbd isn't what it seems ..
I find with units .. Someone has already made the money... Body corporate expenses give me the creeps ...