What to do with Inheritance

[bunsen burner]

Was that freudian?

Yes it was fatherly advice. Anyone who comes on an online footy forum asking what to do with 60 grand needs life experience and sense of how they want to spend their life before they consume themselves with how to get max return on the said money.

The guy is 19. Where else is he going to get some opinions? At 19 he's way ahead of his time (albeit due to his inheritance). At least he's got the nunce to see what's out there from a broad range of people/strangers.

His idea of buying a house was fine but the approach of having mates live in it is immature and a recipe for trouble.

I know heaps of people who have done it and it's an astute move, especially in todays unaffordable housing climate.

If he wants shares, you are hardly going to be on here asking about them, you are going to be trawling this prospectus or that.

He's not really asking for specific share tips, just broad investment strategies.

B-Rock, don't trust the internet for fiancial tips. It's your money, not that of some anonymous dude on the other end of a post.

ie don't listen to clowns who think a term deposit is a wise strategy.

You seem to have a view that 60,000 can equal your life.

It's a golden opportunity to set the base for security 10-20 years down the track. It's hard to explain to someone so young but anyone who's 30+ and struggling to find that deposit for their first house will tell him.

 

[bunsen burner]

Net of costs and tax?

If we're going to do it that way then it's a fair bit higher.

 

[bunsen burner]

. That said, if you check out websites like www.commercialrealestate.com.au and you may find you can buy a small office for around $150k.

Cheers big ears. Just saved that to my favourites. Never knew it existed.

How's your development going?

 

[Scratcher Gillespie]

If we're going to do it that way then it's a fair bit higher.

Explain how a 3% before tax/expenses yield equates to be higher tha a 4 - 5% after tax/expenses yield...

Bearing in mind that the young man could go out and gear a share portfolio in exactly the same way you are suggesting he do with property.

 

[prep80]

Explain how a 3% before tax/expenses yield equates to be higher tha a 4 - 5% after tax/expenses yield...

Bearing in mind that the young man could go out and gear a share portfolio in exactly the same way you are suggesting he do with property.

He can't because haven't you noticed that he posts ignorant horse****. He tries to come across as some sort of residential property guru but in reality and judging by the amount of posts and time he spends on this board he is a sad lonely individual, no friends, probably never had a girfriend and abuses other posters safe in the anomynity of the net, knowing that if he did this in the real world he would get a punch in the head.

As for the young man seeking advice; read a lot, see a good financial adviser and you could set yourself up for life.

 

[bunsen burner]

The 150 -200 grand you first mentioned is a windfall. Something you could make talk from the get go.

60 grand really isn't.

$60k now is enough for this guy to set himself up for a comfortable ride - if he invests wisely with limited risk.

It's only your limited investment understanding that limits you to these views.

Everybody wants a house. Keep it handy for a deposit is the obvious best advice.

It's not "obviously" the best advice at all.

Shares (ie the index) and property get better returns long term than term deposits. No ifs or buts. Why would he hold onto the money for any longer than he needs to?

The Melbourne market will never be cheaper. It won't be long before it starts to slowly rise. He wants to get on sooner rather than later (without rushing). He has the ability to sit on his shares and ING account while he spends time researching.

You have to understand an internet forum has no substance. If you make a decsion that goes awry and it traces back to this forum, you can imagine what a kicking of your self that you will be doing.

No one's telling him to get on some company that's found a "new" oil deposit in the Black Sea, or telling him to buy Dockland units off plan, or telling him to invest in ostrich farms.

People are suggesting low risk solid gain long term investment strategies.

And this guy isn't stupid. He's not going to read what people are saying and rush out into an investment. He's aware that he needs to investigate and do his due diligence.

 

[bunsen burner]

Explain how a 3% before tax/expenses yield equates to be higher tha a 4 - 5% after tax/expenses yield....

There's numerous ways how to calculate it. You tell me the formula and I'll put the figures in for you.

Bearing in mind that the young man could go out and gear a share portfolio in exactly the same way you are suggesting he do with property

Sorry, but that is pure crap.

You cannot leverage more than 50% with shares. You can do 100% with property. This guy would be able to do 60-70% safely with his wage. And you don't get margin calls.

 

[bunsen burner]

He can't because haven't you noticed that he posts ignorant horse****. He tries to come across as some sort of residential property guru but in reality and judging by the amount of posts and time he spends on this board he is a sad lonely individual, no friends, probably never had a girfriend and abuses other posters safe in the anomynity of the net, knowing that if he did this in the real world he would get a punch in the head.

Whatever champ.

As for the young man seeking advice; read a lot, see a good financial adviser and you could set yourself up for life.

Where are these good financial planners? How do you know which ones are the good ones? If I had a dollar for every self interested FP who claimed that "shares outdo property every time" and then a dollar for every dumb arse who believes it and goes around spruiking it like they are knowledgeable about investing, I'd be a very wealthy man.

Forget financial planners unless they are highly recommended and have a proven track record that you have seen with your own eyes. Other than that, learn it yourself. It's not hard.

 

[Scratcher Gillespie]

There's numerous ways how to calculate it. You tell me the formula and I'll put the figures in for you.


Sorry, but that is pure crap.

You cannot leverage more than 50% with shares. You can do 100% with property. This guy would be able to do 60-70% safely with his wage. And you don't get margin calls.

Dear oh dear bunsen. Care to take another stab at this?

http://www.infochoice.com.au/investment/marginlending/compare/lvrlookup.asp *Edit, page did't save. Type in any one of BHP, CBA, ANZ, WES, BHP, RIO, NAB, WOW to generate LVR ratios for these stocks.

Most liquid blue chip shares can be geared to 70 - 75%, with a 10% buffer. The exact same as what you suggested he do with property. Might be an idea to check your facts before suggesting someone else is talking complete crap.

Suppose we take this definition as a definition for yield:

2. Yield can refer to the rate of income generated from a stock/property in the form of regular dividends/rental payments. This is often represented in percentage form, calculated as the annual dividend payments/rent divided by the stock's/properties current price.

Residential property historically has low yields, especially net, with investors looking to capital growth to make up the difference. It is easy to get a good blue chip stock portfolio yielding 5 - 6% NET, much more difficult to get a residential property to yield that much.

 

[bunsen burner]

Dear oh dear bunsen. Care to take another stab at this?

http://www.infochoice.com.au/investment/marginlending/compare/lvrlookup.asp *Edit, page did't save. Type in any one of BHP, CBA, ANZ, WES, BHP, RIO, NAB, WOW to generate LVR ratios for these stocks.

Most liquid blue chip shares can be geared to 70 - 75%, with a 10% buffer. The exact same as what you suggested he do with property. Might be an idea to check your facts before suggesting someone else is talking complete crap.

Ok, fair enough. A lot has changed in 4 years. $ years ago, no major lenders where going past 50%.

But I found this bit interesting:

Be aware that LVR's are subject to change without notice

If a stock becomes vulnerable then the lender can change the LVR sending the borrower into margin call. Given they're blue chip stocks, it wouldn't be common, but margin calls can cripple.

Suppose we take this definition as a definition for yield:

Yield can refer to the rate of income generated from a stock/property in the form of regular dividends/rental payments. This is often represented in percentage form, calculated as the annual dividend payments/rent divided by the stock's/properties current price.

value = $500k
rent = $340 pw = $17680

= 3.5%

 

[A Zannatta]

Just read some of the posts here. My opinion = this dude Bunsen is quite a tool.

 

[bunsen burner]

Just read some of the posts here. My opinion = this dude Bunsen is quite a tool.

Good work champ. Going to add your 2 cents and give this lad some advice or just going to sit on the sidelines like a mincer?

There's not one person here who's come out and told this guy how to invest in shares. All I hear is a bunch of knobs regurgitating what their agenda hlding fin adviser has told them - "shares out perform property everytime". Booyah d***heads.

 

[MightyFighting]

Forget financial planners unless they are highly recommended and have a proven track record that you have seen with your own eyes. Other than that, learn it yourself. It's not hard.

So, how did you learn it?

 

[sen entertainment bloke]

B rock you have a responsibility to make a will.

Leave as much as you can to Chief.

 

[bunsen burner]

So, how did you learn it?

1. Books

From authors who have proven property results. Learnt all the different strategies. Weighed up pros and cons. Learnt which ones to use when and when. Taken into consideration what the author's agenda is (ie are they trying to sell house and land packages etc).

2. Internet research (ie real estate.com) & local real estate paper

Followed the market.

3. Speak to colleages who are also keen real estate investors.

Always good to hear different perspectives and then go check them out. Even picked up tips from reading stuff on this very board.

4. Got hands dirty.

Learn as much as I could in theory first. Always understood you can only learn so much theory because most of the learning is in actual experience. But I made sure I knew as much as I possibly could before dipping my feet in the water.
----------------

If someone could guarantee me a finacial planner or property planner than was very good and always looked after your best interest then I would have gone with one. Unfortunately it doesn't work like that.

I've been referred to tax accountants and lawyers etc before that good friends that I trust have sworn to me are the real deal only to be disappointed. I'm a pretty capable guy and I back my ability to learn and understand concepts, to be able to ascertain where I'm at (ie I don't under or over rate myself), and to be able to follow through and get the desired results.

Property is very simple - you just have to learn the concepts, do the diligence, and then hold your nerve for those first few years. I see so many people sell after 2 years and whine and complain that property doesn't work. Duh.

 

[Leper]

How's your development going?

Still need to get it off the ground mate.... not so easy when you're not in country. And too busy (lousy excuses). In the meantime, we're still in the research phase (prices; costs; etc). AKA fluffing around. Hmmm.... must get onto that.

3. Speak to colleages who are also keen real estate investors.

Always good to hear different perspectives and then go check them out. Even picked up tips from reading stuff on this very board.

Agree. No hidden agendas; no secret commissions; no bias. Some may say "how can you believe what some anymous person you don't know from a bar of soap writes on the internet....", and yeah a lot of what people say on here is tripe.... but at least it is unbiased and if you read through the tripe you'll get some good tips.

On on.

 

[A Zannatta]

Good work champ. Going to add your 2 cents and give this lad some advice or just going to sit on the sidelines like a mincer?

There's not one person here who's come out and told this guy how to invest in shares. All I hear is a bunch of knobs regurgitating what their agenda hlding fin adviser has told them - "shares out perform property everytime". Booyah d***heads.

Mincer, havent heard that one for a while. Nice.

I don't like financial advisers either on the whole. If he in looking to invest for over 5 years, if i was him I'd gear into shares for sure. Margin loan/warrants/or other structured products would do the trick.
By the way, historically shares do outperform property, end of story.

 

[deeman12]

Who did you inherit all the money from.