Look for ways to put saving lump sum $5000+ into a place where can achieve a return about 5-6%. Not greed at all! but seriously I really don't where at the moment.
Passively, little to no effort involve.
If any OB can share their ideas would be great!
Update!
Risk for this should be fairly low because I am not looking for great returns.
Yeah… when you find it please tell us all haha
low risk environment. so no shares
$5000 is such a small amount, may be you can borrow it to your friend and get 5% interest.
Or buy some share? you have to pay tax more the profit so dont know it will end up 5%
Offset it against your mortgage.
I hope OP isn't paying 5-6% on their mortgage… :)
Paying down your mortgage is tax free.
So a $250 saving on a 5% mortgage ($5,000 @ 5%) compares to a after tax saving of $254 on a 7.5% taxable investment such as term deposits if your marginal tax rate is 32.5%
where are you getting 7.% term deposit from?
@CheapskateQueen:
I don't believe you can get a 7% term deposit.
I was simply trying to illustrate that if you take tax into account then paying off a 5% mortgage bond, would be equivalent to earning 7.5% on a taxable investment.
Agree with previous comments about risk. But perhaps you could consider P2P lending, eg https://www.ratesetter.com.au/peer-to-peer-lending
I never heard of that product before. so is it you lend to someone else money who happy to take a bigger risk?
Rate setter may be one of the best goes at the moment.
Like others have said, anything over 4% is going to carry more risk and have less liquidity than holding cash with a bank.
What is your investment time frame?
Gold bullion has an average of 8.9% p.a. over the last ten years.
ASX has an average of 10.2% p.a. over the last 30 years.
buy preference notes from big banks. pretty stable in price and you get interest.
but then you will need to pay tax on that interest.
Interest is fully franked.
5-6% - pfft
Weak.
You can get up to 33% or so from banks in Argentina.
Check this out: http://argentina.deposits.org/deposits/icbc-argentina/
Of course, I'm not recommending it. There's a reason why they have such high rates…
thanks. Is this ever safe?? whats happen when you want to take the money at maturity?
Their current inflation rate is around 35% so you could end up with less than you invested.
so you have to pay their inflation before getting it back?
As an example, let's say that your $5000 buys 50000 pesos after conversion, after one year at 33% interest you would have 66500 pesos. Now if inflation is 35% your 66500 pesos would now be worth $4322 after conversion to AUD$. That is my view how it works.
Given some of your comments I'm concerned at your level of understanding of investing and until you have have more understanding you would be better putting your money in guaranteed bank related products. The promised returns may not be as great but you don't want to be laying awake at night worrying if you will get all of your money back.
I'm no financial expert but my understanding of inflation was the rise in value of goods/services/assets in a certain country.
It could also mean a drop in their currency value but wouldn't that be affected by the global market as well, unless it is pegged to something that is "deflating".
@lolbbq: yes the peso won't buy as much as it used to as inflation increases however our inflation rate is only around 2% whereas theirs is 35%. So whether it's a potato or a dollar it will cost more to buy. That 35% is per annum so you could say their inflation or price rise is 3% per month.
@Elppa8: In this case are you referring to the Peso's value overseas or within its own domestic environment?
I just looked at XE currency charts and saw that it was 0.124 USD per ARS in feb 2014 and 0.0674 USD per ARS. That gives it less than 50% deflation (or inflation of USD relative to ARS) over 2 years and 2 months. The deflation was slightly less for AUD per ARS (0.142 to 0.0896 in the same timeframe).
The USD charts looks so artificial, its scary. Considering that you are a foreign investor, all that shouldn't one be more concerned about the exchange rate fluctuations rather than domestic inflation? Of course i'm not saying its a good investment even though 33% interest - ~25% devaluation is a gain of 13% whoo!
Just wondering why publicized Argentinian interest rates should directly affect the exchange rate based on your calculations. Again- not a financial expert here =)
@lolbbq: I'm no economic wiz myself and I agree that there are a number of factors that affect an exchange rate which inflation does impact but not 1:1. I can see your point on what has happened over the last two years, however the 35% inflation rate is projected and likely to increase for the rest of the year with a forecast to be under 10% by 2020.
I was just taking a simplistic view to make a point that inexperienced investors shouldn't get starry eyed at offers of extraordinarily high interest rates will make easy money without risk.
@Elppa8: ahhh. Projected. Yes it does seem to corroborate with the data on the charts for the last 12 months (there was a sudden drop) and it did lose quite close to 35%
I don't think experienced investors would even make this sort of decision with ARS unless they had some inside information on Argentinian politics. The rich gets richer again!
@Elppa8: If you have 35% inflation projected. isn't that no need to worry factor to whatever you invest anyway like the 33% term deposit as you get real money back here but inflation project.
So confuse now
@leehungfei: the money is locked away for 12 months at 33% and inflation over 12 months is 35% there is little if any net gain. If you look at that link you will see that the same bank is only offering 1.5% interest on US dollars, so to my mind they're saying in 12 months time their pesos will be worth about 30% less than the US$ compared to what it is worth today.
Doubt anything that's safe and can achieve 5-6%, especially since $5000 is small amount.
There's no way you can get 5-6% Internet for only $5000.
The best interest rate for online saving at the moment is 3.6% from ME Bank.
http://mebank.com.au/lps/osa/high-online-savings-account/?ci…
Just closed me, and went ahead with Rabodirect.
I get 3% with ING Direct, but I also save 2% on purchases (up to $100) where I use paypass and every ATM for free. If I counted the rebates I received, it would probably bring my total funds received to be closer to 5% all up - plus I am only taxed on the 3% interest.
I'm not familiar with ME or RaboBank though, so they may also offer similar additional benefits?
In order to answer your question (best place to invest) you need to consider the following factors:
1) If you have a bond, then this is probably your best option as it is tax free and with a redraw option you can access the money when required.
2) If you earn more than $23,000 p.a. than salary sacrifice $5000. Your tax saving would be $200 (Income tax $5000 @ 19% less Super Contribution tax $5000 @ 15%). At a salary of more than $42,000 pa the tax saving would jump to $875 (Income tax $5000 @ 32.5% less Super Contribution tax $5000 @ 15%). You will be investing your money in Super with an average annual return of about 7%. Use the $5000 lump sum to replace the $5000 salary you are no longer going to receive. Please note that this strategy will not work if you are already salary sacrificing your maximum. Also depending on your age this is a long term option that is going to tie up your money until retirement age.
3) You may want to consider a voluntary contribution to your super (maximum $1000), in order to receive a government co-contribution (maximum $500).
Note this option is only available to lower income earners. If you earn more than $35,454, your co-contribution entitlement reduces by 3.33 cents for every dollar you earn over $35,454, until it cuts out at $50,454. Also 10% or more of your total income must come from employment-related activities in order to qualify for this concession. As in option 2 above this option ties up your money until you reach retirement age.
could you pls tell me more what bond option is?
Sorry for the confusion - I was referring to a mortgage bond.
Under the mattress.
With extra under the pillow each week for interest.
could you elaborate how that will grow to 5-6% :)
This is a trade secret, but I'll let you on on this one. Every month, the mattress fairy will come and deposit some money. The amount she deposits depends on her mood, so best to decorate your room and bed with unicorns and flowers so you will get the ideal 5-6%.
what you're looking for doesn't exist unfortunately. you should read up about interest rates / savings accounts /mortgages etc.
your best bet would be to find a friend/family member who owes a crap load on a credit card and offer to lend them the 5K on a 5% interest rate. That'd be a major win for both of you. of course, be sure to come up with rigid and clear repayment terms
lending money to family is probably the bigger risk here haha
Lol good point
Current mainstream rates of return are <4% e.g. bank term deposit
Anything returning 50% more than that, the 5-6% you ask for, is not likely to be risk free
If you have any other debt at all then pay that down
Paying off a credit card could 'earn' you 20%!
Give me that 5k loan and you will see a greater return than 5%.
Eneloops
how to get 5-6% return out of that?
1) I want to achieve 5+% returns
2) I want low risk
Pick one. You can't have both.
That is so true. Especially with no effort involved.
You can wait to see if td rates go back up to 8% again!
$5K is nothing for any investment. Save more.
Not sure if anyone has already said this but if you're only talking about $5k, 1-2% extra (over the run of the mill 'savings' accounts) is only $100 per year, which is approx $70 after tax. Much of a muchness - You'll save (or make) much more stocking up on weekly coles/woolies specials or similar.
Or they could do both. I buy shares in 5k bundles. I now have much more than 5k shares but one of those bundles had to be the first.
5%!? Lol do you even know what is the interest rate now. Low risk, I assume you only want to invest in saving accounts and bonds, other than that, risk are fairly more.
Remember rule of thumb
low risk= low return
high return= more risk
Lego
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Full article Here
Interesting. The only problem is storage, as some sets have quite large boxes and the box itself must be kept in pristine condition. Can't just put the boxes away in a shed.
Invest into your own education.
Buy shares in AFIC is returns on average 5-6%.
Ok. Im not really into shares. but just out of interest why share can give you 5-6% return at the moment?
The ones that go up by 5-6%.
ok. any shares we see for over the last 2 years is gone backward. I wish someone tell me exactly with a crystal ball which specific shares go up by 5-6%
@leehungfei:
Dominos. Thanks to ozbargain DMP shares were 20bucks or so early 2014 and 56 bucks today. Why 5-6%? Get 200% return!
On a more serious note a financial advisor should be able to help set things up for you with 5k into a well diversified portfolio but more importantly you invest regularly into it for the long term. Lots of people think financial advice is for the rich but everyday people can definitely benefit.
@mrtin: Nothing but gambling and LOL's at financial advisor.
If they are so good why are they still at the daily grind themselves?
Monkeys can pretty much do better than them.
Any Monkey Can Beat The Market
http://www.forbes.com/sites/rickferri/2012/12/20/any-monkey-…
@Davros:
Did you not read the 2nd last paragraph?
Use whatever investment asset you want (shares, property, hell you can even do it with cash) - just have some sort of goal and invest. Its not an exact science.
My kid was born early last month and i know he will have a sufficient education fund waiting for him. Would i trust monkeys to do that for him? No.
Daily grind?- you cant (generally) get rich overnight but what you can do to stop the daily grind earlier in life is by investing earlier in life but i understand sometimes bargains on this site gets in the way of financial freedom. No one has a crystal ball.
It is possible to achieve if you know how to game the system; this is ozbargain though! As someone alluded to earlier, we are not talking big bucks. 5% of 5k is 250 bucks. I don't know what your risk profile is but lets assume you still want liquidity.
Option 1) Get a citibank cheque to self for the absolute maximum you can. You must be super strict with yourself and shred the card basically as soon as you get it. Let's say you get 5k. Your 5k deposit is now 10k and interest rates of only 3% will return $300. This is of course a rudimentary calculation and it does not include the minimum repayments you must make to the credit card but you will achieve what you are after for at least a year.
Option 2) This involves a bit of "work". If you haven't already done so open up a ING savings maximiser. Everytime you withdraw 200 bucks via EFTPOS you get 50cents. You will need to do this a few times to hit the required $20.83 per month in interest. If you go down this route self serve checkout at woollies and bigw is your absolute friend. If you couple this with a normal interest at 3.5% and a couple of online surveys the target will be very achievable. As an added bonus If you want to get super anal about the maths then the 50cent bonus is not taxable, but interest is. In addition ING often do a 75buck referral bonus, look out for offers.
If you don't need instant liquidity, there are plenty of shares yielding 7+%, but your capital is at risk.
Some others have mentioned ratesetter. I also have a small lending in ratesetter and have been with them for four months, I highly recommend it so far. They also gave me a referral bonus of 50 bucks. I had to refer someone else who successfully lent 1k so I set up an account for the missus and funded it and lent for a month, we both got 50 bucks. This is a little known referral offer, check if they are still doing it.
Just signed up to Ratesetter. Can confirm the referral bonus is still in place. Under the 'Earn More' Tab after logging into your account.
"Refer up to five friends using your unique link. For each friend that lends at least $1,000 you'll both earn a $50 Welcome Bonus".
Let me know if you want a referral. Bro in law hasn't signed up yet.
I have just pre-paid my private health insurance for 1 year and that saved me from the 7.5% increase from tomorrow. Could be some sizeable savings if you have a family cover.
Go for gold overseas: Brazil & Argentina has sky high rates.
http://www.canstar.com.au/term-deposits/cash-rates-around-th…
NZ has a couple of places where you can deposit $5K and take a punt on some risky loans like Mutual Credit Finance.
http://www.interest.co.nz/saving/term-deposits-1-to-5-years
How much risk can you tolerate and over what time. Safe money like deposit accounts are only achieving under 4%.
Higher rates generally mean higher risk.