Looking for Suggestions for Investment Options

tajid on 30/03/2017 - 11:36

Hi guys,

A bit background on me, mid 20s, 2 investment properties (valued approx. $1.1M), $350K in offset.
Thinking to fix part of my loans and given fixed home loans do not come with offset, I probably should think how to use the $350K.
I was thinking of maybe investing into another property but have couple issues with that:
1. Most people think Australian property bubble is at its peak
2. I don’t think my salary allows for more home loans.
Don’t have much exposure/experience in other investments out there.

How would other Ozbargainers do if they were in my position?

Serious responses only please.

Financial

Comments

  • [Deactivated] on 30/03/2017 - 11:39
    -2

    I can help you invest, please transfer 30% of your 350K to me and I'll invest it in the Pokies at Crown.

    • roundnumbersonly on 30/03/2017 - 14:17
      +4

      Don't listen to this guy. Put it all on black at Crown.

  • activ8newbs on 30/03/2017 - 12:01
    +2

    I have no input. But at mid 20's - well done!

  • bejahi on 30/03/2017 - 12:04

    What do you live in?

    • tajid on 30/03/2017 - 12:12

      share rent

  • mskeggs on 30/03/2017 - 12:14
    +2

    Split loans with fixed for the bulk, but variable (with off-set) for the rest.
    Skip buying any more property just now, there are other investments offering good returns.

    • tajid on 30/03/2017 - 12:15

      Yes what I told my broker last night (re the split).

      What are these other investments if you don't mind telling?

      • mskeggs on 30/03/2017 - 12:19

        Specific equities, paying off PPOR, extra into super are where I am currently putting money "buy low sell high" being my golden rule, even though in my heart I would like another investment property.

        • Scrooge McDuck on 31/03/2017 - 13:07

          extra into super

          Surely you wouldn't advise that for someone in their mid 20s…?

        • mskeggs on 31/03/2017 - 14:58

          @Scrooge McDuck:
          There is a sovereign risk, but it is very tax effective if you are in a higher income bracket. I reckon if you already have two investment properties it isn't a bad vehicle for other savings as you have substantial out-of-super holdings.
          I think the largest risk is them increasing the preservation age to equal with the pension, and mandating an annuity rather than the option of a lump sum (perhaps by penalty taxing a lump sum). Neither is a big deal if you have assets outside super.

        • Skramit on 10/04/2017 - 21:50

          @mskeggs:

          I would find it difficult to be topping up super in my 20s. Money put into super is locked away for 40 years for somebody in their 20s. Yes its tax effective but it hurts when you want to upgrade your PPOR you have less equity in the home, or pay school fees, or buy a 3rd investment property.

          It's a tough call which way to go.

  • JetLi on 30/03/2017 - 12:36

    How much debt do you have on the 2 properties out of curiosity?

    • tajid on 30/03/2017 - 13:46

      Based on last valuation, 80% ($800K).

      • chumlee on 30/03/2017 - 16:45

        Is the debt $800K as your response make it seem like the debt level is based on valuation or you just giving us both measures?

        • tajid on 30/03/2017 - 17:33

          Were last valued (before refinance) at $1M therefore debt was 800k.

  • Looking4Bargians on 30/03/2017 - 13:11

    In Mid 20's 2 IP and 350K in offset. Well done mate. Care to share the recipe ?

    • tajid on 30/03/2017 - 13:49
      +1

      Minimise living cost, save most of salary and finding other ways to earn.

      • Looking4Bargians on 30/03/2017 - 13:58

        I Wish if that was easy as said…

      • OzFrugie on 31/03/2017 - 00:41

        what other ways ?

  • frondono on 30/03/2017 - 13:18
    -1

    Blockchain technology.

  • thord on 30/03/2017 - 14:26
    +2

    Just dump it all into a S&P500 ETF. Great returns over the long term.

    • tajid on 30/03/2017 - 14:28

      Interesting, looking at the price history of IVV, since 2010 it's almost tripled!

    • Scrooge McDuck on 31/03/2017 - 13:09
      +1

      Just dump it all into a S&P500 ETF. Great returns over the long term.

      Warren Buffet approved!

  • EightImmortals on 30/03/2017 - 14:38

    Avoid super, (unless it's SMSF) because it hands control of your money over to government regulation and it may not be there when you need it in 40-50 years time. Look at 'safe' stock market investment in the form of LIC's (listed investment companies) WAM (trading at a premium ATM) WLE and others. Morphic is a current OPI with good management history. Or check out some reports here: https://www.morningstar.com.au/LICs/MonthlyReports

    I would say gold/silver which has been the traditional safe haven in times like these but I have a suspicion that crypto might take up that role come the 'big crunch'. Or even safer would be to pay down the loans on the your investment properties, if prices crash as some are expecting you might get caught out. AL IMO of course, DYOR and don't risk what you can't afford to lose.

    • tajid on 30/03/2017 - 14:52

      Hey thanks for the reply.

      Why are these LICs considered ‘safe’ stock? Have finance degree and background but not much knowledge on LICs.

      Morningstar's link doesn't seem to work, will try at home later.

      • EightImmortals on 30/03/2017 - 14:59

        LIC's are corporations of professionals who buy and sell individual stocks on the ASX. They are great for people who don't have the time/knowledge to trudge through company reports and balance sheets and who want to avoid a lot of the 'noise' that comes with trading the stocks yourself. Try this link to Wilson Asset Management for more info.

        http://wilsonassetmanagement.com.au/about-us/

  • Oofy Doofy on 30/03/2017 - 15:04

    https://www.vanguardinvestments.com.au/retail/ret/investment…

    *Note; you can ask them to allow you to put money into a wholesale fund with less than 500k, you just have to ask. People have been allowed to do this with 100k. Best thing to do is ask.

    Otherwise look into the retail diversified fund (same thing as above), fees are a bit higher but that's to be expected.

    Diversified fund at a risk level you're comfortable with. Sit on it and re-invest the dividends. Quit working for other people if you wish, once you have 2 million. Then proceed to do what you want with your life and literally have f-you money. 2 million will get you around 80k in income pa. Of course this is only if you decided to sell and lump it all into a fund.

    Not financial advice, just my personal opinion.

    EDIT: Just read your comment about the overall debt from the two investment properties. Everything above still applies, just means either be happy with less invested or work for longer.

    • Scrooge McDuck on 31/03/2017 - 13:15
      +1

      Diversified fund at a risk level you're comfortable with. Sit on it and re-invest the dividends. Quit working for other people if you wish, once you have 2 million. Then proceed to do what you want with your life and literally have f-you money. 2 million will get you around 80k in income pa.

      Beware: Narrow-minded and/or ignorant people you meet will assume that you're a drug dealer or worse… a dole bludger.

  • garetz on 30/03/2017 - 16:35

    You are not going to make more money/saving as far as interest goes than having a 100% offset. Maybe you should consider fixing a % of the mortgage instead of the entire mortgage.

  • Seraphin7 on 31/03/2017 - 09:30
    -1

    If you are serious about this question, bargain hunting websites are probably not the best place to go.

    As I always advise people in similar situations to yours, you need to understand (1) your risk profile and (2) your likely cash flow profile over the next 10 years. Keep in mind that your outlook in life will likely change radically over that time (e.g. it's unlikely your cost base then will be the same as now).

    • tajid on 31/03/2017 - 10:16

      Could you suggest what websites are the better places to go?

      Risk profile to be honest is low to medium but given my age maybe it should be high?!
      Have quite clear 5-10 years cash flow profile.

      • Seraphin7 on 09/04/2017 - 21:59

        If you really want to go it alone I would so some research around personal risk profile or survey. Some of the stockbroking sites have these sorts of surveys built in, perhaps even some of financial planning outfits will have something online.

        You are really seeking to match your profile to asset classes and then go from there with an appropriate level of diversification. As a very broad summary, low risk will see you investing in fixed interest assets; medium risk will see you introducing other assets classes to create a "balanced" portfolio of fixed interest, infrastructure, property and equities; high risk will see you predominantly in property and equities with spice added through choices of hedged/unhedged positions and a spread of more speculative equity positions on top of your more mainstream positions.

  • Trader101 on 31/03/2017 - 13:56
    +1

    Perhaps it's time to sell. Some possible reasons:
    - by historical standards, that's a hellish debt profile with massive leverage. I'm not talking about record setting Japan, where in the 1980's a borrower sometimes had to get their children and grandchildren to assume joint responsibility for paying off the loan and commercial property fell up to 99 % in the centre of Tokyo by the time the bust had ended, but more "normal" places and markets like here in what is already a developed economy and country.
    - the U.S. has put interest rates up 3 times in the last 15 months. The Fed expects to raise them 2-4 times this year and another 3 times next year. The West usually follows the U.S. and Australian banks have already started raising interest rates and made loans harder to get, especially for investors. In the last two years the world has seen over a dozen countries with unprecedented negative interest rates (eg. Switzerland) and 5,000 year interest rate lows in some places. The Government bodies controlling interest rates in especially the U.S., Europe and Japan have been goosing the market with massive money printing and low interest rates, trying to stave off a near Depression inducing 2008 crash sparked by the U.S. housing loans scam. Unwinding this goosing won't be easy. It's been successful so far, but very few economics text books make any mention of negative interest rates and cases of major goosing having successful overall outcomes in the end are thin on the ground, which should give one an idea of how unusual a situation we are in now.
    - W.A. is effectively in recession, at least in the property market and high flying jobs. China slowing down is the main reason and the Chinese are finding it harder to get money out of their country. Taxes on foreign real estate buyers are rising (eg. 15 % in Vancouver (where Chinese buying has been even more impressive than in Sydney and Melbourne), but a much lesser amount in N.S.W. and only for certain types of buyers). Last year, the Chinese made up 80 % of foreign purchases in N.S.W. In terms of housing prices to income ratios, Australia and Canada recently lead the Western world.
    - Australia should soon set a record in the modern world for the length of time without a recession. If you have lived your life in Australia and are under the age of 40, you probably have no real idea of what a recession feels like (tastes of it have happened in a property sense at least in isolated pockets like Karratha now and Canberra in the mid 90's).
    Anything's possible, including a new wave of inflation and massive price appreciation, but as Robert Schiller has pointed out, the idea that house prices can outperform inflation and be good investments over time is only two generations old and by almost any measure Sydney and Melbourne real estate is unusually expensive.
    Links and references haven't been provided in case they violate the terms of positing conditions.

  • budgetman on 31/03/2017 - 17:31

    register with commsec, first 10 trades free.
    Research medical marijuana stocks.
    MMJ, MXC, ZLD, CPH, AC8, CMY.

    I'm up approx 45K on 120K investment

    Do your own research and be comfortable in whatever you invest in.

    • tajid on 31/03/2017 - 18:50

      How do you do your research? What source?

  • budgetman on 31/03/2017 - 19:13

    after you join commsec just type in the stock code. You can also join ASX and take a look around there.
    Click on news, announcements, charts, have a general look around.
    Go to the company web site and look there also.
    Do a google search on licencing and for MM.
    Join hot copper, a forum where you can ask questions and read threads on a bunch of stock codes.
    https://hotcopper.com.au/

    https://www.commsec.com.au/

    MM can now be prescribed by a GP.

    The industry is in its infancy and from everything I have read, I see a massive up side.

    MMJ, i'm up 102% as of today. I have only held the stock for less than 1 month.

    Be careful if you choose stocks to invest in…..you can loose your shirt too.
    Be aware of capital gains tax too when you sell and make a profit.

    I would start by setting up a watchlist and tracking the stock from there while you do your research. It doesnt cost you anything and you can see how much you could have made/ lost.

    You wouldnt bet big on a Poker hand if you had no idea how to play so educate yourself for the best results.

    • Oofy Doofy on 31/03/2017 - 21:17
      +2

      Selfwealth is cheaper in the long run.

      • budgetman on 31/03/2017 - 22:06

        PM me with your referral code.

        Thanks!

        • tajid on 07/04/2017 - 15:37

          PM me with yours. Not sure when I'll open but will have a read during the weekend.

      • OzFrugie on 02/04/2017 - 13:25

        Better than cmc?

        • Oofy Doofy on 02/04/2017 - 13:34
          +1

          That's subjective. I had a CMC account but I closed it because other options seemed like a better deal with just as many features.

          The guy who started Selfwealth used to work for CMC. From what I know, he thought he could provide a similar service with less cost.

        • Oofy Doofy on 10/04/2017 - 17:37

          @Bamboozle: Can't edit my comment now, though I wanted to amend what I had typed.

          Fellow who started selfwealth used to work for Commsec, not CMC. My mistake.

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