So my wife and I are able to save average of $200k annually and would do it for another 5 years at least (Working our ass off until we have children). Have $200k already in savings and about $100k as a gift from parents. So would you invest into multiple properties by paying 20% or buy outright or buy one property at 20% deposit and invest rest into ETFs. Would love to hear your suggestions.
TIA.
What Would You Do with $200k Annual Savings?
Karansingh on 21/04/2021 - 02:10
Comments
There so much material out there in investing and someone asks the same question every week albeit on different incomes.
- Max salary packaging into super.
- Put the rest into VDHG.
It is a shame that many people have chosen to attack you, but your claims for income given your age and what you do are hard to believe. But yes, its not conceivable if you do both basically work 2 full time jobs. I question the sustainability of this for even 5 years. But even if you end up working a little less and only saving 150k a year, or 100k, its still a very good position and I think the same general considerations apply.
Investment Property
I would personally not buy an investment property in your position. I would first focus on a home you would want to live in. Money is cheap to borrow at the moment. If you are happy to stay rural, then you should be able to afford a house you like out there fairly easily while leaving a significant amount of income to invest. If you think you may want to move when you have kids, and are unlikely to stay where you are more than 10 years, then renting might be better. Or buying an investment property if you really have your heart set on it.Personally if picking an investment property, I think its helpful to pick something that you would be ok living in. Because at least then it can perform that back up function if needed.
Recommendation
My actual advice is to see an independent financial planner.
My recommendation would be a mix between regular investments in ETFs, and PPOR (Principal place of residence). I'd probably buy with a 20% deposit, put another 50k in the offset. Then, slowly aim to grow the offset over the next 5 years (i.e. pay $500-1000 more per month than your minimum repayment), while investing the rest into etfs. 500k in Etfs, would return about 30k in an average year, so in theory that would possibly cover all your costs when your partner stops working. You've also split your assets between property and stocks, so you have some diversification there, and you should ideally diversify your etfs as well.
Ultimately however, it depends on your (including your partner's) goals.
Food for thought
If you went all in on ETFs, and if they typically returned about 6% a year. Then in 5 years you'd be sitting on about 1.5 million returning about 75k a year pre tax. You may want to think about whether the most tax effective option is for any stocks to be owned by your partner who will stop working at least for some time for the pregnancy and birth (possibly multiple times). So maybe more tax effective to be in her name only, or may be better split across both of you.
Retire Early
I see from your posts you dont intend to retire early. You'd go crazy. etc etc.
You should have a think about why you are working so hard. You clearly dont have big consumption habits. I assume your dream isnt to keep working this hard once the kids are in school so you can drive a new Merc every year, and fly first class overseas on an annual basis. So what's the goal? Accumulate money to sit in investments for no end goal?
I think when people think of retirement. They think, sitting on a beach waiting to die. Or some variation there of. But really, its up to you what it is. It just means exiting your current career and normally not needing another. You could want to start your own business or write books. Or travel cheaply. Do a youtube channel. Work 2 days a week etc. Maybe you want to home school your kids. Found a religion. Volunteer somewhere.
If you cant imagine doing anything else but nursing, and you want to do this as long as you can. Then I think you should scale back how much you are working a bit. It'll be hard to travel when you have kids, and it'll be different when you do. You dont get your youth back. Put some time and focus on improving or maintaining your physical (and mental) health. However, great you are both managing working 80 hours a week, that leaves very little personal time for meal prep, excerising, cleaning, and if you are doing those things, it leaves almost not down time to watch tv, catch up with friends, whatever.
IF you are committed to each other, it may make sense to have kids sooner rather than later. It's easier to have them in your 20s, physically speaking, easier to get pregnant, etc. Alot of people I think just go, we'll do it in our 30s. It seems so far away when you are mid 20s. And it is and isnt, but if you look at the charts fertility drops really quickly over 30. If you are wanting multiple, starting at 30 may make it hard.
10/10 Great advice. Thankyou so much!. Yes I would scale back after I have Children. But would still continue to work around 70 hours a fortnight.
I love nursing but have always wanted to become a Surgeon.Hope I would be able to utilise these savings to get to my dream. But still happy with my job.Shortest pathway 4 yr postgrad MBBS then internship then HMO for 2-3 years then Unaccredited surg reg (1-2 years, with publishing papers and research etc) then Accredited SET training = a further 12 years minimum, assuming you pass the exams. No way you will be having any sort of significant overtime income for that time. You can only work so many hours and still have time to study.
Lol a nurse wanting to be a surgeon. Now that's something I haven't seen before. Just how every tradie wishes of being a lawyer.
This reply is actually well considered.
Large sums of money becomes more worthless the older you are.
So what if you have 3mil in ETFs, but you are in your 40s and can no longer enjoy skiing (because of that back injury from all the hard work in your youth)….or had a stroke from chronic stress.
Work like a dog, get burnt out, high cortisol levels from all the mortgage stress on the three million dollar mortgages.
Sure you'll retire rich.
But the best time of your youth was spent working like a dog.
Not even spending much time with your kids as they grow up.
Is it worth it?
I honestly dont think most aussies are lazy - they have significant family wealth (at least the people i know), and work to fund their lifestyle. Australia has no inheritance tax, so they enjoy the prime of their youth.
TL;DR - working too much might be a bad idea.
Pretty much what this poster has said is spot on.
As a doctor who has worked in palliative care for 6 months before, all those patients I watched die never once told me that they wished they had worked harder. The one common thread was that many wished that they had spent more time with their family and not waited till retirement to do the things they wanted.
Everyone's circumstances are different and so you have to decide what is worth it for you.
Getting ahead early in life sets you up for the rest of your life. However you have to live long enough to enjoy that.
Life is short and your youth ephemeral. The one thing in this life you never get back is your time.
How do you actually live off of your ETFs? Do you get ones that pay off dividends and live off that per year? Or sell the gains per year and retain the original invested amount so it rises again?
Yes its usually a bit of both. So for the ones with dividends you may turn off automatic reinvestmetn and just receive the money. Or you may sell a small portion of your portfolio to cover your costs for the year / 6 months.
It's a bit more lumpy than real estate. But I think its significantly easier. Dont have to worry about RE fees, vacancy, bad tenants etc. There are some areas that provide better rental returns that others. But where I am, a 2 bed unit only returns maybe 4% before fees, it doesn't make much sense as a primary investment and has pretty slow captial growth as well maybe 1% atm (actually probably negative the last few months).
Ohh yeah I didn't really want to invest in ETFs until I read your post. I thought property would've yielded more. Thanks for the info!
No specific advice but perhaps some general education about different investment options and strategies wouldn't be a bad idea before you commit to anything. Dev Raga Personal Finance is a good podcast about basic concepts of investing that I have found to be quite informative:
https://podcasts.google.com/feed/aHR0cDovL3Jzcy5jYXN0Ym94LmZ…
Cheers! 🙂
Talk to someone qualified e.g. financial advisor, since that's what you want to do, invest
gov makes it illeagl to offer finaical advise, you have to be a fin advisor….
I'm having a good laugh at the disbelievers here.
Well done for working hard and living frugally.
Thanks!🙂
Have a look at some of the FIRE groups and concentrate on the FI part. This is a good starting point https://www.aussiefirebug.com/
While you don't mind working long hours or shift work now, you may wish to rethink that if you start a family (you never get that time again).
I'd also look at some tax reduction strategies.
FAKE NEWS!
Tired of the not so humble bragging via asking for financial advice threads.
Congrats. I can empathise with the earnings but our savings are way low so well done!
Thanks! 😊
never buy outright when you still have borrow capacity.
That's true. Thanks!
CSB!
If you work 70-80 hours a week, how do you find time to post here on OzB?
The same way we all do, during work time.
Haha😂
What Would You Do with $200k Annual Savings?
Wake up.
Haha😂
Forget about the savings, if I was working 70-80 hours a week I would be aiming to reduce my work. This is no way to live.
Buy an investment property to leverage negative gearing and minimise your tax liability. Go to an accountant and ask them how. Get your own place and use it to further minimise your tax liability. Earning 400k between you is paying ~130k tax (guestimate), so why not spend a few grand on an accountant to help structure your finances to avoid as much tax as possible.
It is really hard to make any recommendations without knowing your own personal situation, your risk profile etc.
What I would suggest is that you sit down with your partner and tackle some of the following questions together before seeking professional advice:
a. Where do you see yourself in these time frames:
- 1 year, 2 year, 5 year, 10 year
- From there, figure out how to get there.b. What do both of you want to do in retirement? How much in net worth do you wish to reach to ensure you get the retirement you want.
c. If both of you want to start/expand your family, what are the challenges? What if one of you wants to stop working?
d. Any relocation plans? Or you want to move to a bigger place? Buy/rent?
e. Is it wise to buy your assets in your names? Do you need a trust? Are any of you prone to being sued?
f. What about your parents/immediate family? Do they need financial assistance?
g. Last of all, make a will as a worst case scenario.
Congratulation on that saving effort! Best to invest in properties before (State?) Govt takes it from ya for your hardwork.
If it was me i would
over a few years aim to have have an investment portfolio withhhhhhhhh
Property - 40-50%
Crypto profolio with the following coins ETH, BTC, ETC, DOT, ADA - no more then 0-15%
Safe Shares/EFT (Australia and O/S) - ie Microsoft, APPL, VOO, VAS, ASIA, etc - 35-50%
Risky shares - speculative stocks miners, upcoming tech - no more then 0-15%
Well done on the $$$
Interesting strategy! Thankyou🙂
I think you should aim to get investment properties, given the amount to you have saved and earning you could get 2 easily in Vic. Interest only should give you positive cash flow, drawn on equity and do it again in 12-18months. rinse and repeat.
What is that going to do? Then you'll have a bunch of houses with no equity growth. Doubt prices in Vic are going to continue to 12 months from now.
That’s what people said last year and the other year… in the mean time…
Wasn't me that said that. But at least now I can see there are very few economic tools that can keep propelling house prices past another year or two. Only government initiatives can do the job until we see some serious wage growth/wealth creation. Unless pandemics become a constant issue and we see mass immigration to this country due to it being relatively safe.
@serpserpserp: You highlight a few good points there, no investment is perfect, they all have strengths and weaknesses. It’s down to the plan and strategy in place.
I haven’t provided a strategy, I just simply blurted out by property. Property is often an easier idea to invest in as it’s a tangible asset. Also it’s a asset and income that banks like
But I’m saying that, even within COVID the demand didn’t change in fact some areas experience additional growth. This was in a time where job security and wealth was at it”s lowest.
If people are not buying, then they are renting and of course some can board with parents. But for sales yes immigration creates a influx of “new” buyers, but this hasn’t stopped sales from happening
But you never know as they say past performance isn’t indicative of future performance.
This was in a time where job security and wealth was at it”s lowest.
This is an interesting point because it turns out this wasn't the case for the majority of the people that have the ability to buy houses. Mostly the poorer got poorer, and the people who had jobs (over 90% of the workforce) got incentives and breaks on their costs that improved their position. Anyone who had money invested in almost anything over the past 12 months have benefited greatly. I think it is fair to say that wealth was inflated which I don't think it's sustainable for most. Not enough to push house prices again past 1Q21.
Who's renting?
What about donating your saving to people in needed? Since you are able to save $200k annually why not help someone in needed.
🙄
Give that $100k back to your parents.
Yeah, actually this is a pretty good point. Unless they are significantly wealthy, or you have a specific plan for this money then I think you should return it.
$100k as a gift from parents
This is pretty crazy on its own, I still get Lynx shower packs as gifts from my parents. But if that kind of cash fell in my lap, I'd be investing it in a few different ETFs, maybe yolo a small percentage into crypto, and forget about it for a decade+.
My mum buys me bic razors when I visit
if you look at the stats on first home buyers, a significant portion receive a large cash gift from family to help with the deposit. So I wouldnt say its that uncommon.
Buy a McDonald’s franchise or something. People will never stop eating McDonald’s and McDonald’s will never stop adapting to what people want to eat.
McDonald's franchises are well over a million, and they want you to have that money in savings, not loans. I may be wrong, but that's my understanding.
They have 300k already and it would only take them 3.5 years to save up 700k in cash.
Troll post. I don't think it's possible for RNs to have 2 fulltime jobs. There must be some rules/union/integrity issue behind it and why would the other employer hire you if you already work 40 hours somewhere else risking the whole workplace.
Lol. It is possible. I know RNs who do exactly what the OP is doing. They are ususally overseas born or children of immigrants and willing to work extremely hard.
The most jobs I know a single RN holding at one time was 5 - one fulltime and 4 part time jobs.
Hours worked per week ranged from 60 to 108.
Yes, I know to most 38 hour week people that is completely insane.
This kind of greed for "property at all cost" and willingness to sacrifice everything to get there is great for the person willing to put in the work. It probably contributes to our poor health care system and completely disorganised, hopeless hospitals though.
It would be in breach of most OH&S requirements to work 80 hours a week once travel is included, insufficient risk time between shifts.
The math is hard to get to. Wife and I are both doctors, work shift work and weekends, with overtime - difficult to get 200k after tax and living expenses without essentially having living costs so low it is being subsidised by other factors (living with family). Just transport alone would be 5-10k a year and at that income level you are talking 16-18k pretax earnings.
OP must either live next to work or own a cheap push bike to get to work. I think the income is believable if they truly both do 70 hours a week, however OP is only focussing on rent when people ask about expenses. There is frugal and then there is OPs story, doesn't make sense to me.
Invest it all in NFTs.
Faced with a similar situation I borrowed as much as I could from the banks to buy real estate (and real estate development).
With debt in the multimilions you'll have significant interest and deductions to your wage.
On the asset side provided you buy well you will have growth assets.
Use any further income to diversify into other asset classes once the banks won't lend to you anymore.
You should be able to retire quite early given your thrify spending and high income.Seems pretty high risk. Also, there income will seemingly halve in 5 years at best, maybe to 1/4 if one of them stops working. And while we have had 30 whatever years of continuous property growth, and it would probably be fairly safe over a 20 year outlook, it's putting a ton of risk into Australian property. There are still people recovering in Perth. The market hasnt been hot in every state.
Perhaps invest more in liquid/low maintenance type assets as you are time poor(ETF and the like). Assume rent is roughly equal to mortgage payments in regional areas and if so buy a house to live in.
I would become an arbitrage
Marks Markdown, is that you?
OzHumbleBraggin'
Jokes aside, good on ya. Would probably be smartest to just buy a house as rents will skyrocket as government keeps printing money.
Doesn't sound like they even pay rent.
This person is lying, it's not possible to save such amount after tax and all expenses. 😀
It is if they were living with their parents and not paying anything hahaha
They are rural. So lets say rent is 250 a week, thats 13k a year. Based on the math elsewhere here that showed them having about 223k after tax income. That leaves about 10k a year to live on for the 2 of them which isnt much but is doable if they are frugal. Also lets say they are actually saving 190k a year and he has slightly underestimated his expenses it doesnt really change the outcome.
@Karansingh Good to hear you work hard and got a good saving habit. Your original post said you are able to save average of 200k annually. And then you mentioned you only have 200k in saving. So is this the first year you saved 200k? And how is the "average" and "annually" come in?
oopsie daisy, OP caught red-handed!
I suspect one of the jobs is lumpy which would explain the average and annually (i.e. when i average our salary and expenses over a year we saved about 200k in the past 12 months and looking forward this seems doable for next 5 years). Perhaps it is based on about 13-14months of work and he's just projecting the future average if things stay the same.
Further, they may have had some one off costs that took some money in the past cars, medical, etc.
I don't want a lumpy nurse.
Buy some shitcoins! jkjkjk
Eh? So it took 2 of you 2 years to save $200k? That's a bit different from you saving $200k annually?
The end result is the same..he wants ideas on how to invest 200k.
Just relax and give an answer to that question instead of being a detective.
As a doctor who talks to nurses a lot, what the OP is saying is not impossible - it's just not sustainable in the long run.
As many people have said here, the key is balancing your life. Time is a finite resource that you never get back. Money, you can always make no matter what age you are. Don't spend your entire youth chasing after the pot of gold.
My advice
Invest in yourself with time. Working is an exchange of time for money. Most jobs have a finite return in terms of skills vs time invested. At some point, no matter how much more you work, you aren't really gaining additional skills. Where possible, you want a job where the skills you learn improve your salary significantly with time.
Invest in your relationships. If you work 60-80 hour weeks whilst your wife does as well, I forsee a breakdown in your marriage. No matter how strong you think your marriage is, conditions like that over time will wear everyone down.
Invest in your dream now. If you want to really become a surgeon, you have to invest in that now. I've seen so many people say they want to become doctors but never come close to achieving it. Working 60-80 hours won't get you closer to that goal. Investing in GAMSAT preparation and CV building might. I have to be honest, every year over 25 that you don't get into medicine will make it harder to ever become a surgeon (for a variety of reasons that I won't go into now).
Educate yourself on finances and investment. Advice is always there but it only reflects a snapshot in time. Asset allocation is a challenge that even the greatest hedge fund managers constantly face. If you have a very poor understanding of finance read the barefoot investor. If you have a better understanding, read the intelligent investor.
Probably the three top tips for investments. (1) Index funds are your friend if you want to get into stocks (2) Dollar cost averaging for stocks / crypto is your second best friend (3) Don't let human emotion affect investment decisions - it's almost always how people lose money.
Re: #3 - you couldnt be more right on this if OP truly wants to be a surgeon. They need to be sitting gamsat/ucat this year and putting their efforts into their studies moving forward, not into working 80 hours a week as a nurse which doesn't contribute to this dream at all.
Great advice.
Invest in West Wits Mining (WWI ASX)
LCL and CRO as well in ASX
200k savings, gah damn! Were in you an episode of Extreme Cheapskates on YT? 😂 only kidding
Male Nurse.
Meet the Fockers.just being mindful if you do buy two properties, and have kids in the future. You won't be able to generate as much income, as you & your wife will not be able to work as much. (trust me having kids change things A LOT e.g. day care, school days, holidays). So having income protection insurance is almost a must. Unless you're in business, where people make money for you even if you don't work (in some business anyway). It's actually easier to be an employee than an employer in Australia (first-hand experience)
Either way, with your current income, you'll be rather comfortable in the future regardless. Just gotta be smart about investment, so the passive income covers the risk.
I would invest in myself and my partner (not that I have one.. haha) and take it slow
If you earn 200k a year you have more than one partner
Username checks out
Buy a investment property I.e. house with a 20% deposit in a high rental yield area or high growth area with a offset account attached to it from a low fee lender i.e. loans.com.au and live in it for 12 months than rent it out and repeat with a different lender but no more offset accounts only standard boring low rate loans.
Do this until you find a place you want to live forever/start a family, then with your income pay down the house loan then redraw it straight away to buy an exchange traded mutual funds called VDHG or A200 or DHHF on the share market. continue to do this till you want to retire.
keep 6 to 9 months costs in your offset account as emergency money in case you lose your jobs or whatever
With the offset account get a zero fee credit cards for your everyday expensiveness, levy, council rates ect ect and have this automatically payed off before interest is accrued. Use this for all your spending some cards will give money back instead of charging fees so long as you never spend more than what you earn/budget and pay off before due dates
You now have a diversified tax effective investment strategy that uses long term and short term leverage, negative gearing, franking credits and gives you a emergency fund.
oh also salary sacrifice into your supers
Put a deposit on a house, both quit your second jobs, start a family and have a life.
Do it now.
If u say u save $200k annually but "already" have $200k in savings, does that mean u have only been saving for a year? And why did u get a "gift" if you earn as much as you state.
Something doesn't add up here.
Could I have the answer for my question please. Then I will explain
Put it on doge coin ;)
Im not doubting the OP,
But reading the comments, working 70-80 hours per week…… that's not living. You're living to work not working to live.
Go live life, do what you want. You're most likely gonna regret not having free time. Once you two have a kid, that's all your free time GONE. Unless the children is your life.
But damn OP….. what a sad life, I earn a little over a quarter of both your pay combined, but I love what I do and I have free time to do what I want….. even I love what I am doing, I would not even think about working more than 37.5 hours a week for my employer. If I had a business, that's a different story lol
Yeah I get your point. But I have enjoyed and splurged alot in my Uni days. And did not work a single day during my Uni. So I have enjoyed alot, So now I think I can work hard for atleast 5 years and will go back to working 40 odd hours a week
How old are you op? And what year are you in nursing?
I dont know how indians work like robots. I get that you're trying to save but daaaaaaaaaaaaaaaaaaaaaaaaamn. 70 hours rip
I have seen aussies, Phillipinos, British, srilankan, nepalese and pakistani people and nurses doing the same
It's definitely an Asian thing. I see it so much in manufacturing and in business.
It's definitely not.
I have to admit, it does seem standard across my friends of Eastern descent to work 2 to 3 jobs. I don't know how they do it, but they seem largely happy.
I am also a health professional and documentation is a bit of a pain in the ass - and it's basically your whole role!
Surely with your experience and work ethic, you may be able to work your way into a higher paying role and scale back on your overall hour count. I admire the hustle, it's just too much, man!
Appreciate for a really sensible answer. Will try to follow that.