Best and safest way to do this?
She is getting this from an Estate and has no idea what to do
Sister Will Have $1.7m after Probate. How to Get 5% Yield Per Year?
Lpoczynek77 on 29/09/2021 - 15:43
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VDHG's international exposure means no franking on that component obviously, but the benefit of the diversified fund is the diversification (and automated rebalancing), which may suit the risk profile of others. VAS may have outperformed VDHG so far (I haven't personally checked), but careful of falling into the trap of assuming past performance is an indicator of future. Both VDHG and VAS are excellent options, but each suit different strategies.
The bigger tax issue for VDHG is the capital gains distributed to investors due to the rebalancing and redemptions. But there's no such thing as a free lunch and if you benefit from the strategy of rebalancing, then it comes at a cost. Whether or not the benefits of rebalancing exceed the tax paid as a consequence of constant rebalancing, well, time will tell.
Interesting the comments about seeing a financial advisor. I have tried this a few times over the years and each time have felt that they have vested interests and trying to sell something. A clueless close family member lost a lot of money by taking advise from a so called independent financial advisor.
Start by doing your own research, like asking here for ideasYup, financial advisers just try to sell shit and get commission. It is fairly easy to become one compared to say, an accountant. I wouldn't trust them tbh unless you really have no clue on investing.
This.
Uhhh. I have little love for financial advisors but all the accountants I know are pretty terrible at investment decisions (although they'll tell you otherwise).
the last financial advisor I went to did the 'free consultation' - 1 hour of asking me all the questions
then a week or so later called me back to show me a nicely bound multi-page booklet financial plan
and told me I could have it for maybe $2600 - I demurred
he then said 'if you don't buy it I won't have dinner tonight !'
thanks but no thanks - that didn't attract me as a source of sensible financial advice I should follow.
I walked out.
"See a financial advisor" WTF?
One of the biggest cop out comments that we see on OzB, but so many people say it.FA's are, on the whole, crap. You only have to understand what it takes to become one to find that out.
The only reason for seeking a financial advisor is to understand the "mechanics" of how certain investments work, not for them to recommend a particular investment. Even then, a few hours spent researching stuff for yourself and you can be pretty much clued up about how investments work and what types there are.Best advice in your situation would be (i) Ask OzBargain and carefully evaluate only the useful comments (ii) DYOR (iii) Avoid seeing a FA if possible unless you are completely confused (iv) Take your time, soak in all the comments, think hard about all the options, ask around, but don't let anyone close to you know the amounts involved (v) When you're ready, diversify into as many different products as is reasonably possible.
Shares, ETF's, maybe investment property, maybe even some in a cash savings account.
Important to to get clued up quickly.I also agree, from the few (2-3) i've seen, all they do is try to sell you life insurance through super… maybe i've seen the wrong ones..
Depends which FA you go to.
Most retail FA's will give you the same spin. With a bank of >$1.7m and perhaps some earnings potential you could go to a HNW service FA. Yes they cost more, but I know people who use such advisors and they have access to unique investments (unlisted types e.g. commercial building trusts etc) with good performance and have access to unique service offerings (beyond the standard 'pay your debt, super contribution and invest in ETFs').
You get what you pay for.
5% yield in today’s market will come with capital risk, noting that asset (shares & property) prices have grown considerably post GFC. A market crash in the near term is unlikely, but longer term sustainability looks dubious. Looking to low risk bank interest, you’ll struggle to get 0.5% (you can get ~1% on small balances with special deals, honeymoons, etc). Not knowing her age or financial situation, I’d suggest she buy herself a home, put some into super (if she can) and/or a share fund (managed or ETF, not direct share holding), and keep a decent amount in the bank for living expenses.
The ASX is pretty much exactly where you'd expect it based on long term trends. Why do you think long term stability is dubious? We're most of the way through one of the worst financial events in trading history and things are roughly back to normal.
Property is the more obvious issue, but both markets are highly susceptible to a rebalancing of interest rates and govt debt. Low rates, low yields, low inflation and high debt won't be around forever. And any upset to property will affect shares.
ETFs, don't touch for 10 years
All in Crypto
Less than 1% of people can handle a 100% digital asset portfolio. The other 99% are satisfied with 5% APY.
What coins are you in?
Yeah 99% of people like to make money.
Buying crypto and holding them in the hope they explode in value because a hedge fund might decide one day to dump then pump it isn't investing. It is gambling.
All on Black.
Max out super contribution and buy 1 low maintenance investment property
I'm surprised no one has mentioned/recommended the "4% Rule"?!
Seek professional financial advice. They’ll work out sis risk profile and her goals. Does she need 5% because that will afford her to retire early and maintain her current lifestyle or is it because 5% is a nice round number? A good adviser will work out with your sis what she needs (maybe she only needs 2% returns) and the time horizon.
Afraid that an adviser will flog their own products? Seek an independent adviser. Do your research and read their FSG (Financial Service Guide) any affiliations will be disclosed there.
Advice fees are tax deductible. Don’t understand how some ppl will pay accountant to do their taxes for simple affair (PAYG only) but will baulk at paying for professional financial advice with something that can make huge difference to their financial life. $1.8M is quite a windfall.
Park it in a balanced index fund. Reinvest distribution. Keep it boring. Keep it diversified and relatively stable. Watch it grow year and on year, and if she's relatively frugal, see the potential for returns to outpace expenditure.
https://www.vanguard.com.au/adviser/products/en/detail/etf/8…
Doesn't sound like she's very frugal tho. That's fine. Keep on working and enjoying life, but have this as a very substantial back up plan/safety net/escape pod/FU money.
Do not fall into the fallacy of investing just for the sake of receiving high yield.
With today's low interest rate environment, you should be looking at a total return investing approach instead of getting caught up with a 5% yield requirement.
For example, there are currently plenty of options out there that offer 5% yield but their risk and growth potential have usually already been priced in and are most likely either high risk and/or nil to negative growth investments.
do the following:
1. Invest in a fairy bread food truck
2. profit
3. convert all to Venezuelan bolívar
4. Swim in a pool of cash- Buy shares in Evergrande
On the dip and all technical indicators shows is about to bounce. Same as those China gaming stocks.
Buy a coal-fired powerplant.
Fortescue.. go go go
I wonder if you could fill a pool with 1.7mln in $5 aussie notes?
definitely not
Maybe a plunge pool?
Maybe NZD fivers?
Gigalos and coke
VAS/VGS
GTR 34
EVO 91.7m is peanuts these days can't even get you a proper house.
I would like some peanuts..
you got some peanuts you can spare us?
If you're going to see a professional it's really FA's. Institutional advisers won't even look at you unless you have serious asset backing.
Lots of divide with FA's for sure, which is why you go to as many as possible.
Usually they come with a 'free consultation' which is where you can scope out what kind of services they offer. I would look out for things like what licensee they are with (are they with a bank? Are they 'independent'?), qualifications (do they have a CFP or at the least ADFP with years of experience?), fee transparency (they often say something like 'depending on your complexity' BS - no. If they are a fee for advice, they have a standard fee which they charge most clients or else how would they conduct their business planning?), chemistry with you (honestly, we talking about a relationship more than a midus hand financial advisor, so pick one that you click with and one you're comfortable talking to). There are a lot of FA's but a lot have fallen out of the industry due to tigher regulations. The ones that remain are trying to adapt and changing business processes and structures. Know that it isn't as outlandish as it used to be.
Seek out both standard retail (cheaper) and the HNW (expensive) advisers. Their range of service offerings is vastly different.
What ever you decide dont be greedy, look at near market returns.
And keep your own lifestyle but just a bit better.
1.7 million isn't a lot for someone young.
Yeah most young people I know have 3 or 4 million…
That's not what he meant. As in $1.7 million can go up in the air quite easily especially if you live in a major city.
70k for 30 years is 2.1 million
1.7 million invested should let u live a modest life without ever working….
Ask many qualified people and people who are experienced in investing in the space you are looking at.
Consider diversifying and keeping at least 25% aside for a rainy day.
Beware, although you should get a financial advisor, many are just overnight ones. They should fully disclose any kickbacks in their recommendations.
FTX margin lending with USD. (you lend to others via FTX)
Paid hourly with rates usually between 3-10%
Did anyone say Bitcoin yet?
Seriously: https://www2.asx.com.au/markets/etp/vdhg obviously nothing can guarantee 5% but this is a good option imho
I will just hit IPO and only after the quality ones, when you have those kind of money you should be able to get some good stock brokers interested.
Go the Star, bet on black, profit
A 1% allocation wouldn't hurt.
Which Mining Stock can Outperform Bitcoin over the next 12 months? Let's find out! NFA of course
https://www.youtube.com/watch?v=uRZfUGNuXOw
IWLD and IHWL 50/50 split and call it a day.
Otherwise an Australian company offering similar products
Eneloops
Tell your sister to read financial independence/retire early (FIRE) blogs. Not because she has to retire early, but they are all about making the right long term investment decisions.
its all very simple really
- buy a PPOR
- put aside a generous but not ridiculous amount for enjoying life (travel or a car or whatever)
- invest most of the rest in highly diversified ETFs (VAS, VGS, DHHF etc) or perhaps a few diversified LICs (you could choose property instead, although I certainly wouldnt buy property in the next 12 months)
- dont forget putting some into super. a non concessional contribution of $300k or so (if she is eligible) will likely hit over $1.25m by the time she is 65
- keep 6-12 months expenses in cashSimple, no complexity. No need for an FA.
Only element of complexity might be to consider having a discretionary trust, but that only works if there are other people in her life on lower tax rates.
Invest into 21+me! If you are closer genetically then claim your share!
I think you’ve mixed up 23 and me and forever 21 lol
here's a diversified tax effective investment strategy that uses long term and short term leverage, negative gearing on property, franking credits, debt recycling and gives you a emergency fund.
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 forever (never sell) and repeat this with a different lender in a different area 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. (this is called debt recycling, by making the house you live in loan repayments now a tax offset against the dividend income from shares)
keep 6 to 9 months of living costs in your offset account as emergency cash money in case you lose your jobs or whatever
With the offset account get a zero fee credit cards for all 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 even 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.
also salary sacrifice into your super if you want.
I work for a financial planning firm so take this advice with a grain of salt if you must. Condolences to the loss of whoever left the money. I suggest your sister get some good financial advice from a Licensed Financial Adviser. Be willing to pay $3000-5000 for it. Anything less and the advice is likely to be computer generated or otherwise sub-optimal. Its a lot of money she's receiived and it has the potential to open a lot of doors for her for now and the future, equally bad decisions could see her lose it all and regret it for a long time. What suits her depends on a whole range of things, depends on her age and her financial position and experience before coming into the money. All the best
Step 1:
Register for Family trust
Step 2:
Build a portfolio (Vanguard)
Step 3:
???
Step 4:
Profit.If she is in her 50s she should top up her super by about 1million.
The $1.7m is tax-free. Why would anyone want to lock in $1m for 15Y?
It would be locked in, under current rules, for under 10 years.
I did not suggest she put all 1.7 in super.Earnings within super are max taxed at 15%.
And usually earnings tax free over 60 (if taken as an income stream).
100k worth of harmony one (crypto ) with average 10% return (staked)
40k worth of Kardiachain (crypto) with average 10% return.This will give you exposure to one of the progressing countries ,vietnam.
60k worth bitcoin100k worth Zippay asx
100k worth bigtincan asx100k worth gold
lock up 100k in super
Take up on a mortgage loan to buy a small studio apartment in sydney as investment property ,use the interests + other things for tax offsets.
hold onto the remaining 1 million and take a financial advising course and a crash course in taxation accounting and Dyor .Make instagram and tiktok account and tell people how to be rich.
Not a financial advice
5% requires some risk, even 3% requires a little risk.
This is probably the most sensible comment in the whole thread. OP needs to understand nothing is without risk and I'm not sure if OzB is the best place for investment advice.
So true, you can get around 3% with residential housing, but you always run the risk of the tenant not paying.
If I was a scammer, I'd start by following the lemmings that leave the offices of a financial advice firm.
Not only do they listen to garbage advice, they are happy to pay for it.resi property + a 120k built granny flat in the back yard is an auto 7-8% yield with weekly cashflow. Spread it between 3 properties around brisbane.
Storm Financial
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VDHG has poor tax implications (hardly any franking) and hasn't grown as well as VAS over it's lifetime. Some in VDHG is fine, but a young person can afford to put more into a riskier index.