$900 000 windfall - enough to retire now?

Discussion in 'Investment Strategy' started by Butterfly88, 19th May, 2017.

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  1. Butterfly88

    Butterfly88 Well-Known Member

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    Hi all

    Hubby (about to turn 50) and myself (just turned 52) :eek: are about to receive a $900 000 windfall. Our PPOR (needs some work but still worth $1.3 conservative valuation) with $220 000 P&I loan against it and have one investment property worth $1.2 million with $ 553 000 owing IO that is rented out at $750 per week.

    We currently have $70 000 cash in the bank offsetting.

    We have no other debt and our chicks have flown the coop.

    We are about to receive a $900 000 gift from the retiring parents. Quandary: where to put the money in terms of our overall situation given our strategy is to retire ASAP?

    Open to all suggestions!
     
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  2. Bran

    Bran Well-Known Member

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    On red
     
  3. Butterfly88

    Butterfly88 Well-Known Member

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    Not half on red and half on black,?
     
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  4. Bran

    Bran Well-Known Member

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    Lol. No!
     
  5. D.T.

    D.T. Specialist Property Manager Business Member

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    Yes and then spin a 00
     
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  6. 158

    158 Well-Known Member

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    What are your incomes now and what are your income requirements in retirement?

    pinkboy
     
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  7. Butterfly88

    Butterfly88 Well-Known Member

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    Hiya. Our income is $150 000 gross and we spend wayyy less than we earn. We would be more than comfortable on $60 000 per annum.
     
  8. Butterfly88

    Butterfly88 Well-Known Member

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  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Consider financial advice that includes super so that long term tax savings enhance retirement income.
    Choice of paying personal tax rates and 0% ? Usually fairly straight forward.
     
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  10. Butterfly88

    Butterfly88 Well-Known Member

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    Thanks for the input. Are you suggesting we put a large portion into super and then wait to turn 67?
     
  11. Cimbom

    Cimbom Well-Known Member

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    I'd put it in the offset account of your IP and then retire. $750/week is 39k/year between you (keeps you just over the tax-free threshold if jointly owned) plus 400k left over but I have low expectations :p.
     
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  12. Phase2

    Phase2 Well-Known Member

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    I could easily retire on that.. how does ~$80k/yr after tax, completely debt-free and no tenant hassles sound?

    Steps:
    1) Sell PPOR and move into IP.
    2) Use proceeds of PPOR sale to pay off loans.
    $1,300k - $220k - $553k - $32k (sell costs) = $495k
    3) Use the remainder of the sale proceeds to buy LIC shares
    $900k + $450k = $1,350k
    4) Work for 6-12months more to build cash buffer (add to the $70k you have already) and let first dividend payments come in..
    $1,350k x 7% (gross yield) = $94,500, split 2-ways = $47,250, after tax is ~$39,600ea

    (~5% yield fully franked = 7% gross)

    5) Enjoy your retirement. :)

    Alternatively you could sell both properties and do the same thing, then just rent or buy a cheaper PPOR. Sea-change? Tree-change?
     
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  13. Butterfly88

    Butterfly88 Well-Known Member

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    Thanks. Where to put the 400K though? In the bank?
     
  14. Phase2

    Phase2 Well-Known Member

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    yeah but that $39k is going to get eaten by PM fees, maintenance, land tax?, rates etc etc.. more likely $27-30k left over.
     
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  15. Butterfly88

    Butterfly88 Well-Known Member

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    Hmmm. Thanks very much. Looks like I need to do some research on LIC shares and how they work,,....Any pointers on where to start @Phase2
     
  16. Butterfly88

    Butterfly88 Well-Known Member

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    Yes. Too many outgoings..
     
  17. Phase2

    Phase2 Well-Known Member

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  18. Butterfly88

    Butterfly88 Well-Known Member

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  19. Cimbom

    Cimbom Well-Known Member

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    Or put it in the offset accounts of both, rent them out and live like a king overseas in pretty much any country you want :p
     
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  20. Butterfly88

    Butterfly88 Well-Known Member

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    I am assuming you mean places like Borneo..but nice suggestion!
     
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