Investing $200k. Where?

my ex husband and I have sold our family home.

I have walked away with $240K and four children. I am after some direction of where to invest $200k of the amount. I have no debts so I am looking at this as a fresh start and I really want to be smart about this.

I have a financial adviser coming over in a week and I am thinking along the lines of putting a deposit on a small unit in Sydney?

Can anyone tell me some areas I should be looking at or any other investment ideas?

TIA

 

Speak to a broker, there are plenty of good ones on here. Use as little cash as possible for your property (your broker will advise the sweet spot) and dump the rest in an offset account while you decide what to do.

I'd also speak to @Terry_w about your options.

 

All the best flossompossum.

Hathro, can you tell me why you are suggesting to put as little cash possible for the property?
Thanks,

 

Cash is not tax deductible. Debt is.

 

It depends on your income and risk appetite.
If you don't have any income then serviceability becomes an issue, so you may not be able to get a mortgage.
Also if you don't have any income then I'd suggest you stay away from the share market, it is more risky than bond, property etc, you may be in risk of losing the 200k.
Also don't invest all 200k in one asset class, don't put all your eggs in one basket.

 

So just to get my head around this..

Not paying too much as a deposit but taking a little more on loan(debt), because this debt is tax deductible?

So the financial planner would find a sweet spot to achieve this.

Yes?

 

I'd be investing the 200K deposits towards NRAS approved investment properties.

But thats just me....

A 500K property would require 12% + stamp duty + I always recommend a modest cash buffer of 10K. That would equate to @ 90K of cash invested. You would generate @ 10K tax free from that .

A 2nd 500K NRAS approved property would also require 90K to cover 12% + stamp duty + cash buffer. Again, you would generate @ 10K tax free.

That's 180K of cash invested, for 20K return tax free. 11.11% tax free return on 180K.

Better yet, if you have a PPOR, dont use cash. Draw the 180K from equity so all the debt is deductible, and invest the 200K with your planner. Your total return would be even greater this way ...

Now, I can almost guarantee your planner will poo poo the idea but equally, I can almost guarantee they wont have anything they can offer you with 11% tax free returns , unless you are willing to take a lot of risk.

 

If the planner knows anything about loans, possibly.... but I would be very careful to make sure thats the case... I say that because financial planners tend to work exclusively within the constraints of their dealer group's approved product list.... meaning they dont always deal in mortgages, and almost never discuss property. Thats fine... no issue there - its not a criticism at all - just saying you cant necessarily expect them to talk to you about anything outside their patch of turf.

They will almost certainly talk to you about insurances and managed investments and ETF's and shares.... simply because thats what they are authorised to discuss - but usually planners dont not even introduce property or mortgages into the conversation.... but its possible they may surprise....

 

I disagree with this. Buying shares is no more risky than buying property or holding cash for the long-term. Without educating yourself on the assets your looking to buy, ANYTHING is risky.

@flossompossum Hi and welcome to the forum. I'd park the cash in a term deposit and learn as much as you can about shares and property, coming here was a good start! Then decide what you want to do.

Do you know if your financial planner is independent? If they aren't you'll probably be guided towards some kind of managed fund that they're affiliated with. Don't let them pressure you.

For sensible share investing knowledge I'd look up Peter Thornton. There are threads about him in this forum, and he has a website that sells his book.

 

Welcome to the forum. There is a massive oversupply of units in Sydney at the moment, please be wary of this.

 

As above
For investment, there are better markets to buy in
Adelaide, Brisbane also, Sydney is near top of cycle, Melb isn't to far behind

 

Even without 4 kids, I would be investing in a roof over my head

Look at where you can afford.

 

Hey @flossompossum , welcome aboard.
I would be avoiding Sydney for an investment property, especially a unit.
It could be a good idea to use as small a deposit as you could, maybe buy an IP in another area and rent where you want to live.
Still wouldn't be looking at a unit, somewhere with a good land content that's more likely to increase over time.

 

Oops hate replying to myself... I meant Peter Thornhill (not Thornton)

 

Depending on her goals this may not be the best financial decision for her. I'm renting as its better for me to keep my investment properties and the rents supplement my income. And with property prices so high, I can't justify spending 950k on a PPR when I can rent the same for $600 per week.

 

Was not even close to advising to spend silly money on a home, you do not need to spend 950k for somewhere to live even in Sydney, nor do you even need to live in Sydney I would suggest, therefore the "afford" comment.

Either way, I cant think of much worse than buying an investment unit in Sydney at the moment.

At the end of the day, none of us can offer real advice, too little info.

 

@flossompossum do you currently have somewhere to live? Are you paying rent? Are you currently working or plan to start working? Are your children young?

These things will help with some more specific advice.

 

Another option is to keep your money in the bank and give yourself a few more months to consider your options property after reading over this forum and accessing the archived Somersoft forum. Read books and magazines, they're only $10. Things change, as you know... and you may need access to the cash in the near future.

There's a big difference between investing in a property and buying a home. Work out what your goals are.

Be careful of financial planners - only you have your own back - and try to learn as much as you can.

 

Hi Do Androids Dream,
Could you elaborate a little on this difference?
Thanks in advance.

 

Thanks for the like, RJS. I'm no expert but I've learnt a lot from this forum the past 2 years.

My thoughts are that a home is more of an emotional decision; you buy where you'd like to live, because you love the home and can imagine you/your family living there. Whereas an investment property you are achieving an objective, a logical goal, whether that's immediate cash flow, capital growth or long-term retirement, or all. You care about what the tenants want, but it has nothing to do with you wanting to live in the property whatsoever.

My criteria for buying an investment decision is different, for example, the numbers just have to add up... finance, etc., if they don't, I walk. I've bought (and will buy) in suburbs I will never live in because they meet my criteria. I've never owned my own home before, I'm a rentvestor, but I find that when I start becoming too attached to a potential investment property emotionally, it can blur my decision-making.

Both are very different.