Investing $250k-300k for cashflow

I'm doing some serious reading but am a slow learner in this area ☺Other than property where would you park approx $280k cash for a lowish risk return. What cash flow return could you expect and what risks? I'm interested in dividends but need to read alot more. Any leads?

 

If you have debt, then if your $280k is parked in an offset account then the rate of return is essentially equal to the mortgage interest rate you otherwise would have been charged on your borrowed funds...

 

I was after a higher rate of return though..

 

Then you will be taking more risk, in general. No free lunches, etc.

Given current bond rates, if you want a rate higher than your mortgage you're probably looking at equities / shares. Plenty of info on that here in this subforum, and some nice introduction threads.

Keep reading, however slowly. I'm sure you don't actually want to park 280K into something on a tip from the internet, without knowing the ins and outs of the investment. Take your time, avoid short cuts. Once you have the knowledge it's with you for life.

 

Dammit, that's so true! Alright, back to reading and I'll hopefully be back with a shortlist of options

 

Maybe a selection of ETFs and LICs for diversification.

A couple of resources:

• Australian ETF and LIC fund list, blogs, news
  
• Exchange Traded Funds (ETFs)

Also take a look at Dividend Yield Scan (9 January 2017 - 36 Results) if you want to direct invest in any individual stocks.

Keep an eye on management fees.

 

You do not "park" cash in stocks.(this obviously includes stock ETFs and LICs). "Park" suggests that you may need the money in the short-medium term. Stocks are a 10+ year proposition unless you are generating income via a trading system.

 

I am in the same position. I have been looking at some ETFs such as ASX:VHY. The risk of a fund like this seems reasonable and the returns are solid but not spectacular. I really don't know how they work though, and my lack of understanding of this area really puts me off investing in this area. I am not going to commit hundreds of thousands of dollars to something I don't understand.

 

That's where I'm a bit stuck. I keep reading stuff between the lines that puts me off. Lavk of understanding really. Perhaps I'm better investing a much smaller amount for diversification and following JacM's advice. Also wouldn't mind buying another property but I don't really want more longer term buy and hold resi.

 

Agree. I think I was imagining roughly "buy $xxx of ... product and receive $xxx cash flow" but these are the possible outcomes/risks. I've been on 3 planes in 1 day so probably delirious.

 

Great, thanks. I'll have a look.

 

Sounds like you want to focus on a range of investments that would be showing a consistently high dividend/income return ( for cashflow ), without necessarily being too focused on growth ( will naturally happen if you try and buy at low points in the market ). Make sure you diversify into different market segments / sectors.

For example $10k invested on 16 Feb 2016 in the Market Vectors Australian Banks ETF ( MVB ticker on ASX ) would be showing the following return:



I bought ( equal weight ) into ANZ ( Jan 16 ), NAB & CBA ( Feb 16 ), WBC ( Jul 16 ) by taking advantage of buying opportunities ( discussed on the What's looking cheap on the ASX? thread. For these purchases I am showing a return:

15.16% (gain) + 8.11% ( dividends ) = 23.75% return.

Main point is to take advantage of points in time where the ETFs or stocks are at a value price. The above thread is a good one to keep an eye on if you are looking for value opportunities.

( you can see below where the buying opportunities were starting to present themselves for MVB, but support with more research at the time for info that *may* support a decision to buy - google is your friend )

Maybe dip your toe in the water with some smaller ASX investments to build your knowledge. Perhaps others can suggest good dividend plays, but do look for value buying opportunities ( often when the market seems to be panicking ).

You can signup at sharesight.com for free. Use it as a tool for what-if analysis. E.g. What if I invested $10k in stock XYZ, 5 years ago. It would show you the capital growth as will as all the income distributions ( dividends ). Useful for learning.

Once you think you want to take the plunge, this page will help you get started:

How to Buy Shares in Australia

 

Nope. I've had 2 recent attempts to buy a commercial and both fell through (not due to me). Still looking.

 

That's gold, thanks

 

That's my focus as well. Looking for a total return better than my offsets, also to build capital and progressively build non-salary income to aid serviceability.

Still keeping a healthy balance in offset though.

@The Y-man, are you invested in ASX-listed property trusts?

 

This is what I was looking for too. But it doesn't actually work for property or listed securities, such as LICs or ETFs. For example, my IP was previously rented for $440 pw, then $320 pw now $280 pw. Hardly consistent returns. VHY would be the same. Typically it returns around 6% plus franking credits plus capital growth. However, because it invests in dividend shares, the quarterly return can vary quite a lot. So while the long term average is very consistent, the quarterly return is more volatile. I think this is something that property investors have to adjust to.

 

Curious why this happened? care to share