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IP Offset or Shares

Discussion in 'General Property Chat' started by hash_investor, 9th Oct, 2016.

  1. hash_investor

    hash_investor Well-Known Member

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    Looking for opinions on using 100K cash. I can park it in an IP offset or buy some shares.

    btw, these are the two options that I can think off right now. If you have a better option let me know. Buying another IP is not an option for now.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Paid off ppor?

    Will your shares return more than 4%?
     
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  3. hash_investor

    hash_investor Well-Known Member

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    PPOR is paid off.

    Yes, I will be looking for shares only which return more than 4% in yield. CG will be on top of it.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I think you answered your question.
     
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  5. Bran

    Bran Well-Known Member

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    Now comes the hard part... which shares? :)

    Read the LIC thread.
     
  6. marty998

    marty998 Well-Known Member

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    I am struggling with this question too... IO periods end between 2019 and 2021 for me, but I'm really keen to start building offset balances so that the interest burden is reduced when the time comes.

    I am going with a mix for now - general savings to shares, and bonuses & tax refunds to offsets.

    I know that I will need shares for income if I ever stop full time work, but equally the level of income I will need will be reduced if the offset balances are high enough!

    Difficult question that I don't have answer for as yet.
     
  7. Sezy22

    Sezy22 Member

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    Where is the LIC thread??
     
  8. theperthurbanist

    theperthurbanist Well-Known Member

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    What is your timeline?

    < 5 (some would say 7) years = offset or 'fixed interest' (if you can get a better than 4% yield).
    > 5 years = shares.

    Always wise to diversify too - if you decide to go with shares, keep a bit in cash/offset (say 20%) and visa versa.
     
  9. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Just make sure it a nett yeild :)
     
  10. hash_investor

    hash_investor Well-Known Member

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    Where do you get more than 4% in offset / deposit these days?

    Also, if you put more money in offset it would make the property cash flow positive, means pay tax on the income. But if I buy shares I can get >4% return tax free and negative gear the property too? Good strategy?
     
  11. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Why shares tax free but property not? Are you talking about the same ownership structure?
     
  13. hash_investor

    hash_investor Well-Known Member

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    My understanding is that franking credits make dividends tax free upto 30% income tax bracket?
     
  14. willair

    willair Well-Known Member Premium Member

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    Then the only question is what do you buy in the way of ASX listed companies,or as there are pages on "LIC,S" already from long term "sober" investment styles within this site..
    But look at the number from top 4 high end banks,over 800,000 Australian households are direct shareholders,even more if they looked into their superannuation funds..
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It will depend on your income.
     
  16. theperthurbanist

    theperthurbanist Well-Known Member

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    Peer 2 Peer lending (not strictly a traditional 'fixed interest' investment but practically the same in the way it operates). Check it out.

    I have been using the RateSetter platform for a bit over a year now. '7-9% returns on all my investments. It took me a lot of research to get comfortable with the platform (as the concept is quite new in Australia, less so in the UK), but I have been nothing but impressed so far.

    It's not for everyone, isn't 'guaranteed' by the government like savings accounts, but I seriously cannot find another asset class that comes close to its performance with the same lack of volatility.
     
  17. hash_investor

    hash_investor Well-Known Member

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    And what is your point? Are you saying they are the safest bet because so many others bet on it?
     
  18. hash_investor

    hash_investor Well-Known Member

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    That is a risk / return business as I get it. The more risk you are ready to take they more interest they will pass your way because they will lend your money to risky people. Is that right?
     
  19. theperthurbanist

    theperthurbanist Well-Known Member

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    FYI - PM me if you want a $50 sign-up bonus (no I am not affiliated, I just use the platform myself, and yes I do also get a $50 bonus if you sign up :), but no I wouldn't be pushing an investment vehicle on someone if I didn't 100% recommend the platform myself. Take a look, see if it meets what you are after.
     
  20. hash_investor

    hash_investor Well-Known Member

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    Correct. But the point is tax will be minimum on share dividends compared to property income.
     
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