Seeking investment advice

Discussion in 'What to buy' started by TimboH, 29th Sep, 2021.

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  1. TimboH

    TimboH New Member

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    Hi all - long time lurker, I’ve learned a lot reading and taking in information over the years, thanks all! Looking to pick your brains for advice, anything’s welcome.

    I’m about to inherit about a million or so, and my wife and I own a place worth around 3 million, with 1 million owing. We’re in our 30s, have one young child, and would like to have another in the near future. We are musicians, running a music school (primary income source) with supplementary income coming in from performing.

    We’re currently considering 4 options:

    1) taking the inheritance, and paying off the remainder of our mortgage

    2) selling our own home, and buying my in-laws place, which has an already-partitioned house such that the back section could be readily turned into a music teaching space. This would increase the number of music studios available for us, giving the opportunity to expand our business. The in-laws’ house is valued around 4 million, meaning an increase in our current mortgage repayments

    3) remaining in our house, keeping our current mortgage, and investing the 1 million inheritance

    4) selling our house, and using the proceeds together with the inheritance money to invest


    Our risk appetite is fairly low, and we aren’t enthusiastic about not owning anything of our own (happy to downsize, however). We have no idea how or where to invest, and will probably seek wisdom from a financial adviser. However, I’d love any input from people here!

    Thanks again.
     
  2. Tyla

    Tyla Well-Known Member

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    Welcome to the forum.

    How long do you want to continue living in your current home? Will it suit your family's needs when you have another child for their schools, etc?

    Assuming staying there longer, I would mix 1 and 3. Meaning pay off existing loan without closing it then redraw for deposit or for funding the whole/majority of investment. Thus you can claim tax for the redraw.

    My 2c
     
  3. willair

    willair Well-Known Member Premium Member

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    Number ''2'' sounds like a plan, but still comes with the fear of uncertainty ..
     
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    id sit with various specialists here to work an opimtised way forward

    Accountant, broker and planner

    Until you can work through the hard data to see where your boundaries are for your risk profile, its hard to make sense of " whats right for me" because one will be relying largely on soft data and the views of others who dont have the same wants needs and risk profile

    ta
    rolf
     
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  5. Stoffo

    Stoffo Well-Known Member

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    Apart from selling/buying costs, how will it mean an increase in loan repayments?
    Your place worth $3m, add $1m inheritance = $4m, the inlaws place worth $4m, differnce made to your current mortgage = nearly $0

    Definitely option 2 for ongoing lifestyle ;)
    Assuming that this inheritance is coming from the sale of your partners parents home there may be tax benefits to move into/own it also

    You could do option 3,using @Terry_w tax tips to debt recycle :cool:

    For 4, selling everything to invest, where would you live ???
     
  6. boganfromlogan

    boganfromlogan Well-Known Member

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    I would do 1.

    Plenty of options would follow.
     
  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Firstly is your current house your forever home?

    If it isn't take this opportunity to obtain the forever home, perhaps from a combination of selling and using the money to make up the difference.

    If it is the house where you're happy to spend a good portion of your life, use the inheritance to pay it off. That'll give you a secure roof over your head and suprlus cash flow to invest elsewhere. Consider debt recycling if investment is on the cards.

    Now that your shelter needs are taken care of for the long term, invest for the future. So many ways you could do this, especially with the huge equity position in your home and the extra cash flow you've just generated. Debt recycling the inheritance would be a very strong option if you're so inclined.

    Before you do anything final with the money, think about your objectives and build a plan towards using it in the best manner going forward.
     
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  8. Gav

    Gav Well-Known Member

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    Agree with Rolf, you need to have a lot of conversation around where you see yourselves in 20 years time - some basic thoughts:-

    I would take out no 4 as a start, you have a great foothold in the property market and you dont want to lose it (in trading terms , owning your ppor is like being flat the market, not owning anything is like being short the market....and you dont want to be short Aussie property!)

    You are young, so a bit of leverage is a good thing, plenty of time to let the market work (whether that be property or stocks)

    No 2 is kind of like investing in your own business, as opposed to say investing in the stock market - do you want more risk exposure to your personal business, is the potential reward worth the risk?

    Plenty for you to think about, talk to lots of people, let your thoughts cystallise...
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    number 3 would result in about $3,000 lost tax deductions per year.

    It sounds like 1 and 2 are mathematically similar so it mainly comes down to a life style decision with some potential differences in growth between the 2 properties over the coming years
     
  10. Desperado

    Desperado Active Member

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    Chuck the million into a Vanguard ETF and let it be

    Property is good if you want more debt or you plan to create value through improving property
    Options 1/4 you decrease your asset base to 3mill which is absolutely fine if you rather no debt
    Option 2 has a few transaction costs which will eat up money

    2/3 will perform better since you have more asset

    Obviously not fin advice
     

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