What would your strategy be if you earned $1mil p.a In your twenties!

Assume you had $1mil p.a surplus funds (after living expenses, company and personal taxes etc)

Would you:

Leverage into $10mil of resi property?

Leverage into $3-4mil of commercial property?

Leverage into $3-4mil shares?

Direct investment in small businesses/start ups?

Mix of all of the above?

Nothing - get a gun financial advisor to handle it all for you!

 

Mix of all the above.

 

Get professional help.

 

It's surely going to be mix of all but I would definitely sit down with few of the best Financial Advisors to find out all the best moves and make informed decision!!..

Cheers,

 

$1mil net per annum in passive income

 

I would invest 80% and spend 20%. I would avoid financial planners completely, and invest in an expensive main residence then debt recycle into property with 100% borrowings, index funds and businesses.

 

Hi Terry,

Do you mean buy a expensive PPOR due to:

1) CGT exemptions
2) Ability to raise investment $ form this PPOR which are 100% deductible, then invest in property, shares, businesses etc

 

Both really

The main residence is the only tax exempt asset you can have (that goes up in value), so if you have the means good to maximise this.

you could borrow up to 80% of it, pay it off, and then invest at owner occ rates too. So holding it costs you nothing except rates, insurances and gardeners, cleaners, repairs.... and the 20% plus duty tied up initially.

But it should also be a good 'investment'.

 

In my mid 20s if I had $1M I'd have spent it on wine, women & song. Actually I don't drink (never have), so I'll let you figure it out...

I actually have a client who had a similar windfall when she was 19. She spent about 40% to purchase an apartment outright and put the rest into a share portfolio. She was then able to support herself through university living off the dividends. I can think of other good ways to spend the money, but that's not a bad start for someone that age.

 

Start a Cayman Islands company to employ you and lease your services out.
$1 million a year income is $450k a year in tax. All the problems for those in the rich category are taxation related to Australians.

 

Not quite - tax on $1Million is $423,232.00, and that will fall as the 32.5% bracket expands in coming years.

You'd be clearing $576,778 per annum this year, and a little more each year thereafter
Tax worries? First world problems, really......


You may have some deductions you can offset as well... thats a very simple calculation.

It's a lot of cash flow either way .... as long as you were disciplined for a few years and purchased solid income producing assets using that money - whether commercial, resi, shares etc... you would be set.

 

I love your maths. Can you please be my accountant.

 

For the purposes of a very basic calculation, this is all that was required...

Simple tax calculator

Obviously if there is a spouse, things like concessional contributions to Super for the OP and/or a spouse, private healthcare ( if applicable ) and any of a multitude of other possible deductions ... may change the numbers a tad. ie The numbers may get a little better. For that sort of detailed analysis you'd want to engage an accountant.

 

It was a dig.

Re check your maths @euro73

 

Whats 100K between friends? Corrected

 

Yes, we’re all friends with the tax department!

 

Some more than others . I’ve been audited 4 years in a row and paid them a grand total of zero .

 

You can leave Australia and no longer be a tax resident of Australia.
Live on a ship tax resident of no country except Cayman Island (or any other taxfree country) then pay no tax on your $1m income!

 

Yes but I assume he has to work for his $1 million per annum, so may be difficult to swim to work from a boat in international waters.