WWYD - Short term cash?

Hi All,

I was hoping for some advice/views as to how best to use some short-term cash surplus.

In simple terms the situation is:

• Mid 30s couple
• Currently have 1.5M PPoR (fully offset, no interest being incurred)
• $500K IP loan (slightly negatively offset) fixed IO (have considered breaking and putting in offset but the return is negligible). This was positively geared prior to COVID but rent has dropped by 20%..
• Saving approx $10-12K p/m
• $500K incremental cash surplus earning sweet nil right now.....

In about 1.5-2 yrs I suspect we'll need to upgrade PPOR to circa $2-2.2M (outgrowing the space).

So that funding will mostly be used up until that point (also noting that we'll probably save another 150-200K by that point).

I have been planning a share portfolio so figure the best option is to establish a portfolio, park it in there for some growth in the meantime and draw out when we upgrade. At that point, I can continue to plug in the monthly savings into the portfolio............

Side note: any FP recommendations in Sydney welcome. I've been reading up a whole lot on LICs and have read a few books but don't feel a huge amount wiser. Given I'm also significantly time-poor fast-tracking the process would be hugely helpful.

Am I on the right track?

Harry

 

Are you planning to sell the current ppor when upgrading?

shares for 2 years is a very short time frame.

 

Hi Trainee,

I think we'll more than likely have to sell the current PPOR, although I'll need to run some updated numbers to understand if we can convert it to an IP and hold.

I understand the timeframe is short. I guess the balance would hover around $500K, lift up to $650-$700K (based purely on savings injections) and then drop somewhere close to $150K post-withdrawal for PPOR upgrade.

I'm just not sure whether that's the optimal way to use the cash in such a short time frame (if that makes sense).