$250k burning a hole in my pocket.

[luce.rocks]

I sold some land a few weeks back and I now have $250k sitting in my bank account. Which is waaay more than I've ever had just sitting there. It's making me itch. I'm not sure what to do with it or where to put it.

I doubt I can get a mortgage in Australia seeing as I live in Spain now, and neither DH or I have a job (I'm a SAHM and he's trying to get a business started).

Term deposits look pretty miserable.

From the little amount of time I've spent trying to understand the markets it seems markets move well before headlines come out, so you're always behind.

I definitely don't trust myself at forex.

Different bloggers and investment banks have different opinions on what's going up and what's going down.

What would you do?

 

[Terry_w]

Time frame?

Any loans in Australia at all? An offset account may be a good place.

If not, any relatives? A secured loan to them to park in the offset may be the next thing to consider.

 

[moyjos]

Park in an offset against some non deductible debt until you decide?

Lol snap Terry

 

[luce.rocks]

I only have one loan in Oz and it doesn't have an offset. I've been advised by the bank that any extra repayments I make can either a) be applied to my loan and not available for redraw or b) be available for redraw but not reduce my repayments.

 

[sash]

Put into 150k into the top 10 Aussie stocks - i.e. Westpac, NAB, Woolworths, Telstra, ANZ, CBA, Westfarmer and collect the dividends. If you are brave maybe also take 100k margin. The 60:40 coverage should minimise chances of a margin call. You should get on average about 6% with franked dividends so you will get about $15k...which will easily pay your 8k interest costs.

The other 100k put it into rolling 3th term deposits..it will pay about 3.5% tops...

I sold some land a few weeks back and I now have $250k sitting in my bank account. Which is waaay more than I've ever had just sitting there. It's making me itch. I'm not sure what to do with it or where to put it.

I doubt I can get a mortgage in Australia seeing as I live in Spain now, and neither DH or I have a job (I'm a SAHM and he's trying to get a business started).

Term deposits look pretty miserable.

From the little amount of time I've spent trying to understand the markets it seems markets move well before headlines come out, so you're always behind.

I definitely don't trust myself at forex.

Different bloggers and investment banks have different opinions on what's going up and what's going down.

What would you do?

 

[luce.rocks]

Put into 150k into the top 10 Aussie stocks - i.e. Westpac, NAB, Woolworths, Telstra, ANZ, CBA, Westfarmer and collect the dividends. If you are brave maybe also take 100k margin. The 60:40 coverage should minimise chances of a margin call. You should get on average about 6% with franked dividends so you will get about $15k...which will easily pay your 8k interest costs.

The other 100k put it into rolling 3th term deposits..it will pay about 3.5% tops...

Sash, what do you think about the talk at the moment of the ASX being overbought? (I hope that's the right term - I've really only just started following this stuff)

 

[oc1]

I sold some land a few weeks back and I now have $250k sitting in my bank account. Which is waaay more than I've ever had just sitting there. It's making me itch. I'm not sure what to do with it or where to put it.

I would seriously let it sit there (eg term deposit) for say 6 months until you get use to having that amount of money to your name. This would eliminate some or most of the emotion you now have.

 

[luce.rocks]

I should add, I'm happy to look at overseas markets, managed funds, etc.. Anything really. Or pay for advice, so long as it's not coming from someone who's getting paid to sell me products.

 

[sash]

Yes there is a risk...you could also buy put options to prevent a fall of say more than 10-20% as insurance.

The real issue is you are probably only get 3% if IR rates fall further. In parts of Europe....you will get less than 0.3%. ...you are going backwards.

The reason I said to gear conservatively and keep cash is to plan for these risks.

Sash, what do you think about the talk at the moment of the ASX being overbought? (I hope that's the right term - I've really only just started following this stuff)

 

[Graemsay]

What plans do you have, and what timeframe are you looking at investing for?

1. If it's a long term investment then split is 2:1 into cheap Index Tracking and Bonds funds. Or roll your own as Sash suggested.
2. Pay off your existing loan. At typical interest rates, mortgage payments are likely to be more expensive than the total return off the stock market, and there are no risks to it.
3. Park the money in a term deposit. Split it between a couple of institutions in case things go pear shaped in the financial sector. (Yes the government will cover you to $250K, but it might take time for them to pay.)

As for the stock market, I'm starting to get a bit nervous about valuations. QE has pushed things up, and the ECB is starting to drop another ?1.1 trillion into the banking system. It'll probably be OK for a while, but I'm thinking of rotating my cash out in the near future.

 

[Intrigued again]

Yes there is a risk...you could also buy put options to prevent a fall of say more than 10-20% as insurance.

The real issue is you are probably only get 3% if IR rates fall further. In parts of Europe....you will get less than 0.3%. ...you are going backwards.

The reason I said to gear conservatively and keep cash is to plan for these risks.

Make sure you know all the tax rules in this case it can effect imputation credits and cause a nasty shock

 

[luce.rocks]

Hi Graemsay (and Terry, who also asked about time frames),

I don't have any short term plans. Once we have some steady cash flow from the businesses my husband is working on, I might considering using it as a deposit for more investment properties, or a small development, either here or in Australia. But that could be a year or two away.

In the mean time, I want it to earn more than 2.5-3% that it would get from a term deposit. I don't mind taking on a bit of risk.

I'm not really interested in paying out my IP loan because I want to keep the cash available for other opportunities that may pop up.

 

[Mr. Fabulous]

Hi Lucy, take a step back and decide what your goals are over the next five years. What do you want to do over the short to medium term? If you're not sure, then just sit on the money. There's no rush - the biggest mistake you can make is jumping into something you're not ready for.

There's no problem with sitting on your hands and waiting.

Something you might like to look in to is getting into Angel Investing? This will be heavily dependant on your expertise and knowledge of start ups and whether you are willing to take on huge risks for potentially huge rewards (the downside is definite huge losses).

If this sounds appealing, I suggest reading Zero To One by Peter Theil (one of the founders of Paypal and an early investor in Facebook, amongst others).

Another option is talking to some of our resident forum developers and see if they are open to you partnering with them on future development projects. That is something I have seriously considered myself, but haven't gone ahead with (yet).

 

[luce.rocks]

Hi Mark. My husband suggested angel investing too, maybe I'll look into it. I've also been looking at some cheap resi units here in Barcelona with good returns. Hubby reckons that if I put 50% as deposit and put the equivalent of the other 50% in a TD with a local bank, they'll use the TD as a guarantee and give me a mortgage for that 50%, even if I'm not working. Worth looking into. And reno's have always worked for me in the past.

 

[Mr. Fabulous]

Lucy, I know nothing about the Barcelona RE scene, but if that is something you decide to go in to, then I wish you all the best!

Good luck with your future endeavours!

 

[see_change]

Chat to one of the mortgage brokers and see if you can borrow anything .

Eg 2 at 250

There are certainly places to invest in Australia at the moment .

Don't put 250 hard earned money in the share market unless you KNOW WHAT YOU ARE DOING and most people don't .

Otherwise , can you refinance your loan . If there's a break cost , will being able to put the money in an offset quickly pay for that . ?

Cliff

 

[Richard Feynman]

Agree with cliff above. Definitely talk to a good broker just to explore options (or confirm a lack of them).

If you can't do much, and since you're ok with some risk, look for some Joint Venture partners or consider peer-to-peer lending.

Or be conservative and pile it into an index fund.

 

[virgo]

Hiya
Check out Vanguard in Australia....

 

[WattleIdo]

Hi Mark. My husband suggested angel investing too, maybe I'll look into it. I've also been looking at some cheap resi units here in Barcelona with good returns. Hubby reckons that if I put 50% as deposit and put the equivalent of the other 50% in a TD with a local bank, they'll use the TD as a guarantee and give me a mortgage for that 50%, even if I'm not working. Worth looking into. And reno's have always worked for me in the past.

What's calling you?
You could do a reno with a large deposit and all of the above suggestions.

 

[xactly]

Once we have some steady cash flow from the businesses my husband is working on, But that could be a year or two away.

OK, So your husbands fledgling business has no steady cash-flow,
This means that at any time in the next 2 years there may be a call on your funds?

If so the stock market is not the place to put a large whack of cash all at once.
currently its at the top of the market, beating pre GFC levels.

We are due for a crash, When? Who knows?

your risk of having to pull some cash out to prop up your husbands business which hasn't matured yet, and crystallise a share paper loss over the next two years is too high. It will magnify the hurt as you juggle losses from two places.

Warren Buffets letter this year advises punters not to buy his stock if they only want to hold for the next 1-2 years (possibly your time frame). Page 34
http://www.berkshirehathaway.com/letters/2014ltr.pdf

Since what he is running is basically a LIC and is a buffets view of the best of the index, you can extrapolate that advice to the general owning of GENERAL stocks in the short term.
Including the indexes advice on this thread. In the short term you are gambling

by all means speculate, But you asked for investment ideas not speculative ideas.

BUT if its a longer time frame than 5 years then I DO think indexes are the way to go. (Im a Bogle head)
But why stick to ASX only?
read this for a nice report on Aus: US share mix

http://cuffelinks.com.au/wins-australians-investing-us-shares/

which is why my long term share portfolio is
40% Aus
40% US both countries: LICS and Indexes and market leaders
15% emerg ETF
and 5% playing with share punts for the thrill of the share ride.

all the best
Its a nice position to be in that you have there.