$300k cash in bank - what would you do?

[jaycee]

Put it on anything paying better than 6 to 1 odds at fixed odds.

Don't put it on the totaliser or you will find it comes in a little not long after you get your bet on.

Then buy Commercial properties with the untaxed winnings. Too easy.

Putting jokes aside apart from that risky proposition I suspect 300k is only a stepping stone to retirement. It is not of itself going to be enough, but the first 300k is the hardest to save so if you have that much you are well past half way to a million. Or better if you have been gifted it you have a massive 10 year plus start on someone who has to start from scratch with an above median job.

Say you can save 20k from your PAYG income per annum.

Now you get another 20k in income off your investments total $40,000.00 p.a. saved so your saving rate is double what it was when you first started investing and only had your regular PAYG income savings.

Are roulette odds good enough ?

 

[Deltaberry]

it's all hypothetical.

I'm very philosophical.

 

[tom32]

Are roulette odds good enough ?

Well if you can find a table with a max bet 300k then no probs. Roulette has a whole gammut of odds to pick from.

Just has to be fixed odds which roulette of course always is.

I have had enough late night plunges on dog races to know, no matter how much you think you know what is going to win the next race never bet more than the pool can take around totaliser betting. Indeed better to never bet in the first place but the least you can do is keep one eye on the total pool.

Nothiing worse than deciding horse xyz is good value at 6 to 1 odds putting $500.00 on her only to find the odds are now 3 to 1 because you have just doubled the total wagered on her...

Actually I should not get bogged down talking about gambling for fear someone may take me seriously, I am just putting it out there I guess there are ways to turn anything into a retirement situation, some ways just have more risk than others.

I imagine most here are astute enough anyway to understand 5 out of 6 times (or more given the house wins more than their fair share) you walk away with nothing, right?

the upshot of all this is finding somethign with a potential 600% return per day is easy, unfortunately finding something with even an after tax 15% p.a. return with limited risk impossible. 15% p.a. is enough for even someone with limited savings to retire young. with 300k at say age 20 you would have $80million at age 60.

 

[Sunfish]

Just avoid the American roulette wheel with two zeros.

 

[jaycee]

Just avoid the American roulette wheel with two zeros.

Sold !

Now all I need is the $300k

 

[Deltaberry]

The Australian one has that now.

0 and 00

 

[recruit2]

I am in a similar situation where I have about this much equity and I am wondering what I should do with it.

The share market seems fairly risky to me lately as it is mostly fairly bloated and if anything, most at risk of a collapse. But the banks such as CBA and NAB are starting to look slightly attractive again, but just need to try to pick the bottom of this supposed GFC #2. Looking at how hard the banks were hit back in 2008 there could be quite a bit more for them to fall worst case yet. So again, I still wouldn't put my $300k into NAB/CBA shares just yet.

I wouldn't touch gold now that it looks like a bubble.

Likewise, resi property has further to soften in most cases. But I would still be keeping an eye on it as there are some bargains starting to surface.

Commercial property seems the most appealing, love the cash flow!! Apart from that, I would also probably put about $50k into "high risk" new company shares where they are worth nothing now but could potentially sky rocket. E.g. ASX:CFU or ASX:MMR etc.

 

[Theresa777]

My friend did have $300,000 just sitting around, and this is what she just did with it:

She bought a flat block of land for $115,000 in a small colonial tourist village, long boundary facing the street. She had two separate colonial style cottages (13.5 squares each, 2 bed, 2 living, 1 bath, 1 garage) built side by side for a bit over $9,000 per square total cost. (Very simple style, budget fittings, 9 weeks build time) She stata titled them and sold them for an average of $293,000 each in a ready market which craves the colonial village lifestyle.

She said it was fun, and she barely did more than make phone calls and drive around.

And she doesn't have to pay the tax on the $200,000 profit until May 2013, that's in 20 months time.

That's what I would do anyway.

 

[bono1]

Hi Theresa,

it looks like your friend had a good idea. it is all about leverage, speed and safety.
I hope however that she held both properties for at least 12 months after completing construction. If not she may be hit by income tax on the entire profit, which would hurt a lot.
bono

 

[Theresa777]

Hi Theresa,

it looks like your friend had a good idea. it is all about leverage, speed and safety.
I hope however that she held both properties for at least 12 months after completing construction. If not she may be hit by income tax on the entire profit, which would hurt a lot.
bono

She sold them both straight away, and is already looking to do it all again in her new company name as soon as she finds another block, then regularly do about three such projects each year from now on, then maybe more.

If she turns the initial profit over in a couple of these projects before she has to pax the tax on it in May 2013 (not 2012) she will actually be using other people's money for free.

She reckons the whole thing is easy and fun, with each project using up only a few weeks of her actual time, if that.

She also reckons she wants to set a goal of paying a million dollars company tax one day!

Makes sense when you think about it.

 

[Aaron_C]

She also reckons she wants to set a goal of paying a million dollars company tax one day!

Makes sense when you think about it.

Sorry Theresa but that doesn't make sense to me...even if I earned $100m I wouldn't like to pay $1m in tax if I could get away with it legally

 

[jaycee]

Sorry Theresa but that doesn't make sense to me...even if I earned $100m I wouldn't like to pay $1m in tax if I could get away with it legally

And if you couldn't avoid that $1m tax bill legally, woudl you be upset at earning $99 m a year ?

anyway, quite obviously earning the money in the first place was what she was focussing on when making the statement.

I somehow doubt that if the possibiliity of not paying $1m extra tax presented itself, that she would ignore it on purpose

 

[Melbournian]

maybe she's got a lot of deductions

 

[Graemsay]

the upshot of all this is finding somethign with a potential 600% return per day is easy, unfortunately finding something with even an after tax 15% p.a. return with limited risk impossible. 15% p.a. is enough for even someone with limited savings to retire young. with 300k at say age 20 you would have $80million at age 60.

Agreed.

Barclays Capital are apparently targeting a 15% return on equity in the next few years, but are currently managing around half that.

I've got a feeling that anything over a 11% or so annual return is considered risky by the professionals.

If I wanted to take a punt, then I'd be tempted to drop the cash into Japanese shares (which are currently considered historically cheap), or possibly in the UK stock market (where you could exploit the advantageous exchange rate).

 

[VYBerlinaV8]

Wow, and here's silly little me aiming for a yield return of 6%pa on my investment portfolio.

 

[Mick C]

Diff type of risk

My Investment properties makes me average 6.1% NET currently.
My Shares - "unrealized" capital lost of 22%...a 1/4 yield of 5.2- 8.5%
Currently looking at Commercial property with Yield of 9% ( not high, but good location and strong asset class)


Regards
Michael

 

[limmy.loh]

My 2 cents on $300k

Hi all!

I'm new to the forum, so I don't know whether everybody is still discussing the question in general. But for my money, if I had $300k, I wouldn't buy a property outright just to return $500/w in rent. (Although I doubt you could get such a good return on a $300k property in Australia! In my experience, the net rental return p.a. is typically 5% of the property value, or between $300-320/w taking into account outgoing expenses, e.g. council rates, etc.) Firstly, I'm of the school of thought that says you shouldn't put all of your eggs in one basket. Perhaps you should consider diversifying in shares...but even setting that aside, $300k isn't just a means of buying property; it also represents an opportunity to borrow more money. With that much money in the bank and a steady income (the dreaded "day job"!) I could borrow $200k and negative gear a property worth $500k for a greater return. Much better investment in the long run. You'll still get to lie on the beach one day, but you just have to stick it out at your job a little longer. Think of it this way: in the long run, you'll get to retire earlier!

 

[Deltaberry]

If you're negative gearing, why would you get a better return than buying a paid off house outright...? Lol

 

[tom32]

Hi all!

I'm new to the forum, so I don't know whether everybody is still discussing the question in general. But for my money, if I had $300k, I wouldn't buy a property outright just to return $500/w in rent. (Although I doubt you could get such a good return on a $300k property in Australia! In my experience, the net rental return p.a. is typically 5% of the property value, or between $300-320/w taking into account outgoing expenses, e.g. council rates, etc.) Firstly, I'm of the school of thought that says you shouldn't put all of your eggs in one basket. Perhaps you should consider diversifying in shares...but even setting that aside, $300k isn't just a means of buying property; it also represents an opportunity to borrow more money. With that much money in the bank and a steady income (the dreaded "day job"!) I could borrow $200k and negative gear a property worth $500k for a greater return. Much better investment in the long run. You'll still get to lie on the beach one day, but you just have to stick it out at your job a little longer. Think of it this way: in the long run, you'll get to retire earlier!

expanding on what delata said;

Houses yield pretty low numbers with inflation being the goal in many cases: take the rule of thumb 5.2% gross yield for example. But I suspect even with that in mind if you put 300k on the table and bought a 500k house with 200k credit, it would not be negatively geared.

With 300k capital you would need to spend around 700k-800k in property as I see it before you could start to get into negatively geared territory unless you deliberately set out to buy low yield property like blocks of land with old knockdowns on them etc.

 

[Ekki]

buy my place in Noarlunga area, use rezoning ability to knock down current house and build two units. Either rent or sell.
But I wouldn't take any notice of my advice as I really don't know what I'm talking about and just have an ulterior motive