How would you invest a lazy couple hundre thou'

[Oscar]

I have a situation, would like some ideas;

I fluked some good IP buys between 1999 and 2002. Net result today is that I have 4 IP's worth about $2million with loans at $1M. In 2003 as everyone I knew was buying IP's I got a bit concerned and stayed out of the market. In fact, since April 2002, have not invested in property.

I've basically been putting my excess savings into my IP mortgages (which effectively, post tax, is getting me 3.5% on my money). Pretty useless especially if you consider there is no leverage in doing this.

Last Novemebr I also started investing in managed funds for exposure to international shares, bond markets, and so on - savings here are growing nicely with no borrowings, but again, there is no leverage in what I am doing.

I have the ability to redraw around $200,000 from my IP's (at 7%).

I could use these funds as a deposit on $1M worth of proprty (leverage to 80 L/V ratio) - but I'm wary of leveraging into the current market. Also, this would hit the limit of my serviceability, would be tight, but potentially managable.

I have also been toying with the idea of using the 200K for more investments in equity markets and borrow another $200K against it. Effectively to set up 50% L/V ration fund/s worth $400K.

Then, since I am currently working and living o'seas, I get constant calls from "advisors" to invest in an offshore tax haven entitys such as Guernsey, where they claim the investment would be completely tax free.

I'm in a rut - would like to leverage a bit more, but don't want to lose what I have built up in last 6 years...

Any ideas would be handy.....

 

[see_change]

Might be worthwhile getting revals at this stage , so you have more money available to invest when the property market is looking better.

You can always stand aside and relax for a while untill the market looks better ( awaits for the howls from the buy now brigade.... )

Some people I know are investing in businesses. Some havn't done so well.....

As I have an interest in shares I'm spending time trading a system I've developed , and once I'm happy with how it's going ( the last 6 months havn't been kind to trend following systems but I knew that can happen before I started ) I'll start investing more money in it.

I would look at managed funds , but I'd spend some time checking out different funds and not just invest in the flavour of the month / forum.


See Change

 

[Sunfish]

You can always stand aside and relax for a while untill the market looks better

I wouldn't howl at this suggestion. You could also slowly buy into the share market, testing the water and your own skills, expanding on any successes and "stopping" out of bad selections. You really should have realised cap gains before extending risk. You need to diversify and never go overweight "one mine" companies. You never know when there will be a fire.

Even if you're a fast learner I would plan to take two years before being fully invested.

Thommo

 

[see_change]

I wouldn't howl at this suggestion.

Thommo

Yep , but you're not in the buy now brigade

See Change

 

[Rixter]

Why not convert some of your $200k equity into cashflow via an Annuity/LOC and use it twofold - 1/ To Increase your borrowing power & 2/ use part of it to cover your cashflow across your newly increased asett base ??

 

[The Y-man]

Some of the funds have internal gearing (eg geared share funds and most commercial property trusts).

You may also consider capital protected products which are geared at 100% (you pay the interest only).

We are with the band with the view that the market may be in for a bumpy ride for the next few years so that a "normal" protected lending product may not return much.... so going on this point of view, we are actually putting money into a capital protected hedge fund product with 100% gearing.

Cheers,

The Y-man

 

[Oscar]

Yeah, I came across the whole issue of greared share funds today actually. Last 12 months had awsome returns, the ones I saw about 60-70%. As usual though I feel I am too late for these products???

It seems most of the advice so far is not to rush into anything too deeply and take some time learning about equity based asset class.

Having given it some more thought I am leaning towards redrawing some of the equity and investing more aggressively into some carefully selected funds. Maybe start with just $50K - drip feed into 2 or 3 funds over say 10 months (aka dollar cost averaging), gauge the success or failure after several months or a year and take it from there.

Atleast this strategy would be aimed at getting more than 3.5% on my money and doesn't sound terribly risky.

Cheers,

 

[Oscar]

Should also add;

that I'm from the "lazy investor" school and like to make capital gains via some leverage that I can live off later. Not into developing, active share trading, or the like. Would love to slow down from the J.O.B in about 5 years time - but am finding time is going too fast and my strategy is not quite aggressive enough...........

 

[Kennethkohsg]

Dear Oscar,

1. Like you, I cashed out from my 2 Goldcoast properties in 2002-2003 period and stayed invested in the Perth property market instead.

2. I now have 4 properties in Perth at the Anchorage Estate in Rockingham WA 6168 between 2003-2005, twice doubling my property portfolio and values within a period of 2 years.

3. There are still good investment opportunities in the Perth property market, which I can recommend for your considerations if you are really interested. Please email me directly at [email protected]

4. Thank you.

regards,
Kenneth KOH

 

[Simon]

We are with the band with the view that the market may be in for a bumpy ride for the next few years so that a "normal" protected lending product may not return much.... so going on this point of view, we are actually putting money into a capital protected hedge fund product with 100% gearing.

Cheers,

The Y-man

What fund is that? Am thinking of doing something similar myself.

Cheers

 

[The Y-man]

What fund is that? Am thinking of doing something similar myself.

Cheers

Will PM you....

(Not sure about whether I am allowed to post the name of the fund etc etc - although it's probably been mentioned anyways)

Cheers,

The Y-man

 

[ggumpshots]

Will PM you....

(Not sure about whether I am allowed to post the name of the fund etc etc - although it's probably been mentioned anyways)

Cheers,

The Y-man

Please post the name , if its not allowed the moderator will scrub it.

 

[Aceyducey]

that I'm from the "lazy investor" school

The good thing about the lazy investor school is that you have 40 or more years of your working life to get it right.

That's also the bad thing about it.

Passive investments are better termed 'savings'.

Cheers,

Aceyducey

 

[Oscar]

Passive investments are better termed 'savings'

That's an interesting way of looking at it.

My "lazy investor" philosophy saw me purchase property investments from 1999 to 2002 which extended my borrowings to > $1M, but gave me back more than that in equity. That was a pretty efficient way of generating equity.

These are different times however, and what I am doing right now is nothing more than savings, agreed.

Will the "lazy investor" approach generate any real wealth in the next 2 - 3 years????

 

[Aceyducey]

Oscar,

Purchasing investment property isn't passive investing (nor can you be 'lazy' and do it successfully).

But sitting on a property portfolio for years without review or improvement is.

If you look at what many people on this forum are engaged in right now you'll see they're all working on improving the effectiveness of their investments - but in many different ways.

The end of the property boom has brought about an amazing diversity of investment 'solutions' - in a similar vein to what I saw towards the end of the tech boom.

Cheers,

Aceyducey

 

[thefirstbruce]

Oscar, I have been faced with similar situation and have decided on margin loan for shares (in addition to expanding 2 businesses). IMHO, many funds won't do that well in a flat market, even hedges, while mid cap and large resources, health, and banks may return 10% or better cg in the next 12 months, plus divs.

I tend to think there won't be a lot of need to rebalance your portfolio over the next 12 months, so should be a passive affair, with stop losses.