Investing my Inheritance

[slater]

Dear all,

My name is Shaun and I am a 24 year old male residing in Sydney, unemployed and still at university

As an anonymous person to you, I wish to seek the experienced advice of people on this forum with what I have recently been blessed with

A close relative of mine has recently passed and I have been fortunate enough to have received a large inheritance mostly in immediately accessible cash

Currently, I am able to access approximately $32 million USD of which my initial plan was to purchase around 35 inner Sydney units over the next 6 months worth about $600,000 each of which I will live comfortably off rent over the long term

The rest of the money will remain in a bank, go towards helping immediate family members, about $1mil on my own home and some for other expenses - car, holiday etc...

I know my situation is quite left field and it has definetly hit me completely out of nowhere. I also realise how lucky and fortunate I am since I have grown up in a relatively lower class scenario.


Given the situation, I would love to hear the advice and options different people here would do if they were in my shoes. I am after sensible, financially sound investment advice and would appreciate if personal judgments and prejudices be left unsaid.

Many Thanks

Regards,

Shaun

 

[Aaron_C]

Shaun,

With that kind of money I would suggest looking to invest in a decent commercial property. You could purchase a suburban shopping centre for that kind of dough - and would be far better than purchasing residential property.

 

[oracle]

Giving you the benefit of doubt that it is your first post and you question how to invest $32m.

I will hazard to offer some advice even though I don't think I am in a position to offer any advice because I myself have never invested that sum of money before in my life (not even close).

Given your lack of investing knowledge, I would advice you to either park the funds in a bank and learn as much as you can about the asset class of your choice for the next couple of years.

If you feel like investing is not your cup of tea and can't be bothered learning than the next best alternative is to invest in a few different asset classes (property, shares, cash, bonds, precious metals) to achieve diversification.

Also, talk to a few financial planners and see what they recommend.

Cheers,
Oracle.

 

[slater]

Shaun,

With that kind of money I would suggest looking to invest in a decent commercial property. You could purchase a suburban shopping centre for that kind of dough - and would be far better than purchasing residential property.

Hi Aaron,

I am completely in the dark when it comes to commercial property apart from seeing ads all over the financial review! Where would you suggest I start in educating myself a bit more? suggested books? seminars?

What is the risk like compared to residential property? I'd imagine the vacancy periods will be more severe and costly over the long term?

I hear stories about retail heading down the hole - will that be a worry for a shopping centre?

Thanks for your response,

Shaun

 

[Belbo]

Shaun,

With that kind of money I would suggest looking to invest in a decent commercial property. You could purchase a suburban shopping centre for that kind of dough - and would be far better than purchasing residential property.

Í thought you of all people would have taken notice of what Dazz has had to say about the wisdom of investing in suburban shopping centres, Aaron. Or perhaps this post is intentionally aneuristic, like a blindingly cunning riddle?

 

[Aaron_C]

Í thought you of all people would have taken notice of what Dazz has had to say about the wisdom of investing in suburban shopping centres, Aaron. Or perhaps this post is intentionally aneuristic, like a blindingly cunning riddle?

Just because Dazz has had bad experiences with that property does not mean that suburban shopping centres are bad investments. In any case, it was just an example provided, not a recommendation of that particular type of property.

 

[DaveM]

Is it just me or did the first half of the OP read like a nigerian scam email in reverse?

OP, with that kind of capital, you are really advised to go and see a top notch financical planner. $32m opens up a lot of options to make far more money than buying some residential IP's and living off rent.

Invest in businesses, shares, R&D a new invention, so many options rather than getting 5-6% gross return on some units.

 

[Aaron_C]

OP, with that kind of capital, you are really advised to go and see a top notch financical planner. $32m opens up a lot of options to make far more money than buying some residential IP's and living off rent.

I think the vast majority of financial planners would be overwhelmed with such a large amount of money. That kind of capital requires a clear direction from the person owning it with a bit of help along the way.

 

[Propertunity]

Is it just me or did the first half of the OP read like a nigerian scam email in reverse?

It wasn't just you. I felt the same things and was waiting to read the words "Nigerian", "your bank account details", "Ministry Contract" etc.

The only thing missing was an offer of marriage from Shaun and I am seriously considering it, if he wants to make me an offer (memories of Rove's 'Who would you turn gay for?', question)

On a more serious note Shaun, bear in mind Land Tax if you make all your purchases in one State. Consider diversifying into other states, that way you also get exposure to different stages of the RE cycle - so something in your portfolio will be going up (while others are going down or flatlining).

 

[Rolf Latham]

Hiya Shaun

We deal with a few young clients that have large amounts of "cash" Invested on their behalf via various planning groups.

The most diverse of those seems to be Perpetual Client Private Client Services, while quite risk averse, they are not against their clients taking on direct property investments.

I dont believe that such a large amount of cash should be left in the stewardship of one organisation or indvidual, nor should it be "asset allocated" in the way you are thinking.

Inner city unit stock might be a good thing ............but its really too much of concentration risk surely.

For the moment, Im sure you can find a few capital guaranteed investments that will rtn you 2 mill a year ............

I believe you really need to have a look at your life goals in some detail before you look at allocating the majority of the funds to some form of direct investment or management.

Your life goals may dictate that you spend X on some form or forms of charity directly, or set up a charitable foundation etc.

You might find that you want to take some of the cash and invest in businesses etc

First and foremost, be careful, but not to the point of being paranoid

t
arolf

 

[Jake D]

Call me. I've got some awesome ideas.

 

[slater]

Thanks Rolf,

Will investigate Perpetual's product.

Any suggestions on decent financial planners? Had some phone conversations with major institutions who all seem to only be interested in lunch!


Life goals at 24? Hmm...

I think it may be worth mentioning that there is a personal obligation and expectation when being handed the result of a lifetime of success, so although I would like to gain the most financially out of whats been given to me, there is naturally an adversity to risky ventures - definetly not like winning the lotto!

The note that came with it was interesting however:

"Shaun,
...have fun."

 

[Rolf Latham]

Thanks Rolf,



Any suggestions on decent financial planners? Had some phone conversations with major institutions who all seem to only be interested in lunch!

yes .........but without knowing whats in your heart and mind, its hard to recommend any one particular person or organisation.

Given the volume, there would also be merit to look at splitting things a little amongst different advisers in their area of expertise.

Size of planner and group is NOT a core indicator here, in fact the bigger the less personal a service you may end up with ?

I think you could look at putting the brakes on a little and spend some time at the front end with a great accountant that can spend the time to take you through some structuring options, and then a good solicitor to work with.

one accountant that I know in Sydney that can be of great help to you would be

Nick Moustacas

www.strategicwealth.com.au

He isnt cheap, but the advice is rugged and good value.


Then perhaps worry about what planners to look at what to buy what to avoid etc


ta
rolf

 

[Aaron Sice]

with $32m, i'd be offering Dazz about $250k for one of his CP lease contracts (no guarantee it'll be accepted though) and then I'd ask Dazz to accept another few mil for his advice on where to start and how to maintain your CP portfolio.

 

[hobo-jo]

Don't rush into anything.
Don't put all your eggs in the one basket.

I would be wary about transferring such a large amount from USD to AUD in one hit to buy Australian assets. IMO AUD is over valued and as RBA cuts rates and the Australian economy continues to degrade over the next 12-24 months we *could* see a substantial drop in the rate...

USD $32m / AUD 1.035 = AUD$30.9m
USD $32m / AUD 0.95 = AUD$33.7m

Could make a big difference depending on when you transfer the cash.

Keep in mind that there is only a 250k government guarantee per customer per ADI in Australia (by default), so take care even with cash in the bank.

Keep in mind that 99.999% of the Somersoft population don't have anywhere near the amount that you have to invest (including me) so take any pointers here with a grain of salt.

All the best with your investing, would love to have your problem (except for the loss of a close relative, condolences on your loss ).

 

[nww]

So we are talking $32 million and not $3.2 ??

I'm wondering why you are still at uni with having $32 mill in your pocket.
I can tell you if I had that kind of money I would not be bothering to turn up to uni.

I think I would also be spending a little more than $1 million on my own home as you
have suggested if you do have that kind of inheritance.

 

[jrc77]

So we are talking $32 million and not $3.2 ??

I'm wondering why you are still at uni with having $32 mill in your pocket.
I can tell you if I had that kind of money I would not be bothering to turn up to uni.

Oddly enough if I came into that sort of money I would stop working immediately - and then go study financial planning (as well as learning to sail ).

Jason

 

[cimbom]

I would go on a trip around the world for a few years to clear my head and then decide what to do when I got back

 

[Terry_w]

You need to seek some legal advice asap. There are some asset protection and taxation strategies that you could impliment and still access the money to invest.

 

[slater]

Good points hobo-jo! Thank you

nww - I could put the whole 32 mil on a point piper mansion aswell. How about several ferrari 458's in every colour on the brochure?? I am uncomfortable with $1 mil apartment already which is excessive for anybody my age and more than ill need probably for the next 10 years. I have my eye on a few in the Eastern suburbs with stunning water views already that are under a million.....not sure why i would need to spend anymore apart from the w**k factor

Im currently enjoying uni and would probably still be learning in one form or another until the day i die. As jrc77 pointed out, the lack of financial pressure makes uni more enjoyable if anything.