Investment for the unemployed?... I'm in limbo and seek advice

Hi all, I'm in investment limbo and would appreciate some opinions… I'm really not sure what to do for the best.

Earlier this year I started reading and generally educating myself in preperation for IP#1. To cut a long-ish story short I lost my professional job and have spent a large part of the year unemployed :( . Additionally my wife (also a professional) is pregnant :rolleyes: and will shortly go on maternity leave for 6-12 months, pending arrival of the little guy mid-november. Sounds dramatic, but we're level-headed and happy! Its been a crazy year...:eek:

Obviously IP#1 was shelved… and will be for another year or so until things are straightened out with regard to income (which I'm hoping they will be soon-ish, for me) and we are able to borrow again.

In the meantime we still have maybe $350K equity in our PPoR of which $100K or so is cash which is just sat in an offset account… I would like peoples opinions on what they think I should do with this money in the short term, given that with interest rates quite low it kind of feels like its just sat there, doing nothing special? I've thought about buying some shares but know nothing about this… the wife is sceptical.

On one hands it feels difficult to commit to anything financially at the moment but I also know that if I do nothing, nothing will happen! I don’t want to miss the "recovery boat", if it exists… and we're not getting any younger.

Cheers in advance for your help, Sam
 
Sam,

It probably does not matter that you have a lazy $100K sitting around at the moment, if you are without employment (or a business) then not many (if any) lenders will lend you any more for any type of property.

If it were me (and it isn't) I'd be doing some shares and generating income from some covered calls but this is not a strategy for a novice. That being said, you don't have to remain a novice - go get an education in shares.
 
I'm aware that no one will lend to us, thats why we're delaying IP#1 until stability has returned... plus I've had short periods of casual (professional) work, and am working now.

Just trying to work out if this cash in the offset account is sensible or not... for example can a complete shares novice like myself reasonably expect that, say $50K invested in shares will out-perform $50K invested in my house in the short term?
 
Hi ..I'm pretty much a novice in the share arena myself but the market has seen an upswing of over 30% over the last few months. Start reading and educating yourself on shares, most blue chips have already shown a stellar recovery.

Good luck and hopefully you'll find a day job soon and IP 1 will follow.
 
Just trying to work out if this cash in the offset account is sensible or not...

Cash in the offset will be saving you interest on your home loan :)

Cash in the right shares in the share market will give much higher returns than the offset savings :).....cash in the wrong shares can be (much) worse :(.
 
Hi Samwise,

From reading your posts it looks like the $100,000 in the offset is a buffer/emergency money. I'd probably focus on gaining employment, and then recommence my plan to buy an IP.

You'd regret loosing the buffer in a shortterm flutter on the sharemarket and possibly risk loosing your home. Especially at this time when you both have a child on the way.

If you do decide to buy an IP and borrow up to 80%, the leverage you obtain from this strategy may, over the long term, outweigh any short term gains you make on the sharemarket, and is perhaps a less risky option.

Although sitting on your hands for a while may seem frustrating, sometimes waiting is the best thing to do. :D



Regards Jason.
 
Hi Samwise,

From reading your posts it looks like the $100,000 in the offset is a buffer/emergency money. I'd probably focus on gaining employment, and then recommence my plan to buy an IP.

You'd regret loosing the buffer in a shortterm flutter on the sharemarket and perhaps risk loosing your home. Especially at this time when you both have a child on the way.

Although sitting on your hands for a while may seem frustrating, sometimes waiting is the best thing to do. :D


Regards Jason.

Yes, youre exactly correct that this has been our approach up to now... the cash is a buffer, but we've not had to dip into it (much) thankfully... I wouldn't stick the whole $100K on the share market, maybe half of that at most.
 
Hi Sam

Firstly, congratulations on the soon-to-arrive little one.

If your investment plans are to buy an IP, then I would leave the money in the offset account. It will be saving you interest on your home loan interest so is not unproductive. It is not forever, a delay of a year or so will not make a huge difference to your investing future.

Sort out your professional career, take time to enjoy your new family and hopefully you will be telling us all about your IP next year.
Marg
 
Thanks!

So which are the "right" ones?!!! I want to earn 30% :p

You could always go out and do a 5-20k share trading course which may well end up as very expensive reading material,or you can teach yourself the way the system works,just watch what happens over the next few
weeks on world stock markets,and paper trade through that period with your 100k,it's very easy on paper,very different when you place the order and see it drop 10-25% over a few days or go up 300%,it happens both ways,:)..imho willair..
 
Some great advice here :)

Thanks Marg4000 especially for keeping it real ;)

Maybe i'll start off small ($10K) with some shares and see how it goes, build up a bit of confidence... to be honest i'm pretty risk averse by nature and the thought of watching my money disappear as the stocks plummet kind of irks me.

Just want to do something positive to get ahead whilst my career has stalled a bit.
 
to be honest i'm pretty risk averse by nature and the thought of watching my money disappear as the stocks plummet kind of irks me.

If that really is the case then direct share investment might not be for you and you might look to other instruments to invest in.
 
Samwise


Leave money in offset account for now....

Try to get a job....

Enjoy new Bub when he/she arrives.

Stick to getting IP No1

Shares are not for the fainthearted and risk adverse.


I consider myself still to be 'learning my trade' in share trading and I have been doing it for 10 years. :eek: So start reading & most importantly learn about money management in relation to shares.


On Somersoft we are running a 3 month Share trading game

The current results are below
Punters Net Worth Profit / loss $ Profit / Loss %
Hobo Jo $120,041.10 $20,041.10 20.04%
Project1080 $110,556.00 $10,556.00 10.56%
Lily House $114,482.10 $14,482.10 14.48%
Sheryn $110,833.65 $10,833.65 10.83%
Gordon Gekko $113,330.00 $13,330.00 13.33%
Ol School Skata $109,854.00 $9,854.00 9.85%
Hiflo $104,080.00 $4,080.00 4.08%
Blue Card $105,695.00 $5,695.00 5.70%
Joey5641 $85,080.00 -$14,920.00 -14.92%
kumyin lau $81,710.00 -$18,290.00 -18.29%
Joanmc $94,720.00 -$5,280.00 -5.28%
Average Profit / Loss $ $5,038.18 5.04%


You could be 20.4% up or minus 18.29%.

All players started with 100K in paper money.


Regards
Sheryn
 
Thats very illuminating, thanks!

By the way I went for a job interview today (laid off February) so fingers crossed, I felt like it went well and its a great role :)
 
Since no one's suggested it, how about setting up a business?

Given what you've said in the post (first child, significant equity in the house, savings pot), I'd guess that you're probably somewhere in your late twenties to thirties. That implies a reasonable amount of experience in what you do.

It's a risky strategy. Something like 60 or 70% of new companies fail in the first three years. But it could be more lucrative than dabbling in the stock market, or buying several IPs.
 
Ive thought about it but bad timing with bub on the way - the next year is a time for me to get me head down and just earn whilst the wife is off (she is our major wage earner)

When she's back working i can think about doing something funkier like starting up on my own.

Cheers
 
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