Just a thought....

[DaleGG]

Hi

During our lunch time silliness/therapy yesterday we had an interesting discussion...and, I thought I would share it with you, for what it may be worth.

One of the gilrls wanted to know if someone was rich.
"Define rich", was the answer
"A million dollars in the bank", she said.

"Ah, but rich people don't have that sort of money in the bank.... "was the reply. "That is a poor person's thinking."

"The wealthy people have their money working for them and having funds in the bank does not do that."

Something to ponder, perhaps?

Have fun

Dale

 

[asy]

Hiya Dale,

Just for clarifying porpoises...

She wasn't an accountant... WAS SHE???

asy

 

[kissfan]

"Ah, but rich people don't have that sort of money in the bank.... "was the reply. "That is a poor person's thinking."

"The wealthy people have their money working for them and having funds in the bank does not do that."

Hi Dale.

Whilst I agree with the above comment, it would still be nice to have money working for you AND have a lazy million sitting in a bank account that could be accessed whenever I like at the drop of a hat.

Regards
Marty

 

[michaelg]

Hi,

Was that person trying to draft a checklist to determine Mr Right?

Michael G

 

[Mr. Fabulous]

Hi Dale.

Whilst I agree with the above comment, it would still be nice to have money working for you AND have a lazy million sitting in a bank account that could be accessed whenever I like at the drop of a hat.

Regards
Marty

Marty,

That's what LOC's and offset accounts are for. But even then, a million bucks sitting around? Even if I was worth a cool bill, I wouldn't be leaving that much money in any sort of account. But I do know what you meant though.

Mark

 

[vandalic]

I do agree that the rich have their money working for them but I also believe in having a portion of your wealth sitting in cash reserves ready to take action against further investments, emergencies or required shortfalls, taxation, etc as an added margin of safety / SANF.

Whilst my cash reserves are nowhere near a million dollars, I assume those with rather high net worth's could potentially have a million dollars sitting in the bank for the same reasons? As a million dollars in some people's circumstances would probably only be a small percentage of their wealth.

Any thoughts?

 

[WillG]

It is clear that different people would do different things with $1mil.

The poor
$1mil in the bank

How would you 'as an investor' invest a $1mil winfall tomorrow
(what percentage of the following would you choose)

1. pay off some non deductable debt
2. shares
3. managed funds
4. leverage into further property
5. cash (high interest bank accounts)
6. cash in offset/loe accounts
7. improve current ppor
8. new car/update car
9. holiday house
10. holiday
11. big party

 

[nomadic]

...it would still be nice to have money working for you AND have a lazy million sitting in a bank account that could be accessed whenever I like at the drop of a hat.
Regards
Marty

I think Kerry Packer had this type of cash sitting around available for "emergencies". I think i also once read that he had $5m worth of gold bullion stolen from his office safe. Maybe once you get to the multi billionaire status, it's ok to have a lazy mil or 2 in cash sitting in the safe or bottom draw of the filing cabinet.

 

[vandalic]

Given it highly depends on individual circumstances, at the moment I would probably go with...

1. No real bad debt so no need
2. 50% for capital growth and share dividend cash flow LVR'd further at 50%
3. None
4. 35% spread over a few IPs with 80% LVR using cash flow from 2. to support negative gearing
5. 5%
6. 8% as mostly grow against IP's when equity increases and LVR is below 80%
7. Nope
8. No need as yet
9. Nope
10. 2%
11. Nope

It is clear that different people would do different things with $1mil.

The poor
$1mil in the bank

How would you 'as an investor' invest a $1mil winfall tomorrow
(what percentage of the following would you choose)

1. pay off some non deductable debt
2. shares
3. managed funds
4. leverage into further property
5. cash (high interest bank accounts)
6. cash in offset/loe accounts
7. improve current ppor
8. new car/update car
9. holiday house
10. holiday
11. big party

 

[Mr. Fabulous]

Will,

Big party all the way mate! Nah, just kidding.

Here's what I would do with that money:

1. purchase my own place outright.
2. use some of the left over money to build a mini ramp in the backyard.
3. go to my mortgage broker and get an equity loan for the value in the PPOR.
4. Dump this money into investments and a buffer.
5. Margin the investments (capitalise interest), start looking for IP's.
6. Have the distributions paid out to me, use some to pay loan, put some away for the sweet left hand kidney I'm gonna add next to the mini, put the rest back into investments.

Mark

 

[The Wild One]

I dream about this every Saturday night at about 8.30.

My answers :

1) yes, pay of all bad debt
2) yes some shares, may be $80,000
3) Yes $80,000
4) yes $500,000. buy 2.5m of quality homes, and leverage more in the future.
5) $50,000
6) No
7) Sell, start again. cost $200,000
8) Yes $30,000
9) No
10) yes with close friends $15,000
11) no

 

[thefirstbruce]

One of the gilrls wanted to know if someone was rich.
"Define rich", was the answer
"A million dollars in the bank", she said.

The girl who asked the original question must be extremely attractive Dale

 

[DaleGG]

Hi

Yes, she is a very attractive young lady.
More than that though, she has a heart of gold!

Dale

The girl who asked the original question must be extremely attractive Dale

 

[DaleGG]

Hey Michael

In a funny sort of way...it was actually.
Mind you, all the girls are taken or spoken for....but, they do like to go window shopping.

Dale

Hi,

Was that person trying to draft a checklist to determine Mr Right?

Michael G

 

[thefirstbruce]

Hi

Yes, she is a very attractive young lady.
More than that though, she has a heart of gold!

Dale

Of course you realized I meant she wasn't employed for her financial savy.
And a woman doesn't stay attractive very long without a heart of gold...Am sure you'll have her financially savvy before the year is out.

 

[Mr. Fabulous]

Hi

Yes, she is a very attractive young lady.
More than that though, she has a heart of gold!

Dale

Dale,

Is she willing to move to Brisbane or have a long distance relationship? I don't have a mill in the bank just yet, but I'm working on it! An attractive woman with a heart of gold sounds just up my alley!

Mark

 

[keithj]

Whilst my cash reserves are nowhere near a million dollars, I assume those with rather high net worth's could potentially have a million dollars sitting in the bank for the same reasons? As a million dollars in some people's circumstances would probably only be a small percentage of their wealth.

Any thoughts?

My spare $1M is sitting in a margin loan a/c. All my equity & cash (& several $M of OPM) are fully invested. If I need $1M at short notice it's right there. As others have posted cash is a wasting resource (at this stage of the cycle).

I view a LOC as a waste of resources. Draw it down, invest in shares/LPTs, and set up a margin loan against them to use instead of a LOC.

 

[vandalic]

Nicely said Keith, some very valid points.

 

[lizzie]

two kids in the park:

my mum is so poor she owes the bank $2000.
my mum is so rich she owes the bank $2,000,000.

(please excuse the change of gender - apparently god is currently menopausal)

 

[monoply]

1 million in the bank at 5.5% would give you and income of 55k a year to live off, without having to lift a finger.

And interest rates are very low, so any increase is a pay rise.

While we all know there are much better returns around, I can see that some people would consider this.

Not everyone is into property, shares, etc etc