Next Step in Investing

Hi,

I am about to settle on my first IP - purchased for $315k. Once this is all complete I will have aprox. $40k in cash remaining, and I'm looking for ideas on what to do with it.

I'm 23, live in a granny flat on parents property and earn aprox. 70k pa. I am aiming to move out soon, hopefully within a year or two. I also have $30k in a Vanguard High Yield fund, which I would like to keep their.

The options I have running around in my heard are...

1. Hunt for and buy 2nd IP leaving me with pretty much 0 in the bank - spend the next 1-2 years saving for PPOR deposit.
2. Put 30k into the managed fund and keep 10k for rainy day.
3. Keep the 40k in the offset and look to buy IP in the 450-600k range in a few years.
4. Use 40k to purchase PPOR while prices are reasonable and move out.

Any comments or criticism is welcome!
 
1. Hunt for and buy 2nd IP leaving me with pretty much 0 in the bank - spend the next 1-2 years saving for PPOR deposit.
2. Put 30k into the managed fund and keep 10k for rainy day.
3. Keep the 40k in the offset and look to buy IP in the 450-600k range in a few years.
4. Use 40k to purchase PPOR while prices are reasonable and move out.

Option 1 is always popular around here. In many areas around the country prices are going up, so a lot of people are of the opinion that it's a good time to buy. Prices won't get cheaper, instead they're generally anticipated to increase so buying now (for investment or PPOR) may be a wise move.

For option 2, do you anticipate that a managed fund will return more than about 5% per annum after franking credits? Your offset will save you this much, so if the managed fund isn't going to at least match this, then you can eliminate this option. Also give thought to the risk that the fund might reduce in value over the next few years.

Option 3 is a tough one, you've got to ask yourself what's better long term value. A cheaper property now or a more expensive one in a few years.

Option 4 is like option 1. If prices are going up, you should buy. There's also something to be said about cheap rent and living with parents. :) Perhaps you should consider buying a future PPOR as an investment now? The rental income will help with affordability and cashflow, but you've still got the option to move in later if you want to.
 
Hi,

I am about to settle on my first IP - purchased for $315k. Once this is all complete I will have aprox. $40k in cash remaining, and I'm looking for ideas on what to do with it.

I'm 23, live in a granny flat on parents property and earn aprox. 70k pa. I am aiming to move out soon, hopefully within a year or two. I also have $30k in a Vanguard High Yield fund, which I would like to keep their.

The options I have running around in my heard are...

1. Hunt for and buy 2nd IP leaving me with pretty much 0 in the bank - spend the next 1-2 years saving for PPOR deposit.
2. Put 30k into the managed fund and keep 10k for rainy day.
3. Keep the 40k in the offset and look to buy IP in the 450-600k range in a few years.
4. Use 40k to purchase PPOR while prices are reasonable and move out.

Any comments or criticism is welcome!

I put the money to the offset first, and review the performance of managed funds. I will consider/put into manage funds (gear)

When the time is ready, I will withdrawn from manage funds and use it as ppor/IP deposit. I don't know bout u, I will stay as long as I can with my parents. This will help you accumulate wealth faster..
 
Sounds similar to what I asked myself 2 years ago.

Since then I've purchase 3 IP and looking for #4 with the plan to subdivide and build PPOR next door (I'm still at home)

Best of luck the decision to go IP or PPOR is always hard as it has more factors then just numbers...

As you would better off financially at home, but its not always suitable or best.
 
What would I do in your situation;

Stay in the granny flat for as long as I can bear it & buy another IP OR cash in the managed fund buy a PPOR and then get my mates to pay my mortgage buy renting out the rooms :)

All the best, sounds like you are doing well thus far.
 
For option 2, do you anticipate that a managed fund will return more than about 5% per annum after franking credits? Your offset will save you this much, so if the managed fund isn't going to at least match this, then you can eliminate this option. Also give thought to the risk that the fund might reduce in value over the next few years.

posters seem to be down on the managed fund. Leachy90 has 30K in a high yield fund from vanguard. probably same as mine. returns have been considerably higher than 5% when you add in capital gain and yield. I am considering adding to my fund by around 500K :eek: No maintenance issues etc, set and forget, low fees - if you DCA into these wisely they provide automatic wealth and a very healthy part of anyone's wealth portfolio in my opinion.
 
Visit a financial planner and have them go through your existing situation and sit down and agree to where you want to be in the future.

If property is your investment vehicle of choice, find a planner that will work with you. However, take note that it is always a good idea to diversify.

You also need to look at insuring yourself.

They will then be able to advise the best methods and structures and you can take it from there.
 
Visit a financial planner and have them go through your existing situation and sit down and agree to where you want to be in the future.

If property is your investment vehicle of choice, find a planner that will work with you. However, take note that it is always a good idea to diversify.

You also need to look at insuring yourself.

They will then be able to advise the best methods and structures and you can take it from there.

After reading "Millionaire Teacher" I'm not going to approach any financial advisers. I'm not sure how they compare to Canadian advisers but if what Hallam is saying is also true for Australia then I'll make sure that I won't become a victim to purchasing via an adviser. I'll be approaching Vanguard for indexes when the time comes.
 
Yes, it's the Vanguard High Yield Fund. I have all my money in the ETF for lower fees and easier liquidity. It has averaged around 10 percent since inception.
 
At this relatively early stage I think you need to leverage even more into growth assets, and doing so with residential property I think is your best bet (and as long as your job and income earning capacity is fairly secure).

I would buy a PPOR (get the FHOG - if that is still available?) and live in it for at least 6 months or so, then rent it out after this (so it remains CGT-free) and move back in with the folks and stay there as long as is practical.

And keep at least 10k as a cash reserve.

If you can do this without selling the shares that would be better.

And if you can add a conservative 20-25% margin loan onto the shares that would also be ideal, but this very much depends on your risk profile and what you are comfortable with, and only if you are likely to remain positively geared after doing this.
 
FHOG is only available on new constructions, and I don't think I'm eligible anymore.

Oh well, can't turn back the clock now, but at least interest rates are at historical lows so now is a good a time as any to borrow.

If it means you have to cash in some of your shares to do so then I would do this, and/or have a lower cash reserve of 5k or so to start with which you can build up over time anyway.
 
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Leachy I don't know whether you're right about there being FHOG for new constructions only. As far as I know (90% sure) new constructions do get more but existing properties still get $3k, thats how it is in WA at least.
 
Leachy I don't know whether you're right about there being FHOG for new constructions only. As far as I know (90% sure) new constructions do get more but existing properties still get $3k, thats how it is in WA at least.

thats correct for wa. All states are different and think we are one of the last to still have something for established.

cheers
 
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