what to do with cash?!?

[topcropper]

What would you do with 500k cash , today?

I'm buying shares right now.
BHP, United group, Leightons, Woodside. I've dribbled some in already and will dribble more in later.
Bought property trust MLE for $1.57. six weeks ago.
http://www.somersoft.com/forums/showpost.php?p=424785&postcount=2
It's payed 10c div already, and is now $2.03. The MLE shares I bought 6 years ago are yielding 30% and I have got back my initial invested capital.

Shares have had their drop, if it's not over there's not much more to go.
Property drops in slow motion as it's so illiquid. That's sometimes a good thing, but right now it's not if you want bargains. Property might not even drop, I don't know, but there is good value in shares right now.

See ya's.



Anyone who takes free advice about shares from a farmer on a property forum deserves to lose all their money.

 

[murrayo]

Murray, what country are your remaining properties?
You want to take on board the RBA announcement yesterday.

Hard to tell where the bottom will be in the US economy, and global credit.

The stabilization of global credit conditions is just one hurdle.

Another is who is going to do all the new borrowing when credit conditions stabilize. I can't see how the US consumer can manage to bounce back to previous levels of expenditure/investment. And I don't think Chindia consumption will fill the vacuum left by a strung out American middle class.

THe greatest risk is a global recession and further deterioration in credit conditions, which will put further downwards pressure on asset prices.

My view:
- 1/3 cash at 8%+.
- 1/3 Aussie oil stocks (Woodside, OilSearch, AWE). if your time line is shorter term consider entering when the 50day EMA crosses above the 200EMA and exit vice versa. If your outlook is longer term, use 140 and 350day EMA. These won't deliver overnight riches but will preserve the greater portion of gains and keep you out during bear runs. I like oil cos the negativity of a global recession isn't likely to outweigh growing global demand.
- 1/3 dollar cost averaging or buying dips in silver bullion

Thanks for the reply,

the properties are in the Uk. Market there as you know i'm sure, is very sticky & on the decline. I have a very long term view on them as they were bought 10+yrs ago.

 

[WinstonWolfe]

The herd is still frozen in limbo land waiting for a sign.

You mean the herd of vendors still trying to get January prices

 

[murrayo]

You mean the herd of vendors still trying to get January prices

ha! & there are plenty of them around!!!

 

[murrayo]

If it were 500 million I'd lease an old tanker, fill her up and park it in a safe harbour and wait.

might be the way forward !!!!!!

 

[Rockstar]

ha! & there are plenty of them around!!!

Interesting to know if the listings are above the norm? My trusty Agent rekons that listings in our area are at average numbers compared to the past 6 or 7 yrs. The market has been dead - though in the past couple of weeks there has been a definite increase in lookers. Spring is in the air.

 

[jasperjue]

Gold is going down to $600
Silver to $12

shine up that crystal ball. Silver hit the target pretty much. now for gold.

 

[Sheryn]

My thoughts

Look for a good house that would suit a family and buy it as your PPOR.

I believe you have a little bit of time to look for the above house in the current market as suitable good PPOR take time to find (or build).

1. Concentrate on getting your house since you have IP's overseas.

2. Once you get your house, learn about money management and risk management of your money before you put too much in the share market.


Regards
Sheryn::

 

[knightm]

If you are gonna start a family there is defitely a case for cash to buy the house - then set up a mortgage/loc to 70 or 80% and prepay the money so you can redraw if you want to invest in anything - shares, property, gold, mung bean futures etc.

= NO non deductable debt and no cost of rent plus open to opportunites as they arise.

 

[murrayo]

Look for a good house that would suit a family and buy it as your PPOR.

I believe you have a little bit of time to look for the above house in the current market as suitable good PPOR take time to find (or build).

1. Concentrate on getting your house since you have IP's overseas.

2. Once you get your house, learn about money management and risk management of your money before you put too much in the share market.


Regards
Sheryn::

Thanks again for all the advice / ideas, much appreciated.

I have decided I will put the 500k cash in 8.6% term deposit (Elders rural bank or Bendigo are best - I think!), & wait to see how the property market fairs, & see if I can bag a bargain from a 'motivated' seller in the meantime.

I also plan on learning more about what to do with the cash coming in from IP's abroad & develop a long term plan for them.(Where to start?!)

With the baby on the way & being in the fortunate financial position we are in, buying now could well be the most prudent thing for us to do.

Ironically, I have seen a house that I REALLY like, going to auction next week To bid, or not to bid ! That is the question !

Though I still have this nagging feeling , that if I just hold off for a year or 2, prices may take a significant hit , it is a cycle after all - & we seem to be at the top/just past the top?!??! (minsky credit cycle theory etc)

I suppose sometimes you just make the best desicion you can at the time & when its done , its done .......

 

[murrayo]

If anyone was wondering WTF is the Minsky theory !!

 

[yo yo ma]

Gold is about as cheap as it's ever going to be. US$860/oz.

Though it's now $US775...

 

[BV]

Though it's now $US775...

it's terrible isn't?
And there are no safe currencies either
Maybe CFC or YEN but interest rates are very low...

Cheers

 

[ianvestor]

it's terrible isn't?
And there are no safe currencies either

AUD is pretty safe if you do all your earning and spending here. Why swap it for something else at the mo?

 

[chilliaa]

I agree with the shares but there could be some more turbulance so IMHO don't jump into it straight away.
Also you need somewhere to live so why pay rent?
The property markets will soon stabilise because interest rates have peaked and are about to fall, and ofcourse any capital gain on a PPOR is tax free

Cheers

Im not sure about that, people wanting to invest in shares should have a 5yr minimum horizon.
Personally id leave it in the bank until you find your dream home. If the home meets your requirements and it feels 'special' to you then id buy.
Theres a big difference between buying for investment and buying a PPOR. Theres nothing like that 'welcome home' feeling of a house you really enjoy.

 

[BV]

AUD is pretty safe if you do all your earning and spending here. Why swap it for something else at the mo?

We live in a globalised market so if our $ drops we lose buying power.

Lets say you swap your AUD's for CHF's (Swiss francs) when the AUD is high and then our $ falls 20%. By switching early you prevent losing the 20% and in the meantime you also make 2% or so in interest.

When you know that a currency has peaked,
switching over to a more stable currency is not such a bad idea.

Our $ had it good so far but commodity prices are coming down and so are our interest rates so the AUD is only going in 1 direction and that's down...

Cheers

 

[jcjchung]

I would split the money and put it into 2 properties. One in Sydney within 5 kms of CBD and the other in another as your PPOR. Your cash will be the deposit on IP Sydney mortgage loans and make sure your rent will completely cover your mortgage payments. Your properties will be postively geared from day one and the extra funds can pay for other mortgages/ expenses/ private schools/ your daughter getting married + your super. Why sydney..... the underlying demand in Sydney within 5km radius is so huge that it is beyond anyone's imagination. When the newspapers are talking about the current buyers' market and property prices falling, I recently attended an auction where there were 50 registered bidder and over 200 groups of people visited the property, 90% were 30 years and under. The property went 28% above the price guide.

 

[hobo-jo]

Though it's now $US775...

What is it in Australian dollars? That's what really counts here isn't it? Unless you happen to have money in the US to purchase gold...

 

[boomtown]

$757.90/oz and continuing to drop.

Dont forget to take your holding costs (storage and insurance) and add those to your capital losses.

 

[ianvestor]

the AUD is only going in 1 direction and that's down...

Hehe, which is great when it's predictable, because I've made myself over $1000 just in the last few weeks (selling AUD/USD and AUD/NZD) with some play money I have in a forex account.

All I meant before was, I'd rather hold the bulk of my wealth in AUD simply because I live here and don't need to worry each day about exchange rates that way.

On the other hand, if I held the bulk of my wealth in USD (as I did for a while last year) I might see my buying power in Aus shot down in a small amount of time which is bad for my SANF.