Where to from here

[Harro]

Hi all,
Relatively new to the forum, however have been reading with interest many investment strategies that forumites have in place.

Our Position: My age 53 ( retired)
: My wife 46 ( tutoring) 7 hours p/w@ $60 hr.
We own our home.

$1,000,000 in fixed interest @ 4.4
$500,000 in shares ( 4 companies, direct investment)
2 vehicles, 1 boat. Have travelled extensively ( we believe) and thoroughly enjoy the coastal lifestyle.

We are in need of greater cash flow. Your suggestion please.

Remembering we are risk averse.
Thanks in advance.

 

[ok180]

Work another 5 years. Put more in the savings account. Retire again at 58.

 

[Rolf Latham]

Congratulations

early retirement !

its a toughie

risk averse usually means nil borrowing .................... and without that, the 1mill asset you are living in is a major cash flow absorber.


ta

rolf

 

[Shahin_Afarin]

Can you build a granny @ your PPOR or subdivide your block and build?

 

[dan c]

Can you build a granny @ your PPOR or subdivide your block and build?

Why would they want to do that?

If it was me, I'd be looking at putting some of that $1m cash into higher yielding blue chip stocks.

 

[Harro]

Work another 5 years. Put more in the savings account. Retire again at 58.

Thanks ok180, but returning to the workforce is not a consideration. Far too busy for that. Haha! :

 

[Harro]

Can you build a granny @ your PPOR or subdivide your block and build?

Across the rear of our yard is a 3 and a half Bay Shed. This garages 2 vehicles, our boat and a small workshop area. No room for a granny flat and block is not large enough to subdivide. Wouldn't want people that close either.

 

[Harro]

Why would they want to do that?

If it was me, I'd be looking at putting some of that $1m cash into higher yielding blue chip stocks.

Considering doing this, with part of our fixed interest monies. Reluctant to purchase IP'S as we both detest the human factor.

 

[Blacky]

Considering doing this, with part of our fixed interest monies. Reluctant to purchase IP'S as we both detest the human factor.

If you have managed to land up with a house, plus $1.5mil in liquid assets why don't you keep doing what ever it is you have done to this point?

Assuming your shares are paying a dividend of 4%, and you spend $80,000/pa I calculate that you have about 40years before your $1.5mil is fully depleted, assuming no capital growth.

That puts you at 93 and 86. At which point you sell your house and use that to pay your nursing fees until you kick the bucket.

Blacky

 

[ok180]

If you have managed to land up with a house, plus $1.5mil in liquid assets why don't you keep doing what ever it is you have done to this point?

Assuming your shares are paying a dividend of 4%, and you spend $80,000/pa I calculate that you have about 40years before your $1.5mil is fully depleted, assuming no capital growth.

That puts you at 93 and 86. At which point you sell your house and use that to pay your nursing fees until you kick the bucket.

Blacky

Good advice. Just eat the capital. You will be lucky if you live another 30 years, your life is more than half over already. enjoy what you have while you still can

 

[Harro]

If you have managed to land up with a house, plus $1.5mil in liquid assets why don't you keep doing what ever it is you have done to this point?

Assuming your shares are paying a dividend of 4%, and you spend $80,000/pa I calculate that you have about 40years before your $1.5mil is fully depleted, assuming no capital growth.

That puts you at 93 and 86. At which point you sell your house and use that to pay your nursing fees until you kick the bucket.

Blacky

A good portion of the $1.5 mil came from an inheritance. To frivolously squander it would be disrespectful. My aim is to live comfortably without eroding away the capital, and leave it to our 3 kids.

 

[Harro]

Good advice. Just eat the capital. You will be lucky if you live another 30 years, your life is more than half over already. enjoy what you have while you still can

Thanks for having me 1 foot in the grave. I am enjoying what we have and hopefully will continue to for a long while yet.

 

[equitymate]

My aim is to live comfortably without eroding away the capital, and leave it to our 3 kids.

With respect to your comfort levels having 2/3 of your income producing assets in cash will see inflation probably erode much of your capital anyway.

 

[Blacky]

A good portion of the $1.5 mil came from an inheritance. To frivolously squander it would be disrespectful. My aim is to live comfortably without eroding away the capital, and leave it to our 3 kids.

In that case you need something which holds/increases in value over time. So property or shares. You don't like property so increasing your share holding it is.

I would stil keep a good portion of cash. Maybe go 50/50 shares/cash. Or slightly more 66/34.

Vanguard have a portfolio which is made up of basically all listed stocks. It has low mgt fees. It is basically 'the market'. It pays a dividend which can be reinvested.
I don't like managed funds generally. But this one appears pretty good.

Blacky

Ps I'm not a financial advisor, I'm just a guy on the interweb so you should ignore everything I say and do your own research.

 

[Harro]

With respect to your comfort levels having 2/3 of your income producing assets in cash will see inflation probably erode much of your capital anyway.

Good point. So what would you suggest we do? Taking into consideration our ages and risk adversity?

 

[alexlee]

You want more income but aren't willing to take on gearing or more risk.

If minimising risk is the priority, then the answer is lower your living standards.

 

[TPI]

Hi all,
Relatively new to the forum, however have been reading with interest many investment strategies that forumites have in place.

Our Position: My age 53 ( retired)
: My wife 46 ( tutoring) 7 hours p/w@ $60 hr.
We own our home.

$1,000,000 in fixed interest @ 4.4
$500,000 in shares ( 4 companies, direct investment)
2 vehicles, 1 boat. Have travelled extensively ( we believe) and thoroughly enjoy the coastal lifestyle.

We are in need of greater cash flow. Your suggestion please.

Remembering we are risk averse.
Thanks in advance.

You seem to be in a good financial position.

Although you are risk averse, you are both relatively young and depending on how long you live have a potentially long retirement ahead of you.

So being too conservative may actually be more risky for you.

At face value you seem too overweight in fixed interest.

Some combination of shares, commercial property (via listed and unlisted property trusts/syndicates), hybrids and bonds should do the trick.

Exactly how much you allocate towards each of these asset classes depends on a lot of variables.

As you approach 55 you need to also consider what role the superannuation structure will have in your portfolio.

 

[willair]

Hi all,
Relatively new to the forum, however have been reading with interest many investment strategies that forumites have in place.

Our Position: My age 53 ( retired)
: My wife 46 ( tutoring) 7 hours p/w@ $60 hr.
We own our home.

$1,000,000 in fixed interest @ 4.4
$500,000 in shares ( 4 companies, direct investment)
2 vehicles, 1 boat. Have travelled extensively ( we believe) and thoroughly enjoy the coastal lifestyle.

We are in need of greater cash flow. Your suggestion please.

Remembering we are risk averse.
Thanks in advance.

The one mil at 4.4 in the bank is useless ,it would be better in high-end blue chips that do pay above 9% fully franked,,the 500k depending on what listed companies would have to be above 30-40k,hard to say what to do,,imho,,

 

[Harro]

You want more income but aren't willing to take on gearing or more risk.

If minimising risk is the priority, then the answer is lower your living standards.

All investment has some level of risk. You are correct, we do wish to minimise it. While gearing can work in your favour it can also multiply losses (sometimes quite rapidly). We are "Old School" and like to own everything we have, not the BANK owning it.
We are considering purchasing more shares (directly). Not too much in favour of managed funds. I realise for some with limited time this may be a suitable option; but for us time is not a factor.

 

[alexlee]

All investment has some level of risk. You are correct, we do wish to minimise it. While gearing can work in your favour it can also multiply losses (sometimes quite rapidly). We are "Old School" and like to own everything we have, not the BANK owning it.

That's fine. You can run your portfolio the way you want. However, you have to realise that by avoiding gearing, doing it 'old school', especially earlier on, you've ended up with a smaller portfolio than you otherwise would. Resulting in your current problem of not enough assets to generate the cashflow you want.

I realise for some with limited time this may be a suitable option; but for us time is not a factor.

Then you already have your solution, don't you? Spend your time analysing the market and finding good dividend paying shares with growth potential, and shifting the fixed interest into that.