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What do I do now????

Discussion in 'General Investing Discussion' started by selena18, 28th Apr, 2008.

  1. selena18

    selena18 Member

    Joined:
    28th Apr, 2008
    Posts:
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    Location:
    Melbourne, Victoria
    Hi everyone,

    Here's my story.
    I'll try to keep it brief.

    Currently have place of residence in Pakenham Upper Victoria on the market.

    "Anyone want to buy a house" :D:D:D

    The plan after the sale of this property is to pay off the mortage therefore being totally debt free. Woohoo!!

    I then intend to give up working (permanently) and relocate to Bundaberg QLD. Yippee!!

    After paying cash for a new residence I will have a bank balance of approx $250k.

    Now to my questions.

    1/ In an effort to remain "unemployed" what would be the best way to invest this $250k to allow me a sufficient income to live on?
    I guestimate requiring approx $10 - $15k annually. (whilst being self sufficient in the vegetable garden etc)

    2/ I was considering Term Deposits which would currently give me a return of approx $15k annually. Any Thoughts appreciated.

    3/ What are the Tax Implications (if any) of interest earned on Term Deposits bearing in mind that the interest earned will be my only source on income.

    I am a total newbie to this, any advice will be gladly accepted and muchly appreciated.

    Perhaps I should add I am 42 years old, so this $250k needs to last me 30 years + (I hope)

    Thanking you all in advance and in anticipation.

    Regards Selena
     
  2. Smartypants

    Smartypants Well-Known Member

    Joined:
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    Posts:
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    NSW
    Hi Selena.

    Firstly, well done on getting to your current position.

    My initial thought/s was, is 10-15K sufficient to live on?

    Even if you are growing your own vegies, there will obviously be a lot more expenses on a day to day basis.

    I think you can do better than the 6% you mentioned by the way.

    You will have to pay tax on any interest earned but if this (interest) is the only income you are earning, the tax will be minimal. Not sure of the current tax free threshold, someone else ( here) will know for sure though.

    Don't forget that even if your 250K is earning you 15K, and that is enough for you to live on, what is going to happen in the future. I.e, unless your initial investment is growing (in your case, the 250K), your return will be approx the same. What I'm trying to say is that 15K may be ok for you now, but what about in 2, 3 -5 years on when the cost of living has gone up.

    Could you not consider getting a part time job in Bundy whilst looking for somewhere to park your 250K to get some additional growth.

    Anyway, just hoping to give you something to think about.

    All the best.
     
  3. Billv

    Billv Getting there

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    I think it's very very hard to live on $15K a year
    Additionaly, as smartypants mentioned earlier over time the buying power of the $15K will be reduced.

    At 42 you are not old, IMHO you should continue to work (even part time) You should not use that money to buy a place to live in. You could perhaps find a partner who has his own residence?

    Why sell the house?
    If for example you did not sell the house and that provided you with regular income, the income/rent will be increasing adjusted for CPI and at the same time your asset's value will be increasing.

    Cheers
     
  4. Glebe

    Glebe Well-Known Member

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    $15k p.a - good luck if you ever have health problems!
     
  5. Billv

    Billv Getting there

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    Selena,

    If you did keep the house the other thing you can do is to take out a reverse mortgage
    where you slowly dip into the equity and lets say draw down some of it's annual price appreciation.

    So let's say the house is worth $600K and on average it's value goes up by 8%
    therefore it's value will be going up by $48K pa.
    From that increase you could draw down let's say $25K plus collect the rent
    and therefore live on $45K.
    The good thing is that half of that income (the rent) is adjusted to CPI.

    You will need to come to an arrangement with a lender though
    and I can't recommend a particular product (it's been a while since I've looked at the issue).

    Cheers
     
  6. Rob G.

    Rob G. Well-Known Member

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    Location:
    Melbourne, VIC

    Let's see about a simple term deposit ...

    *REAL* rate of inflation 5%
    Term deposit returns 8%

    You want to draw $15k pa whilst protecting your equity against inflation,

    Deposit required = $15k / (8%-5%) = $500k

    A liitle under-capitalised perhaps ???

    You need some srious financial advice BEFORE you sign anything !!!

    Cheers,

    Rob
     
  7. selena18

    selena18 Member

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    Location:
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    thanks everyone

    Thank you so much to you all.

    Smartypants:
    Thank you.
    ??? In a Term Deposit OR some other suggestion???
    Yes part time work is a consideration - but I really don't like it much :D I was thinking of doing some stuff from home, like art, to generate some income.
    I guess what I am looking for are suggestions on how to do this please.

    BV - Bill
    Was that a marriage proposal? :D
    My understanding was that reverse mortgages where only available for Seniors (60 +) Am I wrong?

    Rob G
    Thanks - will do. Where do I start to get this advise from please?

    Thanks again for all who shared, giving me food for thought.

    Selena
     
  8. Smartypants

    Smartypants Well-Known Member

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    NSW
    You could shop around for a good term deposit but if it were me I'd try someone such as Steve Navra. If you read this forum long enough, you will see his name mentioned quite a bit.

    Whilst the Navra fund/s may be what you are looking for, Steve (or one of his staff) may be able to offer some financial advice for you.

    You mentioned painting. If you could come up with something like a Mona Lisa, all your problems are solved ;)
     
  9. selena18

    selena18 Member

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    house sold

    Hi all,

    Well I have just officially sold my house (subject to finance) so there is NO turning back now.

    Onwards to Queensland.

    Smartypants
    LOL - if only.

    Thanks for your advice - I will look at Navra.

    Regards
    Selena
     
  10. Jacque

    Jacque Team InvestEd

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    Well done on the sale, Selena!!! Were you happy with the result?
    Happy moving :D
     
  11. Billv

    Billv Getting there

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    Location:
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    Wish you luck, also, take plenty of mozzie repellent with you
    you will need it..:eek:
     
  12. Young Gun

    Young Gun Guest

    not a serious recommendation but :p

    newstart allowance is ~$442.90 pf = $11,515 pa :)

    put the $250K in super it's not treated as an asset under the asset test, nor is it subject to deeming under the income test until you reach aged pension age.

    by that time (23 years) that $250K will have grown to Millions, at which stage you can withdraw it all tax free.

    got to love this country.
     
  13. selena18

    selena18 Member

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    good idea

    Thanks Young Gun,

    Terrific Idea, but would I get away with the newstart allowance for 23 years??? :D

    Your idea has given me food for thought though, in that perhaps I could place part of the $250k into Super and continue to work (YUK!) part-time. I will definately investigate this option.

    Just did some reading on Super Co-Contributions. Am I right in assuming that if I was to put a $1000.00 lump sum contribution to my Super every year, the government will match my contribution every year?

    Thanks very much for your input.

    Regards
    Selena
     
    Last edited by a moderator: 7th May, 2008
  14. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Since when? There are no mozzie's up here. Had more issues with flies and mozzies when I lived in Melbourne.

    Mark
     
  15. Billv

    Billv Getting there

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    Did you kill them all?
    and what about the sandflies?
    Last time I checked there were major problems
    and mozzie borne diseases spreading south due to the floods etc.
    Perhaps they don't like the East coast...???
    Even the red cross when I went to give blood asked me if I had been to Qld in the past 6 months so something is going on.

    Here is some info and use your aeroguard
    Mosquito-borne Diseases
     
    Last edited by a moderator: 7th May, 2008
  16. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    BV,

    Guess I'm just too awesome for them to bother me. My mum and stepdad were living in Gladstone for most of last year and said they had issues with sand flies, but not mozzies. Myabe further north, I dunno, but in three years, I've never had an issue. If I see a fly in my house (had about half a dozen in three years) I wonder where on earth it came from.

    Maybe if got sick of looking at all the ugly Sydneysiders and wanted to check out all of us spunky Queenslanders, hahaha.

    Mark
     
  17. Billv

    Billv Getting there

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    Yeah that's it :rolleyes:
    Why didn't I think of that...
     
  18. Young Gun

    Young Gun Guest

    you'd be surprised how long you can be on the dole Lol!

    The government will contribution $1.50 for every $1.00 you contribute up to a maximum co-contribution of $1,500 pa. (So the most you can put in is $1,000 pa to gain the maximum benefit).

    However you have to be gainfully employed to qualify and earn less than $28,980 to get the maximum benefit.

    the maximum co-contribution reduces by 5 cents for every dollar of total income over 28,980 cutting out at 58,980.
     
  19. selena18

    selena18 Member

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    ???

    Thanks again Young Gun,

    So if I am gainfully UNEMPLOYED and earning less than $28,980 and still contribute $1000.00 annually to my Super fund I get nuffink??

    Bugger, I thought I was on to somefink there.

    Thanks for your time.
    Selena
     
  20. Young Gun

    Young Gun Guest

    your 100% correct