A friend of mine recently inherited and sold a modest property in Point Piper. We can't find a bank account with a decent interest rate for the whole amount, so time is critical.
My friend is in their 20s, single and not looking to start a family any time soon.
Any advice is appreciated.
Thanks, but we're looking for something with an expected return of more than 1 and a lot less volatility.
More than 100%???
More than 0 I mean. I initially wrote "expected value".
Ah, that sounds like red then
Easy there. She's not trying to grow FedEx.
I was thinking 00
I can give double interest of bank, if interested with all legal documents signed.
I would have offered at least 3000 ENE for a Point Piper property. Your friend got ripped. edit: OP corrected :(
In all seriousness though … Invest in Tesla. Profit.
Invest in Tesla. Profit.
To be honest, I think Panasonic has better prospects in the energy storage industry.
notsureifaprilfools
Yeah, me neither, mainly cos April Fool's is meant to be funny.
Tesla sources their battery cells from Panasonic.
Causing a strain on supply. They then built a magic factory where employees are forced to eat copious amounts of nuts, lithium bars and bananas whilst passing 2170 cells in a squatting position for the remainder of their days. Some chickens are outraged they have to pass an additional 3mm & 5mm than their Asian brothers but take solace in that their cells make them rich.
At $USD280? Tesla has a market cap greater than Ford. Last year Tesla made 80,000 cars and Ford made 3.2 million. I understand that a lot of the Tesla share price is speculative, but damn thats a big gap. I can't foresee any big price rises.
Really all boils down to the success of Tesla's 3 big projects:
- Gigafactory (actually executing production of high-density batteries and high-quality solar panels… in high-volume at low-cost)
- Model 3 (quality, availability, success = brand loyalty)
- SpaceX (Outside influence. Will this be merged, will it fail, will that project steal Elon away from Tesla/the bigger picture?)
I'd say Tesla's over-valued at the moment, and there's a high-risk its value will go down.
However, if these projects do work (or workout fine for the business)… then Tesla's actual value will rise to its current "over-value" and surpass it easily.
I'm a big fan of Tesla, but I think you're wrong. The shares are trading on emotion and devotion. Even if they did sell 400K model 3s a year, it's still overvalued.
@Burnertoasty:
You say that I'm wrong, then continue to say the exact same thing…oh..kay??
Tesla's overvalued at the moment, its true, there's a lot of emotion and devotion mixed.
But they are still a business, and do what a business does.
I think if the Model 3 turns out to be a success, they're inherit value will catch-up to their over-valued level.
But then emotions and devotions will get involved again, and they will become over-valued again.
Just like a cycle.
However, let's say the Model 3 is a success… and that success is followed up by a failure in the Gigafactory…
…well, then their shares will crash. Not worthless, but certainly low enough to remove the shares from the emotional investors.
@Kangal: If anything survives it will be the Gigafactory. But let's face it, Tesla is too big to fail now and their cars are too good. Driving a Tesla is like driving a Mercedes from 2027. Looks like I was a bit pesimisitic on their success though, they just released figures for the last quarter and it was record deliveries (25k), that's a big surprise in the face of Model 3 imminent production. I still don't believe the share price will
Get any higher than than $300 though (in the short term), even with Model 3 production. They are kicking goals at the moment though, the latest AP2 software is excellent.
@Burnertoasty: I think it's important to establish that Tesla don't/won't just make cars. Energy storage is where massive revenues will be made. Think South Australia's power crisis and extend globally.
@kywst: And how's that going? I can tell you that despite Turnball jumping on the bandwagon when he saw a press opportunity, behind the scenes he is doing everything in his power to stop it going ahead. Beaurocracy and politics is a killer for infrastructure. Musk might be able to deliver in 90 days, but you can bet your arse the Australian govt can't even schedule a meeting in 90 days.
@Burnertoasty: Don't know how we can call Tesla overpriced when there are companies like Snapchat, Twitter worth tens of billions.. lol
Tesla market cap: $45B
Snapchat market cap: $26B
Twitter market cap: $10B
Tesla total sales: ~ 200,000
Snapchat user base: ~ 161 million
Twitter user base: ~ 319 million
Tesla loss 2016: ~$600 million
Snapchat loss 2016: ~$500 million
Twitter loss 2016: ~$400 million
So on basic financials, even compared to .coms, its really overpriced.
And obviously the Ford comparison is the biggest indicator.
@raven2000: I've not compared the sale of a Model 3 at all. Only Model S, X and roadsters. Regardless of user base, profit is profit and loss is loss.
And when they're spending five billion dollars on a battery factory you would imagine it will take some time to make a profit on that investment. I would say they're far more likely to make a profit than Snapchat or Twitter ever are.
@Burnertoasty: How wrong am I. Tesla shares shot up $50 in the last few weeks, $30 in the last two days. If the OP had listened to the Tesla suggestion his $5m would be worth $5.5m.
@John Kimble: Who actually thought Tesla would sell a record number of cars in this quarter? No one.
@Burnertoasty: stupid comparison, the whole market is up significantly the last month. He could have invested in any number of a segments and made that same return without being at risk of an emotionally overpriced stock.
@zappy32:
By the time they start making money,
China already flooded the market with cheap knockoff ;)
@Burnertoasty: Only if he's setup for international trading. You have to fill out the US Form 4, print/sign, scan it. Then you have to wait for payment to clear into your broker's account (in USD).
Took me at least 5 business days to get setup with the payment cleared.
@Burnertoasty: where the hell did you get 469% from? Telsa is up about 20% over the last 12 months. up around 40% since Jan as it had declined badly towards the end of last year.
Hear, hear!
Better yet invest in KDR Australia's 2nd largest lithium deposit which is still open at both ends. Dyor
Lithium investment is not a wise move. Almost no exposure, low returns, high risk, near worthless resource per tonne.
gotta assume you are just trolling now. First you recommend an overpriced Tesla, then you poo poo the very commodity that enables Tesla and is skyrocketing in price with expectations of yet another 20% increase on the already insanely high price per ton.
@gromit: No I did the opposite of recommend Tesla. Read again. Then read about Lithiuk exposure. Lithium and Cobolt sailed years ago.
@Burnertoasty: are my bad, sorry I misread your userid as the poster up higher instead of responder. I do disagree on your lithium advise though, it is a commodity that is scarce and has a long way to climb in value yet. Having said that the only correct advise is the thread below this from Daabido
@gromit: Lithium is not scarce at all. It's one of the most abundant Elements in the earth's crust. You need to do more research.
@Burnertoasty: perhaps poor choice of words, it is scarce as in its availability and areas where it is easily extracted, mining is struggling to keep up with the rapidly increasing demand with mining capacity coming online in the next 5 years expected to be far short of the demand, hence the skyrocketing price.
@gromit: You really need to research this before posting guy, what you are posting is in complete disagreement with the market, and in complete contradiction to people like Elon Musk who would be considered an expert in the field.
https://chargedevs.com/newswire/elon-musk-debunks-scare-stor…
@Burnertoasty: cobalt?
That is scarce.
Sorry dude you need to.eat your words. COBALT is currently being sourced in DRC using child labour and there is NO fair mine anywhere in the world that can mine is ethically.
I'd look into CLQ and the syerston project they are trying to kick off in NSW. Gonna be huge. Seen cobalt prices per tonne? How about the amount of it used in todays batteries?
Another mineral is scandium. Huge potential.
Hmm next comment down has all that's needed to close this thread
Set up a family trust with a corporate trustee. This will ensure that in the future if he is personally sued, his assets will remain somewhat quarantined. Invest in a range of asset classes - equities (both foreign and domestic), property (or listed property trusts if he doesn't want the hassle of management), a small amount of precious metals and cash. Any distributions to him from the trust will be taxable at his normal marginal rate, but he will get to benefit from any tax already paid by the trust.
He really needs to seek the advice of an accountant and solicitor. They don't need to be big fancy firms, your local suburban firms will do just fine.
so you are really doing this for the limited asset protection? Given he is single and has no plans to have a family anytime soon there would be pretty much no tax benefit with this setup in his current situation.
Asset protection is not something you think about until your assets have been threatened and then you are thankful that you were prudent enough to do so. Hopefully you will never have to be in that situation.
There are definitely tax benefits to be had and the initial and ongoing costs are not onerous. I forgot to mention I would also add a corporate beneficiary in the family trust. They are always handy.
The whole setup could be done DIY for less than $1000, but if I had $5m I would get advice from a solicitor and accountant. Ongoing costs would be $500 for keeping both the corporate trustee and beneficiary registered and your normal accounting costs. Seems like a bargain to me, especially since he is currently single and childless. It would be much harder to do if he wasn't.
i do agree that asset protection would be important, just not seeing any obvious tax benefits on this arrangement at his current stage of life.
Actually if it is held by a non discretionary trust the tax rate on the returns that it can generate may well be less than what he would personally pay if the assets were held in his own name. Hence a lot of property syndicates/etc are held by trusts and not individuals.
@kilcarnup: Pretty sure "trust" dont pay any tax, they need to distribute all their profits to the beneficiaries / unit holders, so the taxing point is at the beneficiary/unit holder level. So not sure what you mean by your comment.
Medical cannabis companies? Read a few weeks ago the share price went up something stupid for one of them.
So now would be the perfect time to get in right? Dude, I think you need to stay out of financial advice threads.
What's wrong with penny stocks?! There was a documentary about it called Wolf of Wall Street recently!
I'm just throwing out ideas, up to the OP or "friend" to research and decide.
OP said "any advice appreciated". Mine falls under this.
Here's the article BTW: http://www.smh.com.au/money/investing/cannabis-stocks-are-al…
I'm going to have to rule against you on this one, Mr Kimble. All your advice associated with finance has been terrible. You shouldn't be giving any advice on finance or property. I guess stick to the threads about Eneloops and fugitives?
That's where the Jew's are investing…
Israel's medical marijuana pioneers look to cash in on $20bn market
https://www.theguardian.com/science/2017/apr/03/israels-medi…
Until you decide, two separate high interest accounts like ING and MEbank might be the way to go.
Often unwise to make a large financial decisions when "time is critical".
That is good council. For that much cash, I would be talking to a good financial adviser.
You're only guaranteed for $250K per Authorised Deposit-Taking Institution (ADI). If things go boom then you're only covered for $500K by the government (2 * $250K). I would try to stick the funds in a few more ADIs just in case.
should hv kept the property until at least they had an idea. once in a life time event don't waste it on cars or crap
CA here. If the person who he inherited it from was using it as their main residence then the sale is tax free providing the property is sold within two years.
Its a common misconception to keep a hold of an asset such as this when inheriting it but it can have severe tax implications if you do.
Consider this - the property may have been bought for 1 million in 1990. If the person who inherited it sold it within two years for 5 million then their capital gain is nil. If they sell it outwith the two year limit they now have a 4 million capital gain.
This is why you need to speak to a CA rather than go to ozbargain for help.
I love it how someone actually qualified on the subject matter makes a comment, offering free advice gets shut down while these cowboy know-it-all's are high-fived!
@D Money: I'm not being a cowboy, I just thought the comment was irrelevant to the OP's post and seemed like it was mostly about bragging about being a CA/plugging the industry when there are good resources available on the net.
Just going cop my downvotes above, and take this opportunity to point out that the self-identified CA's advice has now been thoroughly trashed by others (including other CAs!) below :)
'the property may have been bought for 1 million in 1990. If the person who inherited it sold it within two years for 5 million then their capital gain is nil. If they sell it outwith the two year limit they now have a 4 million capital gain.'
Shockingly incorrect information from a CA.
If sold after 2 years, the cost base is market value at time of death and NOT original purpose price.
I.e. valued at $5m at date of death. Sold 5 years later for $7m. Capital gain is $2m, not $6m as speedyjon would lead you to believe.
I'm assuming the property was a PPOR since you mentioned it could be sold tax free within 2 years.
And another way to keep it tax free potentially forever? Live in it.
I agree, speak to a CA, but make sure you speak to someone who knows what they are talking about ;)
It all depends on what the property was used for and when it was purchased.
So both of you are correct (as a CA myself) - in that the cost base of a property can be the market value at date of death, or the original cost base it was purchased for.
For it to be revalued at date of death, it must satisfy certain test.
For speedyjonzalas to make the assumption it can be sold tax free within 2 years of death, that would imply it has always been PPOR since purchase (let's ignore the 6 year rule for now).
He/She can't then turn around and then say the whole capital gain is taxable if sold after 2 years of death, that would it imply it was always been an investment property since purchase.
There is no ambiguity. I think we can agree with that.
Sounds too hard… On black it is.
Hi JB1
I assumed PPOR as it would take forever going into the details of different CGT events when all i was trying to show was that it wasn't a simple case as RowdyAlpha had hinted at.
& also that from my point of view the sale would have almost certainly taken place to take advantage of the two year window.
My mistake on the second part though - it was late at night so just an oversight after a long day out on the bike!
@JB1:
Yep. Totally agree. I just wanted to say that it is possible for the property to have it's original cost base when it's inherited.
Apparently if you donate a small amount of money to the "Liberal" Party you get a receipt, but if you donate a large enough amount you own the party and get to become/stay being Prime Minister.
Wrong friend. :P
Tesla or any energy companies
What, are they underpriced?
Invest in OzB stocks
OzB has stocks? :D
penny stocks
No, out of stock.
Might susceptible to significant duration risk if you invest just in this fund
I would prefer if the young fella with that type of money would just put some aside, to get his study paid for/career going and then put it in a nice diversified fund provider with low fees, such as Vanguard.
The other option of for this young person to buy himself a place to live in, and rent out the other rooms while he gets on with his life and figures out what he wants to do.
Buy more Sydney property, it'll only go up!
go pay a good independent financial adviser for proper advice!!!
Ha ha what a joke. No such thing. When did you ever hear an investment advisor suggest buying a property. Never because it doesn't generate any commissions for them. And in this case thats the best thing to do
There is but you have to use your common sense….
https://www.superguide.com.au/the-soapbox/truly-independent-…
A friend of mine just bought an apartment per advice from his adviser.
So 100% of the people I know that have spoken to financial advisors have bought property as a direct result.
I believe that there are no more commissions on investment and superannuation. Advisers are fee for service i.e. pay a fee for the advice to the adviser. It may still be a % of assets under management but it would be the same regardless of how the money is invested and it takes away product sales based on who pays the highest commission.
Insurance is different and commission equal to something heading toward first year premium and then ongoing is still very much around.
Commission based investments products are banned if you didn't know. It is no longer a remuneration option and was removed as part of the FOFA reforms (Future of Financial Advice). Adviser's now charge a fee based service to ensure the advice provided is much more transparent… and yes, many investment advisers will recommend property as part of a portfolio.
you are seeing the wrong type of financial advisors
Advisors are a fixed fee service.
On black.