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.
Being a financial adviser doesn't mean you can 'get rich quick'. Advisers just know the ins and outs of taxation rules, superannuation, Centrelink rules, cash flow, debt management, aged care, etc. They use this knowledge to provide strategic recommendations that should put someone in a better position than they were in or give them some guidance or knowledge of the financial path they are on.
Sure there's plenty of bad press about dodgy ones who are out to make commissions on selling products, but the majority of advisers are not out to do that, especially ones that don't work for a bank.
You are fine to be sceptical given the media, however the job of an adviser is to apply their knowledge to improve someone's position and it doesn't need to involve investments or any product for that matter.
I would say that while a financial adviser isn't 'that good with money' to get rich quick, they know enough about investment markets and tax rules and structures to recommend appropriate investments for someone's situation.
Finally, as a financial adviser myself, I can only make the comment that it's never a good idea to take advice from a forum such as this. Sure use it to get opinions for education purposes, but I'm afraid you will end up with a lot of misleading and inappropriate advice and information.
ok my bad, maybe I have confused "get rich quick gurus" with financial advisors, but you guys/gals have certainly been getting a lot of bad press lately :)
Would be better off just asking on ozbargain
What ever happens, I want to know where the money is now. It's gained 3mil since this morning.
haha yes, did he add extra zero's? Has gotta be an april fools post
Definitely consult a financial advisor. I would hazard a guess and think a family trust would be set up with that kind of money, no one just puts a few $m in a high interest account and calls it a day.
A financial advisor? Really. You think anyone with money goes to see someone who has a tafe qualification about how to invest it?
OP, your friend needs to contact his bank and get in contact with their private banking division. They will steer him down the right path. $5m is entry level for private banking, but you at least get people with degrees looking after your money.
Obviously you'd pick someone that isn't just TAFE qualified. A good financial advisor with authorisation to handle your investment portfolio can bring you returns with minimal effort on your part. My parents don't have the knowledge to grow their wealth so they've paid someone to do it for them - it's working out extremely well even after performance fees have been deducted.
And they might even suggest buying a property !
Now here's a guy you really really don't want to listen to.
A financial adviser? Of course not! Take comprehensive financial advice from a guy named 'Burnertoasty' in an online forum for bargain hunters.
I'm a Private Banker with one of the Big 4's and echo this comment. Plenty of wholesale solutions available for anyone with net investable assets of $2.5M+.
Most 'financial advisors' are glorified insurance salesmen.
Why insurance???
In my experience (with several) they don't seem to offer you investment strategies, or savings plans. They check your super levels and then offer you income protection insurance and life insurance to 'plan financially' for some impending doom. It is aimed not at increasing your wealth, but protecting what you have.
What is the point in having a financial plan if you dont protect it? Financial planners tailor the advice to the person sitting in front of them. i.e. Investment strategies and savings plans are not relevant for a lot of people.
People insure a $30K car without even thinking about it but cant seem to understand why they should insure their income which is worth millions.
@noise36: and that makes them insurance salesmen but by a fancy name. I don't have a problem with their profession, other than the name being a bit deceptive for those that don't know. I do have insurance, arranged through a financial planner.
and a surgeon is just an operation salesman, a lawyer just a legal document salesman, an accountant just a tax returns salesman, mechanic is just an oil & brake pad salesman…
@Euphemistic: is there a difference between a financial adviser and a certified financial planner? My dad is accountant who did some course to add the latter to his signature/wall certificates, but is now semi retired so is now just an accountant again.
Any company involved in autonomous vehicles.
Invest in a gap year and travel the world with his best mate…
I can be a tour guide part way if needed
*Announcing own lotto numbers on live national TV*
Not the sharpest tool in the shed.
How so? People are gonna think some dude off the street has the right combination of numbers?
People will copy them anyway. Then he has to split any prizes he wins more ways.
We're talking about the lottery here…
Tell them I said hi :p.
Seriously though I don't know if you're allowed to but I'd probably stick 1 million in each of 3 banks at the typical high interest banks (ING etc) and use maybe 2 mill on an average home in Sydney (assuming your friend is renting).
Likely your friend will be able to sell off the home when they want to start a family, to get the perfect one they want, they'll probably pay less overall owning a house compared to renting (as you'll likely be able to sell it off at a higher amount) and can live easy on the interest you make each year from the three banks.
If anything it will give your friend time to make a proper decision in where to invest as well in the future inside of just trying to pick one quickly now.
Pass it to me. I will put it one a four leg multi.
Just buy Australian Bank Shares the next time they take a dip.
Long term it's about the safest bet, even if the property market has a big correction and shares drop to 5 bucks it won't be long before they climb back up on to our collective backs and dig in the spurs
Have you considered the threat of FinTech?
Max $1.6 million in an industry super fund to provide for retirement
Good advice!
At 20 years old that would be the LAST thing I would be suggesting.
Gotta wait AT LEAST 45 years to get at it and who knows what terrible laws will be made to prevent you getting your super for even longer.
STAY AWAY FROM SUPER!
Best advise is only to invest the minimum amounts in super (work contributions only) and the invest in a vehicle such as property where you will always retain control
Wouldn't someone be able to have full control over a SMSF? They are more annoying to set up, but I thought that was the whole point. Plus the government contributions if he puts in a certain amount up to the limit of maximum yearly contributions…..
Can someone fill in the blanks here? I know the devil is in the detail.
1) SMSF's do allow you to control what you invest in but there are fairly strict guidelines in what you can and cannot invest in. There is also a much higher chance that the money will go 'missing' if the person has no common sense and is easily swindled.
2) Government co-contributions are so small they are not even worth discussing.
There was a great post of Reddit last year about the lengths you need to go to to protect yourself when you come into money. Trust is a good idea. Another idea is not to advertise the fact (. Tell as few people as possible.). There is an old investment maxim which says 33% in high risk (shares) 33% medium risk (property) and 33% low risk (cash,bonds,etc).
If it were me I would put say 25% in Bitcoin, 25% in Gold and the balance in an index linked fund.
Sounds like a well balanced and hedged suggestion.
Are you expecting an economic or financial crash any time soon?
Its funny when people look back at this in 3 years and realize what would have been. 0_O
Buy property, property, property
With hundreds of millions of Chinese try to get out of that super polluted country and buy anything in the city here, that's probably the best way to go
Two storey brick with no trees and low maintenance yard and stick two mil on it,
online in Chinese language real estate
They can't resist
It's like catnip
more like money laundering, and Australia's rated the worst in the world.
http://www.transparency.org/whatwedo/publication/doors_wide_…
So you inherit a property, sell it, but another one.
Genius!
in my bank account
If you want higher return than a term deposit but you do not want the volatility of shares, you can consider directly buying a floating rate notes.
With A$5m networth, your friend could qualify for a sophisticated investor certificate and invest in unlisted bonds directly. Roughly capital structures in finance is like the below:
1) Covered/Secured
2) Senior Unsecured
3) Subordinated
4) Tier 1/Hybrid
5) Equity
If the company you are investing in goes bankrupt, the most junior in ranking (equity) would be the one that gets wiped out first, then tier 1/hybrid and so on. So you are most likely wouldn't be getting return as high as you could get in the equity market. However, it is less risky. Also, you can buy a floating instruments so that you are not exposed to interest rates, as payment is basically margins plus any prevailing benchmark rates (so in short, if interest rates go up, your payment goes up too). Please message me if you are interested in more details, I can help point out your friend in the right direction.
If you invest in the subordinated range, you can probably expect around 6% p.a. running yields at the current benchmark rates of 1.8%. Or you can access the RMBS markets too. Offering between 4-8% running yields (ofc the higher you return, the lower you will be in the RMBS tranches/structure).
This is not a financial advice, just a general good o'le ozbargain advice as their circumstances were not taken into account.
You can also buy some of these bonds via xtbs on the normal stock market.
you are correct. For retail punter (around few hungies or thereabout) it is a very valid alternative.
But good luck unwinding your position of A$1m+++ in the exchange without moving the markets too much. I can tell you comparing to XTBs, buying OTC would still be cheaper at the right volume.
Furthermore, if you want to access RMBS, it is only available in the unlisted market. Pros and Cons, both methods serve different client base.
So many financial expert on this forum
I'm guessing this was a joke post?
hire a qualified financial planner
1,000,000 dominos pizzas or pork rolls your choice.
i wish I had the same problem as your friend.
I'd invest in property. I live in Darwin. The housing prices have dropped here at the moment. First home buys has only been on building new homes. Just recently they have re-instated the first home buyers on established. You'll get the rent return up here. I'm getting $395 a week for a 2 bedroom unit in Palmerston. Aw 4 bedroom house and you'll get the rent return. Have a look into it. They still have the US marines on the way and they wont all want to live on base and wont be able to buy homes. Plus all your expenses become tax right off.
I like the suggestion above to get some financial advise. Don't try to figure it all out on your own- where to invest, etc. You make a few bad moves and you'll have nothing left. They last thing you want is a few bad trades and your having to head back to full time work.
Ozbargain: where the people with no money give you advice on how to invest it
And people who spend all day on the internet give you life coaching advice!
I think that sort of money justifies a financial planner be involved. tell your friend to not skimp on these sorts of stuff. Ozbargainers can only give general advice like make a diversified portfolio. But that's as far as it goes without going into more details into your friend's personal goals that you may or may not know and some s/he might even find invasive.
The end.
Send it to me or invest in tesla.
First things first, buy as many $80000 high yielding vehicles as you can!
what ever happened to that kid ?
He's out high yielding
a low fee sharemarket index funds guaranteed (long term) returns that even property cannot match.
…patiently waits for the negative votes and haters to comment on this :)
What/who are they guaranteed by?
by history. when has it ever, over the long term, not given a profit.
Start a business?
Username checks out.
Peer-to-peer lending https://www.ratesetter.com.au/peer-to-peer-lending
Annualized rate repaid monthly:
1-mo 3.9%
1-yr 4.9%
3-yr 8.4%
5-yr 9.5%
better returns than term deposits with banks, at a bit higher risk level
$105,914,925 Value of loans funded
6,164 Everyday Australian investors
100% Capital and interest returned as due
9.5% p.a. ?! Wow. 5 years is a long time to lock up your money though.
Unless you're dying soon five years isn't too long
There are other things I may want to use my money for within 5 years…
Buy as many $80,000 mercs as you can as they have high yield. Another option is to invest all of it into Westpac.
You mean driverless teslas that ride-share?
Option 1: (what I would do): https://www.commbank.com.au/business/investment/short-term-i…,
https://www.citibank.com.au/aus/investments/bonds.htm?cid=PS…
Invest in Bank Accepted Bills, Government Bonds or some other kind of debt security. These are less risky than equity securities (i.e. shares). A lot of banks have pages like this but they don't give any information on the returns unless you have a lot of capital and make enquiries. I've always wanted to know whether they offer better returns than the interest rate from a savings account or term deposit (and if not then what's the point?), maybe you can tell us here if they do. BTW remember returns generally correlate with risk, so if you were going for treasury bonds make them US, or AUS if you have a home bias. Okay enough speculating (there's some finance humour for you).
Option 2: (the smart thing): https://www.reddit.com/r/personalfinance/
Credit to @siriach for bringing it up, here's the link. On the right hand side of the subreddit there are green, blue and purple buttons that link to a wealth of knowledge. Look at the age-based guides, the investing guide and the guide for what to do if you have a windfall. Do some research there. A lot of it relates to how your life may change once you have money, and I would say the amount your friend has inherited qualifies as life changing. TL;DR for the Windfall section: play it smart and the money can make your life comfortable (or don't and it will cause a lot of headaches and regret).
Walk in to any bank - ask for a Wealth Manager, there is a whole different banking system waiting to assist people who walk in the door with $5m (kind of like the high roller room at the casino but within any bank). You don't need to bother trawling bargain forums or reading retail rates on bank websites, the high roller managers at the bank will be willing to assist with exclusive offerings.
I wouldn't. I'd hire an independent financial advisor with a fiduciary duty. These Wealth Managers exist to sell financial products which benefit them and the bank first and foremost.
https://www.forbes.com/2010/05/24/private-bank-trust-persona…
might as well just invest in index fund. They'll most likely tell you to invest in one of their affiliated managed funds (high fees, not much alpha either).
this wealth manager, puts his banks interest before the customers
dam so ppl are lucky hey…but seriously with that money, just get a proper lawyer with investment interest. The lawyer can get you into the big fishes with that money
Having an inheritance normally means someone close to you died.
Being born into a wealthy family is still good luck.
Death is inevitable, so while the timing may be bad luck, the fact that it happens is not luck.
Also this is pretty clearly an April fools joke thread.
Being born into a wealthy family is still good luck.
Compared to what?
Existing in a stable universe is good luck.
Existing on a planet with a geodynamic ferrous core, hospitable atmosphere and abundance of water orbiting a main sequence star in a spiral arm of a galaxy is good luck.
Existing after a number of mass extinction events and at a substantial time since the last is good luck.
Being born at all compared to the billion other sperm in one ejaculation alone which didn't make it to the egg is good luck.
Being born within the last hundred years is good luck.
Being born in a developed country is good luck.
Being born into a wealthy family is good luck, but not compared to being born into a wealthier family. So what is wealthy?
The fortunes of a family extend well beyond mere financial wealth. Love, care, empathy, compassion, knowledge and ability are all valuable attributes too.
So what is wealthy?
I'd say cash in pocket > $1M. At that point you can live off the investment gains (in Australia) if you want.
The fortunes of a family extend well beyond mere financial wealth. Love, care, empathy, compassion, knowledge and ability are all valuable attributes too.
Very true. But you can't spend most of those to acquire goods and services ;)
my friend who is the Nigerian Prince is looking for a partner in shipping gold, just give him your bank details. :P
Okay, my password is "12345".
Spend& enjoy. The way the world is going - take the money & run. Keep enough to live on but there won't be anyone to leave anything to as you grow older. Spend it now, do everything on your bucket list. Have fun in your own lives.😰
Why? What is happening to the world?
A starting point would be reading books on investing preferably the classics like "The Intelligent Investor" and "A Random Walk on Wall Street". The books are American but they're far better than any of the new sensationalist books.
Long story short low fee index funds that track the S&P500 are your best bet. See: http://www.barrons.com/articles/warren-buffett-bet-500k-that…
The key takeaway from those books is that active fund managers rarely beat index funds in the long run, they have to beat the market and on top of that make their management fee back to justify you hiring them. The problem with index funds is they're not sexy, they require patience and discipline and people seem to think that they can beat the market because they know which killer stocks to buy and when to buy them.
Other than that he should read "The Millionaire Next Door", not saying he's financially irresponsible, but a little guidance on how to deal with newfound wealth never hurt anyone.
"The Millionaire Next Door" in a nutshell: save every cent, dont buy anything, live like a hermit. bam. millionare.
You just wrote my biography.
You mistyped "eulogy"
Good tip!
Would've made $36,500 today on IVV.
Lol no worries but you're only supposed to cash out decades later!
If the sentiment in this thread has taught me anything, it's that I should short TSLA.
Drop me an email and I'll tell you how I invested $10mil recently.
How? What's your email address?
I'm surprised with the amount of media and truths revealing the financial industry how many people still first like to refer to financial advisors for advice.
I won't bother throwing in my advice, but I will make reference to a well respected person in the field and shouldn't be too controversial when I say he gives the best financial advice.
Warren buffet has basically said when he dies he wants his many many billions invested in low cost index funds.
http://www.berkshirehathaway.com/letters/letters.html
if its good enough for him and his billions i'd say its good enough for your friend.
One little tip, I would say is this, if you friend isn't interested in moving overseas I would go for Australian only Index funds. Take away your currency risk.
personally I am a bit skeptical about so called financial advisers
if someone is really that good with money, you would think they would be rich already and wouldn't even bother getting out of bed to earn whatever little commission they might get from you "advising" you………