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.
We do have a large financial influence in the Aussie market, but what u will find is any advanced economy is more financially tilted than ever before. Think of all the major investment banks in the world, none are in Australia, most are in the USA ;).
When Buffett said index fund, he literally meant the diversity of the local economy that matters to the individual, after all, what the underlying principle banking of his comment is that the "system" of our "world"(Australia) has and will be providing us with a better life tomorrow than the day before.
It's hard to fault, I can't think if a decade in past history better than the current decade. Hopefully it's no luck, and it's a system that will continue :)
AFAIK Buffet recommends the US market not the Australian market. The US market features IT and Healthcare industries that are lacking domestically.
If you read carefully he recommends US market because he lives in the USA. Their proportion of health care stocks is no different to ours relative to the financials.
His first investment in Australia (being IAG) he said he has been slack in not investing here (due to the fact Australia and US have a very similar system of capitalism). He doesn't diversify away from he US at all.
In Australia we have plenty of heathcare stocks, if you don't want to diversify by market cap you can diversify by price. This will remove skew towards financials (which is common in all advanced markets). But this isn't really reducing risk, it's just having a investment sector preference. IMHO
invest in some commas mate
Use the money to leverage into Sydney property at 20%, you will do really well. Government is expecting Sydney to double in population by 2050 and then quadruple by 2100, crazy not to invest there. It is easy money, just talk to a bank manager and they should be able to get you the finance you need for it.
Yeah that 2100 population will really work well for him. Seeing as your logic in entirely based off population, wouldn't Melbourne be a better investment, as its population is projected to surpass Sydney's by 2030 and its avg house price is less.
Yes, either will be good, wouldn't want to live there thou.
With spelling and logic like that, the population of Melbourne breathes a sigh of relief.
keep in mind, its "land" value that goes up, not "property". a house with green grass will go up in value. all those cbd apartments? they have no "land" therefore the value will not go up, or only marginally so.
Have you thought about switching teams?
Every day, but that has nothing to do with this.
I can see 5 Million reasons to bat for the other team. lol.
Everyone would bat for the other team if there were $5 million in it for them. No one would be left to bat for the original team.
Probably just property.
Start a brothel near a football club
Seriously, someone with your name asking this question? Should be obvious - a money bin
Buy a house, some cars. Some property overseas and a yacht.
20's and 5mil. Biggest problem in the world.
Maybe we can get the individual to buy each of us some movie vouchers ;)
Appologies if anyone has asked, but why would you sell a point piper property and then try to find a better investment. I'd be investing in point piper property. Secure, high return, and best of all you could live in it if you had too ☺
because April fool day, people do foolish thing :)
Research lotto winners, see who was successful with their wins, and emulate them.
That's a pretty low bar.
Also, what leads you to believe that what worked for someone in the past will work again for someone else in the future?
Smart people learn from other peoples mistakes, not so smart people learn from their own. Plus what other category of people suddenly get such a sum of money and then try to invest it, where its in such a public manner.
Most people who get to 5 mill do so through work and investment, only lotto winners get 5 mill to invest all of a sudden with no previous experience in earning that kind of money.
I would think their experiences could give you friend some interesting perspective.
That's fine for avoiding failure, but you were referring to emulating success.
@Scrooge McDuck: Its not an either or sum, you can learn from their failure, and emulate their successes at the same time.
Maybe the person is qualified for Vanguard Wholesale fund. Like Mr Buffet said, just pick an index tracker and enjoy the compound effect
$5000000 and 20s….. oh my gosh…….. so good
I don't know why all the property suggestions is getting negg'ed but I reckon it is the safer option… Looking at it in the long term, if you purchase a property of two outright, you don't have to make repayments and you just receive rental income which you can save up to fix up the property when needed. Even if you don't sell it, you'd still be earning rent, provided it is in a good suburb or if you target family friendly suburbs (that is, with good school network, close to stations etc) you shouldn't run out of tenant options. IMO, this would be less risky than shares.
comma comma chameleon……..
Kind of a weird April Fools joke thread, Scroogey…. I expected more.
Invest in Ozbargain ^_^
Afterall you posted and asked advices here…
buy eneloops
I'd put some of it in USD, and some of it in Bitcoin.
(If you decide to put some in bitcoin, let me know which exchange, and when you're going to place the buy orders lol)
5mil AUD isn't going to move the market that much these days.
True. Fine; put it in zcash and again, let me know first :)
Was this an April fools joke?
Not sure. It's a troll thread but not sure if it's deliberately on Apr 1….
Buy up big in US armaments. Trump is hellbent on war and is investing billions into it. What could possibly go wrong? (I hope this is an April Fool's posting).
Lol at the fact that 80%+ of the posts here are deadly serious.
IKR
maybe your upset that your not smart enough to join those 80% of informative posts :)
I would probably start a property portfolio with a few rental properties.
Bank some of it maybe 33% and live comfortably without having to work your butt off.
Invest in several high yield 80k sports cars.
I think thats a horrid idea, Giulia Quadrifoglio and BMW getting in loan trouble is causing Germans to have fire sales.
Trust me I'm an Investment Analyst from Westpac.
Saw this coming a mile away.
https://www.vanguardinvestments.com.au/retail/ret/investment…
If I was in your friends position and knew nothing about investing, I would put it into into Vanguard LifeStrategy Growth Fund or Vanguard High Growth Index Fund.
It's well diversified over various stocks and fixed interest funds and low in fees. Balance over $100,000 fees are only 0.35% p.a.
The average return since inception is 7.64% per year for the growth fund and 7.85% for the high growth fund.
First stop is an independent adviser! Most financial advisers can draw you a good picture of your general options. It is when it comes down to their specific recommendations for funds and things I would double check, one because they may not be thaaaat independent and two they probably don't know everything that's available. So google any recommendations and check for alternative similar options. See which comes out best.
My advice:
Don't put it in the bank, interest rates suck (nearly the same as the 1.5% inflation rate meaning that anything lower will cause you to lose money). Any good adviser will recommend a diverse portfolio with some parts invested in high(er) risk assets with high potential and other more stable assets. if they want to buy stocks, don't buy them outright… as this is very risky and requires a fair bit of knowledge (and luck). Investing in a fund incurs some fees but but allows you to spread the risk by investing in 10000s of different stocks (as part of the fund) and will significantly reduce risk (e.g. one may go down but others will go up).
Either way, you have 4 options as far as i can see:
1. Put it somewhere easy and lose money (either money you could've earned or actually lost due to inflation).
2. Pay a bit of money and time to find proper investment options. Make the money earn money
3. Donate it to charity.
4. Throw one hell of a party and invite all OZb's
Buy OB from Scotty
He only takes Eneloops and we can't find a good exchange rate.
…you mean was single lol. Is this what you call white peoples problems haha. Good luck with it :)
Put it all on Winx to win this weekend at Randwick … easiest 1 mill you'll ever make
I don't think a 1:0.2 is a good return
How do you figure that … its 1:1.2 i.e. put 5 mill on get 6 mill back … just like 20% interest earned in 2 mins
My bad misread the sentence thought the total payout was only 1mil I.e a loss.
Hire an independent NON-commission based financial advisor then stop looking to the internet for advice.
You would be insane not to seek financial advice from a professional.
Even if you dont take the advice, its super important you at least see what some of the "best" options are given you specific situation.
A quick thought of how I'd handle it…
Bank it quickly to earn short term high interest by splitting across multiple banks up to limits. E.G. RAMS, ING, CUA, ME, Rabo. You'll pay tax on interest for now.
Choose a strategy for investing by getting advice from several places, and build knowledge. My personal preference is regional property and tech startups.
Find a mentor or two in those areas through high net worth networks. These are different people to those who you will pay for advice.
Rapid training courses in industries you are interested in to make it a career rather than trusting Advisors alone. Try some small practice deals to learn (e.g. A $25k Angel investment in a capital raise round)
Structure deals to be tax efficient for returns. E.g. Tax breaks and CGT exemption for Startup investing through the right funds. https://www.ato.gov.au/Business/Tax-incentives-for-innovatio…
It's a great problem to have, so best of luck to your friend!
Thanks, your advice seems the best so far!
Do you have any pointers regarding finding mentors and researching angel investment opportunities?
Thanks. I would suggest people who sell a service as mentor aren't the way to go, unless for a specific deal where you need industry DD advice. Most people who have already had many years experience and success are happy to spend time sharing advice over a good meal. Build relationships through networks until you learn to trust their advice in time. It's a much smaller world than you expect so it isn't that hard.
I'm guessing you are in Sydney. To find people who have been in the game, there are numerous events which run regularly. Network groups like Sydney Angels have been running for many years, and Startup Angels is good though newer. You'll learn from chats there, though don't bust yourself to make first deals. Innovation Bay run pitch breakfasts which might be interesting too. There are demo days (startmate is on tonight) where accelerated companies pitch for investment. Again a good place to start until you learn enough from others who are in the industry.
I do think you need structuring advice fast. Your pot isn't enough for Big-4 but you should get help from a proven accountanting firm (not a one man band) to set up a trust, and investment entity to protect yourself and future family from deals that might inevitably go wrong. Don't try to do it yourself to cheap out. A friend did, and has been audited 5 years in a row by ato after making a mistake.
On property side, there are a lot of strategies, but my personal view is buy, create more value and keep. My sister is full time on this (after $30k+ training) , and does it for a living for her own investor network. Start from a few conferences, but don't get sucked into the property hype. Sales teams can be relentless.
Happy to PM if you want some specifics of events and networks.
Spread it around, not all eggs in one basket
Buy commercial property with a long lease to a A grade company, like a Coles supermarket
Property is the safest and satisfactory return, plus strong growth
$5m in today's market isn't easy.
There's a bond market for unlisted but tradable bonds (therefore liquid) issued by various ASX companies which will get you 7%-9%, and if you can accept the risk property developers are willing to offer much more (14-18%) for funds that they cant get from regular banks. You'll need to register as a wholesale investor for those bonds. Other than that you could buy in to some property but the prices are already factoring in future price growth that might not happen for a few years.
I'd spread the money out among many banks and investments. That way if something fails, it doesn't wipe you out. Then just live off the interest.
he could rent the leadership of the Lieberals for possibly 2 election cycles with that
Do what all the other millionaires do with their money. Land bank it in Sydney or Melbourne.
Be sure to take photos of the depressed first home owners you destroy at auction to muse over while drinking cognac in a robe while sitting in a drawing room.
Give me 1 mil I'll give back 5 mil in cash in 5 years, I'll take care of the tax for your friend as well.
Spend the rest on clothes, luxury watches, brand new cars, first class flight to exotic locations to help the economy. Get a black Amex for the points and set up auto repayment every month to avoid interest.
Will this be a secured loan?
No, it's an angel investment not a loan.
Do you have a prospectus?
As someone who works in the investments industry, see a professional. Most comments on here equate to terrible, terrible advice.
Ask someone who spends their days on a yacht, not on ozbargain.
I spend some of my days on a yacht and some on OzBargain.
Should I ask myself, or ignore my own advice? 🤔
I think you should rest and go to sleep.
Ask your yacht and ignore your children. Live the dream.
I guess your company thinks index funds are the devil, yeah?
Any 'professional' worth their salt would almost certainly default to a market index fund with low fees, besides fixed interest and others (level of risk/volatility etc). If they don't, they're pretty much telling porkies.
One word: Bit Coins
Two words?
Pork Bellies, Ostrich Farms, Coconut plantations.
Inbox me if you're interested in land/property development. I am dealing with a few lands in the South-west Sydney atm. Thanks.
have you had a look at Macquarie bank financial services?,they have a good track record of personal financial solutions on high profile clients.
Chiron is out …so get one http://www.bugatti.com/chiron/
3.8m(price) + 1.254m(Tax) = $5054000
First put the money in Bank to get $54000 ( Advices above should do it)
Good luck …let us know…how it goes…
You could put a deposit on the matching boat too
http://www.dailymail.co.uk/travel/travel_news/article-430600…
Managed funds - listed & unlisted. For unlisted, have a look at mFunds, for listed, Morningstar.
First thing to do is engage the service of a financial adviser though. I wouldn't recommend doing this on your own since it's a lot of money. But if he's foolish enough to do this on his own, make sure to diversify even though buying into managed funds is already a form of diversification. This means Equity - Global - High growth-Blend-Value, Australian, Asia, REIT - Australian, Europe, Global & defensive MFs like Bonds.
Tulips.
Can't lose.
I invest in US property. The return is 10-15% gross.
Banks would be the lowest returns.
With $5,000,000 in the bank speak to a trusted financial advisor perhaps?
MediBank shares
Berkshire Hathaway shares (Mkt cap 409.08B)
Buy 2-3 McDonald's
Invest in OzBargain
Buy and sell property
Go seek professional advice ASAP.
Then get a second opinion.
Then get a third opinion.
Listen to advice.
Longest running April Fools joke I've seen! Kudos!
If he is clueless in respect of what to invest, why didn't he just keep the property, move in it for 3-6 months, then rent it out. This would give him time to really think about what to do with the property and would be CGT free for 6 years. As there's no debt, the annual rental income would result in a stable income source.
How rentable is a 5 million dollar property bro?
Probably better for a place for television/movie crews to film or for photogs to take snaps (variety of uses)
To be honest, whoever the person was who gifted this kind of asset/money, for it to be so easily sold and accessed boggles the mind. I knew people that had done well and hadn't attained this sort of money, who clearly had things well organised long before they passed. They had it clearly in their will to put it somewhere to grow and pay dividends, then allow the children/child to scrape off the cream every year. Sometimes there were withdrawal conditions added, sometimes not. Sometimes partial lump sums and the rest invested, sometimes not.
I just think handing something over like that, while an individual right, is irresponsible. In the sense that I would try and protect people from themselves. There are ways to mitigate potential impulsive risk related to simply being human.
Well you only need to rent it out for say $2,500 a week to get an equivalent of 2.5% return in interest. Plenty of people can afford to pay rent in that range. My original point is, if someone has no idea how to invest the proceeds, then why sell a quality property asset in the first place which most likely will only appreciate in value over time?
Golden rule:
Do that and keep it for 10+ years, you'll get at least 5-7% return per year.
protect him from gold-digging ladies!
read the title of this thread, in a dr evil voice. makes it more fun.
Have mutiple bank savings accounts.
Heaps to choose from
Westpac
Nab
CBA
ING
Bankwest
1mill in each = 5mill
You want to be talking to a Pivate Banker. Just ring one of the call centeres at on of the big 4 and Im sure they will sort you out. A Private banker will make sure your investments are safe. You dont want to be leveraging up into anything stupid, although you can have some risky investments in the mix to see if you can get lucky.
You're asking at ozbargain for advice how to invest $5 million? Are you out of your mind?
Your friend needs to invest in 66 Audi cars (valued around $75,000 each) in order to maximise profits on appreciating assets.
5,000,000?
Think of how many $80,000 cars that could buy.
Eneloops
You mean🔋🔋🔋🔋🔋🔋🔋🔋🔋🔋
But the Australian market is extremely concentrated in the financial sector. Wouldn't it be more prudent to invest internationally in a currency hedged fund?
Even then, are the costs of currency hedging justified? What is the risk of the USD collapsing against the AUD long-term?