Redundancy pay $95k wisely where to invest 35 yo

Lnadbud79 on 10/11/2018 - 10:03

Hello.
I took voluntaryredundancy package as I am highly employble. My colleagues were surprised and sorry to see me go after 7 years in multinational IT company.

Anyway, it worked out well for me and I am with 95k cash. It took me 3 days to find new work with 20% more pay.

The real question is where she'll I invest this cash.

In super ? I am thinking this
Or
ETF
Or buy land or rental

My house is paid a year ago , no other debts. Got 4 months kitty , emergency money.

If I invest in super after tax , what are pros and cons. I understand no access to super and government can change super access rules.

I hate financial planners as I have been taken for ride before.
I rather buy ETF then going to these self pleasers so called financial planner.

Thanks you.

Barry

Financial

Comments

  • Donaldhump on 10/11/2018 - 10:07
    +72

    Invest in a holiday, why are you working 3 days later

    • idonotknowwhy on 12/11/2018 - 15:14
      +25

      For ozbraggin purposes.

    • p1 ama on 10/11/2018 - 12:11

      Investment property is a great place to invest next - particularly that your current O/OCC is paid off.

      What makes you say this?

        • idjces on 10/11/2018 - 13:12
          +6

          Best investments in order are (losely)

          Property
          Shares
          ETFS

          Not trying to start a heated discussion as i get the idea, but that sounds more like a ranked list of easiest to leverage against.

          Volatility is more commonly referred to as having a greater reward

        • TimOfEastBNE on 10/11/2018 - 17:24
          +8

          You've never read the Barefoot Investor obviously. Real estate is not a good investment

        • p1 ama on 10/11/2018 - 17:51
          +6

          A commonly agreed rule of thumb for investment is that…

          Commonly agreed rule by whom? I have a degree in economics and finance and I've worked in finance (corporate) and have never heard this "rule of thumb".

          Also, what do you mean by 2. Shares, 3. ETFs? ETFs are just listed funds which are made up of shares which track an index.

          Reason being that property is hardest to get into, but comes with a larger reward

          What does being "hard to get into" have anything to do with reward?

          Shares cost a bit less usually to start and at least diversify a bit but returns often a bit lower

          What evidence do you have? Shares return consistently higher than property over the long run.

          ETFS can offer greater diversification for same $ investment as shares and as such as "cheaper" but less lucrative.

          Why less lucrative?

          Majority rational investors would get into Property at any given time…except in most cases, only thing stopping them is their ability to get into market. i.e. deposit, or servicing income.

          Says who? Property has fallen over 10% over the past year. Clearly it hasn't been a good investment.

          I don't know what background you have in regards to investment or otherwise, but it sounds like you're just repeating hearsay. If you're currently investing, I suggest that you really brush up on your fundamentals. Generally, anybody who says "X is a better investment than Y" without diving into the fundamentals (by fundamentals, I mean value vs. price), then they're really just gambling.

            • p1 ama on 10/11/2018 - 20:41
              +4

              @activ8newbs: What you're saying is still not concrete. Also, "friends who are finance professionals" is not really a defence for what you're saying.

              3) if I gave you $100k and said you can either put it into shares or as Deposit for a property, which would you choose?

              If it's strictly for investment (i.e. not for me to actually live in the property), I would choose shares.

              It's hard to get into Property but the returns are often greater. Anyway sorry I can't do a good enough job explaining ATM, apologies.

              You're not really explaining anything at all. You're just repeating the same point again. What you're saying is partly true, but you're only looking at a subset of the facts. Let me explain.

              Firstly, has property performed better than shares?

              In the long run, no it hasn't. Both property and shares have returned, on average, around 10% p.a. over the long term horizon.

              In the short run (past ~10 years), yes, as shares took a massive hit during the GFC. However, it's important to note that this only applies in Melbourne and Sydney specifically. If you bought properties in Adelaide, for example, your returns would be quite low. If you bought properties in Perth, it's likely you would have lost a good chunk of your money. See the drift here? You're picking out a very high performing time period and sector for property and saying that it reflects the asset class as a whole. You're just choosing only to look at the evidence that suits your point.

              It's the same as me picking out one particular share and saying "see, you should invest in shares, it's great!". None of what I've said so far are my opinion, it's all facts based on the data.

              Now, the more important question. Will property continue to perform better than shares?

              This is where we can disagree. However, you don't address this question. You're basically saying to invest in property because "the returns are often greater", and "it comes with a larger reward". You need to be honest and say that "the returns have been often greater", and "it came with a larger reward". None of this has anything to do with how property will perform tomorrow. As I said before, you need to look at fundamentals, something you haven't done at all.

          • cameldownunder on 12/11/2018 - 11:48

            @p1 ama: ETF are good idea, to avoid Brokerage fees and Fund management fees and god know what other fees.
            Investments, not so much.
            Shares, not so good either, unless you know more than others about a certain company, its research, the industry of the share in general and it's competitors.

        • railspider on 12/11/2018 - 12:34
          +1

          Jesus Christ, this is bad advice

        • idonotknowwhy on 12/11/2018 - 15:21

          When you say "ETFs", I assume you mean index funds purchases via exchanges (as opposed to other exchange traded funds like metals, realestate, etc).

          All relevant research shows that on average, investors cannot beat the market. Read "The little book of common sense investing" by Bogel.

          While you're at it, read "The millionaire next door" to learn why the AMG was a bad idea lol

      • idonotknowwhy on 12/11/2018 - 15:15
        +1

        He's the "AMG kid" remember?

    • exulted on 11/11/2018 - 20:03
      +5

      Investment advice coming from a uni student? Academia is the antithesis of investig and entrepreneurship

      • YoungQuan on 12/11/2018 - 07:31

        well said, academia is a massive con

  • Worulz on 10/11/2018 - 10:22
    -4

    Definitely do property. You have set yourself up pretty well. Utilise the equity from your house to buy property and the capital. Then rinse and repeat.

    I would think about putting a bit into super but factor in the time value of money. I don't know if you can do this, but if you're going to put money into super, do it through salary sacrifice instead from your new job.

    • virhlpool on 12/11/2018 - 02:25

      'rinse and repeat' formula doesn't go too far these days as loan eligibility criteria are very tight and one can soon hit the borrowing limits before they realise.

    • blackfrancis75 on 12/11/2018 - 09:35
      -1

      even without 'rinse and repeat', this is IMHO your best move at this stage of your life you'll never regret it

    • 2ndeffort on 12/11/2018 - 22:12
      +2

      Cant borrow against negative equity, be careful

      • Worulz on 12/11/2018 - 22:36
        -1

        ah that's good to know. thanks!

    • masto182 on 13/11/2018 - 00:25
      +1

      In this market I feel that is the worst advise anyone could give. Look at two graphs and then maybe edit your advise. Debt to income ratio and the cash interest rate over the last 10 years. Australia is over 200% debt to income, driven by record low interest rates for a record period of time. The tightening of lending will mean less money being thrown around and will slow the price rise that will will slow foreign investment as the huge gains will be a thing of the past. It will also scare a lot of rinse and repeat investors who are over leveraged living the high life and would be broke overnight if we had a 10-20% fall.

      I like buffets theory and believe that while everyone is patting themselves on. The back about how much money they have made… you sell… when everyone is down about how much money they have lost you buy at bargin basement prices.

    • KLoNe on 13/11/2018 - 09:49
      -1

      Found the person who read Rich Dad/Poor Dad about 20 years ago and thinks the world hasn't changed.

      • Worulz on 13/11/2018 - 18:38

        good to know. Thanks for the feedback Klone.

        Happy to hear about your recommendations.

  • altomic on 10/11/2018 - 10:28
    +37

    The only answer-

    Bank of Altomic.

    Guaranteed returns*

    *returns may not be favourable. Bank fees include a 1 off deposit fee of $95,000. If swelling persists then see your doctor.

    • Kangal on 11/11/2018 - 21:56
      +3

      I can attest to this, never been happier!

      • smartazz104 on 12/11/2018 - 21:11
        +3

        With the swelling?

        • Kangal on 14/11/2018 - 11:05

          Yes, I am swell, how are you?

      • khomeini on 13/11/2018 - 18:56
        -1

        Is this the same Prince Altomic the III who needed to transfer 240 million in gold bullion overseas from his dear dead uncle President Altopic's estate which I'd recieve 10% of?

        If so, yep, best investment option there is. Can't believe others don't know this.

    • [Deactivated] on 10/11/2018 - 20:07
      +4

      So one who actually has money and values money would never say $95k is not a lot of money.

    • chriise on 11/11/2018 - 23:10
      +8

      95k isn’t a lot of money

      :(

      • LFO on 11/11/2018 - 23:39
        +16

        96K is more money…

    • SnakeCasablanca on 12/11/2018 - 08:45
      +24

      The reason that you will "Probably get flamed for this" is for the following reasons:

      A) No one asked whether it was a lot of money. The question was how they should invest that money

      B) Your intent was to brag about how much money you have. And even it it isn't it exhibits how ignorant you are as to how a lot of people's financial situation can be.

      C) Whether $95k is a lot of money or not is entirely subjective. For some people it is more than they will ever see in their bank account in their entire lives.

      • Chridim on 12/11/2018 - 11:49
        +4

        For some people it is more than they will ever see in their bank account in their entire lives

        For most people?

      • Thaal Sinestro on 13/11/2018 - 01:22
        -1

        True, money is relative. The $5,000 baby bonus (plus Family Tax Benefit A & B) is small change to middle class people and has no effect of their breeding rates, but it does make lower class people more likely to have children.

        The government considers you wealthy if you have more than ~$70,000 in liquid assets, and you lose eligibility for a full pension.

        • SteatoLegato on 14/11/2018 - 08:14

          That’s simply not true

    • smartazz104 on 12/11/2018 - 21:12
      +1

      Probably get flamed for this. But 95k isn’t a lot of money.

      You won't get flamed but you'll probably get called dumb.

  • HighAndDry on 10/11/2018 - 10:59
    +9

    Not super - too inflexible. ETFs until you have a better idea of what you might want to invest in. Property is (almost) always a fairly safe bet, just not in the past 2-3 years though even now it should already be close to bottoming out.

    • Iamnotcheap on 10/11/2018 - 13:38

      Agreed not super…

      • cameldownunder on 12/11/2018 - 11:51
        -4

        Only God knows ( if he exists ) where SUPER is going. Could well be that a Labour government decides to abolish and merge all personal SUPER in favour of a government based pension.

        • LlamaOfDoom on 12/11/2018 - 19:58
          +3

          What has given you cause to think that is even a possibility?

      • Brianqpr on 13/11/2018 - 16:35

        Super is just a structure, you can have many types of assets, including property.

    • TimApple on 12/11/2018 - 09:33

      Historically property yields 5-6% per year. Index funds yields 8-9%, in US even close to 10% per year.

      It depends on their time horizon, 3% is a lot of difference when compounded over decades.

  • TheBilly on 10/11/2018 - 10:59
    +33

    All these financial windfalls only seem to go to members that joined 1 hour ago

    • JIMB0 on 10/11/2018 - 14:57

      They forgot to add an extra 0 to the amount.

  • wwwwwwwwwwwwwwwwww on 10/11/2018 - 11:08
    +38

    Mercedes A200 AMG

    • vinni9284 on 10/11/2018 - 11:35
      +3

      Nooo.. a C63!!! ….. second hand of course :P

    • cuteseal on 12/11/2018 - 13:42
      +3

      Too risky… how about investing in 1,100 bags of rice instead?

  • chumlee on 10/11/2018 - 11:14
    +1

    Investment property or super but remember with super there is a yearly cap for contributions

  • akyeeeahdude on 10/11/2018 - 13:27
    +1

    If it was me, I'd gp for an ETF (eg www.vangard.com.au) which you'll buy from a broker (eg Commsec etc).
    Super is often in ETFs/Indexes but is locked in.

    *Not financial advice.

  • GangGang on 10/11/2018 - 15:22
    +5

    Wow, 95k for 7 years? That's one serious redundancy package.

    • renster72 on 10/11/2018 - 17:56
      +3

      yes it does, kinda jelly got nowhere near that after 6 years with IBM on 100k

    • JIMB0 on 10/11/2018 - 18:43
      +2

      Would have included long service leave and any other leave owing. Some people never take holidays.

      • GangGang on 10/11/2018 - 22:29

        Long service starts at 10 years?

        Even if op accumulated all of the holidays over the 7 years (4 weeks a year) & 2 weeks of sick leave a year. I'm still only get around 70k.

        • JIMB0 on 11/11/2018 - 06:11
          +3

          Some get it pro rata at 7 years.

          • potm on 12/11/2018 - 02:17
            +1

            @JIMB0: Redundancy will often pay out LSL no matter how many years it had been accruing for.

            • lgacb08 on 12/11/2018 - 11:24

              @potm: Not in Victoria if you're employed for less than 7 year

            • [Deactivated] on 13/11/2018 - 19:50

              @potm: Redundancy actually takes into account LSL, and assumes you're eligible at 10 years and so decreases. (You get less redundancy pay at 10 years than you get at 8 years, but you get your LSL paid out at 10 years in addition).

              NSW and QLD don't pay out LSL on termination / redundancy / quitting until you've been on the job 10 years. Other states are more generous (eg, you always get it in SA). Believe Vic is per lgacb08's comment, min 7 years.

              Voluntary redundancy packages are clearly more generous than required. :o

          • abb on 12/11/2018 - 10:44

            @JIMB0: "Some" get that because that's the law… (edit: this may be a state law, I dunno)

            • [Deactivated] on 14/11/2018 - 12:00

              @abb: LSL varies state by state. 'Some' get it pro-rata at 7 years because they're not in QLD or NSW. Some companies in QLD/NSW also offer it after 7 years with conditions (eg, you have to remain employed by them for 6 months after you use it, you have to use your annual leave first), but they don't have to give anything until you've been in unbroken, paid, employment for 10 continuous years.

      • Donaldhump on 13/11/2018 - 07:27

        Some people also have 3 or 6 month notice periods

    • tukulzz on 12/11/2018 - 21:03

      Anyone willing to share their experience on how to ask for voluntary redundancy? Like do you discuss this with HR first?

      • macrocephalic on 13/11/2018 - 12:17

        You have to be in position which they want gone/want to move. You can't just ask your boss to fire you for money - because replacing a needed employee costs quite a bit (recruitment alone is 10k+)

      • [Deactivated] on 13/11/2018 - 19:52

        You don't ask, they offer when they want to remove roles / move them offshore. It's basically the step before they start mandatory redundancy but they get the people who want to leave to leave first.

        • tukulzz on 14/11/2018 - 11:41

          Yes but from my experience they just pick and choose without communicating to the broader team first which is understandable as they dont want to lose their best performer.

          • [Deactivated] on 14/11/2018 - 11:57

            @tukulzz: Yes, most redundancies aren't voluntary for exactly this reason. In those cases you are basically out of luck, you're not going to be able to ask for a voluntary one. Voluntary redundancies are basically there to stop the company looking bad for making people redundant and making the remaining staff worry it will happen to them without warning. Most companies don't offer them.

    • dufflover on 14/11/2018 - 00:03

      Just going off the comment about all the OzBraggin users being only 1hr old…

      That's one serious redundancy package of bullshit.

  • TimOfEastBNE on 10/11/2018 - 17:26
    +16

    Spend $30 on the Barefoot Investor book. Read it, then decide what to do.

    • bottletop on 11/11/2018 - 09:41
      +9

      $15.49 at Costco!

    • Rosace on 12/11/2018 - 07:07
      +2

      $19 at Big W for those with no Costco membership.

      • SupeNintendoChalmers on 12/11/2018 - 09:57
        +24

        Its $0 at the local library

        • k-rokfm on 12/11/2018 - 11:40
          +1

          5 finger discount code, you're a thinker

    • gentlecrack on 12/11/2018 - 13:30
      +1

      Or buy with the Echo dot deal at $16.45, and use the credit to purchase the book.

  • renster72 on 10/11/2018 - 17:59
    -2

    How much you pull in a year? I assume Tax is a big burden, investment property Neg Gear while u can..

  • fossilfuel on 10/11/2018 - 18:54

    Anyway, it worked out well for me and I am with 95k cash. It took me 3 days to find new work with 20% more pay.
    My house is paid a year ago , no other debts. Got 4 months kitty , emergency money.

    Ok wtf. Please share your secrets sir.

    In super ? I am thinking this
    Or
    ETF
    Or buy land or rental

    There is high risk in rental. You need to consider insurance, maintenance and possibly someone to manage all your paperwork. Land value in Sydney has been stagnating in the past 12 months. Prices in my area has dropped around 9%.

    The positives of super is that you can choose your investment option (higher or lower risk), tax benefits (any money you put into super will be taxed at 15% instead of income tax) and super has yielded reasonable returns over the years (5-8% p.a for core strategies). However, like you said, you cannot access the money until you reach your [preservation age] i.e 60 years old if born after 1 July 1964. Government can also change rules to super.

    I rather buy ETF then going to these self pleasers so called financial planner.

    Agreed, invest in a passive managed fund. You can get reasonable returns at 5-7% p.a. If not, then look at government bonds which provide 3-5% p.a return paid out quarterly and half yearly.

  • cybapete on 10/11/2018 - 19:28

    kudos to you on wanting to invest it
    if you leave it sitting in the bank it's getting low interest and the temptation is to go on a holiday, get a new car etc etc etc not that there's anything wrong with that but once it's spent it's gone

    i knew a guy at work who was made redundant and got a $70k payout most of it went straight in the pokies within two years the lot was gone it still makes me shudder when i think of it

    • boostpak on 13/11/2018 - 10:38

      how is it gone if you spend it on a car and sell that car within 2 years? you're still going to get some if not a log of your money back.

  • [Deactivated] on 10/11/2018 - 20:13
    +7

    OP, you've done really well to pay off your house at 35 and have no other debts. With $95k, the world is your oyster. I would put it in some bluechips for now, and then invest it in something you feel passionate about and believe in. Investing in shares that I cared about or in companies that I believed in, has served me well.

    • boostpak on 13/11/2018 - 10:38
      +3

      or go on a long holiday to many destinations seeing different cultures and cities

  • hawkeye on 10/11/2018 - 20:31
    -8

    Buy a big boat and invest in international people transport before it goes gangbusters again when Labour win next year.

    • cashews on 14/11/2018 - 11:32

      Are you ok?

  • sagrules on 10/11/2018 - 20:57
    +5

    I'm curious too how you found a job within 3 days?
    It takes months in Sydney just to go from first interview to offer.

    • footyboy on 12/11/2018 - 07:23

      Months?!?!

    • sulmar on 12/11/2018 - 09:11

      Not hard actually. I know someone who was made redundant on a Friday and the following Monday he was at another job, paying more.

      Companies (afaik) usually let you know when you'll be made redundant (in advance), so you just start looking for a job beforehand.

      • 0FoxGiven on 12/11/2018 - 10:08

        I can attest to that… I was out of a job one Friday and landed another job the following Wednesday. Started work 5 business days after getting laid off.

    • UFO on 12/11/2018 - 16:24

      He didn't get fired on the spot… he took a redundancy. That takes ages for the paperwork to get sorted. Plenty of time to line something else up, and then pick what you want in a few days.

    • macrocephalic on 13/11/2018 - 12:22

      I often get cold contacted by recruiters. It's pretty rare for me to get contacted for a job which is better than what I currently have, but someone in a more specialised field could be taking offers every week. It's also quite possible that he went to one of the competitors or companies that he works closely with and said that he wanted a job, and that company, knowing who he was and what he could do, gave him an offer straight away.

      Recruiters often charge 15%-25% of the roles salary to recruit. By hiring directly a company may be saving 30k+ right off the bat.

  • f38r1 on 11/11/2018 - 08:00
    +1

    I wish I have this kind of problem… Where to put my extra cash lying around. :)

  • nadbud79 on 11/11/2018 - 12:20
    +14

    Hey guys ,
    Thanks for comments.
    It is unbeliable to see all your inputs and ideas for many people here.

    This amount I can afford to loose but this time I have bit matured.
    Last year I invested in Bitcoins $200k which is a big lesson learnt, all that 200k is sitting under $30k. No more risky investment. At some stage Bitcoin went up and I could have made $400k easily but thought to hang around and that was bad invesrnt and strategy.

    I am bit matured from finance point of view , not checking out this time this money therefore asking around ..for ideas.

    Let me answer a few of your questios.

    1. Why 95k in 7 years. - it is combination of unpaid leave , plus long service plus golden handshake. (not really redundancy )

    2. How did I find a new job in 3 days - it was quite easy for me. I started job hunt when I resigned 4 weeks noticed, I soaked most companies with my CV. Had 15 employer seriously wanted to interview me while I was still at old employer. 3 days was the unemployment period between old job and new job. I had 3 offers and chooses the best one. Still I am interviewing while I have this new job with Google and Amazon to see what their offer would look like , their interview process is long. .

    3. @fossilfuel
      Any tips for pay rise - just look around and don't get comfortable with one job. I was going to leave this ployed in a new year and this redundancy was a god gifted to me. I think I wasted last 3 years learning nothing new. But I was doing my side projects and done my certs.
      The key secret is align your qualifications in IT ahead of the game.

    4. I don't spent much. I save almost 60-70 percent of my income. I don't drink, mostly vegan and occasionaly meat. I don't spent on car, never own a car as it's unnecessary. Have a good GF who makes more than I make and not so demanding.

    However , I give away 10% of my income to support poor people in third world country. I visit them once every two years. Been doing it for 10 years now.

    I have been maxing out my super eg regular plus co contribution plus I dump additional 10k after tax money.

    From my experience:
    - Property I have is good to write in tax. It's a good debt . I will keep this continue until I am working.
    - no more Bitcoin or risky investment. Learn the lesson in hard way .
    - financial planner are only a take. My neighbour went to cba to invest 20k and they said they will charge 2k for advise what the (profanity) ..they making knstamcely 10 percent regardless of where they dump her 20k. It's a no no for me.

    • this time I want to invest wisely and you guys have already given me some of your life experience. I really appreciate that. Keep the comment coming.

    Have a great day.
    …

    J

    • Kangal on 11/11/2018 - 22:01
      +4

      How do you lose $200,000 in Bitcoin to just $30,000….you don't sound (financially) mature at all.

      I think a lot of people here earning $40,000 a year are justified in their envy.

      • Blitzfx on 12/11/2018 - 01:04
        -4

        Yeah I was thinking that's so irresponsible to throw 200k into something so volatile. This person clearly has 200k in disposable income and dumb with money. I'm willing to bet the first thing 99.999% of Australians do with 200k is NOT throw it ALL into Bitcoin.

Login or Join to leave a comment
Login Join