What to Do with Lumpsum of Money

dmb0312 on 08/09/2019 - 10:42
Last edited 08/09/2019 - 10:44

Hi All,

After a long time at current employer I was made redundant and thankfully have secured employment elsewhere so wanting to put away my severance pay. I have an ING savings maximiser but believe they only pay the bonus interest for amounts up to 100k. With my lumpsum payment I would be over that so wondering where i should put the Money? With all the rate cuts most banks have low term deposit rates so im unsure what to do.

I might look to put a deposit on a property within next 12 months but dont want my money sitting around earning little to no interest till then.

Is it worth seeing a financial advisor?

thanks!

Financial

Comments

  • bobbified on 08/09/2019 - 10:48

    Any credit card debt or personal loans?

    Personally, I would be spending some of that money on a holiday before starting a new job. Everyone's obviously got different preferences though.

    • dmb0312 on 08/09/2019 - 11:26
      +6

      Nope im ok with credit cards etc only use them for points and pay of straight away.

      Went on a holiday few months back and will put something aside for xmas

  • Soluble on 08/09/2019 - 10:59
    +5

    Split it over a couple of savings accounts? Grab the 2 or 3 with the highest rates

    • megadeth on 06/11/2019 - 01:14

      Be prepared to pay your marginal tax rate on the interest income unless you've got a non-working spouse, in which case you may choose to use her account to park money.

  • vikvance on 08/09/2019 - 11:06
    +4

    If you have definite plans for using the money as deposit on a property then just put the money in a term deposit in a bank.

    Putting it in any type of investment means there is a risk of capital loss. And this means that you might fall short of the required deposit when it comes time to buy the home.

    Any money which will definitely be needed in the next 1 to 3 years should be kept in a safe bank deposit.

  • Xyzzy on 08/09/2019 - 11:10
    +1

    Ubank pays bonus interest up to $200k. Current rate, including bonus is 2.41%.

    • [Deactivated] on 08/09/2019 - 11:31
      -2

      Right now on their website they advertise 'up to' 2.0% or 2.1% with loyalty bonus. Is 2.41% possible still?

      • apsilon on 08/09/2019 - 14:33

        Yes, still 2.41% with the bonus.

      • nfr on 08/09/2019 - 18:05

        You are probably thinking term deposit accounts. 2.41% is for Ultra Saver account.

  • Baysew on 08/09/2019 - 11:18
    +2

    Are you able to roll it over to your super?

    • zoob on 09/09/2019 - 09:30

      If he's planning on buying property putting it somewhere he won't be able to touch it until he retires seems a poor choice.

      • Baysew on 09/09/2019 - 10:16

        Agreed - Missed the bit about buying property.

      • hamole on 07/11/2019 - 16:35

        With the exception if it's for a first home. The First Home Super Save Scheme means you can put up to an additional 30k into super and withdraw it when you go to buy your first home. I put in 15k (concessional limit) just before the end of last finicial year and will do another 15k this year.

        https://www.ato.gov.au/Individuals/Super/Withdrawing-and-usi…

  • qwerty on 08/09/2019 - 11:23

    Put some into a term deposit and then take it out if needed after the period

  • dmb0312 on 08/09/2019 - 11:25

    New job starts Monday!

    I have a Ubank term deposit from when rates were good but cant add to that at the good rate.

    I think ING is only 2.4% as well up to 100k

    • Gratt on 08/09/2019 - 11:36
      +4

      You need to be cautious with ubank. When my term deposit approached maturity I called them to stop rollover somehow managed to get one of my security questions wrong causing them to lock my account. They insisted I'd be taken to Oz post to get it going that process took 2 weeks to restore the account as active. During this time an auto rollover occurred and they refused to release the funds until the new term deposit period ended.

      I also had a term deposit with ING that they allowed me to access early with a minimal interest penalty. Suffice to say I don't bank with ubank anymore. Yes I probably could have gone to the banking ombudsman at the time. Personally I find it more effective to vote with my feet and tell my story to all.

      • onetwothreefour on 08/09/2019 - 17:30
        +1

        Why did you call them? They are an online bank, I haven't had a term deposit with them for a few years but when I did you could update your maturity instructions in your online account, it was very easy.

        • Gratt on 25/10/2019 - 09:21

          I had some difficulty with the online accepting a change in discharge options. So called them all prior to the maturity date. At this point I had been banking with ubank for 3 years. They insisted that new proof of identity documents be lodged with Australia Post, and then took 2 weeks to process them and unlock the account. Over the course of that 2 weeks the term deposit matured and rolled over. Even though the instructions were given prior to the rollover, They refused to budge. Bad bank perhaps after the Royal commission into banking the big 4 and their subsidiaries have lifted their game. if you pardon the pun, don't bank on it!

  • gozyla86 on 08/09/2019 - 11:54
    +1

    86400, the new bank, offers 2.5% annual. All you have to do is transfer 1k monthly. Or you can do some Ratesetter short term.
    Split it out and invest in different ways.

    • nfr on 08/09/2019 - 18:04

      Website says "We'll be launching any second!", are they open for business now?

      • catbug on 09/09/2019 - 15:40

        R7TW6KZJ That’s an invite code! I’m not sure if it’s unique but give it a try, I’ve been using them since they launched and so far I really like it! I just migrated from ING.

  • tomleonhart on 08/09/2019 - 12:00
    -3

    Best is to put it on red.

    • dasher86 on 08/09/2019 - 17:18
      +1

      Sorry my friend. Black.

      • djones145 on 08/09/2019 - 22:49

        roll zero
        bank wins

  • serpserpserp on 08/09/2019 - 12:12
    -4

    I would put the deposit down now on a property. In 12 months market will have moved over 10% upwards again.

    • mskeggs on 08/09/2019 - 12:31
      +4

      Guaranteed!

      • t_c on 08/09/2019 - 12:50

        Not sure Warren Buffet would make that guarantee.

        • [Deactivated] on 08/09/2019 - 16:09

          Is it good to buy now?

      • virhlpool on 09/11/2019 - 15:52

        Now that I look back, this seems to be happening?

    • brendanm on 08/09/2019 - 14:04

      That's a bold call

      • serpserpserp on 08/09/2019 - 21:31

        Must be why I got downvoted?

        • brendanm on 08/09/2019 - 22:22

          Probably. I didn't downvote you, but pretty sure the economy is going to go to shit within the next year or two. Don't think house prices will be going up markedly for at least a few years.

          • serpserpserp on 09/09/2019 - 07:43

            @brendanm: They'll go up first before it goes down. Clearance rates already have had a huge uptick since the 2 rate drops. With another rate drop in the pipe for 2019/Q1 2020. I see them rising until something majorly bad happens to the economy.

  • Eeples on 08/09/2019 - 12:29
    +4

    We could play this game all day because we don’t know the OPS financial or social setting.

    Does he own a house or investment property?
    Does he own shares?
    Does he own a car?
    Is he 50 and plan to retire with super?
    Does he have loans, bills, credit card….
    Is he married or plans to have kids?
    ETC

    We keep asking… and the OP keeps flexing.

    • apsilon on 08/09/2019 - 14:38

      This, there are so many options and without details you can't provide any real suggestion. I know what I'd do with it but the OP is unlikely to be in the exact same situation as myself so what I would do is unlikely to be their best option.

    • vinni9284 on 08/09/2019 - 15:57

      This!

      The OP has to give more info on their financial investments and then the advice might be worth while

  • [Deactivated] on 08/09/2019 - 13:01
    +2

    Gold bullion

  • Sage on 08/09/2019 - 13:04
    +1

    you have over 100 thousand dollars? what are you doing on this site!

    • t_c on 08/09/2019 - 13:27

      Probably trying to save the other 8 they need to buy a concrete cubicle

    • JIMB0 on 09/09/2019 - 08:22

      Most people here have that much in their car's ashtray.

  • Seraphin7 on 08/09/2019 - 13:48
    +2

    Just spread it around "n" number of banks to keep under their limits for bonus interest … ING, UBank, BOQ, Suncorp off the top of my head have decent rates/products for this purpose.

    If you think you're going to be using the money in the next 12 months, putting the cash in the bank in the only prudent choice. You don't need an adviser for this purpose.

    • kmwa on 09/09/2019 - 00:21
      +1

      OP, it's a waste of money to see a financial adviser. Totally agree with Seraphin7.
      This ozbargain page https://www.ozbargain.com.au/node/445043 details the best savings accounts at present.

  • onetwothreefour on 08/09/2019 - 17:32

    100k is a pretty good redundancy package!

    • apsilon on 09/09/2019 - 08:32

      It's based upon time of service and salary. eg if I were made redundant I get 4 weeks of pay per year of service plus an extra 4 weeks. On top of that my annual and long service leave would also be paid out. Not hard to get into 6 figures when talking redundancy.

  • [Deactivated] on 09/09/2019 - 09:22
    +1

    High interest savings if you need to access it quickly, for example the ideal property comes up and you need to get everything together quickly.

    Don’t forget to factor in the tax implications of large payout, it might push you up a tax bracket.

  • pdperth on 09/09/2019 - 10:06

    It depends on your age. If you are close to retirement then stick it in super - the returns generally kill any bank interest. Otherwise don't be in any hurry to spend it - good options will turn up. A useful standby option might be to open two progress saver accounts with anz - earning about 2% (wow!) - if you need to withdraw money, take what you need and swap the rest to the second progress saver so you always get the better interest.

    • dmb0312 on 09/09/2019 - 21:14

      Definitely not retirement age!

      Essentially just want it in a decent savings account where I can access when I need to put down deposit etc - no rush

      • apsilon on 10/09/2019 - 07:12

        If this is your only goal then you need to consider the tax implications of that lump sum. Is it going to bump you up a tax bracket or two so you get a tax bill at EOFY? Speak to your accountant and look at ways to minimise that impact. You're going to pay way more tax on it than you're going to earn interest so this is critical IMO.

  • kingsville on 09/09/2019 - 10:16

    BOQ pays the high interest for balances up to 250k.

    The app isnt't as good as ING, but the interest rate is higher and no need to make 5 tap&go transactions each month!

    • dmb0312 on 09/09/2019 - 21:10

      This looks really good, I could just set up to auto transfer 1k a month from my ING account to the BOQ account.

      Do you have this account? How do you find BOQ?

      • kingsville on 10/09/2019 - 10:14

        I have the account and it is only new. Set up mid-late August and put in a grand into the Day2Day account then transferred the money to the FastTrack Saver, then at the end of the month the interest was paid and bonus interest is payable for this month.

        I like it because it is easier to 'maintain' than my old ING account - just a regular deposit, without doing the 5 tap transactions. My understanding is that there is no worries about taking money out.

        I found BOQ a little bit slow and the app is simple. But I am ok with this since I don't need to tinker with my high-interest saver funds.

        If you set it up now, you should be able to be eligible for the bonus rate next month.

  • knightslay2 on 09/09/2019 - 13:41

    Has the OP considered putting some of the money into Exchange Traded Funds (ETF)? I'd keep some money in savings just in case for emergencies.

  • eXo on 09/09/2019 - 17:20
    +1

    Buy. Crypto..

  • dmb0312 on 09/09/2019 - 21:04

    Looks like Mebank is the least amount of work for 2.35% - only 1 tap and go and no other accounts required.

    Ubank is 2.4 if you link it to a USaver Ultra transaction account

    What do others think is the easiest option? I already have a term deposit with Ubank from about 2 years ago when rates were good so have just been letting that roll over at that rate

  • weezlebub on 11/09/2019 - 11:27

    If it were me, I'd just pay off debt :)

    But if it were me, without debt, I'd use some of it as a deposit on an investment property …
    - if you don't have family, live in the investment for 12 months to avoid capital gains
    - 12 months later, buy another when you get your tax returns
    - rinse & repeat

  • Jojo-Ma on 17/10/2019 - 15:59

    P/S: I have read and understood OP's situation, and have made my analysis as best as I could.

    After being an expat that has not lived in Australia for 5.5yrs, I would say there are better saving opportunities outside of Australia (6-12%). So depending on your tolerance, and if you're risk-averse, putting the moolah in local cavings account would be faultless.

    If you have a good risk appetite, then you can consider putting your money in:
    -Local savings (35%)
    -Overseas fixed deposits (30%)
    -Precious metals (15-20%)
    -Foreign currency, e.g. USD, JPY (5-10%)
    -Gov/sovereign bond (5%)
    -High risk stuff, e.g. cryptocurrency or stock (5%)

Login or Join to leave a comment
Login Join