Financial Planning with Chronic Illness

gigi16 on 26/04/2020 - 15:47

Hey people! Perhaps a sad day in your life when you're asking Ozbargain for life advice but hey!

I'm 28, have $100K in savings but for the past few years I've been very ill and my diagnosis keeps changing and is quite uncertain (not dying though which is a plus lol). I feel like it's a waste of opportunity to have that money sitting in the bank, but it's hard to make plans given that I don't know what my future working capacity will be like (currently on income protection) and I don't know whether or not I'll regain full health.

Normally with financial planning you start with life or financial goals - but everything for me is one big question mark!

Being sick also affects me cognitively so I doubt very much I'd want to go through the process of buying a house anytime soon (and the associated stress).

I've always wanted to buy shares - should i just hit up a financial planner and sink most of my money in this direction? (I have been studying share market basics in my own time and have learnt heaps - but am still very much a beginner and not looking to be a day trader or the like).

Thanks to anyone who cares enough to have feedback! <3 Take care

Financial

Comments

    • gigi16 on 26/04/2020 - 15:51
      +1

      Sigh.

      • [Deactivated] on 26/04/2020 - 15:53

        Just go VHY or VAS asx or something similar, take the guesswork out.

        • gigi16 on 26/04/2020 - 15:55

          Thank you, yes currently learning about ETFs - starting to understand everyone's love of Vanguard :) Will keep investigating :) Had not look at the VHY yet .

        • Melb69 on 26/04/2020 - 15:55

          VAS. Went back down after a week, but probably still a long term bet,

          • [Deactivated] on 26/04/2020 - 16:15

            @Melb69: Ifyou think bhp the banks telsra colesworth and the like wont survive then the economy is in trouble and money will be worthless.

            • Melb69 on 26/04/2020 - 16:52

              @[Deactivated]: I'm just saying you have to look at in a long term strategy. The trend will be up more than likely. The price is still volitile. Nothing is a sure bet here. All really depends when you sell or miss the boat all together as to whether it will be profitable.

    • Melb69 on 26/04/2020 - 15:54

      Please don't roll the dice. Put some in managed funds and use some to do your own investiing in shares for a hobby. That amount being something that you are willing to lose.

      • gigi16 on 26/04/2020 - 15:56

        Thank you! Good advice! i'm looking into all the fund options :)

      • Bunnyburger on 26/04/2020 - 19:58

        Not actively managed funds! D:

  • Muzeeb on 26/04/2020 - 16:04
    -2

    Buy virgin australia

    • gigi16 on 26/04/2020 - 16:08

      i guess you'll either make a lot of money or lose a lot of money O:)

  • Trying2SaveABuck on 26/04/2020 - 17:21

    Buy VAS and reinvest dividends

    • brad1-8tsi on 26/04/2020 - 23:00

      But don't do DRP.

      • gigi16 on 27/04/2020 - 09:45

        Thank you! I wouldn't do DRP just yet because it would pay to have income coming in just in case? i assume thats the logic. cheers!

      • tomleonhart on 27/04/2020 - 10:53

        Why not ? o.O

        • brad1-8tsi on 27/04/2020 - 15:41
          +1

          @tomleonhart
          Many reasons. My main one is that if you have DRP for 10 years and you have a small(ish) parcel of shares then there will be 20 "purchases" that you have to keep a record of. When you sell you either have to work out the average or the individual CG. It's a bit of a pain.

          Also, you still have to pay the tax on the dividend (income) in the year it was incurred, so you have to fund the tax obligation from somewhere.

          Most of all, you often won't get a single share.
          eg: You have $15000 each in VTS, VESG, VAE & VAP. In the latest quarterly distribution only 1 of those ETFs would have paid enough to get 1 unit. Vanguard would keep the rest of the distribution in their trust account until your "bank" had built up enough to buy 1 share. Even after 12 months you might only be ahead 9-15 units in total over the 4 funds. Do you want to keep records on 1 share?

          • fredblogs on 27/04/2020 - 20:52

            @brad1-8tsi: I do DRP but you make some good points. I like it because it forces lazy people like me to invest more, rather than letting the money stagnate in the bank.

            • brad1-8tsi on 28/04/2020 - 07:34

              @fredblogs: If the choice is DRP or wondering where the money went then DRP for sure.

              All my dividends go into a sub-account. When it hits $5k I buy something.

  • Ocker on 26/04/2020 - 18:34
    +1

    Life itself is a big question mark for everyone. No-one knows when the end will come!

  • Oofy Doofy on 26/04/2020 - 21:19
    +1

    Is the income protection indefinite, or for a set period of time? Are you still able to work somewhat ATM? Sit tight on your money in a savings account until you have the final word on your condition/s, then make these decisions about your savings. 100k is about 3 years of living expenses at worst, 4x at best.

    I wouldn't be doing anything big atm.

    • gigi16 on 27/04/2020 - 09:45

      three more years of IP to go :) actually this is great advice, sometimes its hard to be patient and step back when you're so eager to get on with life and things. I hadn't even considered 'not' doing anything.

      • brad1-8tsi on 27/04/2020 - 15:43

        At least try and put it somewhere that the interest rate is higher than the inflation rate.

        Have you read Barefoot Investor. Some good basic advice and simple explanations there.

        • gigi16 on 28/04/2020 - 11:53

          Yes thank you i have read Barefoot :)

    • SlavOz on 09/05/2020 - 20:08

      100k is about 3 years of living expenses at worst, 4x at best.

      Depends. If you're living with parents or paying minimal rent with a friend, 100k can last a very, very long time.

      • Oofy Doofy on 09/05/2020 - 20:22

        Of course, but that's for the OP to decide.

        Considering Centrelink gives single aged pensioners 24500 per annum, it's a bare minimum to live on, and that figure is based on someone owning their own PPOR.

  • brad1-8tsi on 26/04/2020 - 23:03
    +1

    look here. https://www.aussiefirebug.com/

    It has some good advice / direction.

    Dollar cost average in

    Don't do DRP until the number of share you can get becomes meaningful.

    My sister has had a chronic illness for 30+ years so you still have to have some "vision" about where you want to be.

    • gigi16 on 27/04/2020 - 09:43

      Thank you for the link - I appreciate it. Always up for learning more. I don't quite understand why you wouldn't use DRP just yet but I will make note!

      • brad1-8tsi on 27/04/2020 - 15:43

        see my reasoning above.

        • gigi16 on 28/04/2020 - 11:54

          Thanks for the explanation. I'm roughly understanding- appreciate these considerations.

  • Benoffie on 27/04/2020 - 16:09

    Also chronic illness here and so get the need to look at alternative income streams.

    Had this been at any other time, I would have said shares. But given age and the recession, liquidity is important. Added to that, the share market rebounded from its dive and so we might have to wait until future drops (which may come at EOFY, winter outbreaks, October… who knows).

    Property, if you are cashed up and have the ability to borrow, could well be an option. Unless you can afford Syd/Melb long term (and I obv don't know where you are), look elsewhere. $100k is half an investment property in Adelaide that can give you options and income long term.

    If it were me, I'd sit and wait. Be patient. Look for an account giving say 2% interest and park it. It is a difficult thing to do, I know.

    • gigi16 on 28/04/2020 - 11:56

      Thanks - it's a great tip to be patient. Sometimes that is hard to do. In the meantime I can keep reading and researching and learning :) I'm in Tasmania so not sure what will happen with the property bubble here :/ !

      • Benoffie on 28/04/2020 - 13:14

        Urgh Tassie! Yes, bit of an unknown atm

    • jdee87 on 08/05/2020 - 05:13
      +1

      Before all this I was also reading on owning property, flipping houses, that sort of thing. Even had this page and others bookmarked. Now I'm a little grateful not to have made any big moves for the point you raised. Patience is a great thing to have at this time.

      • gigi16 on 08/05/2020 - 12:05

        thanks :)

  • SlavOz on 09/05/2020 - 20:15
    +1

    Exact same boat as you OP. Almost same age, same situation, same outlook. I've had countless health issues over the years with new ones popping up faster than I can count.

    I'd say if you can save 100k despite battling countless medical conditions, you really don't need to be asking for financial advice. Keep doing what you're doing, I guess. Save. I'd say $50-100k is a good safety net to keep as a reserve in case shit hits the fan. Buying a property means you'll be locking yourself into two decades of financial commitments. Tread carefully. Nothing wrong with just sitting on your money in a regular interest account to keep it brewing. Not sure if it's possible in your situation but maybe you can also put some into your Super.

    • gigi16 on 10/05/2020 - 16:05
      +1

      All the best to you <3 It's a rough situation.

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