Inherited 1.6 Mil. How to Secure My Family Future

Ljohndough2020 on 27/09/2020 - 08:39
Last edited 27/09/2020 - 13:04

So I've just inherited $1.6 mil. How should I diversify my money to ensure my family future? I don't believe in financial advisor as "if they're so good, where are their yatch?"

Current financial position:

  • Cash inherited: AU$1.6mil

  • Cash saved: AU$200,000
    All cash assets are currently sitting in an offshore account with an annual interest rate of 7% for … tax purposes.

  • Shares in Commsec: $60,000

  • No house, Renting atm.
  • No other debt.
  • Lost job since April.
  • 1 wife 2 kids. I'm 29 yo and kids are 3 and 1.

Living in Auckland but looking to move back to Sydney when their border opens up.

Why asking Ozbargainer, because we're frugal with our money. Also I've been a longgggggg time lurker.

I'm thinking we need a house, but won't go and spend the whole lot on one house and that would be silly. What % should a house take up in my case but still have enough cashflow from the interest and dividend for a future proof recession?

Financial

Comments

  • AustriaBargain on 27/09/2020 - 09:02
    +27

    Marry me. You suddenly got a lot more attractive, anonymous faceless person.

    • Hangryuman on 28/09/2020 - 11:38
      +1

      if you're rich - I'm SINGLE !!!

    • Zachary on 28/09/2020 - 17:58

      You gold digger!

  • Hithere on 27/09/2020 - 09:03
    +29

    Member Since
    34 min ago

    Yeah, the first place I'd go if I inherited a large sum of money would be OzBargain.

    Try Whirlpool, they'll be happy to give advice about what you can do.

    • johndough2020 on 27/09/2020 - 09:10
      +6

      Not a whirlpool person especially they all earn 200k/annually over there.

    • [Deactivated] on 27/09/2020 - 14:55

      Whirlpool is just full of (profanity) anyway.

      • This Guy on 28/09/2020 - 09:42

        It's ok, we don't censor arse on this site.

        I don't know why that would be an insult, but if you want to sexualise a group of internet geeks, you do you.

  • 87percent on 27/09/2020 - 09:04

    Sure you did

  • Archi on 27/09/2020 - 09:05
    +5

    If indeed it is true that you have an offshore account earning 7% for tax purposes. Then you already cluey enough to know what to do with your inheritance.

    If you indeed genuine share your off shore investment here to benefit others.

    • GoldenPan on 27/09/2020 - 13:08
      +2

      There is most likely currency risk. I wouldn't put my money offshore unless it was denominated in AUD, and if it was, then the interest rate would be very low.

      I think the OP is receiving very poor advice. Especially if it's in India because their currency has collapsed in the past year.

  • iforgotmysocks on 27/09/2020 - 09:08
    +30

    A fleet of high yield investment vehicles. Park them in the Westpac corporate carpark and wait for a seat on the board.

    • johndough2020 on 27/09/2020 - 09:17

      Lol I drive a sh*tty 2004 Corolla and I bet my saving on fuel outweighs the AMG appreciation.

      • ChatCPT on 27/09/2020 - 19:29
        +3

        None of this makes sense. Why would it appreciate? Depreciation? Even then it doesn’t make sense.

        • pilchard on 28/09/2020 - 09:33
          +6

          I'd appreciate an AMG, thanks.

        • Mr Haj on 29/09/2020 - 17:15
          +1

          Maybe John's brain is back to front and he just inherited 1.6 million in debt.

  • WreckTangle on 27/09/2020 - 09:10
    +5

    Give it all to charity

    • Hangryuman on 28/09/2020 - 11:40

      Let Me Show You How To Get RICH !!!

      Send money to this address …

    • azngamer on 29/09/2020 - 10:21
      +5

      Hi, my name is Charity

  • daalinz on 27/09/2020 - 09:50
    +8

    Work/invest enough to have 2 million invested earning you money (salary) and have a house paid off to live in, then retire.

    7% returns seem quite reasonable for what seems like a lower risk investment. Unless you want to get more risky investing in stocks/etfs, you could do indexed/managed funds or buy an investment property.

    My suggestion:
    - leave overseas investment as is (unless rate drops)
    - get job
    - buy a house
    - let overseas income income increase to 2 million (take a few years)
    - use all income to pay off house
    - retire

    • johndough2020 on 27/09/2020 - 09:57

      Thanks. Really tossing between getting a place of our own and keeping the cash. Not sure what to do yet. Leaning toward keeping the cash as I like the cashflow.

      On the job front, I've applied for more than 30 roles but not much luck due to 2 lockdowns, will keep trying though.

      Should I increase my share holding? Gold? Bitcoin?

      I won't retire, I like working.

      • daalinz on 27/09/2020 - 11:19
        +2

        My understanding (basic) of investments is that the higher the risk - the more time you need to spend monitoring/managing it.

        If you do the research and have spare time go for bitcoin/shares/etfs/forex. If no spare time, leave it somewhere where you can leave it alone with checking on it daily.

        Also figure out what your risk profile is. If you screw up will you be on the street? Or do you have a backup plan? I think it's easier to be risky if you are dependent on someone else for living arrangements. But if you are the main income in the family give it some serious thought.

        Do research and talk to people. You can consider getting professional advice, but I think most would have ulterior motives for helping you.

      • [Deactivated] on 27/09/2020 - 14:56

        I'm sure someone else can take over your job delivering pizzas at dominos

        • johndough2020 on 27/09/2020 - 19:28
          -2

          Funny you say that, even pizza delivering job declined my application. Reckon I was over qualified.

          • Zachary on 28/09/2020 - 18:50

            @johndough2020: SO what are your qualifications then? And I'm guessing you're living out on the streets with your family, assuming you're foregoing paying rent to save up and thats how you got your 1.6 mllion?

            • johndough2020 on 29/09/2020 - 05:08

              @Zachary: was working for Air NZ as a flight crew.

              1.6mil is from my grand parent.

              We have separate saving in NZ so the number i put down is just from my own account in Aussie.

      • This Guy on 28/09/2020 - 09:44

        Buy a flashy suit. Your flush now. Then rock up to the local Maccas and ask to flip burgers.

        • johndough2020 on 28/09/2020 - 10:47

          Suit was part of the issued uniform so don't need to waste money on it!

          Even super market has been actively declining my job application!!!

          • This Guy on 28/09/2020 - 10:49

            @johndough2020: Call first, ask about what they are looking for then adjust your resume, cover letter and application to suit.

            And don't forget to wear that monocle the bank sent over (once your balance passed 1 million dollars) to the interview.

      • Cyphar on 28/09/2020 - 22:04

        Yes. Invest it all in bitcoin. You won't regret it

    • gromit on 27/09/2020 - 16:52
      +3

      2 million? seems a little of a low target unless you plan to live a very frugal retirement.

      • daalinz on 27/09/2020 - 17:57
        +3

        Assuming a worst case 2% investment return on 2 million = 40k a year. If your house is paid off, this should still be a comfortable retirement. This should mean you can eat takeaway whenever and have at least an international holiday every year.

        • gromit on 27/09/2020 - 19:16
          +2

          35.5k a year to live on, with a wife and 2 kids? you aint going to be affording overseas holidays on that and then it leaves no room for inflation.

          • johndough2020 on 27/09/2020 - 19:52
            +1

            @gromit: Gromit, you have the grit. There's no way 35k (hell even 70k) is enough for a wife and 2 kids, hence the thread seeking ideas that I have not thought of.

            My wife and I will keep working as if we have nothing.

  • Arthur Dunger on 27/09/2020 - 09:51
    +11

    So you don't own a house and have a family and have just inherited 1.6 million. What do you think you should do with it?

    • johndough2020 on 27/09/2020 - 10:04

      I like the flexibility of renting and cashflow of the interest. But getting a house to settle down is growing on me so I don't know what to do, hence the post.

      • conan2000 on 27/09/2020 - 10:30
        +3

        I would be mixing it up a bit if I were you. $1.6m could easily be the deposit on multiple investment properties, which are beneficial in OZ due to the negative gearing/tax benefits and I'd put a chunk into ETFs or shares as well. You should be able to do this and also have a decent deposit left for a place to live in. I'd always keep a buffer of $250k in your case in an offset account against your primary residence.

        • johndough2020 on 27/09/2020 - 10:44

          I like that idea, but i hate debt! Talk me into debt please.

          • DemocracyManifest on 27/09/2020 - 12:13
            +2

            @johndough2020: It's good debt, tenants will be paying it off, thats the point

            • conan2000 on 27/09/2020 - 16:50
              +7

              @DemocracyManifest: It's difficult to do well without getting into some form of debt to be honest. Any debt that is used to produce an income is good. So to give my personal example. I built an investment property for $320k about 3 years ago. It generates about $1300p/m in income, on a mortgage repayment of just over $1k, we also get back about $8k per year in tax because of depreciation. So other than my initial deposit of $16k (you could do 95% investment mortgages back then), and $7k in LMI and $3k in stamp duty, I now have an asset paying itself off and adding a second income. It's only ever been vacant for a maximum of 3 weeks between tenants. Property is now valued at $360k.

              If you have multiple properties geographically dispersed you reduce your risk, and with your level of inheritance you could do this relatively easily. You could in theory just buy a few in lower cost areas and have an income debt free, but I'd rather have 10 on mortgages that cover themselves than 3 fully paid off given I'm in my mid-30s and the long term gain is significantly better given likely capital growth and tax benefits.

      • Arthur Dunger on 27/09/2020 - 10:30

        Where do you think a large percentage of the cashflow from interest is being spent though?

        • johndough2020 on 27/09/2020 - 10:42

          Back into the account. Nothing has been spent out of the 1.8 mils interest.

          Living on my saving at the moment.

          • Arthur Dunger on 27/09/2020 - 10:49
            +1

            @johndough2020: It's all one in the same. If you're using other money to pay rent doesn't really mean you have more cashflow than if you bought a house.

            Also you're paying tax on all that interest & income as opposed to buying a house cancels out the need to earn taxable money to pay rent. Plus any capital gain on your principal place of residence is tax free.

            • johndough2020 on 27/09/2020 - 10:51

              @Arthur Dunger: The interest is tax free. I don't know why, but it is. The way I see it, If I spend $1 mil on a house to save on current $500 rent x 52 weeks = 26k. I would lose 70k - 26k = 44k. The question is if I value the certainty of a house for 44k/year. I can't work it out yet.

              • knasty on 27/09/2020 - 11:14
                +6

                @johndough2020: Are you Australian tax resident? If so it's only tax free because it is not being declared. I'd get some informed advice on this strategy if I was you.

                https://www.ato.gov.au/individuals/income-and-deductions/inc…

                • johndough2020 on 27/09/2020 - 11:25
                  +1

                  @knasty: It's tax free because that particular country do not tax interest from saving and no I am not Australian tax resident.

                  • loulou1 on 27/09/2020 - 14:03

                    @johndough2020: what about when you return to Australia. Will you be an Australian tax resident? Will it then be taxable?

                    • whooah1979 on 27/09/2020 - 14:04

                      @loulou1: Op can come to Australia as a visitor.

                    • johndough2020 on 27/09/2020 - 19:29

                      @loulou1: I'm Australian, just not Australian for Tax purpose because I live in New Zealand.

                      • lostn on 28/09/2020 - 00:55
                        +5

                        @johndough2020: is NZ ok with you not declaring off shore interest?

                        • johndough2020 on 30/09/2020 - 04:40

                          @lostn: yes. perfectly legal since I am not personally receiving the interest. There is no income to declare.

                          • lostn on 30/09/2020 - 14:07

                            @johndough2020:

                            yes. perfectly legal since I am not personally receiving the interest. There is no income to declare.

                            You're not receiving it yet. Presumably one day you will retrieve this money back into your hands? Will you declare all interest you've earned in this time all at once?

                            If the money is not in your name, is the person who's name it is in declaring the interest?

                            • johndough2020 on 30/09/2020 - 18:06

                              @lostn: Their gov doesn't tax interest from saving account. So the person/company/trust receiving interest doesn't have to declare it.

                              Detail on how I'll receive the $ will not be discussed. I've got plenty of advice on that already.

                              • lostn on 04/10/2020 - 09:16

                                @johndough2020:

                                Their gov doesn't tax interest from saving account. So the person/company/trust receiving interest doesn't have to declare it.

                                Dude. If that person is not a tax resident of the country the money is sitting in, they legally have to declare the assets to their own government.

                                Detail on how I'll receive the $ will not be discussed. I've got plenty of advice on that already.

                                You are a tax evader, pure and simple. If you get busted—and governments are getting smarter at this and sharing more and more info—you are done, even if you think everything you are doing is perfectly legal.

                                • whooah1979 on 04/10/2020 - 09:39

                                  @lostn: Australians leaving for another country and setting up a permanent residence there are considered a foreign resident for tax purposes. Foreign tax residents are only required to declare income from Australian sources.

                                • johndough2020 on 04/10/2020 - 11:32

                                  @lostn:

                                  Dude. If that person is not a tax resident of the country the money is sitting in, they legally have to declare the assets to their own government.

                                  Except the government doesn't have a tax policy that taxes saving interest so how are they going to declare their saving interest when there is no need to do so? They have a equivalent of TFN anyway, if the gov wants to tax it, it's easy to track.

                                  You are a tax evader, pure and simple. If you get busted—and governments are getting smarter at this and sharing more and more info—you are done, even if you think everything you are doing is perfectly legal.

                                  Sure.

                                  • lostn on 04/10/2020 - 15:19

                                    @johndough2020:

                                    Except the government doesn't have a tax policy that taxes saving interest so how are they going to declare their saving interest when there is no need to do so? They have a equivalent of TFN anyway, if the gov wants to tax it, it's easy to track.

                                    It doesn't matter if the foreign country taxes it or not. Your own government wants a cut of what you made.

                                    Sure.

                                    I presume you don't intend to leave it offshore forever? At some point, you're going to have to bring that money back in if you want to spend it.

                                    When you do, there's going to be a paper trail, and a lot of questions.

  • roonie on 27/09/2020 - 10:01
    +11

    (Comment deleted. Not worth my time)

    roonie on 27/09/2020 - 10:01 (Collapsed - Offtopic. Show)
    • Muzeeb on 27/09/2020 - 10:06
      +4

      (Reply deleted. Not worth my time)

      • No ONE on 27/09/2020 - 13:18
        +5

        (reply Comment unpublished, not worth the time to read)

      • Zachary on 28/09/2020 - 18:54

        [comment unpublished]

  • [Deactivated] on 27/09/2020 - 10:11
    +8

    All on black and make it rain.

    • WaterMark on 27/09/2020 - 15:50

      What about red?

      Why can’t we have both? cue Mexican tacos song

  • mbck on 27/09/2020 - 10:14

    Yolo

  • nomoneynoproblems on 27/09/2020 - 10:15
    +1

    It sounds like you got a free house in Sydney. Congratulations man.

  • holdenmg on 27/09/2020 - 10:19
    +3

    This is just another yatch envy rant…

  • JimmyF on 27/09/2020 - 10:32
    +4

    All cash assets are currently sitting in an offshore account with an annual interest rate of 7% for … tax purposes.

    Put the $1.6m into this account. So with your now $1.8m in cash @ 7% you'll be getting ~$125k a year to live on.

    Move to Asia, live like a king.

      • gromit on 27/09/2020 - 16:55
        +3

        It won't be tax free if you are living in Australia. Would have thought the same for NZ too? You do realise NZ taxes you on worldwide earnings even if you aren't bringing the money back into the country. So unless you are a tax resident of some other country then basically your interest is definitely NOT tax free.

        • john71 on 27/09/2020 - 18:15
          +1

          If, hypothetically, OP linked his high-interest overseas account to a credit card issued by the same institution, and used that credit card to finance his living expenses here, how would the ATO ever know about it?

          • gromit on 27/09/2020 - 19:02

            @john71: I have a friend who received a very large fine from the ATO about 10 years ago that had the same thought. So much data sharing especially around tax, never know when u will get hit.

        • johndough2020 on 27/09/2020 - 19:30

          What if hypothetically say the money is in another person's name and the country happens to not tax interest from saving account?

          • gromit on 27/09/2020 - 19:34
            +4

            @johndough2020: sure, tax fraud is one way around the issue. sorry didn't realise you were fine with criminal means to increase your money. That opens up many options for you.

            • johndough2020 on 27/09/2020 - 19:53

              @gromit: How is it tax fraud when I simply take advantage of that country tax policy?

              • gromit on 27/09/2020 - 20:03
                +2

                @johndough2020: You said it was your money? you said you were not paying tax on it? simple fact is if it is your money and you are a tax resident of Australia or NZ then the only way you can not pay tax is by not declaring it.

                • johndough2020 on 27/09/2020 - 20:07

                  @gromit: That's the problem, you might think of it as simple fact. The legal service I paid for to minimise tax doesn't think it's that simple and take it quiet seriously. Simple fact is that I don't have to declare interest in Aus or NZ if I don't personally receive that interest.

                  • gromit on 27/09/2020 - 20:26
                    +1

                    @johndough2020: yes you do, I would suggest you find other legal advise though. if you are a tax resident in AU or NZ you must declare all foreign earnings even if you never bring them into the country. being in a tax friendly country only excuses the tax in said country not in the country you are a tax resident of.

            • whooah1979 on 27/09/2020 - 19:57

              @gromit: Don't be so quick to assume that this is an offence.

              A husband can gift his wife with money that is of a personal nature and have it not assessable as income. This gift is not required to be reported on a tax return.

              • gromit on 27/09/2020 - 20:03

                @whooah1979: It would still be taxable regardless of whether the wife or he is receiving the interest.

                • abb on 28/09/2020 - 10:27

                  @gromit:

                  What if hypothetically say the money is in another person's name and the country happens to not tax interest from saving account?

                  The person who really owns the money could just take it and you'd have no recourse.

                  • Zachary on 28/09/2020 - 18:56

                    @abb: so get someone you trust to keep the money for you….

  • whooah1979 on 27/09/2020 - 10:33

    The USD is testing the 94.7 res. All markets will take a beating from next week if it closes above it. Having a position in USD would be an advantage when it moves further up.

    • johndough2020 on 27/09/2020 - 10:44

      So what do you suggest? Buy USD cash?

      I've never thought of buying USD actually. Thanks for the comment.

    • popsiee on 27/09/2020 - 19:06

      Lucky you got the likely move to .1% by the RBA.
      Its priced in the market now and the AUD will continue its jolly run to 80 .
      You have -10 to 60 and I'll bump when I win :)

  • Oz8argain on 27/09/2020 - 10:39
    +5

    Member Since 2 hours 9 min

    • johndough2020 on 27/09/2020 - 11:36
      +3

      Been a lurker since Broden's day.

      • Zachary on 28/09/2020 - 18:56

        2006?! Nice…

  • Godric on 27/09/2020 - 10:50
    +1

    All in on Red

  • nanonoise on 27/09/2020 - 10:59
    +3

    Hookers, Blackjack and Cocaine!

  • Typical16-bitEnjoyer on 27/09/2020 - 11:03
    +9

    Do a Cert IV in Financial Services then buy a yacht.

    • knk on 27/09/2020 - 12:37
      +1

      Cert III should be enough

      • Muzeeb on 27/09/2020 - 19:47
        +4

        Statement of attendance would even be OK.

    • abb on 28/09/2020 - 10:27
      +2

      *yatch

      (check OP before downvoting)

  • ECE on 27/09/2020 - 11:07

    Nice Flex 😷 YOLO

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