What Would You Do with $200k Annual Savings?

So my wife and I are able to save average of $200k annually and would do it for another 5 years at least (Working our ass off until we have children). Have $200k already in savings and about $100k as a gift from parents. So would you invest into multiple properties by paying 20% or buy outright or buy one property at 20% deposit and invest rest into ETFs. Would love to hear your suggestions.
TIA.

Comments

      •  

        Thanks @kingsville. You took a pretty close guess. Cheers!

    •  

      Exactly my thought too.

  •  

    Buy as many as you can at 20%. Then return on to a bargain website and ask for more financial advice

    •  

      Buy as many as you can at 20%. Then return on to a bargain website and ask for more financial advice

      Don't need to. There will be a point where there is so many properties they will soak up all your free cash flow. Then you can't wind back your hours or afford to have kids.

      Simple example $1.2m property, your loan is $1m, 2% interest rate is about $20k a year. Monthly repayment $3,696 a month of $44k a year on 30 year basis. Now you just need to work out how much rent you are getting. Lets say $44k. Cashflow neutral but you'll need to pay income tax on $24k ($44k less interest of $20k) at top marginal rate of 47%.

      It depends on what OP's income will be once they wind by from 80 hours a week. I'm assuming over time is like 1.5x. If they both end up on more like combined $180k - $200k a year their take home will be a lot less. OP needs to know buying enough IP with cash flow commitments to stop at the lower salary rather than trying to max out.

      Maxing out on debt is everyone's problem. Until it is too much and lots of people start getting into trouble like US housing in 2009/10 which is basically borrowers borrowing money to which they have no cash flow to pay.

      •  

        By the time you factor in rates and insurance on the $1.2M property I'm sure there won't be $20k. Also, in your analogy you have to pay $9,400 in tax, but you're still taking home the additional $10,600; that doesn't seem like a problem to me. If they take pay cuts when they have kids then they'll drop out of the top tax braket and be taking home a bigger slice of that $20k.

        I'm not saying that property is the answer, property investing is a huge problem in Australia because everyone wants to be a rent seeker and no one wants to put money into anything useful, but the numbers look good on the surface.

        •  

          Providing housing is useful though.

        •  

          but you're still taking home the additional $10,600

          No you're paying the bank all your money and having to find tax on the $10.6k to pay the ATO at the end of the year.

          The problem when you are having kids isn't to do with dropping to a lower tax bracket. It is having to pay the tax at the end of the year.

          Imagine if you have $200k and you bought 5 IP over 5 years then figuring out you got a $50k tax bill at the end of the year because you can be so lucky. OP is working 80hrs with 40hrs most likely on higher rate. If you go back to normal hours then you're stuffed. Wife would most likely be off work for 9 months on maternity leave at the lower rate. If wife wants to return to work they are basically working to pay child care.

  • +9 votes

    Gotta say that the true Aussie spirit is dead. Thanks alot to the people who actually replied and took the question seriously.
    But why so much hate? Being called out for lying? Why would I lie? Would I get anything out of lying to people about my earnings. Have never seen these kind of replies to another similar forum discussions.
    You all have a great day ahead regardless.

    • +9 votes

      Why would I lie? Would I get anything out of lying to people about my earnings.

      To feel good about yourself and hoping some else will praise you, that's all I can think of. Instead the reality is that it will backfire and the people you boast to will drag you down…. But if you're lying anyways, it won't hurt you since you're only boasting for fun…..

      •  

        Haha I won't just post here for fun. I don't like to waste my time.

    • +1 vote

      ETFs is a safe bet. VDHG or DHHF.

    • +5 votes

      Why would I lie?

      Not specifically talking about your post here but if you don't think people lie on internet forums then you are in for a big shock. Heck even I lied when there was a poll asking how much people earn on these forums.

      •  

        It's because I wanted genuine advice and not people questioning that whether I earn and save that much. I would not lie If I wanted an accurate answer.

        •  

          Then don't reply to those comments and just ignore them.

    • +3 votes

      The Aussie sprit is not about flexing. If you have any common sense you would know not to come to a bargain forum for financial advise. But then you are a nurse and common sense is not so common after all.

      •  

        Nobody is flexing here. I just asked a question. It was a common sense to just take it as a question. Well you are true that common sense is not so common afterall

    •  

      It's called ENVY.

      People don't like it when you make more than them and they work 38 hours a week and you work 80.

      Just human nature.

      Being a nurse, I'm sure you're more than accustomed to the nature of Man.

      •  

        Yeah true. I was just taken aback looking at all tge negative comments. I think hardly anybody gets happy to someone progressing or working hard.

  • +4 votes

    at 160k each the combined net is around 224k, so their annual spending combined is only 24k, which is 2k a month for accommodation, food, insurance, phone etc.

    i know nurses get paid well but i havent heard of one close to 200k annually.

    ill be very happy if my annual living expenses os only around 24k.

    • +1 vote

      We both do salary package as we work for a NFP company. So tax savings there help to save about 10k in tax combined

      • +3 votes

        You don't save 10k in tax, you reduce your taxable income by 10k.

        •  

          NFP is pretty stupid if they aren't willing to hire another person and have to constantly be paying higher rates for over time.

        •  

          Hence more the saving

    • +13 votes

      He’s also only 26 and presumably his partner would be around the same age too. So they wouldn’t be anywhere near the top of an RN pay bracket yet

      This dude is talking total shit or he’s selling meds on the side to junkies.

      •  

        I wish I could show you all my payslip😂

      • +1 vote

        I don't usually deal with the S8s but the key to the cupboard can only be used in the presence of another person and two cameras staring back at you. Why would I risk my job for few bucks worth of meds? And my parents haven't raised me to exploit someone.

  • +1 vote

    Brb starting a gofundme for Op to donate to…

    •  

      That's so sweet of you!

  •  

    this also means both are working 6 days a week at least 11 hours per day, based on 70 hour a week.

    •  

      Technically you are right but the way you said it almost made me feel like Geez man you are working way too much🤣

      • +1 vote

        maybe, i know someone who makes 250k but only works 30 hrs a week.

        • +7 votes

          What if I told you the people who make collect the most money don't work at all?

        •  

          This is fairly standard for a privately employed doctor or dentist with a few years experience.

    • +6 votes

      This is a bit concerning - those kinds of hours are okay in IT or Finance or whatever other industry. If you make a mistake, you can go back and fix it.
      But in nursing, mistakes from being tired, exhausted or overworked can cost lives. There is no going back to fix anything.

      •  

        I wouldnt put someone's life at risk. As I said I am not involved directly in anybody's care.

        • +4 votes

          Direct or indirect you are in medical.

          •  

            @Xistn: How would typing on a computer risk someone's life? I do this job and have passion for it. I don't do it just for money. I won't be ever selfish to risk someone's life. Funny how judgemental people are.

              •  

                @Xistn: I didn't put any opinion here. I just asked a simple question. Then everybody came running pointing fingers at me🤣

            • +3 votes

              @Karansingh:

              How would typing on a computer risk someone's life?

              If you enter the incorrect data into the the wrong person's file and one of your fellow nurses or doctors acts on that incorrect information, it could easily lead to disastrous consequences.

          • -3 votes

            @Xistn: You do realise that I am the professional here.

        •  

          So have to deal with lots of drugs in a day

          But you said you deal with lots of drugs. You could kill someone.

  •  

    Retire in 8-9 years and never work again. EFTs.

    You've learned a lot through living frugally and spending so little, you can keep it up.

    Set the goal to never be wage slaves after a short term of 8-9 years, and live off your bank account and interest earned.

    • +1 vote

      Would not retire in 8-9 years as I will kill myself with boredom. And with the inflation i won't stay in retirement for long🤣

      • +2 votes

        If your money is invested then inflation isn't a problem. Inflation drives up the prices of equities.

    • +1 vote

      you can keep it up.
      8-9 years

      At 80 hours per week it ain't going to happen

      • +1 vote

        Have been doing it for past 2 years. The plan is to do the same for 5 more years.

        • +5 votes

          Have been doing it for past 2 years.

          Then by your maths you should have $500k in savings

          $200k (year 1) + $200k (year 2) + $100k (gift)

          Have $200k already in savings and about $100k as a gift from parents.

          • +3 votes

            @MS Paint: probably blew it all on a couple of teslas or expensive looking sports car for joyriding when not nursing around.

            •  

              @Zachary: Didn't do that but what's wrong in blowing ur money that you earned?

          •  

            @MS Paint: 200 k is my savings and 100k is the gift. I was talking about my savings. The gift is not a saving. And I do have a car paid in cash. And I did not start at the same pace that I am going now.

            • +1 vote

              @Karansingh:

              able to save average of $200k annually

              $200k average over 2 years is $400k

              Check your excel spreadsheet 🙂

      •  

        Did that for 10 years from 18-28. Never again, I was so so unhappy for 7 of those years..

  •  

    Probably half to 75% charity to be honest and rest in etfs.

    • +4 votes

      No one's working 80 hours a week to give 75% to charity.

      •  

        OP works for an NFP. If they are paying that much in OT then they are taking from charity.

        • +1 vote

          If they are paying that much in OT then they are taking from charity.

          That's the fault of the NFP management to allow someone to work such unsustainable hours.

      •  

        Sorry, I thought it was excess, as in everything else is covered. Not 75% of your pay. We're lucky to be living in a rich country where we can get high conversion rates. I have friends from other countries (asian) who know very reputable charities and I send over a few thousand every now and then (as well as donating in Australia). Although I'm still student now and don't earn a lot. It'll be good once I get a full time job.

  •  

    I’d do the usual, buying a house, invest in ETFs and charity. But also would spend quite a bit of it on travelling. Trying to go somewhere different each year (putting aside the pandemic). Making sure I balance out how much I work with some downtime.

  • +4 votes

    Serious answer….I personally wouldn't invest in property. Why not? High initial outlay, dealing with crap tenants, dealing with crap PMs, always forking over money for maintenance etc.

    I'd do some research into ETFs. Not just Vanguard (they do OK but not massive returns) but plenty of others out there. I'd invest in about 10 different ETFs, ensure dividends are reinvested. Pick the indices you think you'd like to track and go for it.
    Every few months whack in another few thousand.

    ETFs are just easy. No stress, no share portfolio to monitor & juggle. Just sit back and watch it bounce up & down. Mostly up!

    If you can't get 10% to 20% (even higher possibly) returns you've picked the wrong ETFs. Just cash it in & find a different ETF.

    •  

      Most people don't think that way. They are just looking at that big pot of gold. You know the dinner conversation about how they bought in 2000 for $300k and recently sold for $1m. They just don't tell you all the years of negative cash flow as IP and after fees they can't buy back in anyways, or OO paying interest and now they sold they have to buy at the same higher prices.

      Property only makes sense If you need somewhere reasonable to live or if you have an IP being accidental landlord or a place you want to return on retirement otherwise it is false economy.

  • +1 vote

    Any financial plan should be based on your goals. Sounds like you want to have children in 5 years and continue living in regional VIC - does that translate to owning your own house in that time frame and shifting to working part time for both of you?

    You should be maxing your concessional contributions to super since it's very tax efficient at your tax bracket. I'd also recommend putting a 20% deposit on a 2% home loan and investing the rest of the money into ETFs. Your investments would yield more than 2% over the long term. If interest rates hike, you can switch to paying off your loan instead.

    Select low fee ETFs and switch off DRP (easier for calculating tax when you do eventually sell) but make sure you're rolling your dividends back into your next investment chunk.

  • +7 votes

    Maths don't add up.

    I struggle to see who's paying an RN $140k+ a year. Many doctors don't even get that.
    Even if you are working 2 jobs to make it work, you're only young once, no amount of money could replace these years when you've got kids and wondering why you didn't go travelling/live your life when you were younger.

    Literally slaving away in your early years just so you can bring children into the world, no thanks.

    Even then you'd have to actually spend something on your life such as rent etc.

    •  

      edited

    •  

      It's actually the opposite in Asian cultures, work hard when you are young and then enjoy life when you are older.

      • -1 vote

        Geez
        No thanks.

        • +1 vote

          It's because in Asia you have no pension, no healthcare, if you don't save enough for when you are older you are stuffed. If you love your kids, you wouldn't want them to be stuffed when they're older so you save for yourself and try to build extra wealth.

          Here you need a 100k life saving procedure at 70, medicare covers you even if you've been a bum all your life.

      • +1 vote

        Yep. Work hard now, enjoy later. Accumulate wealth early and put it to work. I used to work 14-16 hours a day in Singapore. After a long day at the office, continue at home after a dinner and shower. Money is good, taxes are low though.

      • +1 vote

        Thats an outdated stereotype pre-2000's
        Modern day young Asian millennials would work hard and spend hard too

    • +1 vote

      Only way you can blow bubbles is to make sure most of the population can't do math. People believing negative gearing is some kind of magic. Bill shock end of the year with ATO when they find out paying principal isn't a tax deduction.

      People used to pay 30 years to get rid of $300k principal. Now they pay 30 years to pay off $1m in principal. It is just older people passing the bag to the younger generation. Only people smarting would be the ones who choose not to have kids which is a minority.

  • +3 votes

    I'd just buy beer.

  •  

    Find a mezzanine loan lender and invest the cash there at almost credit card interest rate and most of them pay out monthly.

  • +2 votes

    doge coin

    •  

      down 20% last 24 hrs :(

      •  

        is up and down 20 percent for the past 3 days, i could have gotten in at 0.01 i regret it so much, i always miss out on the good shit.

        •  

          Yep I got in a bit too late, went up but now down by a bit, hoping it will come back up again.

  • +1 vote

    Invest across various investment vehicles.

  •  
  •  

    Eh, I'd probably just put a little bit here, a little bit there. But as others have said, basing your thoughts on random ozbargain advice is kind of dumb with this sort of money. It's fine if someone is trying to save $20,000 or so a year and looking for some basics.

    But otherwise, I'd maybe buy an investment property for $500,000 somewhere, $500,000 in ETF's, maybe gamble a bit with $50k in crypto if you are interested in that.

    • +3 votes

      A little bit of black, a little bit of red?

      Or a little bit of Monica, a little bit of Jessica?

  • +2 votes

    I assume you're living at home? How else are you able to save so much?

    •  

      And the parents gave them $100k. I'd be more interested in where to find parents like that!

  •  

    If you are stuck with PAYG and paying significant income tax … have you thought about a primary production business as a side-gig?

    https://www.farmstyle.com.au/comment/160#comment-160

    Cattle prices are crazy and small properties 50-200 acres close to main cities (1-3 hours) are only going to skyrocket provided a nice outlook

    purchase land over 500k in one persons name
    cattle in the other persons name (or do an agistment)
    20,000 revenue (7-10 cows :) )

    deduct losses from your sub 250k income

    Old Bill Gates is now the biggest agricultural land holder in the US - and for investment purposes and not to save the climate

    http://www.morsegroup.com.au/files/docs/white%20papers/morse...

    •  

      This is a good idea!

    •  

      Primary production business as a side gig ? If you have land and cattle, wouldnt that end up being the main gig … is there a way to a hands off primary production business ?

      •  

        The end-goal is essentially the property valuation steadily going up in value. If you don't think the property is likely to rise in value and you are not doing it from a lifestyle perspective (escape to country), then there is little point.

        If on the other hand you believe the land will steadily increase in value, and/or you like escaping to the country, then there are benefits….

        the write-offs are the interest on the loan, and all the expenses it costs to run the farm including your new farm vehicle 4wd (which you try and get the immediate asset write-off)

        Cattle themselves are pretty low-maintenance after all the initial business it taken care of ..

        https://futurebeef.com.au/wp-content/uploads/Beeftalk-38-Low...
        https://futurebeef.com.au/wp-content/uploads/A-guide-to-best...

        Fenced paddocks, clean water, shade, and feed are your main requirements.

        Then it becomes just a matter of rotating them across the paddocks and ensuring all your farm maintenance like fences, weed control and so forth is up to scratch,

        You could setup a system with different 4g cameras scattered throughout property that take photos and send back to your server / or cloud storage etc to allow remote monitoring. The camera costs and the associated data plans are all expenses.

        If you don't want to take care of the farm or deal with cattle, you can also just purchase the land, then lease out the paddocks (agistment), and get the farmer whom takes up the paddock leases to help-out with all the maintenance.

        https://www.farmstyle.com.au/forum/starting-cattle-farm

  • +2 votes

    Decent salary if you both can save 100k a yr, never heard of any RN (even managers or working 2 jobs). Example salary of 180k, net is around 125k, 25k for outgoings to hit 100k savings…

    Curious what your outgoings/expenses are? - rent, bills, utilities, food.

    With that level of savings, would suggest getting a financial advisor.

  • +6 votes

    What currency is your $200k savings on?

    • +1 vote

      Maybe dong

  •  

    Invest in that mark guy that buys clearance items. With your capital and his skills, you guys will make GAZILLIONS in no time!

    Good ouck

    • +2 votes

      A bargain superstar doesn't share profits with anyone.

  • +1 vote

    Well done to generate that amount of savings. Nurses do pretty well but they deserve it, have to say I don't think I could do it.

    If it was me, I'd be thinking not to take such a big risk as you'll be wealthy. Assets can go down. The real estate market has been so strong for so long but we're at 0.1% interest rates with no population growth. That means limited ammo for it to get much stronger.

    So I'd buy one property and keep pumping the money into that to limit your risk exposure. Buy shares if you want and pump less into the property market.

    If it was me I wouldn't be so stingy now or work so hard either. if you're young you'll want to make the best of those years. You don't need to worry about financial security that much either, as the world will always need nurses. That said it's just an opinion.

    •  

      Appreciate for a really sensible answer. Will try to follow that.