Investing in Shares after investment property sale

[reni10]

I am very new to Shares so I am looking for peoples opinions on the following so a bit of background first:

- I have a couple of investments properties and I am in the process of putting one of them up for sale and will keep the other one which is negatively geared.
- After fees and taxes etc. I should come out with $400k+ profit from the sale of the investment property.
- I am looking to invest for up to 10 years possibly 15.
- I don't want to have too much overhead management of my investments
- I have a decent paying secure job ($100k+) and am in my late thirties with a family.
- I have approx $150k in super.
- My goal would be to fully retire by 50.

So my plan is looking something like this:

1. Keep $175k in an at-call High Interest Cash Account (UBank probably)
2. Hold the remaining Investment property
3. Transition my super into a low cost index fund(ING Living Super probably)
4. Position the remaining $225k from the investment property sale into the following ETF's: VAS, VTS and VEU at 33% into each.

Very interested in opinions on whether this looks like a good plan and contains enough diversity to enable me to look towards a comfortable early retirement.

 

[skc]

Very interested in opinions on whether this looks like a good plan and contains enough diversity to enable me to look towards a comfortable early retirement.

Can you provide us with your definition of a comfortable retirement? What would be the annual income desired?

Are you sure your asset base / income stream will be big enough to retire comfortably in 12-15 years time?

 

[reni10]

Can you provide us with your definition of a comfortable retirement? What would be the annual income desired?

Are you sure your asset base / income stream will be big enough to retire comfortably in 12-15 years time?

In 10 years time my second investment property will be paid off completely and so will my home mortgage so I have calculated to live comfortably at the moment without those mortgage costs I would be looking at approx $50k/year from age 50 until age 60 where I would then see my Super kicking in to help keep that going too.

At the moment I am receiving $500/week rent for the investment property that I am keeping so I would be looking at supplementing that with probably another $500/week from other investments to bring me to around the $50k/year level.

Obviously this is at today's levels, who knows how much living costs will be in 15 years time

 

[Vixs]

Do you need to sell the property for any particular reason? Sounds like it has plenty of equity (though I suppose it's relative to the dollar value), why not just borrow against it to diversify your portfolio into some quality managed funds or bluechip shares? You're going to need all the growth assets you can get to retire comfortably in 10 years.

Pay attention to your super as well, it's going to be key because you'll have a lot of living to do after 60 most likely - retiring at 50 unless you live off the smell of an oily rag is not going to be easy...

ETFs are not a magic bullet, they're flavour of the month. If you don't have the investment knowledge to make the decisions yourself yet then pick some high quality managed funds in growth asset classes and get in there. There are fund managers out there generating significant alpha above the indexes after management and performance fees.

EDIT: Why pay off your investment loan when you could buy another property or two? Or three?

You're benefiting from the tax deductions, why not allocate your income to further wealth creation rather than debt reduction?

You sound like you should talk to a financial adviser. Shop around, some won't suit you. Some you won't suit. Get to know the adviser a little bit before you commit.

 

[Klogg]

EDIT: Why pay off your investment loan when you could buy another property or two? Or three?

You're benefiting from the tax deductions, why not allocate your income to further wealth creation rather than debt reduction?

Are you a real-estate agent or mortgage broker?

 

[Hodgie]

Are you a real-estate agent or mortgage broker?

In all fairness he did suggest other investment options as well. Sounds more like a financial planner. Although thats unlikely because financial planners cannot recommend direct property purchases.

 

[reni10]

In terms of keeping the investment properties I just want to diversify and think that holding 1 is enough so really interested in people's views on the 3 ETFs that a large proportion would be invested in?

 

[ROE]

Sound like a sensible plan to me ....
You got plenty of cash, and in no hurry...spend a bit of time research on the stock market before jump in

If you want good yield with chance of capital appreciation you can't beat invest in sound business for long term...

Good business over time generate enormous wealth for its holder through dividend stream and capital appreciation.

A 400k invest across a wide range of good business should deliver you around 20k dividend plus 30% franking credits

And dividend should keep track with inflation and with some exceptional business dividend should increase a lot more.... When earning and dividend increase share price appreciation is a given...

Once you enjoy the dividend stream and comfortable with the market you can invest in startup and more speculative ends ..... This area if you have the time and research can yield massive return in capital appreciation with higher risk scale...

Good luck and well done and with that asset based I think you can retire in style -

 

[ktech]

Hi. My 2 cents. I started in shares 2+ yrs ago as I stopped work around 54. It's good you have an initial plan on what you intend to do.
No 1 tip: Read up on strategy on how to handle a large sum to invest. Keep reading!!!.Don't feel the pressure to throw it all in on one day. It has taken me almost 2 years to invest 350k..
Whether its ETF's or a mix you will still need to read up and research well. Get a dummy share account and play with it. Give yourself time to get educated on investing. Just because you retire doesn't mean you stop investing. Whatever you do it's a big learning curve, fortunately there are plenty of people that share their knowledge on these sites. All the best in your journey.

 

[Julia]

We all have different priorities and expenses. In more than ten years' time, I'm not sure that the asset base you're suggesting will be enough to fund a retirement that's even moderately comfortable.

And I wouldn't be putting all the funds destined for shares into the same company, as you've suggested.

Maybe just work a few more years?

 

[Vixs]

Are you a real-estate agent or mortgage broker?

I do some mortgage broking as part of my job, yeah.

The posters ambition and goals are out of touch with his decision to sell now.

Personally if he has property exposure but no shares experience I'd suggest managed funds, and a lot of learning how to invest in quality companies with more money as it becomes available.

Then again, I've seen the crap funds that people get put into by crap or conflicted (by ownership) advisers, and I understand why people take a negative view to them on the face of it. I know that they are not all the same.

In all fairness he did suggest other investment options as well. Sounds more like a financial planner. Although thats unlikely because financial planners cannot recommend direct property purchases.

Correct and correct. Personally I think property has its place - namely to get you access to equity that can be further leveraged. Still, I can't go to work tomorrow and tell someone which property to buy the way I can tell them what companies and funds I'd recommend they invest in.

 

[brty]

In 10 to 15 years time, I would not be surprised if you couldn't access your super at 60. Maybe 65 or 67-70 like the direction the pension is heading.

Money is being printed everywhere, and as the current kerfuffle in the US is solved by more debt as usual, eventually something is going to give, (or not give in). I'm wondering why you would put 1/3 of your funds into the US stockmarket and 1/3 in the rest of the world? As Julia stated, why with the one company?

The western world is stagnating and weighed down by debt. Growth and therefore profits are in the cheap labour, developing countries, and the resource exporters.

 

[reni10]

My thinking behind selling 1 of the investment properties is at the moment I am fully invested in just property and the property market seems like it is reaching the top of a bubble now so I want to get out with some good profit

I have no Cash or Share exposure at all at the moment so everything seems to be in one basket so to speak so I am trying to diversify my investments by holding:
1. Cash - $175k
2. Property
3. Shares in the form of ETFs - $225K+

I do though like the idea of not actually buying all the ETFs with one provider like Vanguard so would probably look at buying VAS with them and then maybe IOO and WXOZ.
Very interested in peoples views on these 3 ETFs and investing about $75k into each one?

I would also possibly look at trying to work part time from 50 to 55 and transition into retirement from my investments and then have my Super supplement that past 60.

I have looked into a Financial Advisor and it is hard to firstly find a good one and second the fees seems to be anywhere from $1k to $10k for even some initial advice so I am not sure it is worth that!
I may just pay a good accountant instead to keep everything as tax efficient as possible...

Would love to get more comments from everyone on what they think of this plan

 

[ROE]

If you have family with kids set up hybrid discretionary trust .... Good way to dice and slice how you distribute your profit

 

[reni10]

If you have family with kids set up hybrid discretionary trust .... Good way to dice and slice how you distribute your profit

Thanks for the Hybrid Trust advice, it is something that I am familiar with and will look into it before I start investing.

I do like the idea of maybe a smaller holding in an Emerging Markets ETF as it could come very good in a few years as those markets mature so some pretty good options here so far.

Does anyone else have any further comments on my plan and specifically any other ETFs you think I should buy to help spread the risk?

 

[reni10]

Would taking maybe 100k in diversified ETF's and then getting a Margin Loan for another 100k make more sense then actually putting a full 200k into ETFs?

 

[TheUnknown]

What return will you be aiming for with your 225k? Per year net?

 

[reni10]

10% per year would be my initial goal.