Safe but Effective Investment options

Hi Everyone

Good looking forum. I'd like to pick your Brains if I may. I recently left work due to Health conditions. I have been placed on a Disability Support Pension. I'm sorry I can't talk too much about the medical conditons or the situation surrounding it. I am not sure if I will ever work again and I am not sure as to how long I will live, should my condition detoriate. But at the moment I certainly need to look after my future. All it seems I will be left with is around $200,000 in Cash. Nothing else. No property, one Car, no Wife, nothing.

I am thinking of firstly investing a percentage of the $200,000 in Term Deposits as I need to keep this money as safe as possible. I am also thinking of keeping some of the money in a more Growth based Managed Fund, one of the more conservative funds.

I am 45 and faced with the prospect of possibly not working again. I am concerned with how to keep the money as safe as possible but get the best return (as is everyone I guess). My question to you more knowledgable folk is; what should I do with the Money to keep it as safe as possible but still get some return on investment?


Many thanks in advance for your help.

HowardJ said:

Hi Everyone

Good looking forum. I'd like to pick your Brains if I may. I recently left work due to Health conditions. I have been placed on a Disability Support Pension. I'm sorry I can't talk too much about the medical conditons or the situation surrounding it. I am not sure if I will ever work again and I am not sure as to how long I will live, should my condition detoriate. But at the moment I certainly need to look after my future. All it seems I will be left with is around $200,000 in Cash. Nothing else. No property, one Car, no Wife, nothing.

I am thinking of firstly investing a percentage of the $200,000 in Term Deposits as I need to keep this money as safe as possible. I am also thinking of keeping some of the money in a more Growth based Managed Fund, one of the more conservative funds.

I am 45 and faced with the prospect of possibly not working again. I am concerned with how to keep the money as safe as possible but get the best return (as is everyone I guess). My question to you more knowledgable folk is; what should I do with the Money to keep it as safe as possible but still get some return on investment?


Many thanks in advance for your help.

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My two cents.

Might be worthwhile to see what assets you have that you need to insure.

Depends on your other income stream, probably put a large chunk of that $200k into long term deposit and gov't bond. Not much interest now, and interest looks likely to go up rather than down for much longer.

With investment... there really is no "safe investment". All investment come with risk. To minimise risk, for my money I wouldn't go with those "growth" or "safe" funds. That's just marketing. Put your investment into a low cost index fund.

Over the longer term, index funds have shown to beat most fund managers.


If you want to buy stocks and select other investment instruments by yourself. Make sure you know what it is you are doing. Don't take people's advice or hot tips. Make dam sure you know the business or know exactly how the investment you're getting into is going to make you money.

This takes a lot of work, as all business and things that could produce steady income do.

Since, I'm assuming, you're new to stocks and finance... if you are interested in it, put no more than 10% of your assets into the venture. This is your punting money, money you can lose and it won't break you.

Then use it to learn investing in stocks.

You will probably not make much money first few years. But as you gain competence, put more of your savings to work. Get rich slowly, not get poor quickly, as they say.

HowardJ said:

Hi Everyone

Good looking forum. I'd like to pick your Brains if I may. I recently left work due to Health conditions. I have been placed on a Disability Support Pension. I'm sorry I can't talk too much about the medical conditons or the situation surrounding it. I am not sure if I will ever work again and I am not sure as to how long I will live, should my condition detoriate. But at the moment I certainly need to look after my future. All it seems I will be left with is around $200,000 in Cash. Nothing else. No property, one Car, no Wife, nothing.

I am thinking of firstly investing a percentage of the $200,000 in Term Deposits as I need to keep this money as safe as possible. I am also thinking of keeping some of the money in a more Growth based Managed Fund, one of the more conservative funds.

I am 45 and faced with the prospect of possibly not working again. I am concerned with how to keep the money as safe as possible but get the best return (as is everyone I guess). My question to you more knowledgable folk is; what should I do with the Money to keep it as safe as possible but still get some return on investment?


Many thanks in advance for your help.

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Hi Howard,

Sorry to read about your health situation, I think it is a positive your looking at your financial future, no matter the age, health or income it is never too late to learn and the more you work at it the more likely the rewards.

It always said to speak to a professional about your own circumstances however additional to that there is a lot of books, videos and courses available to gain some knowledge on investing.

On your term deposit I often heard professionals say not to put your money in the bank, put it into the bank shares as the bank dividends pay better than any product the bank has to offer. However shares do come with risk where as the bank products have safe some guards.

Often people are terrified about risk but at the end of the day there is a risk even with cash as the cash value can change even if it is locked in a safe.

Hope this has been food for thought for you to help you to decide where to go from here, Good luck [emoji4]

Sorry you're going through this.

I think you've got it. I'm assuming no debt at all and no house (you rent).

With the caveat that this is a forum and not financial advice - if we were talking in person, I'd recommend the basic financial planning advice to keep 3-6 months expenses as an emergency fund, and keeping that in a readily available account.

Beyond that - investing the rest is a good idea (you're only 45yo and like you said - you need to take care of your future). But investing the rest assumes 2 things:

- you can budget your living expenses with the pension
- you don't need any of it for medical

If either of those things are not true, that changes things.

There's also a possible positive in that you sound like you might be able to work down the track. That could mean something different or something from home maybe or whatever - but anything would help, and I'd see that as a positive.

HowardJ said:

Hi Everyone

Good looking forum. I'd like to pick your Brains if I may. I recently left work due to Health conditions. I have been placed on a Disability Support Pension. I'm sorry I can't talk too much about the medical conditons or the situation surrounding it. I am not sure if I will ever work again and I am not sure as to how long I will live, should my condition detoriate. But at the moment I certainly need to look after my future. All it seems I will be left with is around $200,000 in Cash. Nothing else. No property, one Car, no Wife, nothing.

I am thinking of firstly investing a percentage of the $200,000 in Term Deposits as I need to keep this money as safe as possible. I am also thinking of keeping some of the money in a more Growth based Managed Fund, one of the more conservative funds.

I am 45 and faced with the prospect of possibly not working again. I am concerned with how to keep the money as safe as possible but get the best return (as is everyone I guess). My question to you more knowledgable folk is; what should I do with the Money to keep it as safe as possible but still get some return on investment?


Many thanks in advance for your help.

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Howard,

Two things to consider:

- Take a look at annuity products. They may or may not suit your need and now may or may not be the best time to buy. But it's a good time to get to know them at least.
http://www.challenger.com.au/lifest...ectancy.html?gclid=CJzD1ruOr9ACFQqbvAoddegEFA

- There's a huge range of work these days. If you are capable of posting on this forum (assuming you did that yourself), then there's probably something you can physically do to make a living. Some of that lump sum may be better off being allocated to education / training in pursuit of a new path.


All the best with your health.

My post above are (for me) things that need to be looked at before the, 'what do I invest in?' question.

On the investment side, you'll always see me say something along the lines of a recommendation to keep it real, real simple.

Unless you want to learn, dig in and go deeper as an investor, then you want a set-and-forget option. The worst kind of advice you'll often get on a forum like this are random suggestions to, 'not forget to re-balance' or to 'start looking at charts,' particularly when the person is (a) new and (b) might not be interested in being that active about their investing anyway.

So again, if you and I were friends talking over coffee...and assuming that you are not looking at learning investing very deeply (or at least not yet)...my recommendation is to keep it so simple that you might invest in something like a vanguard product. Your paying reasonable fees, not risking your money with active management (these are index products). You can learn plenty enough for the lay investor from their brochures / website etc. You don't even have to worry about asset allocation - look at something like the life strategy funds here

My opinion (get your own advice) is that - just as you said yourself - you need to invest for the long-term and for growth. Overly conservative investing also has risk - like not keeping up with inflation.

On the page I linked to, you will see a High Growth option...have a look at the pdf on that one. For the type of investors on a forum like this, this might actually seem like a 'conservative' option. A mix of Australian and International shares, with property and cash making up about 10% each. That's a nice mix that will do the job. The other funds in that Life Strategy category (such as the growth fund) just allocate a bit more (30% in the Growth fund) to fixed interest, the same idea applies.

No rebalancing needed - they do all that. Set and forget.

Again - get your own advice (you need to look at stuff like whether to invest through super etc), but just something to think about.

Many thanks for the help luutzu, bon123456789, systematic and skc. Its members like you who are the true assets of any of these Forums.

Sorry for the tardy reply, I'm using public wifi at the moment.

Yes I have sort Financial Advice. Interesting task finding a good CFP. A lot of them seem to be Fund Managers themselves and won't deal with people with such small amounts to invest or small income streams.

Thanks for the links and advise on Annuity products skc. Will look into them.

Thanks for the links on Vanguard etc Systematic. I have starting looking at things like that, just unsure as to the number of options out there as I haven't gotten to see a Financial Planner yet.

Thanks again everyone. You guys are great.

Unless you want to learn, dig in and go deeper as an investor, then you want a set-and-forget option. The worst kind of advice you'll often get on a forum like this are random suggestions to, 'not forget to re-balance' or to 'start looking at charts,' particularly when the person is (a) new and (b) might not be interested in being that active about their investing anyway.

So again, if you and I were friends talking over coffee...and assuming that you are not looking at learning investing very deeply (or at least not yet)...my recommendation is to keep it so simple that you might invest in something like a vanguard product. Your paying reasonable fees, not risking your money with active management (these are index products). You can learn plenty enough for the lay investor from their brochures / website etc. You don't even have to worry about asset allocation - look at something like the life strategy funds here

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Systematic has given some pertinent advice and very sensible.
I don't envy you and I fully understand the risks going forward. More so where capital is going to be eroded from time to time from losses and inflation---a silent killer of wealth.(You need to keep funds in inflation proof investment---that's Not cash)

My opinion (get your own advice) is that - just as you said yourself - you need to invest for the long-term and for growth. Overly conservative investing also has risk - like not keeping up with inflation

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The problem here as I'm sure you and everyone else knows is those who advise you will have an agenda of profit.
Theirs in more important than yours---when it comes to sums under a million.

My advise is to take the time you have to invest in YOUR future knowledge of how best to take care of yourself financially in the future. Above all study RISK.

The answer to your question is complex yet the solution is simple (Invest/trade in advancing products). This will be time very well spent so you can sort out the charlatans from those who actually know what they are on about.
I'm sure you are aware that one bad decision could wipe you out.
I have one rule which meant many many hrs of my own research/education and seeking out of Experts I could trust.
But it remains to this day.

If I cant understand/control it I wont do it.

I have trusted Solicitors/Accountants/Agents/Experts in fields I need---build yours.

Thanks tech/a. I wanted to see what experienced people such as yourselves thought as well as seeing what a CFP thought, just to be more aware if the CFP was taking me for a ride.

I'll look into all the advise you all have given and obviously do some of my own learning. I'll let you know what sort of products the CFP recommends. Hopefully I can find one who is independent. Thanks again.

HowardJ said:

Thanks tech/a. I wanted to see what experienced people such as yourselves thought as well as seeing what a CFP thought, just to be more aware if the CFP was taking me for a ride.

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Often these guys don't hold a licence they work under a licence held by a company that offers a range of funds (eg Zurich). So they have to work within the limitation of what they have to sell. Product sellers more than being capable of mapping out a plan for your financial future. I spent a great deal of time looking for one who came close to being capable of plotting a future for my investments.
I found all but 2 were striving to become as wealthy as their clients. Its like giving advice on Running to Usane Bolt

Most wanted to know how I got where I have!!! Then sent me a bill for the conversation!!
So the way I filtered them out was to find people who could recommend a share to me. Discuss Property Development --- and have opinion that I knew was valid (Its my field).

On Wives.
I wouldn't change mine for Quids----But 20 yrs ago when I was loving the bachelor life My wife came to me after 2 yrs (A record for me) and said---Why don't you live with me it will be so much cheaper.

(1) It was!!----For Her.
(2) The most expensive decision I ever made.---But I can sort of control it!!

I'll look into all the advise you all have given and obviously do some of my own learning. I'll let you know what sort of products the CFP recommends. Hopefully I can find one who is independent. Thanks again.

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Excellent.
Make sure you can exit at will with very little or no cost to do so.
Have control as much as is possible.

HowardJ said:

Hi Everyone

Good looking forum. I'd like to pick your Brains if I may. I recently left work due to Health conditions. I have been placed on a Disability Support Pension. I'm sorry I can't talk too much about the medical conditons or the situation surrounding it. I am not sure if I will ever work again and I am not sure as to how long I will live, should my condition detoriate. But at the moment I certainly need to look after my future. All it seems I will be left with is around $200,000 in Cash. Nothing else. No property, one Car, no Wife, nothing.

I am thinking of firstly investing a percentage of the $200,000 in Term Deposits as I need to keep this money as safe as possible. I am also thinking of keeping some of the money in a more Growth based Managed Fund, one of the more conservative funds.

I am 45 and faced with the prospect of possibly not working again. I am concerned with how to keep the money as safe as possible but get the best return (as is everyone I guess). My question to you more knowledgable folk is; what should I do with the Money to keep it as safe as possible but still get some return on investment?


Many thanks in advance for your help.

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Hi Howard,

I think it would be best in your situation to put your funds into an ASX200 or 300 index.

It's going to be low cost, and pay a higher dividend than you would get in a term deposit, it's also going to protect your capital base from longterm inflation.

Cash (eg term deposit) seems safe, but it is a guaranteed way to lose over the long term, because the value of the cash is going down every year.

If you are just interested in holding a safe investment through all the ups and downs that will provide income, protect you from inflation, grow in value and be hassle free I don't think you can go past an index fund linked to the ASX 200/300.

If I were in your position, I would slowly move from cash to index fund by adding $10K a month for the next 20 months into the index fund,

You mentioned you rent and have cash of 200K
Is there any other income ( Govt)
May be ..... a thought ... using NRAS grant and perhaps first home buyer's grant also if you could get in to small dwelling and keep a flatmate!
That way the money you are spending on rent could be used more effectively!

Good luck mate. I agree with getting advice. $200,000 isn't that much and you will need some of it from time to time.

I could have recommended a couple of high income shares a year ago but they have all risen now.
Rather than putting it all in a term deposit, you might want to consider Mortgage Choice MOC. It has a yield of 7.25% and you get the 30% back from the dividend as your income will be low. There is a small amount of growth and as the company is a mortgage broker and doesn't use it's own money for the loans it is of low risk. A lot safer than investing in a bank.

Knobby22 said:

Rather than putting it all in a term deposit, you might want to consider Mortgage Choice MOC. It has a yield of 7.25% and you get the 30% back from the dividend as your income will be low. There is a small amount of growth and as the company is a mortgage broker and doesn't use it's own money for the loans it is of low risk. A lot safer than investing in a bank.

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Do you own a lot of these Shares? How much do you suggest this person with limited funds put on this ONE stock? I just checked that Stock, down today. Hope it rebounds for you :

I notice Risk has been wisely mentioned previously. Wouldn't a somewhat diversified portfolio be more prudent. Something like: Cash and Fixed interest 30%, Shares (Aust. and Int.) 60%, Property 10%????


But, seek your own Professional Advise please Howard.

Knobby22 said:

Good luck mate. I agree with getting advice. $200,000 isn't that much and you will need some of it from time to time.

I could have recommended a couple of high income shares a year ago but they have all risen now.
Rather than putting it all in a term deposit, you might want to consider Mortgage Choice MOC. It has a yield of 7.25% and you get the 30% back from the dividend as your income will be low. There is a small amount of growth and as the company is a mortgage broker and doesn't use it's own money for the loans it is of low risk. A lot safer than investing in a bank.

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The hard part about buying individual stocks on other's recommendations is that you don't know when/if you should sell.

For someone who doesn't have the knowledge, index fund(s) along with a sufficient amount of cash in case of emergency is probably the way to go. That said, Australian index funds have some serious shortfalls, specifically the ASX200 (mostly banks).

Seeking financial advice from a truly independent financial adviser might be the way to go. Of course, that is also fraught with danger (check their incentives)