Admittedly my finances are very tighty at the moment, my finanncial planner says we are financially stressed.
The good news is we should come into an inheritance of about $120000 within the next 6 months.
I own a block of land value about $75000 which my planner wants me to sell now to ease the stress and when we receive our $120000 he wants me to it pay off our current mortgage . With the sale off the land and $120000 “inheritance money “our mortgage will be reduced to about $25000. (on a home worth about $280,000)
After all that and this is what I question, my advisor wants me to get a interest loan only of $100000 and invest it in a managed fund. I know a loan like that is tax deductible , (and just a block off land is not) but would nt I be better of just keeping the block of land?
It just seems to me I am swapping a block of land for $100000 in the share market. Also I am con[strum]cerned shares are very high at the moment.
Hope all this makes sense.
well I cannot give you any financial advice.
Some points:
What are your longer term plans for the current home? If you think you will ever upgrade AND keep the current home as an IP then I would advise against banging your lump sum into the loan. I prefer an offset as it will be the same in the short term and more tax effective if you do rent this home out.
Land vs shares.
Noone knows what the future holds. Your planner will make money from you buying a manged fund. About $4000 upfront and an ongoing trail. Using a discount broker will save you this first $4000.
If we can assume that the land and the fund will both appreciate the same then this is a no brainer. The income from the fund and the deductibility of the interest makes it a better deal. But that is not a reliable assumption to make and you will have to research how well your land will do vs a historical return of about 15% on the fund – and over the long term this is realistic even if there is a correction soon as you suspect.
Few people know that you CAN claim the interest against a block of land if you have the INTENTION to develop and rent it out in the near future. Perhaps your advisor doesn’t know this? Or is keen on the $4000 commission on the fund…
I buy mine through http://www.nevward.com.au and pay $0 upfront.
Disclaimer – I hold funds and no land …..
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Dear
I have been advised by a so called financial advisor who has lost me millions since I took his advice. Does that answer your question. [email protected]
NB New email address.
Originally posted by wiseinvest:Dear
I have been advised by a so called financial advisor who has lost me millions since I took his advice. Does that answer your question. [email protected]
NB New email address.
I don’t understand this – if you had millions to lose, you must have done something right to begin with?
Why start taking advice after you’ve made a lot of money.
Was this advisor as successful as you at the time?
If not, how could he possibly help you?Cheers,
Marc.
[email protected]Simon,
Thanks for the points you raised I am glad I posted this question on this forum now.
I had no idea that the advisor would get $4000 upfront. I ll certainly be pushing for a discount broker if I decide to go that way (I’ll certainly weigh it up very carefully now and do some research)
Also I did not know interest can be claimed if I intend to develop the land in the near future.
And lastly teh thought of offset never even entered my mind or the planners> It certainly sounds like an option to me.
I paid the man $900 for a plan. I did not know what I was going to get but after receiving the plan I am a bit dissappointed with it cause it did not tell me anything new.
Thanks for advice on this forum, it will help me make much better informed and balanced decisions.
Originally posted by cyclist:Simon,
Thanks for the points you raised I am glad I posted this question on this forum now.
I had no idea that the advisor would get $4000 upfront. I ll certainly be pushing for a discount broker if I decide to go that way (I’ll certainly weigh it up very carefully now and do some research)
Also I did not know interest can be claimed if I intend to develop the land in the near future.
And lastly teh thought of offset never even entered my mind or the planners> It certainly sounds like an option to me.
I paid the man $900 for a plan. I did not know what I was going to get but after receiving the plan I am a bit dissappointed with it cause it did not tell me anything new.
Thanks for advice on this forum, it will help me make much better informed and balanced decisions.
In all fairness if he charged you upfront then he probably would rebate some or all of that $4000 back to you. It would be a greedy finacial advisor that did both. You are well in your rights to ask him about it.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Simon I think you would be suprised i have come across so many clients who have paid a fee for their Statement of Advice ($900 is about right well it is what we charge) to a FP and then find the FP does not rebate any element of the upfront commission.
We rebate commission on both life only quotes as well as any approved investment products. You don’t need to be greedy to be a sucessful FP as doing the right thing by the client works a whole lot better.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
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