Hi,
I have recently inherited $130,000 and would really appreciate some ideas on how to best use it as i would like to start investing in property.
My partner and I have just moved into our new about 8 months ago, we still have a lot of money to be spent on our new house, e.g landscaping, furniture. We also have a wedding to pay for next year and some debts we would like to clear. All up I think we would need between 85k-90k to be debt free (apart from our mortgage of 370k), have our house fully furnished and landscaped and have our wedding paid off.
We are pretty much left with around 40k for investing.Is there a better way of using my inheritance for the purpose of investing and still getting all the above items done?
Any help would be much appreciated.
Regards,
Steve
Hi Steve
$90k for furniture, landscaping and a wedding seems like a lot! I take it you have some other debts to pay off as well?
Your $40k could be used as a deposit and purchasing costs on an IP. It just depends on how much you're looking at spending.
Alternatively, if you have sufficient equity in your current home, you could look at accesing some of it (instead of using your $40k cash). Instead, you could place that $40k in an offset – safe and sound for a rainy day.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I would put all the money on the house and personal debts (and avoid the wedding! sorry!).
This will reduce non deductible interest. Then reborrow and invest.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Agree with Terryw.
All money into personal debt first, then the rest into PPOR mortgage. Then borrow and invest.
Thanks everyone for your advice, i guess i'll have to spend less on landscaping and furniture lol.
"I would put all the money on the house and personal debts (and avoid the wedding! sorry!)."
That's interesting. We've just bought a new PPOR and lets just say we have a lot still owing. We have approx $100,000 sitting in an offset account that we were eventually going to use to buy another IP. Should we be putting it on the PPOR instead?
"This will reduce non deductible interest. Then reborrow and invest."
So in our case it would be better to put the $100,000 on the PPOR and then reborrow it? By 'reborrow' do you mean use the extra equity in some way?
Can anyone recommend a good book or 3 on the finance side of investing? That to me seems to hardest thing to become proficient in."(and avoid the wedding! sorry!)."
too late for me on that one I'm afraid
Steve, sorry to hear of your loss. I'm sure you'll get solid advice here.
—
MarkMRW wrote:"I would put all the money on the house and personal debts (and avoid the wedding! sorry!)."
That's interesting. We've just bought a new PPOR and lets just say we have a lot still owing. We have approx $100,000 sitting in an offset account that we were eventually going to use to buy another IP. Should we be putting it on the PPOR instead?
"This will reduce non deductible interest. Then reborrow and invest."
So in our case it would be better to put the $100,000 on the PPOR and then reborrow it? By 'reborrow' do you mean use the extra equity in some way?
Can anyone recommend a good book or 3 on the finance side of investing? That to me seems to hardest thing to become proficient in."(and avoid the wedding! sorry!)."
too late for me on that one I'm afraidSteve, sorry to hear of your loss. I'm sure you'll get solid advice here.
—
MarkHi Mark
Just think about it step by step.
If you take $100,000 out of your offset account what will happen to the interest on your house loan?
It would increase by about $7,000 pa.Would this extra interest be deductible?
No, because it is a house loan for a private residence.So assume you had paid the $100,000 into the loan. You would still pay the same interest as before – as when the $100,000 was in the offset.
Now you can reborrow that $100,000. Best way to do this is to set up a new loan to keep it all separated.
You borrow the $100,000 and invest it.You would pay $7,000 pa approx in interest. But because this money was borrowed to invest the interest will be deductible.
This could save you about $3000 pa in tax.There are no books that I know of that cover this sort of thing. Best to keep reading the forums I think
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:MRW wrote:"I would put all the money on the house and personal debts (and avoid the wedding! sorry!)."
That's interesting. We've just bought a new PPOR and lets just say we have a lot still owing. We have approx $100,000 sitting in an offset account that we were eventually going to use to buy another IP. Should we be putting it on the PPOR instead?
"This will reduce non deductible interest. Then reborrow and invest."
So in our case it would be better to put the $100,000 on the PPOR and then reborrow it? By 'reborrow' do you mean use the extra equity in some way?
Can anyone recommend a good book or 3 on the finance side of investing? That to me seems to hardest thing to become proficient in."(and avoid the wedding! sorry!)."
too late for me on that one I'm afraidSteve, sorry to hear of your loss. I'm sure you'll get solid advice here.
—
MarkHi Mark
Just think about it step by step.
If you take $100,000 out of your offset account what will happen to the interest on your house loan?
It would increase by about $7,000 pa.Would this extra interest be deductible?
No, because it is a house loan for a private residence.So assume you had paid the $100,000 into the loan. You would still pay the same interest as before – as when the $100,000 was in the offset.
Now you can reborrow that $100,000. Best way to do this is to set up a new loan to keep it all separated.
You borrow the $100,000 and invest it.You would pay $7,000 pa approx in interest. But because this money was borrowed to invest the interest will be deductible.
This could save you about $3000 pa in tax.Hi Terry,
many thanks. Pointed out like that it makes complete sense.Terryw wrote:There are no books that I know of that cover this sort of thing. Best to keep reading the forums I thinkWithout question the 2 best things to come out of purchasing Steves book is being motivated to do something rather than sit back and hear of others doing it and this forum. I continue to pick up little bits of wisdom like the above all the time.
.
cheers,
.
—
MarkHi Mark,
I encourage you to keep looking at ways to get the most out of you loan structure, there are a vast number of ways to do so, particularly for people with investments of significant value and even more so if they are self employed and/or getting to an age where they can access superannuation.
Regards
Alistair
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