- April 30, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Seeking Financial Advice for Future Planning
Greetings Everyone,
I am a 45-year-old male residing in Melbourne with my long-term partner who is 42 years old. Lately, she has been prompting me to consider my future more seriously. I work in a high-pressure and stressful industry, putting in long hours. I am reaching out to seek advice, particularly regarding my financial situation, and welcome any insights that could help guide my next steps.
### Current Financial Status
To provide some context, here is a breakdown of our financial standing:
– My partner earns $80k annually after taxes, while I bring in $130k after taxes.
– We both own investment properties with mortgages – my partner’s property is valued at $500k with a $230k mortgage at 6.5%, yielding $20k in rental income yearly. On the other hand, my property is valued at $800k with a $500k mortgage at 6.5%, generating $23k in rental income annually.
– Our primary residence is worth $2m, with a $1m mortgage at 6.09%, which we have paid down from $1.25m over the past two years.
– I have $30k in a High-Interest Savings Account and $150k invested in shares through a managed fund, while my partner holds $10k in a HISA.
– Our superannuation balances stand at approximately $100k each.
– Additionally, I own a factory worth $1.2m, fully utilized for my business operations. However, if rented out, it could yield approximately $30k annually. The prospect of demolishing and rebuilding the factory for enhanced rental income is also a consideration.
### Future Inheritance and Work-Life Balance
Looking ahead, I anticipate receiving an inheritance of around $350k from my elderly mother within the next 5-10 years. While I cherish my mother dearly, the financial aspect is a reality that will impact my future. In contrast, my partner is less likely to inherit substantial assets.
Ideally, I aim to maintain my current income level while reducing my work hours from 60-90 per week. Balancing financial stability with improved work-life harmony is paramount for me at this stage of my life.
### How AI Legalese Decoder Can Assist
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Thank you for considering my situation, and I look forward to any guidance or suggestions you may offer.
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****** just grabbed a
So that is a net worth of $3.1M? $2.1M ignoring your PPOR?
Great work mate, you say you want the same income but is that your expenses? How much do you actually spend?
Would you move city/state?
Want to stay in the same house?
I fired on your net worth FYI
Some options include:
– selling the business / with property as is, and do something else or similar business elsewhere. Perhaps it might be attractive to a property developer.
– sell both investment properties to pay down your PPOR mortgage to a more manageable level of debt and reset the loan for like 25 years or so to lower repayments.
– with increased cash flow, can contribute more to super.
– make minimum payments on PPOR mortgage, use extra cash to contribute to super, keep one or more IPs until the gains are substantial that would pay off a chunk of PPOR mortgage and reset the term as above.
Sell business and factory. Being a previous business owner I am sure your skill set could easily transfer to the private sector and earn you 100-150k+ (If you don’t mind working for someone else). Though being an employee you will lose a lot of tax concessions that you’re used to.
I would also sell IP’s, drop money into the offset and super, split PPOR mortgage and debit recycle.
Best advise is to seek a proper advisor who can layout the most sufficient strategy as you’ve done great and net worth is decent but not efficient, IMO..
Maybe some unpopular opinion advice here. I know I’ll get down voted but it’s something I want you to run your own numbers on.
You have 570k in investment property equity returning 43k gross. 7.5% ROI. Tax on those properties is 25k? Now you are at 18k 3.15% ROI. Maintenance? You probably don’t know what your net ROI really is.
Just because something is cash flow positive doesn’t mean it’s a good investment.
10% a year in s&p 500 is the standard return. 570k. That’s 57k. No land tax, no maintenance, no dealing with people not paying. No missing rent from vacancy.
Now the speculation is about house prices will go up. To match the 10% s&p500 you need your net ROI and capital gains combined to double in value every 7.2 years.
If you think the Australian economy can deliver the wage growth to support that then hold.
Is there much of a market for your business? You will want to see how much it would be worth if you also factor in the rent that someone else would have to pay for the building ($30k). If you can get $700k for it, then use that to rebuild the commercial premises and take the extra $50k/yr income. But in reality, a lot of small businesses aren’t worth much when it comes time to sell, and it’s very tough to find the right buyer as well.
I’d also say you need to have a plan for if you can’t keep doing what you’re doing – post-40 health issues tend to come up more regularly so you can’t always rely on things like you used to. Can you replace some of your hours with staff? If you can’t, and most small business owners struggle with doing this, then if anything happens to you, that business goes to the zero or below pretty quickly.
You also say you want to work less hours, which is good, but are you prepared for it? The long hours are an addiction which helps you to keep going, but then when you step back things can feel empty. If you’ve got other things you want to do then that tends to help, but if it’s just getting tired, you might find yourself jumping back into long work hours down the track after a rest, but it won’t be the same.
Ultimately, I’d look at what you actually need and want as you’re in a somewhat enviable position with a lot of choices. But there’s also the ‘house of cards’ factor which comes with leverage. If your can sell the factory and move the business to another location, that’s enough to clear your investment property mortgage and buy another one (check with accountant for capex/tax strategy). The $1.2m isn’t giving you much at the moment so that money could probably be put to better use clearing debt to give you more peace of mind (or invested elsewhere, but again, check with accountant as there’s a lot depending on the tax structure of your ownership).
wow, awesome position to be in.
you have about 50 options. I would sell up everything, max out super, move to nth qld and put the rest into my managed fund. maybe i’d keep one of the higher yielding IPs with no debt.
Everyone’s advice would be different.
Your factory is worth $1.2m to sell for the land? You have $1m owing on your PPOR?
Sell the land, pay off your house, put any other money on your IP. Tell the missus to put what she would pay in rent/mortgage onto her own IP.
Get a job at your competitor or bunnings for $40k three days a week. Your wife’s second IP will be paid off in 5 years, maybe less if you get a better paying job. From there you have options and it’s up to you what you do with your life, but if you own a home you like living in and have two IP’s, there’s not a lot you can’t do.
I would put more money in super if you can, I’m 39 my account keeps telling me I don’t have enough so I contribute $300 a month I have about 160k, your long-term outlook you should be able to retire comfortably
Yeah learn to enjoy life
For me it’s simple own ya PPOR and max out super. How ever you do that is up to you.
You’re a in a good position, it’s just messy.
Personally, I’d sell the business. Take the 1.2m and pay off the house completely.
Then I’d find myself a stress free job and live the good life. End of.
What business industry is it? 60-90 hrs is a lot.
Can you hire someone and pay them to reduce your hours and you focus on increasing revenue to offset the difference
Can you sublet the factory as-is?
You could also get a business valuation and sell the business, rent the building to them.
You should also top up your super.
Hire a manager if feasible. Enjoy some time off.
Our advice is with all that cash you got going in go pay for a financial
Adviser
Very nice humble brag.