Hi everyone,
I know this is primarily a positive gearing property forum, but many of you are also excellent with figures & finance [
]My partner has just started a new, (much) higher paid job. He will be earning $100k plus, and wants to know the best type of investment to minimise the tax he will be paying…
At this stage he has no investments, and about $60000 in savings. He is 29 & not too concerned about the risks involved. (ie he can afford to use riskier investments).
Any ideas or suggestions [?] He will see a planner soon but I was wondering if anyone had some advice… thanks!
He has more options than a kid in a candy shop!!
I think he should be driven by what he is more interested in than anything else because there are dud options in every investment sector waiting for unsuspecting and uninterested investors. If he just wants somewhere to park funds and forget them has he thought about supplying mezzanine finance – I’ve heard returns are consistently 8-10% for 12 month terms.
Then of course there’s property … [
]For tax minimisation, see an accountant about structures to invest under which may help, aiming to make a loss now for potential future gain is not my cup of tea but if he’s keen buying land and developing could be one option.
Perhaps he needs to consider a negative geared portfolio of growth assets.
Negative gearing with the sole aim of making a tax loss is not a recipe for success, however, negative gearing using assets especially selected for growth potential can be very lucrative.
This might be property, shares or a combination of both. This portfolio may also include high yield investments.
There are other schemes involving tea tree, olive and emu farming which need very careful scrutiny[
]Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Hi Soleil
I agree with Mel that to formulate a tax effective strategy you should see an accountant. You mention that your partner was going to see a (financial) planner … don’t waste your time, (sorry if I offend any financial planners).
Financial planners primarily have one strategy and that is to sell you managed funds or schemes like tree plantation, tree oil plantations etc., that Simon mentioned. They will rarely have property on their books. They might suggest some property trusts which aren’t too bad, usually return around the 8-9% range.
If you haven’t done so already read some property investing books. Some of Jan Somers’ books will give you ideas about negative gearing properties that can lead to the building of a substantial property portfolio for the future.
Cheers
EnuffIsEnuff
Hi Soleil,
I suggust you seek advice from people in the know. Financial planners will only offer products from financial institutions and very rarely recomend direct property investment. They will most likely say to get into margin lending or gearing to purchase shares. Only problem is banks will not lend you anywhere near the $$ to invest in shares and most banks will restrict you to blue chips (lower risk with banks money).
I am the same age as you with similar income and similar stratgies to lower tax through high growth investing. I am primarliy looking at neg gearing to reduce tax, grow assets while protecting what I already have. If this sounds like the track you want to head down email me
at [email protected]Rick
Investment Partners Australia Limited
[email protected]
[]Hi soleil. No advice, just a quick comment as my background is similar to your partner..
I negative gear direct shares, but I use my property assets as equity via a line of credit and avoid margin calls. For negative gearing, shares are easy to get into and get out of and don’t take as much money as property. Thanks to the ATO’s Income Tax Variation form your cashflow can be minimally impacted..
But..
If you have no experience in the stock market then in the current environment its like playing lotto. You need to find an ‘edge’ (just like Steve has with his positive cashflow wrap based techniques) in property.
I don’t think that many of the managed funds out there give you much of an edge either
I think that this document spells it out nicely..http://www.travismorien.com/investment.ppt
One other comment. Do the math with a financial planner. At a certain point it makes sense to go fee for service and pay per hour rather than commission based kickbacks.
cheers
EZ-Rent. The free tax and cashflow simulator for Australian property investors.
http://www.ez-rent.comIf you start by focusing on tax minimisation then you will be missing the point. Focus on investments that make money first, and minimise tax 2nd.
The fact is the worse the investment the more it minimizes your tax.
Buying newer properties will allow you to take advantage of on paper depreciation, but this should only bee seen as the cream on the cake, based on the underlying property being a good investment.
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I think that this document spells it out nicely..
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