Completely crazy. Yet if you have $10000 to your name but its in cash and lose your job you will be told you have too many liquid assets and need to spend that and come back when its gone.
Gotta love this country..
$1 million asset, and get centrelink benefits.
Sensible suggestions. I've tried often to interest her in the sharemarket (long before this present volatility) but she seems resistant for no reason that she can explain.I guess where those funds are going to be best invested comes down to your cousins temperament. If she is likely to be upset by market fluctuations then maybe a property investment would be best, that way she can focus on the weekly rent without paying heed to the ups and downs in it's capital value.
If she can take market flucutations with a degree of equanimity, maybe averaging into asx index fund may be better suited.
Ah, an excellent question. Let's just say she is getting a very nice income under the present circumstances, is very comfortable, and would rather swan about than work too hard.If you don't mind me asking, why is she on centre link benefits, you said she is bright and her kids are teenages, surely she could be working more than 2days a week. That way she could earn more money and also invest without worrying about losing benefits, probably met more people too.
Gotta love this country..
$1 million asset, and get centrelink benefits.
No argument from me on this.Crazy isn't it.
Thanks, Macca. I've already asked what effect her plan would have on her benefits.I'd advise you're friend to investigate what(if any) implications there are with regard to Centerlink benefits in these scenarios.
Cheers
She says a basic IP unit in Sydney would be around $500K. If that's right, what sort of rental income would it produce?
I've done some very rough calculations on around $500 p.w. which is only about 5% gross, and assumed (on the basis she does not now pay any tax) the tax free threshold of $6000, then 15% on the remaining $20,000 = $3000.
Then there would be council rates and body corporate, plus maintenance and insurance which optimistically all up would be around another $4000. Is this about right?
This would be a net yield of less than 4%.
How realistic is the above?
Wouldn't it also affect her Centrelink benefit?
What have I failed to think of?
I'm concerned that she has a blind faith that property - because it's all she has experience of and even then just that in which she has lived - is necessarily going to be a 'fantastic investment'.
I'd be appreciative of any comments members could offer.
She says a basic IP unit in Sydney would be around $500K. If that's right, what sort of rental income would it produce?
Then there would be council rates and body corporate, plus maintenance and insurance which optimistically all up would be around another $4000. Is this about right?
Gotta love this country..
$1 million asset, and get centrelink benefits.
I think there may be some implications when that PPOR is sold and as it changes from an asset to cash. She may find Centerlink will cut her off completely at that point and/or there may be limitations on the value of the to be purchased PPOR and/or IP let alone the income derived.Thanks, Macca. I've already asked what effect her plan would have on her benefits.
Her response was very vaguely that she expected the income from an IP would make up for any loss of these. I don't know if this is the case
That's why you have many old ladies living in $2 Million run down old houses drawing a Centrelink Pension. They refuse to sell and downsize because "I will lose the pension", heard it hundreds of times, truly unbelievable.
I think that if you claim the aged pension, when you die the government should beable to make a claim against your estate to recover the funds paid out to you as part of the aged pension, the government could probably pay out a better pension rate that way.
Good idea but no votes in that.
I think that if you claim the aged pension, when you die the government should beable to make a claim against your estate to recover the funds paid out to you as part of the aged pension, the government could probably pay out a better pension rate that way.
I think that if you claim the aged pension, when you die the government should beable to make a claim against your estate to recover the funds paid out to you as part of the aged pension, the government could probably pay out a better pension rate that way.
Maybe those that pleadge a property to the government to claim against could get a 50% higher pension plan, Sort of like an interest free government reverse mortgage.
Yeah, an estate tax on pensioners, imagine trying to sell that!
Yeah, an estate tax on pensioners, imagine trying to sell that!
As I said it could be sold as a voluntary program.
Yes, but what you're attempting to do is say that people who have contributed tax their whole life on the basis that they will have a pension .
Many thanks for detailed response, Bill, especially the actual figures. that's what I was looking for and which I don't believe she has clearly thought about.Hello Julia, it is best for me to say what my out goings are and then you can work it out from there. My unit is worth around 420K and I get $430 p/w rent as it is very well located, walk to shops, bus, beach and entertainment. Building has one lift, no pool, no yards and no gardens.
Don't under estimate the levys. Mine are nearly $800 p/q, total $3,200 p/y
Water $600 p/y
Warringah Council $1,000 p/y
Landlords insurance $350 p/y
Agents Commission 6.6% = Around $1,500 p/y
Smoke Detector Checks $100 p/y
+ Special Levys if needed, figure unknown as they pop up about once every 8 years or so.
+ Internal repairs if needed, carpets, kitchen, bathroom etc. I haven't spent any but eventually I will have to.
When I ask these questions, she is very vague. I also think she's underestimating how much she likes what she sees as the prestige of her street in Epping and the undoubted elegance and charm of the house.Now back to your friends case. Epping, there is no doubt she would get the money for her house $1.3 M as it is a high demand area and the Chinese in particular love that area. The problem is, where is she going to buy a house for 800K? She will either have to move into a big unit or a worse suburb. Now I am not trying to be funny but I have lived on the Northern Beaches and now I live on the Central Coast and it's very different up here to there. Which suburb is she going to move to and how are 2 teenagers going to live in a unit if they must move into one?
That seems like good advice. I wouldn't either.The other point is that I personally would not wait a year or more to buy the principle place of residence. It is unpredictable which way her new suburb may move in prices, it could just as easily go up rather than down. I would absolutely not take the risk myself of being out of the market. She can hold off on the investment unit until later but I wouldn't on the PPR, that's taking a balanced approach to the decision making.
Sure, but she displayed the same reluctance when we were in a bull market. What concerns me is that she seems to have a focus which regards only property as a good investment.I can understand her negativity towards sharemarket investing, it is very hard for a novice to see $36 Billion and $50 Billion wiped of the markets in daily moves. It is also a very scary that shares are still down some 40% from it's peak 4 years ago, she has reasons for her doubtfulness.
Thanks, SC. Very helpful.A 500K unit would rent for between $430 > $460
Body Corp in a new (good) block would be around 3.5K PA, a very good block 4K and up, an older block maybe as low as 2K PA...council rates PA around 1.5K
I think there may be some implications when that PPOR is sold and as it changes from an asset to cash. She may find Centerlink will cut her off completely at that point and/or there may be limitations on the value of the to be purchased PPOR and/or IP let alone the income derived.
I think she needs to have a chat to someone in the know and become a lot less vague before making any commitments.
Cheers
Yes, I've suggested she talk to a Centrelink FI before making any decision.Yes
Why not suggest she speak directly to a Centrelink financial advisor and get it from the horses mouth
Lindsay
If I have a $2M dollar house I can claim the pension, If I have $2M in cash I can't.
That is unfair,
Offcourse it has developed because the government does not want to be seen making old people sell the family home to fund retirement, But they are quite willing to make them sell shares and empty bank accounts.
All I am saying is that having a system where they can claim a pension to fund life style, but have their assets cover the bill upon death would be fairer.
The way I see it, atleast in the future the pension is a safty net to stop you staving to death if you fail to save for retirement, And you should use all your personal resources before you qualify, and if you can't bear to leave the family home it should be able to be claimed against to fund you past pension payments when you die.
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