How to Invest R500000

[Spencer32]

Hey Everyone

I'm moving back to from Aus next year some time and have managed to save a bit of money and was wondering where I should invest it. I'm moving back as I have no family here and a lot of them are getting towards the end of their innings and I miss home.

So I have around R500000 cash in the bank with absolute no debt. When I get back I would like a place of my own in DBN probably a small easy to maintain apartment and will buy a cheap run about cash. I am a qualified Civil & Structural Engineering Technician and don't know how easy work will be able to find in the first couple of months of arriving. My current employer has offered some contract work which can be done over e-mail corresponding but as we all know contract work can dry up pretty quickly. So please give me some idea's as to how I should invest the money I will have left over. I would say the investment would be short term +-5 years as I do not see myself living there forever but don't mind leaving some form of investment over there if I do move away.

Regards
Spencer

 

[Hendrix]

I guess you will need the money when you get back next year, so I assume you need somewhere to "park" the cash?, and low risk?

 

[Mortymoose]

I would leave the dosh in a fixed account in OZ, that in itself would be an investment, seeing the way the rand fluctuates.....

Also give you peace of mind to know that you have a backup outside the African continent....

 

[Spencer32]

I would leave it here if i wasn't getting 2.5% interest in my current savings account, Inflation is at 5% aha.
I was thinking in terms of property over there, but not sure how the bank would rate me as a 23 year old with no credit rating.

 

[Hendrix]

Give us more info, like do you plan to use the whole 500k as a deposit on a house?
Your intentions will determine how you should invest.
For instance, if you plan to use the 500k within a year, you should keep it in a low risk vehicle.
If you want high returns, you gonna have to go with equities, which are volatile in the short term.

 

[Spencer32]

Well not on just one house, I was thinking of a few that are positive geared and 1 I reside in. I'm not sure how much the bank will lend me and how much deposit they will ask for each property.

 

[chrisc]

I will keep it safe for you. Alternatively, you can buy a Allan Gray or similar investment which will get you about 12% p.a. They will redeem the investment within 2 or 3 days

 

[Hendrix]

If it was my money, and wanted to keep it relatively safe over a short term, I'd put it in a low equity unit trust, like Allan Gray Stable fund or the Coronation Balanced Defensive Fund.
Money is safer than a full equity fund, and you should see above inflation returns.

 

[supersunbird]

OK, here is an some ideas you can ponder on and modify as you wish:

1. Least liquid (cannot always just sell property quickly without taking a very big knock):
Once you have employment this side you can buy two properties. One to rent, the other to stay in. Maybe each in the R600 000 to R750 000 range . You can put a deposit of R400 000 into the one you will live in or spread it over the two properties at R200 000 deposit each.

The remainder of the money you use for a Retirement Annuity with 10x, Coronation, Allan Gray or similar, in a Balanced Fund or you own selection of Unit Trusts that gives you 50% local equity, 25% foreign equity and 15% property and 10% bonds (regulation 28 compliant). This will grow very decently over the 30+ years you have to retirement age. You can cash this out if you formally emigrate later.

2. Midway liquid:
Buy a place to stay in the R600 000 to R750 000 range and put R200 000 into it.

The other R200 000 goes into 4 or 5 unit trusts/ETFs. R100 000 (or R120 000) into 2 (or 3) equity unit trusts or ETFs. R50 000 (or R40 000) into a foreign/global unit trust or ETF. R50 000 (or R40 000) into a property unit trust or ETF.

The remainder of the money you use for a Retirement Annuity with 10x, Coronation, Allan Gray or similar, in a Balanced Fund or you own selection of Unit Trusts that gives you 50% local equity, 25% foreign equity and 15% property and 10% bonds (regulation 28 compliant). This will grow very decently over the 30+ years you have to retirement age. You can cash this out if you formally emigrate later.

3. Most liquid:
R100 000 into the highest interest money market fund you can find. This money would be very accessible.

The other R300 000 goes into 4 or 5 unit trusts/ETFs. Half into 2 or 3 different types of equity unit trusts or ETFs. Quarter into 1 or 2 foreign/global unit trusts or ETFs. Quarter into a property unit trust or ETF. This money would be decently accessible but the capital is not guaranteed but suitable for your timeframe and longer. Should grow very decently.

The remainder of the money you use for a Retirement Annuity with 10x, Coronation, Allan Gray or similar, in a Balanced Fund or you own selection of Unit Trusts that gives you 50% local equity, 25% foreign equity and 15% property and 10% bonds (regulation 28 compliant). This will grow very decently over the 30+ years you have to retirement age. You can cash this out if you formally emigrate later.

 

[Velenoso]

I reckon with 500k you could pull off a property 'flip' in KZN. Buy the worst property in the best area you can afford, fix it up (while you live in it), sell for a profit. Repeat process. If you can partner with a friend/family member, all the quicker the process will be (more money).

 

[saturnz]

In my view investments require an entirely different approach to lets say wealth management, which is what I think most people enquire about but use the term investment.

 

[supersunbird]

In my view investments require an entirely different approach to lets say wealth management, which is what I think most people enquire about but use the term investment.

Well, they (me too) use the term investing for wealth building and then that becomes wealth management eventually.