Hypothetical but serious: what would you do with R1M?

[bwana]

How old are you?

 

[Splinter]

Retire, buy a yacht, oh wait, you said Rand? Pay some municipal rates, elect, water, and buy chappies with the change.

How old are you?

The above. R1m will get you nowhere in terms of financial freedom.

Even if you are 65 and retiring on R1m.

 

[supersunbird]

The above. R1m will get you nowhere in terms of financial freedom.

Even if you are 65 and retiring on R1m.

My method and give it 20 years... it will be decent money.

 

[Splinter]

My method and give it 20 years... it will be decent money.

For sure. If you have R1m and can just invest it and leave it alone for 20 years, then you should have decent money.

But I think the OP was more about having R1m now, and somehow being financially independent (as in not having to work) for the rest of time.

 

[Splinter]

This is not the way to go about it, for investing in property you use the banks money via a homeloan. And you invest the cash you would have paid for the property elsewhere.

The banks will only give you a homeloan if you have security, or an income that allows such a loan.

But, in this example, we are only talking about having R1m.

The banks will require you to cede this money in some sort of suretyship before they will give the loan.

You will not be able to invest this money willy-nilly without their consent.

 

[HavocXphere]

Buy property. Then pray like hell that the SA economy stays stable for 5+ years.

Or move it overseas. Your call.

If I were in SA for the foreseeable future I'd probably do prop

 

[supersunbird]

For sure. If you have R1m and can just invest it and leave it alone for 20 years, then you should have decent money.

But I think the OP was more about having R1m now, and somehow being financially independent (as in not having to work) for the rest of time.

Well, he said goal, which is something in the future, not "and become financially free", which sounds more immediate.

 

[supersunbird]

The banks will only give you a homeloan if you have security, or an income that allows such a loan.

But, in this example, we are only talking about having R1m.

The banks will require you to cede this money in some sort of suretyship before they will give the loan.

You will not be able to invest this money willy-nilly without their consent.

If your income and the likely property income (they do take that into account) doesn't get you a loan (only reason they would want surety), then you have to abandon the whole idea of the property-to-let anyway, it's too risky (all eggs in one specific basket in one specific place).

 

[supersunbird]

Buy property. Then pray like hell that the SA economy stays stable for 5+ years.

Or move it overseas. Your call.

If I were in SA for the foreseeable future I'd probably do prop

House prices are flat or declining (except Western Cape).

 

[Gtx Gaming]

50% BTC and 50% ETH.

 

[Cius]

So debt is off the table, in that case I would invest it all over time in my pension (current age 38). I would for the next couple years put the max tax allowable limit (27% I think these days) of my salary into my pension instead of what I am currently paying and would use the 1 Mil to bridge the difference. Would use a combination of short and medium term savings vehicles to keep the money growing while I am steadily deploying it to the pension fund. So money market, fixed deposits, etc. I guess it would take 10 to 11 years to get it all in the pension fund in the most efficient way possible (with the tax benefit).

I would stay a million miles away from crypto currency. I see a bubble and the pins are starting to home in on it.

 

[supersunbird]

So debt is off the table, in that case I would invest it all over time in my pension (current age 38). I would for the next couple years put the max tax allowable limit (27% I think these days) of my salary into my pension instead of what I am currently paying and would use the 1 Mil to bridge the difference. Would use a combination of short and medium term savings vehicles to keep the money growing while I am steadily deploying it to the pension fund. So money market, fixed deposits, etc. I guess it would take 10 to 11 years to get it all in the pension fund in the most efficient way possible (with the tax benefit).

I would stay a million miles away from crypto currency. I see a bubble and the pins are starting to home in on it.

Well, if you want to put it all in your pension as a lump sum, and never contribute to a pension again (or at least minimally, like down to 5% at my employer), that is possible too. You will just get tax refunds from SARS as if you contributed the full 27.5% of your income each year for a long time.

 

[surface]

Buy a house cash. Rent it out. Guaranteed income and your asset appreciates as well as your income from the rental. Which you can guarantee your growth at lets say 10% annually. However, it comes with it's own headaches. But I will do that and just keep on working still.

erm. 10% annually?

http://www.rollingalpha.com/2016/02/17/the-myth-about-sa-house-price-growth/

 

[skeptic_SA]

atul gupta ~ Thats one years salary ekse boss. Probably just buy me another minister.

 

[Creag]

I'd invest R750 000 overseas in $ (and maybe €) index mutual funds and the remaining R250 000 here in ETFs/index Unit Trusts

This ^ either in Webtrader or some other suitable investment vehicle. The rest spread in ETFs.

 

[NarrowBandFtw]

There was a "what would you do with R10 Bar" thread some time back, my answer still applies.

Hookers and blow?

 

[bchip]

This is not the way to go about it, for investing in property you use the banks money via a homeloan. And you invest the cash you would have paid for the property elsewhere.

This only works if the "new" investment outperforms the banks loan ~11%
Considering the "best" investments were equities that did 13% per annum in a
bull market (at the best of times), and anyone following this advise over the
past 2 years would now be approx. 20% worse off.

Just saying following this advise is extremely speculative and risky, and if anything happens
with your stable income (like retrenchment) you could be seriously up #$$% creek without a paddle.

Would never recommend this to anyone...

 

[supersunbird]

This only works if the "new" investment outperforms the banks loan ~11%
Considering the "best" investments were equities that did 13% per annum in a
bull market (at the best of times), and anyone following this advise over the
past 2 years would now be approx. 20% worse off.

Just saying following this advise is extremely speculative and risky, and if anything happens
with your stable income (like retrenchment) you could be seriously up #$$% creek without a paddle.

Would never recommend this to anyone...

My index provident fund did over 20% in 2012, just saying.

I'd say invest the R1 mil in the markets as I have outlined.

And if you still have this yearning for buy-to-let, do it on it's own strategy and don't overextend yourself (rather start with a sub R600k unit), you'd always have part of that R1 mil as backup.

 

[satanboy]

Put it on black

 

[bchip]

My index provident fund
did over 20% in 2012, just saying.

You understand that the 13% is annualized right?
Its an average over 5-7years.
So pointing out that you were above average in 1 of
the years (also 5 years ago) is like saying I won a poker
game at college, hence I must be a poker genius...

You also completely ignored the quote:

and anyone following this advise over the
past 2 years would now be approx. 20% worse off.