# 200 k cash to spend ?



## wittyalias (7 Oct 2007)

Hi,
First time poster, but love the forum here.
I have 200k cash.
Own House worth 800k mortgage of 280k.
Investment property worth 350 with mortgage of 180k.
Options are to buy an investment property , pay off part of the mortgage or I have been looking at a lot of these syndicate deals.
Young family , am in my mid 30s and self employed. Tiny pension, just started last year.
Any investments in Ireland will take a lot of cash to keep ticking over. Interested in overseas and would prefer commercial.
Bit of a brain dump but would aprpeciate any advice!!!


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## Purple (7 Oct 2007)

For what it's worth if I was you I'd max out my pension contribution for this year and pay the balance off the mortgage on my PPR.


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## z106 (7 Oct 2007)

I definitely wouldn't pay off the mortgage.
Effectively - on a tracker rate that gives you 5.1% net return guaranteed - c. 6.25% gross.

I think you definitely should look into buying property overseas using gearing with maybe half of it or something.
In fact - If it was me i'd pump the whole lot into residential property overseas.


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## Howitzer (7 Oct 2007)

qwertyuiop said:


> In fact - If it was me i'd pump the whole lot into residential property overseas.


 
No surprise there then


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## Sarsfield (7 Oct 2007)

qwertyuiop said:


> In fact - If it was me i'd pump the whole lot into residential property overseas.


 
I've heard 'overseas' is a great place alright!


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## wittyalias (7 Oct 2007)

thanks .
overseas property .... i would be willing to high risk 50k and medium 50k so any ideas of where , what type of property or any suppliers. i have looked at oodles of overseas property and am very unsure where to start..  pretty concerned about the credit cruch  etc so any further advice would be great


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## z106 (7 Oct 2007)

You could always throw €100k on the residentail side and maybe another €100k into some commercial property fund.
There seems to be a lot of interest in germany for commercial funds these days.

As for what country to invest in on the residential side then i suppose you just have to do your reseach.
THere is probably high potential returns in eastern europe.
You could always look at london as a safe bet for the long term.

At the end of the day nop matter what country u invest in there will be some people saying it's a sure thing and there will be other people saying it's destined to fail.

For what it's worth I have invested in london and warsaw this year.


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## MichaelDes (8 Oct 2007)

Best advice will not be gleamed through here or the internet. Would suggest you read some periodicals and finance magazines such as the Economist, Fortune, Financial Times or Money Week. I subscribe to the last two and find them invaluable but do not take their advice verbatim. As what is tipped one week can be disclaimed three weeks later. Best of luck.


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## Damien75 (9 Oct 2007)

Hi there. Nice to see someone has cash left. I recently put some of my hard earned into a commercial fund that operates in germany, romania, poland, bulgaria and uk and ireland. Its wiping its eye very well and the principal investors are well respected here(Ireland). PM me and I`ll send you details.


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## Steve D (9 Oct 2007)

At the moment you have all your money tied up in property. It is not a good idea to have all your money in one type of asset because it is too risky to have all your eggs in one basket, especially if there is a global property bubble, which many commentators are suggesting.

If I was in your shoes I would look at unit trust or investment trusts. These will give you exposure to equities and there are many different types, for example income funds, growth funds and others that specialise in different regions, such as the Far East or you may be find that bonds are worthwhile. 

You will have to do your own research to find out which ones suit your risk profile. You may also be able to put some funds like these into a pension fund and take advantage of tax credits.


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## z109 (9 Oct 2007)

Property in Spain - crashing
Property in the UK - about to crash (probably!)
Property in the US - crashing
Property in Japan - has been crashing since 1989 and still hasn't stopped.

Where else?
Bulgaria, Romania, Poland, the Baltics, Hungary? The natives don't want to live there, so that looks like a poor idea too.
Germany? The cheap stuff is in rubbish places where there is high unemployment. The expensive stuff won't give you a return.

Commercial property values apparently follow residential ones at a lag of some months (is it six-nine?).

Stock markets, at record highs all over the world (apart from our poor old iseq off nearly 20% in the year). If you want to invest in them, do so through a pension at max tax relief. That should cover your stock market ambitions.

I would seriously look at writing down debt on your mortgage. Not only do you then save the interest, you have equity available for when the bottom is closer in property markets around the world.

As you are self-employed with a young family, it will also give you great peace of mind to know that even in an economic collapse your home is safe.


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## Duplex (9 Oct 2007)

Just to clarify; the German commercial market is not performing well.  



> The weakest sector was office properties, which dominate the index, achieving total returns of -0.9%, an increase of 30 basis points on 2005. Capital values continued to fall at the All Property level for the fifth consecutive year. In 2006 property values fell by 3.1%, whilst income return remained at 4.6%.


 

[broken link removed]


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## Maine (10 Oct 2007)

wittyalias said:


> Hi,
> First time poster, but love the forum here.
> I have 200k cash.
> Own House worth 800k mortgage of 280k.
> ...


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## wittyalias (12 Oct 2007)

thanks for all the advice .. lots to chew over.
will post again when money is spent


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## Martin77 (28 Oct 2007)

wittyalias said:


> Hi,
> First time poster, but love the forum here.
> I have 200k cash.
> Own House worth 800k mortgage of 280k.
> ...


Disclaimer: I am not a financial advisor, but this strategy has worked for me.

Looks like you have been fortunate and have done very well so far. Well done.

Why not:
1) do a test to see what sort of attitude to risk and what sort of investor you are [I come out as aggressive level 5/6, but run my portfolio on a model of 4/6, that then gives a recommendation on asset class allocation that is regularly updated by professionals]
2) try putting your household finances into the same format as the book keeping of your self employed company and then doing some scenario analysis. Cross out each income stream/expense stream and see what this does to your family/portfolio. repeat adding 25% and subtracting 25%. You can then identify your real financial needs based on "what if" scenarios.
3) write down some goals based on these needs e.g. get my kids though university', in order to create a long term cash flow chart of when you will need to liquidise long term investments.
4) look for financial products to fulfill the goals and allocations.

I mean if I look at your portfolio, sorry if I say so, but if this is all you have then I would say you are over focussed on property, have low liquidity and limited access to your capital, and have an unsure income because you are self employed.

I'm also self employed and keep a cash cushion in case I cannot find customers/work for a whole year. That gives me time to retrain or get a permanent job. I mean a "what if" that immediately springs to mind for me is "what if there is a recession and my income from my self-employed company halves." I also have a goal of stopping work by 50, which I should comfortably achieve, just to let you know it worked for me.

Maybe you would like to consider some nice boring, safe, and tax-efficient products like:
1) contributing to your pension (just as inaccessible as a house, but can be much more tax efficient. I have maxed out my pension for years using an averaging rule, as I think my income will actually fall over time given my core skill set, and desire to work less over time.]
2) life insurance to protect your existing property for your family (if something goes wrong, they'll need cash, not tied up capital. I have virtually no life insurance because I have no dependents)
3) permanent health insurance (disability insurance) for self employed (I have a minimum cover to ensure that my mortgage is still paid if I cannot work, plus my future pension contributions until retirement age are also covered separately. This is expensive, but I think being self employed is already a pretty big risk.)
4) some liquid emergency cash (up to one month cash)
5) Some cash deposits (I have some fixed interest deposits at 6.8% with low tax costs where I live, yielding 3.6% in real terms after tax and inflation. I actually find that very attractive compared to the stock market at this time and given my goals).
6) a bunch of unitised investments in a mix of very large funds of bonds and shares (my initial filtering criteria are > 1 billion capital, proven record, existing for >5 years, and with low transaction/management costs)
7) some shares and fun stuff on the top (I personally stopped investing in individual company shares and bonds because I could not spend the time needed to manage this properly as a private investor, nor trade fast enough to react to events.)

I decided not to pay off my mortgage because it was simply nuts tax-wise (depending very much on my personal situation and where I live). Having a maximum mortgage for me makes perfect sense due to the particualr tax laws. I can actually loan the mortgage money back to a bank at a fixed rate deposit and make money after income tax and mortgage tax relief!

Another guide that i have is that I would not invest in the same branch in which my company operates. So if you are a builder, investing in property will increase your variance (potential down side loss), because it is likely that house prices and your job are affected by bad events in the same way.

Then you'll see if you really have that 200K cash to spend on property.

I'm not saying property is per se bad, I'm just trying to balance up the replies compared to what some other people seem to be saying when they immediately recommend putting 100% in relatively high risk assets to someone with your list of requirements. Property would probably be number 7 or 8 on my list of options, and not number 1. And as an asset allocation it would be 10-15% of my liquid assets.

But I could of course be wrong.... now back to the original question......

200K is not going to go far in a direct investment in commercial property. I presume that is why you were looking at syndication.

There are also a number of property funds specialing in overseas commercial property. Most have been stellar in the last 5 years, but have not done well at all recently. One to start your research with could be Corio NV [broken link removed] that is strong in Europe, has an English website, pays good dividends, trades in Euros, is easily traded with plenty of liquidity, and is pretty transparent and well respected. That'll give you an idea about what these type of funds are like at least. One advantage is that the fund carries the risk of any gearing, meaning your total liability is limited to 100% of your investment if things really go pear shaped. I am not recommending it, it's just a pointer to start your research with.


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