$700k - where do we put it?

[stell]

We're super fortune through a mixture of hard work and luck have grown a solid business that has allowed my wife & I to secure a decent future. I'm the sole principal/shareholder of the company and my wife works in a large corporate.

Both of us are in our mid 30's.

We've got $160k sitting in the bank (w/ another $540k due in 2-3 mths), want to get your advice on what to do with it and what we should do with our money going forward.

This is the high level overview: (Please let me know if you need any other info)

+$2.4M family home
+$1.5M rental - @ $1k per week, 4 years left on the brightline test and $1M mortgage (2 yrs @ 2.39%)
+$220k in shares (synergy 80/20 SRI -https://www.synergyinvestments.co.nz/portfolios/performance )
+$50k in savings @ 0.8% @ 270 days
+Investors in 3 startups @ $105k across the 3 companies in Year 2-Year 4 (not looking to returning anything till year 3-4 minimum)
+$300/wk towards 80/20 Synergy Investments (managed investment fund)
+ $2k in disposal income/wk

Company wise:

+$500-$600k business profits after tax/yr

Our portfolio 'mix' at the moment is really:

+The Company
+Start Up Investments
+Investment Fund
+Term Deposit
+2 houses (w/ net rental income for the 2nd and what ever capital gains unfold)

Ideally we want to semi retire in the next 2-3 years with a child due soon, or retire forever in which we'd need a minimum of $140k/yr income to keep our lifestyle.

What do we do with the $700k and additional $$$ coming to make our early retirement possible?

I've posted before over a year ago and got a little bit of hate and ppl messaging aggressively, please don't hate, both my wife and I come from humble lower middle class families and have been lucky. We've sort advice from professionals who all say, shares, shares, shares (and clip the ticket for little advice/support).

Thanks you for your advice in advance!

 

[layk]

@stell Surely you could afford a financial adviser rather than reddit?

They would look over everything

 

[brianp24]

@layk This. There are paid-for flat fee financial advisors precisely for people in your position. They'll know much better than most.

 

[stell]

@brianp24 We have been introd to 3 folks. All stated shares as the only option 3-4 years ago. The property market has 'grown' 40%+ since then.

 

[layk]

@stell Don't think financial advisers 3-4 years ago could foresee a pandemic, lockdown, border closure and subsequent quantitative easing which has driven a fair chunk of those 40% gains in property...

 

[yourfriendcrow]

@stell The S&P500 has nearly doubled in that same period, 4 years. So even with COVID driving house prices lately, shares would still have beaten the property market.

 

[zorah654]

@yourfriendcrow Bingo

 

[jamila]

@stell Oh in that case GME and Dogecoin if you want to listen to reddit instead. My fee is $690k please provide it in cash.

 

[mathewmark1988]

@stell Although you're right regarding RE, some high growth shares have grown 100% in last year alone! But this just shows the high importance of diversification.

 

[kendrac]

@stell First off, well done, great to hear stories like yours. I think the advisors have a point about shares & funds though - they do beat property over the long term -check out the s&p500 chart going back decades. It's just property is way better at the beginning, as you get the easy leverage of a mortgage to multiply your gains, and in NZ the FOMO demand, but that might not last forever. Once you get to your level, it's good to diversify, it's what long-term wealthy people do.

I'll assume you want to secure another 100k p.a. in passive income.

You could look into commercial property, there's a recent sales page on interest.co.nz. A lot of older people get these as they have a higher rental yield compared to residential, low maintenance, tenants pay rates&insurance, and if you get a good spot, like a well located industrial lot, or a good cafe in the suburbs, then tenant turnover is almost non-existent. Also the interest on a commercial mortgage is still tax deductible.

Say you buy something with a 5% yield - to get 100k per annum rent you'd need to get something worth 2m. There are higher yielding properties too. Just be aware that the capital gains are quite closely tied to the rental amount, so they don't grow (or fall) as much as residential property has the potential to. As the rent grows, the value does too, but they are more stable, and would hold their value in a crash provided the tenant's business is a good one that won't go bankrupt, or the spot is just a good spot.

Alternatively, you could get up to 3m of dividend producing shares that pay around 3% per annum, to get 90k dividends and some modest capital growth in addition.

If it was me, I'd probably go for some combination of all the options - commercial+dividend shares to start. Then once everything is fairly solid, leverage off that passive income or another windfall to possibly get another residential and some ethereum/growth stocks. i.e. focus on passive income for now to secure retirement option, and then later on return the focus to net worth.

 

[heather0000]

@layk Read it and weep pleb.

 

[resjudicata]

@stell Nice. Avoid internet advice, get a professional.

 

[stell]

@resjudicata Called around today and have a couple of meetings next week. Not that impressed tbh.

 

[resjudicata]

@stell We are you asking here? Nobody here has that type of money lying around, if we had we wouldn't have joined PersonalFinance! LoL. just joking, you doing well!

 

[stell]

@resjudicata I disagree. There looks to be some smart cookies on here.

 

[snapdouyinapp]

@stell I read your previous post and doesnt look like hate to me. The only thing was questioning your actively managed fund by way of (likely) high fees from Synergy. As the previous comments mentioned, lots of us could take advice from you since you've done so well.

 

[stell]

@snapdouyinapp You didn't see the messages sent to us.

 

[snapdouyinapp]

@stell No - Thats not cool. Report them if that happens again.

 

[stell]

@snapdouyinapp We did and they got a smack.

 

[stell]

@snapdouyinapp In terms of advice, the bulk of the $$$ has come from running 3 companies in the tech space. Working hard, giving everything to your staff to have their best life and being lucky. Our first company made $105k profit in the first 5 years, hustle, hustle and believe in yourself.