Transfer Funds or Rent a House

[dme]

I have been toying with a possible idea that I would like some advice on....

I was thinking that instead of tranferring all my funds across to Australia that I instead move a portion over that will get me set up for 6 months of living in Aus whilst I look for a job.

With the rest of the money, I put down a deposit for a good sized "digs" in South Africa next to a university and get tenants (reliable students or staff with a family) to pay off my bond in South Africa. I know there are risks with tenants but I figure if I know staff at the university, they could give good referals, and I could leave the actual rental arrangements with a local Estate Agent.

The rationale for this thought process is that rands are not worth very much in Aus, and the quality of accommodation is currently better in SA for the amount you pay than in Australia. It might also be a fall back base if things in Aus are not better than in SA.

Thoughts? Would I be better off just taking all my money out of SA, or is this a good idea. I don't think tax will be an issue, as I will ensure I am not making a "profit" since I would be paying off a bond in SA.

[Safrican]

Perhaps think of it this way:

if you were in Australia with all your capital, would you invest some of it in a property in South Africa?

exchange control risk plus the other risks of not being close by, not being able to monitor what's happening in the areas you invested in so you know when it's time to sell etc?

[monsta]

I am not a personal financial advisor. So, be carefull about my investment advicr ? You should think seriously about currency fluctuations (and tax).

The mining boom is over. So the Aussie dollar is at the lowest its been in a while compared to the USD.

Add to that the ZAR is plumeting. For a currency that was worth more than a USD +- 30 years ago, its now R14 to the US dollar.

http://mybroadband.co.za/news/hardware/136260-massive-rand-weakness-is-going-to-hurt-your-pocket.html

I know that passed performance isn't necessary a good indicator of future performance. But the ZAR has had a long history of massive declines.

I would look at this scenario. The ZAR keeps declining and the AUD returns to a decent level (e.g. 0.90 AUD to 1 USD). Work out how much interest you would need to earn just to cover the currency devaluation in the Rand.

Then go to a site like www.dividends.com.au and do some deep research on what an investment in Westpac shares (wbc) could return. You could even look at managed fund, e.g. an indexed fund from www.vanguardinvestments.com.au or www.iShares.com.au or even a LIC like www.afi.com.au. Indexed funds do not try to outperform the market, so they can be lower risk.

You may find that even a lower risk investment like an indexed fund will return over 6% and a RSA investment (after considering currency devaluation) is unlikely to match that.

Oh and bear in mind the Australian Stock eXchange has had its worst month since the Global Financial Crisis recently. So, now is a good time for the brave to buy. There are lots of stocks trading at well below what the companies are worth.

[RYLC]

With a falling ZAR year on year, a country where service levels can't seem to get worse (but do) and the ever present threat of squatters taking over your house I have to say that I think it is a mad idea. It looks like you are thinking in rand where a house is worth something whereas in the view of the world economy you will end up with pennies in exchange rate terms. If you live there then you need a house but RSA property is not the place to invest if you are only starting out in Oz and will need the money to be brought over here.

Perhaps this example will help: you buy a house in Zimbabwe to rent to students ( are you already thinking bad idea?). They pay millions of Zim dollars a month in rent - maybe if there is no unrest etc. Once you have paid bank fees and the exchange rate has been applied you are left with only tens of Oz dollars. So if you lived in Zim earning millions in rent you would feel rich but translated to Oz you'd be lucky to have enough to take the family for a take away. So that's why it's a bad idea. Using third world currency to fund a first world lifestyle is a problem unless you are absolutely loaded. And if you were loaded you would have been wise enough to move your money off shore long before this.

[dme]

Thanks for the advice guys. Clearly I was the only one thinking this might be a good idea.

Is it possible to invest in shares now, directly from my bank account in Aus, if I do not have a tax filing number yet? I am only moving to Aus in 2017 and am not liking the idea of leaving money in the bank earning just 2.5% returns in the meantime. If not, are there any suggestions for investing offshore from SA and paying out to Australia in the future?

[RYLC]

Have a look at Barefoot Investor for an idea of investments.

He advocates indexed funds from www.vanguardinvestments.com.au or even a LIC like www.afi.com.au (as advised by Monsta).

Disclosure: I have shares in vanguard and also AFI.

You would need to sign up for a trading account (your Aus bank may have a share trading arm or use Commonwealth Bank with a link to your bank account). This can all be done online and just takes a bit of time.

You'll probably need a tax file number because otherwise they withhold top tax rate from dividends but that can also be applied for online:https://www.ato.gov.au/Individuals/Tax-file-number/Apply-for-a-TFN/

.

[rozellem]

A good few of us (me included) had property in RSA after leaving. Even with family on the doorstep, it was one of the most stressful things we have ever done. South African estate agent checks mean diddly squat. The law is all in favour of the tenant/squatters rights. I had a prominent radio DJ and his family live in ours. They paid the first month, then not for about 8 months, then took them to court, they pay a bit just before court date, judge would tell us "Look, he is extending his hand to you". WTH!!!!???? The rest of the story is one to be told around a camp fire, it is truly unbelievable. At one point I was thinking, who do I know with very loose morals, that can go do a little job for me (no, not death, it involves a pig carcass).......

Bottom line, if you are serious about Aus, come and bring it all.

[ottg]

A general question:

If you had a choice of either $1 million dollars today or your money doubled each day for 31 days starting with 1 cent, what would you do and why?

[RedPanda]

Assuming Day1=1c, Day2=2c, Day3=4c ..... you have a formula of Money=[2^(day-1)]/100 to give you an answer in $, not cents.

Then at the end of 31 days you would have $ 10 737 418.24, which is just over 10x more than the offer of $1 mil.

I'd wait it out for sure!

[RYLC]

I was thinking that instead of tranferring all my funds across to Australia that I instead move a portion over that will get me set up for 6 months of living in Aus whilst I look for a job.

With the rest of the money, I put down a deposit for a good sized "digs" in South Africa next to a university and get tenants.

A general question:

If you had a choice of either $1 million dollars today or your money doubled each day for 31 days starting with 1 cent, what would you do and why?

I'm lost ottg. Is your post just for interest (excuse the pun) or is it in answer to dme's question. Please explain.

[ottg]

If you got the answer correct to my question then you don't need the services of a financial planner - you can look after your own money. You did get it right didn't you? :-)

You can make money anywhere on this planet providing you know where/how to look. However it will always have a timing issue and a tax issue which you need to familiarise yourself with (and it takes time). Get a handle on the tax benefits on capital gains tax when/ or not using a Self managed super fund, the negatives of the different trading platforms (no not to do trading - but its a mechanism for share market investments). Then it may also take some time to liquidate some of your current investments or funds in order to move that across. Start with that process asap.

a. You can make money in the USA, UK, RSA or Aus markets. Start by learning/reading about investment possibilities for all four countries. Get a strategy first.

b. On your doorstep read the last 3 books from Cluver and read some of his documentation/ strategies etc here: http://www.rcis.co.za/documentation/#How_to_use_the_new_ShareFinder_5_Professional

He is working on a system for the Aus/USA and UK markets (Sharefinder 6) but not ready yet, that is why my own investments besides for property is currently in cash for the last 8 months - waiting.

c. Spend time on the inputs given from the peeps on this thread - personally I subscribe to Motley's and Morningstar but with the strategy in (b ) above you can do much better - gaurenteed.

d. Here is a new kid on the block. They move in the right direction but I found the interpretation not easy to read - but watch their space. I did ask them for a spreadsheet format. https://simplywall.st/snowflake/grid

e. Take your time and be patient as opportunities occur everyday!

[ottg]

Would also like to refer you to this response here: http://forums.whirlpool.net.au/forum-replies.cfm?t=2458079