Investing $500000 from house sale

[Tim]

Please can I have advice on investing money from house sale. May not need up to 18 months. Rabobank 7.35% on call. Can I better this. Should I put 50% into rabobank and rest into high dividend NZ shares. I am concerned I may be out of house market and prices move up. Took 9 months to sell house.

[bambi]

Well it looks like you are going to need the money again within 18mths to buy a new house so high div shares may not be the best bet. If they drop 3-4% then you've more than wiped out any gain you'll make from the div. On the other hand if it goes up you'll increase the gains. The risk is you'll have a set date you need to get the money out by and the share price might be lower than you want.

With $500,000 most banks will do you a better rate than what they have listed on their website. You might be able to squeeze out .25% or so extra. Another option that you haven't listed is term deposit. What about a 3-6month term deposit? They can always be broken if you really need the money, you'll usually lose most of the interest for that period but you'll have the cash.

As for house prices, I don't think they will move up heaps. But that's just my personal opinion. Look at how long it took to sell your house, a lot of houses are taking longer to sell than 1-3yrs back. I'm picking prices to stay pretty similar to what they are now with inflation eroding the true value. But this is only my opinion, you have to work out what you think will happen. :-)

Bambi

[Tim]

Thanks Bambi. My real concern is losing value thru inflation. My future is quite uncertain. I will be living in one of my rentals until future is clear. 7.5% sounds okay but taxed at 39% gives a 4.5% no gain or loss taking inflation into account?

[minimoke]

We were faced with a similar quandary.
We put 1/3rd into high interest call account with ANZ and grossed 7%. This was our lazy investment.

Another 1/3rd went into a diversified self-managed NZ share portfolio. Averaged out an 8% net return (capital growth and dividend yield). Had to ride out the highs and lows though. RYM was one that helped save our bacon while we rode out WHS which we are now in the positives again. This was our working investment with associated highs and lows.

Put another 1/3rd into bonus bonds with a net 6% return. This of course was not an investment at all but we had some fun along the way.

[OldRider]

Tim: From your post I gather you have other assets, so you have a similarity to myself, we have as well collected a substantial cash amount recently, while we consider our options money is or will be shortly placed - 1/3rd on call account
7% gross return - 1/3rd mortgage trusts no entry fees or costs round 7.5% gross return, finally betting on further reductions in $NZ/$AUS cross rates, and investment not yet made, 1/3rd into australian indexed trust eg MOZY or similar.

[kittydashwood]

PGW is weakening in the short term, collect some below 1.95 and enjoy some pleasant capital gain in the next ten year period.
Dividend appears stable.[?]