redundancy

[Farm boy]

Hi guys
i was talking to ashore a few weeks ago and told him i have redundancy prospects in june 2007 i will be 42.
has any other members gone through this? the money is good they are offering i will be debt free and a big wack in the bank,is it normal to be scared of the future?
i can work for the new company but it will take 9 years to get to the same financual(sic) position a redundancy gives me and have these new ir laws hanging over my head
what are your opinions
best wishes
greg

[Auld Bassoon]

G'day Greg,

The answer, as is nearly always the case, is "it depends". I'd recommend that you speak with a financial advisor, as quite a few things will need to be factored in, much more than the redundancy payment.

[Greg Q]

Also, what are the 'big picture' considerations? I would try to gauge the prospects of getting a better package if the economy/industry/company went south.

The only thing that I fear in these choices is choosing badly, and not being able to recover. In my case I had to change countries a few times, but eventually I got the hang of it. Now:

THE BIGGEST MISTAKE I EVER MADE IN LIFE WAS LISTENING TO A FINANCIAL ADVISOR AFTER GETTING A HEFTY SETTLEMENT.

It only took him 18 months to abscond with it all, leaving me (and others) to pick-up the penalties on top of the loss.:mad:

[Daddles]

You can't beat debt free. Even if you just pump petrol at the local servo to buy groceries, debt free sets you up for life ... provided you're smart enough to keep it that way.

Richard

[maglite]

Some will suggest sticking the wack into Super, great idea but you will find that you cant make use of it until it matures.

41 and debt free.....as others have said your already ahead of the pack by a mortgage payment at the very least.

What you have to ask yourself is thus:
How much money per FN/Month do i need to live my current lifestyle.
Then you find a job that pays it, if you dont like it......you can leave and find another, simply because you CAN.

I dont know about you........but i know what i would do.

[dazzler]

Hi Farmboy

Spose it depends on how much you value your current job.

I have been playing a similar thing in my head for some time. Not that I am up for a redundancy but thinking of a sea change as cornie as that sounds.

I flip from one decision to the other almost every day.

I am looking at dropping around $30k to do what I would like to do and am still not sure.:o

My 2c is dont do anything unless you are really happy. (Der:rolleyes: )

My other experience from when I lived in canberra when redundancies were all the rage was that most didnt end up debt free but ended up with bigger houses and bigger cars and holidays. Spose thats where you need to be controlled.

The other thing is if you are dropping down the ladder a fair way how hard would it be going into work each day being the underling.

Wouldnt worry about the IR laws. A good worker is an asset that an employer wont get rid of unless thier stupid:(

good luck

dazzler

[Shedhand]

Give Financial Advisors a wide berth. They have a tendency to tout products for which they receive trailing commissions. And they continue to receive these whether your investments rise or fall. Over a two year period I lost 30% on the advice of my financial Advisor. He continued to receive his 4.8% of my contributions regardless. I dumped him and his company.

Park your money in an on-line Cash Management Fund (CMF) with some one like St George (www.dragondirectcom.au), Adelaide CMF (www.adelaidebank.com.au) or CBA Netsaver (www.combank.com.au) which all pay 5.4% monthly on the daily balance. No fees. After you've done that ask your Union to recommend an Independent financial Planner or ring the ACTU who maintail a list of ethical financial planners.
Don't invest in Siberian Llama farms or Alice Springs Pawlonia Plantations. :D

That'll be 300 bucks thanks.

Cheers;)

[dazzler]

I recommend those Nigerian Money Schemes!:p

[Shedhand]

Hello kind Sir
My name is Alphonso Plentycash. My good friend who was hanged recently owned the President Bank of Mombasa. I need your account number so I can share my many good fortune with you...... :D:D

[Farm boy]

hello alphonso
i am more than happy to share a bottle of red with you anytime and help me build my workbench if you are ever in newcastle:D but to get my bank account number you have to go through my wife and man i have to write a withdrawal slip out any time i need money:eek: so you my freind have no chance sorry
best wishes to your planes and bench
greg

[Shedhand]

hello alphonso
i am more than happy to share a bottle of red with you anytime and help me build my workbench if you are ever in newcastle:D but to get my bank account number you have to go through my wife and man i have to write a withdrawal slip out any time i need money:eek: so you my freind have no chance sorry
best wishes to your planes and bench
gregLOL...there's a lot to be said about being single and free..:o.
Don't tell my missus I said that.;) SWMBOATT has grandkids near Newcastle so you never know we might get to share a nice Hunter Valley red.:)
Cheers;)

[Farm boy]

anytime sheddy
if it happens(and i am in the wifes good books) we might be able to organize a newcastle ubeaut bbq and drinks arvo at my place

[Andy Mac]

Hi Greg,
I'm sure the wiser counsel from the financial experts would be the one to listen to. My opinion...I reckon sieze the moment, do what you feel is right!!
I'd love to be put in that position...mortgage free and just having to concentrate on living expenses!:D My part time work/passion would soon move to full time self-employment, and the 'tooling up' I've done over 20yrs would suddenly seem worthwhile (esp. to the missus!:rolleyes: ) Are you able to utilize your woodwork etc to make a moderate income, or would that spoil your hobby?
Sheesh, just thinking of what Dazzler said, what it would be like to drop a whole $30K...the term "bones of my @rse" springs to mind...:eek:

Good luck!

[namtrak]

Get rid of the debts, particularly the ones over the home you live in.

Be wary though that a big wad of cash can very quickly become a small wad of cash. People get all excited about the big payouts which sound like a lot, but when you start using your capital funds for day to day living, the big payouts only last a couple of years.

I would be inclined to pay off all debts, get the balance into some long term investment somewhere (either property or managed funds) and then find another source of income to sustain your lifestyle.

We know once we become debt free (whenever this blasted house is sold) then we will still need around $700 per week to live comfortably (family of four), which can be problematic, given that we probably need another 2/300 per week to increase our investment situation to a comfortable one in about 20 years.

[Bodgy]

Without knowing more details of your situation, I would say take the $$.

You do need financial advise but its very hard to get a competent or honest advisor. Most just flog the products they get commission on. Maybe try 3 or 4 and see how their advice differs.

Do be prepared for a feeling of a sudden loss of status in life. This is temporary (and completely ridiculous) and it does pass.

Make sure that you have a PLAN. You'll go crazy stooging around at home.

It is normal to be scared of the future and the unknown, but it's also pretty exciting.

Being debt free and having a bit in the bank is an excellent situation. Its known as having 'fu78k off money' IE you no longer need to take shzzt from anyone. Except the various levels of Gov but you've got to be a Packer or Murdoch to avoid that.

I think it's really about knowing what you want to do and what makes you happy. Decide that and then see if you can make enough of a quid to get by and indulge yourself.

Do all this before you sign the papers. If you're in the bush whilst living is cheaper, you have less employment options than the city.

[RufflyRustic]

http://www.ingdirect.com.au/ is another great online saver account. I couldn't be happier with it and it's high interest rate 5.4% - ok so it's probably not the highest around, but it certainly beats 0.01% :D

cheers
RufflyRustic

[BobR]

A bit dangerous giving other people financial "advice" (only people qualified to put their hand in your pocket can give advice). Having said that, IF you must talk to a financial adviser, and IF you must go into managed funds, be careful about Wrap accounts. IMO the only beneficary of a Wrap account, is the wrap provider, the accountant, and the financial advisor. It will also lock you into the Wrap provider, and their approved advisors. Should you give your advisor the flick, then you may not get to use a new financial advisor of your choice. And if you do, they might not be prepared to use this wrap provider and you will have to exit the current funds and move to another. You will wear the costs associated with this which include any capital gains tax, plus exit and entry fees. All I am saying is BEWARE!.

[Iain]

Send the money to me, I have a secure account which pays well.
Your Account Number is 1

[woodbe]

be careful about Wrap accounts.

Funnily enough, I have never heard of Wrap accounts until about an hour ago. :)

Bob, are you able to explain how they work? I don't know anything about them, but it sounds like I should...

woodbe.

[ozwinner]

Funnily enough, I have never heard of Wrap accounts until about an hour ago. :)

Bob, are you able to explain how they work? I don't know anything about them, but it sounds like I should...

woodbe.

They send a cheap hooker around to your place, she wraps around your leg, you give her money, she leaves with your money, neither to be seen ever again.

Al :p

[BobR]

This is a crude description but should give you some understanding of what they are all about. If we step back a few years, when you had some funds to invest and you did not want to play the stock market, you could place your money with managed funds. You selected the fund manager, and the type of fund(s) you felt comfortable with. You paid an entry fee, which in a retail fund could be anything up to about 4% of funds invested. That was your only cost. At the end of the financial year your fund would issue you with a statement which you used to fill out your income tax return. Should you be with several funds this process may become a bit of a nuisance. You could pass it all off to an accountant who could manage the process for you. Enter the wrap accounts. This is a marketing umbrella. The wrap provider sets up a particular wrap account that contains a bundle of managed funds. You are restricted to these funds but may move between them based upon terms dictated by the wrap provider. The wrap provider takes an annual fee for this based on the value of funds invested. They will promote access to wholesale funds at a lower entry cost as a positive. What they don't tell you is that with sufficient funds you can go directly to a wholesale fund. The BIG benefit you will be presented with is that they will do all the paperwork for you. You then give this to your accountant - another fee. Your financial advisor not only gets a trailing commission from the fund managers, but will charge you a fee for reviewing your investments each year. Everyone has their hand in your pocket. BTW, you still have to pay the entry fee for each fund you invest in. As mentioned in my last post, you are to some degree now locked in. Could be big dollars to get out if you trigger CGT, exit fees, then reinvesting fees. Hope this crude outline helps you ask more questions when investing.

[woodbe]

Cool. Thanks Bob, I will certainly be asking :)

Thanks for the quick and succinct response.

woodbe.

[johnc]

The only comment I would make concerning Bob's post is the cost of the annual fee in wrap accounts which can be up around 2.4% of the funds invested by the time you add the managed fund fee, the wrap account fee and the investment advisors cut. Probably the last great rip off really. The industry funds have a fee hidden in the return of around 1% but don't feel fooled because the rate of return is after the fee so at least the declared rate is an honest one. Some of the earlier mentions are of no fee but low return products which are fine for short term investing. There is always self managed super but nothing is free and although investing directly in shares etc might save you fees your accountant will still charge an audit fee which can be hefty so that comes down to the amount invested.

So in a nut shell the wrap accounts are a hefty cut to the advisor up front followed by an annual fee of up to 2.4% which when you consider that the dividend yield is often around 4% leaves you relying heavily on capital gains to keep in front.

John.

[Farm boy]

thanks for your advice guys
it is great to have different opinions from everybody the redundancy takes effect in june 2007, my wife is keen to buy a nice property at this stage to rent or leave the money in the bank for a few months until we come back to reality
bodgy you hit the nail on the head about status i am slightly scared working for one employee since leaving school but glad this will pass.
married to a good women helps unfortunately she has already warned me no extra shed time will be granted:mad: until all jobs around the house are completed man i hate varnishing windows
cheers
greg