Question: Since they have come back from a high, would Brambles (BXB) be a good buy at today’s price?
Answer (By Paul Rickard): I am not sure whether Brambles (BXB) is (yet) a great buy. The result was very disappointing, with Brambles providing guidance for FY17 underlying profit on a constant currency basis to be unchanged, and abandoning medium term financial targets. Their USA business is clearly under considerable pressure.
As for the brokers, they are now neutral on the stock (following three downgrades). According to FN Arena, of the seven major brokers, recommendations are one buy, five neutrals and one sell. Target price is down to $9.93.
Question: I have a small business that turns over $400,000 per year giving me just over $200,000 of possible income after expenses. This is only possible after working 60-70 hour weeks, which after 10 years is starting to wear me down. I have an SMSF, which owns the office and the company rents at $28,000 per year. Now worth approximately $400,000. I also own a house approximately worth $1.75m in the inner-west, Sydney. The business was run from the house for 12 years and then I have been renting the property out on airbnb for three years. The house would rent for $1000 per week on the rental market.
I’m 50 this year and would like to take some time off as it has been long overdue and might balance out some of my work life balance that has been non-existent. I have no dependents and I’m single.
Would it be wise to sell the house and top up my super and diversify into shares as well? I’m concerned having so much money tied up with property and am trying to look forward towards earning an income via my SMSF when I retire. Can I retire already?
Answer (by Paul Rickard): The main advantage of the super system is that it is a tax effective way to hold assets and let them grow or earn income. Generally, a 15% tax rate (or 0% in pension mode) is a lot lower than the tax rate you will pay investing outside super. The downside is that you can’t touch the funds (in your case) until you are aged 60.
So, would you be wise to get more money into super? Yes.
Do you have too much in property? On paper, yes.
Should you have some money in the share market? On paper, yes.
Should you sell the house? I really can’t say, because I don’t know anything about the individual asset.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
