What's a safe investment for generating income?

Aurora et luna

Aurora et luna

Well-Known Member
Silver Stacker
A retired friend asked me to recommend a few safe investments that will generate a reasonable income.
Currently she is invested in franked shares and term deposits that are not earning much interest.
She is a very conservative investor so not looking for anything risky
Appreciate any suggestions.
Thanks
 
If she can buy something outright, then I suggest real estate. It's been a go to for many many years.

"Safe as Houses" is a common saying for a reason and provided you're not sucked into the banking machine and are actually operating as a landlord for yourself and not the bank, then you'll always find a tenant.
 
Shaddam IV said:
Strata title self storage units in a good facility. Cost 90-100K to buy and the right one can return 8-9% rent.
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I've not heard of that before. Sounds promising, though probably quite a barometer of affluent times.

Taking the scale down a little, car spaces in the CBD is another quiet earner that a friend did for a while. Said it was trouble free and reliable.
(What would a car space cost now? 40-50k?)
 
JulieW said:
Taking the scale down a little, car spaces in the CBD is another quiet earner that a friend did for a while. Said it was trouble free and reliable.
(What would a car space cost now? 40-50k?)
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You are correct- about $40-50K.
However, DYODD on car spaces in Sydney CBD.
I owned one for many years, and it was the easiest real estate investment you could have - essentially a 14m2 concrete patch - no land lord insurance necessary, no building insurance, no power or water etc.
Raw yields are good, but then the State Gubmint decide to gouge owners and put a "Parking Space Levy" on all owners in the Sydney CBD in attempt to discourage car ownership - mine in Pyrmont copped a $2500 levy at the time, so I was behind the 8-ball by 5% before Council rates and corporate body fees were added. I found a loophole to get my levy down to $0, so it still made sense while I was claiming 4 trips a year to Sydney to "talk to the property manager :p)", but when the Feds abolished travel related deductions, it no longer made sense and I offloaded it about 2-3 years ago.
 
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Aurora et luna said:
A retired friend asked me to recommend a few safe investments that will generate a reasonable income.
Currently she is invested in franked shares and term deposits that are not earning much interest.
She is a very conservative investor so not looking for anything risky
Appreciate any suggestions.
Thanks
Click to expand...
The Holy Grail is conservative risk for good returns - everyone wants a piece of that!
What do you consider a reasonable % return?
 
If it were me, I'd go for a High Dividend Yield Share ETF.
For example -
IHD 4.8% yield (82% franked),
RARI 6.1% yield (7% franked),
SYI 7.9% yield (57% franked),
VHY 5.5% yield (86% franked)

Or a dividend harvesting trust eg -
THIS ONE HAS YOUR NAME ON IT! - AOD Aurora Dividend Income Trust Australia 6.39% Franking 100%
HVST Betashares Australian Dividend Harvester Fund Australia 11.74% franking 66.06%
YMAX Betashares Australian Top 20 Equity Yield Maximiser Australia 10.42% franking 46.46%
 
FGX or future generation investment company

At $1.18 yielding 4.2% fully franked divy and they have a couple of years of franking credits
already banked and up their sleeves

Ii is a fund of funds with the likes of bennelong, wam, regal funds mgmt and many
others looking after the funds investments....pro bono
These funds are not just long, but long/short and market agnostic so to speak, so wont do as
well as long only funds in a bull market, but will offer some protection if the market falls IMO
They have lower volatility than the market as a whole

You also get the feel good factor as 1% of their NTA goes to childrens charities every year, also
if you buy through comsec then they will refund your brokerage so you can buy in smaller amounts
over a longer timeframe and not get stung with lots of brokerage fees

It is also trading at roughly 6% discount to NTA at present

It has traded at a premium to NTA before the Labors franking credit scare at the last election, when it
did then fall to a largish discount to NTA but still has not fully recovered mainly because the market
just keeps going up, and a long only fund is the way to go...until it isnt

Anyway...worth having a look

cheers grant
 
Thanks for all the comments and advice guys!
She is still undecided!
She is in the mold of Vern Gowdie, conservative and ultra careful
She thinks the stock market is going to crash soon and wants to sell her stocks and remain in cash.
However if she stays in cash for more than a year, the interest rates won't cover her living expenses, forcing her to dip into her capital.
Her current thinking is to sell half her stocks now, stay liquid and go back into the stock market after the next crash.
Her stock portfolio consists of your standard well know banks, retail and miners , a mix of duds and winners.
The only advice I gave her was to keep her only gold miner Newcrest which she absolutely hates as the yields are abysmal.
What are your opinions of Vern Gowdie and his strategies? He seems like a perennial bear!
 
Aurora et luna said:
Thanks for all the comments and advice guys!
She is still undecided!
She is in the mold of Vern Gowdie, conservative and ultra careful
Click to expand...

A lot has happened since mid-Jan. Many interesting stocks that will be affected if the wuhan virus starts spreading. I'm making a buy list. Transportation, oil, etc.
 
Some feedback!
My friend is going to lighten up her share portfolio and remain top heavy in cash for the time being
She intends to sell a mix of duds and winners to reduce or eliminate capital gains.
After the "Crash" which she thinks will be coming soon, she intends to repurchase shares.
She is interested in Argo Investments as it invests in a broad range of industries.
Anyone with a better suggestion?
 
Aurora et luna said:
Some feedback!
My friend is going to lighten up her share portfolio and remain top heavy in cash for the time being
She intends to sell a mix of duds and winners to reduce or eliminate capital gains.
After the "Crash" which she thinks will be coming soon, she intends to repurchase shares.
She is interested in Argo Investments as it invests in a broad range of industries.
Anyone with a better suggestion?
Click to expand...

Holding cash at historically low interest rates wont produce much income and if exchange rates fall only a small amount they will be losing wealth. Why not some Au to hedge inflation/AUD and make $$ gains on spot increases.

AUD will weaken when the Reserve lowers interest rates again, it was half expected to last week and looks very likely in the near term.
 
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