Cashflow

Hi all, with a very little dividend expected from the Navra Fund this qrtr ( not sure what can happen with one more day of trading ) I am going to be running into a cashflow problem repaying bills and loan repayments over the next 3mths.

I have comitted also to purchase grapes this year to min tax and loan repayments commence Mid July ! To make things worse ... Tax return not expected till at least September

Unfortunately our reserve cash buffer has been eaten away slowly with new PPOR purchase and few repairs.

I am comfortable that long term our IP and MF portfolio and structure is the right one ... short term ... I am beginning to feel fairly unforcomfortable as I have always had surplus cash.

My questions -

1) Anyone else run into a short term cashflow shortfall situation ?

2) What have you done about it or are you doing about it now ?

3) Any use in discussing alternate arrangements with bank ?

4) Have you had to sell down shares, IP or MF's and take the loss ?

5) How do you keep positive in turbulent times such as this one ?

Thought I'd get others' opinion and views as I am sure there are plenty of folks with more investing experience than me here.

 

Active',
What about drawing down equity from an IP or two? Are you in a position to be able to do that?
ML

 

Sim - thanks for your response. You have this incredible ability to explain things so clearly.

Good point about breaking things down. I have spent some time analysing the shortfall and when you put it in perspective it certainly helps look at the bigger picture. I certainly am not at the point where I have to liquidate everyting.

The biggest challenge is the PPOR. So many "nice" improvement things to do ( gardening, blinds, paint, door handles, light fittings, etc... ) that are not really necessary right now. It has taken a cashflow challenge to realise this. I have certainly under-estimated all the emotional aspects that come with owning a PPOR.

Personal loan / credit card can always assist just scared of the high rates that follow.

Leo - there may be a little more equity I can tap into and will organise some revals to be done.

 

Mark, sorry but I don't really understand this suggestion.
I also have a cashflow problem, but do have 200K sitting unused in a LOC.
I've avoided dipping into the LOC because of this lack of cashflow and the problem of how to repay the interest. Please explain.

Active'
One thing that I did was to go through my managed funds with a fine tooth comb, checking on returns v holding costs. I found that one of them, although it had held up very well in this market, was costing more to hold than it was paying out in distributions.
So out it went.
Probably a fairly obvious solution, however if you're like me and you had a set & forget type portfolio you could easily overlook this kind of situation.

 

lorrimer,
Two things come to mind that may help your cashflow situation.
1. pay your loan interest using your LOC. i don't personally do this but i've read that this is possible. Does anyone here do this?
2. draw down some equity and place into an income fund to enhance your cashflow. i personally use this approach to enhance my cashflow.
Mark Leo

 

Mark Leo - I actually have an income producing Fund (ie- Navra) not sure I should be putting in any more $$$'s here if it's costing me more in interest vs return.

Any other income producing funds currently doing well out there now I should look at ?

 

You'd need to investigate if this is possible (though in theory I don't see why it wouldn't be), but if you've purchased grapevines for tax minimisation via an ABN that is GST registered (as recommended by Navra), you should be able to lodge the annual statement to claim the 10% GST back immediately. This may give you enough of a buffer to ride out the next little while until the Navra fund distribution is paid out and your tax return is processed.

Can anyone else confirm or deny if this is the case?

 

Can anyone else confirm or deny if this is the case?

You definately can claim the GST back, if you have an ABN and registered for GST purposes.

 

Can only but agree with that...

 

Yep - this year we have borrowed full loan amount + GST. Just need to wait for ATO to send out BAS statements. My understanding is that you cannot claim anything ASAP. Hopefully that is soon.

 

lorr',
You could have a look on Compare Funds :: Managed Fund Comparison Charts and Statistics to see how the various income funds are going i.e. past performance. By my reading there are over 20 income funds listed on the site so that should give you a good indication of performance. My guess is that the Nav fund is probably par for (or slightly ahead of) the course...? It's my understanding that this fund has to pay out all trading profits at the end of the FY so we'll see what happens in the next couple of weeks. I'd be suprised if they can't crack 3 - 3.5% for the quarter (10% for the year).
ML

 

Sim,
My reading of the other thread is that the distribution is still unknown. Are you suggesting that you have some more information?
ML