What's the best reason you've heard for investing from people?

[Aceyducey]

We've heard a lot of excuses for not investing...how about the reasons why people should.

What are the best reasons you've heard, or what's your reason?

Reasons that go further than 'to become wealthy'.

Cheers,

Aceyducey

[Monopoly]

Husbands/wives are there as long as there is money, but property is there until there is a natural disaster!!! :D
(My divorce lawyer)

[quiggles]

My wife realised that even if she recovered from her chronic illness (which has not happened), her super would be negligible. She wanted to contribute to the security of our retirement and not leave it on my shoulders alone.

[Sunstone]

Dear Acey,

This thread touches on the legacy one will leave behind. :)

http://www.somersoft.com/forums/showthread.php?t=16649

For myself I will build a library further helping an area that has helped myself.

Might even have a dedicated financial self-education section. ;)

Cheers,

Sunstone.

[Muz]

Hey Everyone,

What's the best reason you've heard for investing from people?

"That I could do it too"!!!!

I have two friends that have been in the property game a long time.

One just retired at 40, and the other in their early forties told me that they retired years ago and didn't have to work. Both due to property investment.

They certainly got me motivated...and were living proof it could be done. And whilst I won't be retiring at 40 I certainly am taking control of my financial future :D

[PT_Bear]

One of my clients is investing because she wants to ensure that her son with downs syndrome will be taken care of after she's gone.

[kissfan]

Fairly mundane answer.......... but anyway, after my father passed away quite a few years ago I watched my mother take rein of their finances etc (up till then my father had taken care of most financial matters) and saw what a struggle it was for her initially. She's now retired and on the pension and receives a small annuity as well. Even though she is happy and content, it got me thinking a few years ago that theres no way in hell that I want to even think about receiving a pension (if there's one still around) when I retire so that put me on the quest to create my own financial freedom for myself and my family.
As a sidenote, I find it funny that some people choose not to better themselves. Everytime I mention to my mother how she should do something with the equity in her house (she has owned it for a long time) it just falls on deaf ears, with her saying that she can't be bothered or brings up some story she heard about so and so being ripped off by so and so (another reason why people don't invest). Oh well, I'll keep trying with her.

Regards
Marty

[chrispy]

We built our second house and owned it and the original house we had built at 19, outright when we were 23. We went overseas and on our return went to Centrelink to sign up to get access to whatever jobs were around and discovered that the means test meant that we were ineligible for any government assistance. So at 23 we realised we had to set ourselves up for retirement and away we went.

Now at 61 and owning 15 properties, I say thankyou to the CES unhelpful person all those years ago for encouraging us along a path we had already started.

It also gives us so much more freedom, we can make decisions based on financial reasons and what is right for us rather than decisions that will affect a government pension.

Chris

[stickysandwich]

My reason is simple. Contributing to the family income, so my hubby can have a day off occasionally.

At 24 (38 now), I got an illness that made me bedridden for 2 years. Still have it but not as bad now. Aug 2003 discovered I had something wrong with my thyroid which needed to be taken out, had to have radiation, all fine now. Have not been able to earn much of an income since age 24. Had to change what I was doing so the outcome was different. My mind is still ok it's just the body not working properly.

Xmas holidays 03-04 saw a property on the esplanade in inner city beach. Rung for the price 1mil! It was so daggy, it was about to fall down. Hubby is a builder, so got me thinking if I could buy it and knock it down, I could get him to build something on the land blah blah blah. Hubby was enthused. So here I am. Didn't buy that property, but others, and have been on a steep learning curve ever since. The best fun I've ever had in my life. Just feel stupid for not sarting earlier!

Stickysandwich

[qaz]

Steve Navra, who put me in front of his little funky spreadsheet and said "take your 10k in savings, add 12K a year to it and invest all of it and you can retire in 10 years with a passive income of 80k a year in today's dollars". I was like, "sounds good to me":D.

[Sultan of Swing]

I lived on the Gold Coast from 1985 - 1991 and the wealth there was unbelievable, to me anyway, coming from a sleepy little rural town in Tasmania. A lot of the people were similar ages to myself, in my 20's at the time. So i set about trying to work out how they made it and had the attitude that anything they can do i can do better!! :p I wish!! I've progressed and learned a lot along the way. Unfortunately, the illusion of knowledge has held me back :o so i still have a long way to go. <<Ok, i confess, i thought i knew it all>>

One of the things that really struck me when i started as a RE salesman 12 years ago was the number of retired people that wanted to sell the PPOR of many year and buy a unit because it was easier to maintain etc.

The problem for them was, in the mid 1990's, a lot of their homes were valued at between $50,000 and $75,000 and a reasonable unit was more than that. Most of them had no extra money to pay the difference. They live week to week on a pension and are stuck. It struck me that a lot had worked all there life and all they had to show for it was an asset worth 50 - 70K and they'd never considered preparing for retirement.

I decided there was no way i wanted to live like that when i retired so started buying self help books etc to help me a learn.

Cheers

[quiggles]

I lived on the Gold Coast from 1985 - 1991 and the wealth there was unbelievable, to me anyway, coming from a sleepy little rural town in Tasmania. A lot of the people were similar ages to myself, in my 20's at the time. So i set about trying to work out how they made it and had the attitude that anything they can do i can do better!! :p I wish!! I've progressed and learned a lot along the way. Unfortunately, the illusion of knowledge has held me back :o so i still have a long way to go. <<Ok, i confess, i thought i knew it all>>
Jeez, sounds like there's a long story there! :)

[wish-ga]

For me I think it is;

* Peace of mind from making provision for self (and future partner/family)

* Seeking/obtaining knowledge and the fortitude to act on that knowledge also keeps the panic at bay

You don't actually know what is down the track but making provision for my future gives me a bit of emotional support from within.

[The Y-man]

This is simple.

An open wheeler rolling chassis costs money. Engines cost lots of money. A blown engine costs money to fix. Carbon fibre disc brakes are very expensive. Racing slicks are very expensive - especially when you spin and flat spot them. A spare car to replace a crashed car costs lots of money.

Of course, my wife may not necessarily agree where the output of our investment will go to.....

Cheers,

The Y-man

p.s. a mate of mine just got quotes on Ohlins racing dampers for his car - he reported back "$10,000". I said, "Wow, that's $2,500 a corner". He said, "No, that's each....." :eek:

[Brizzy Boy]

It's easy for me, my reason was to give my children the things that I never had!!!
John

[Steve Navra]

My father in law told me I wasn't good enough (meaning rich enough) for his daughter!

I have been punishing him ever since ;)

Steve

[bawley]

My father in law told me I wasn't good enough (meaning rich enough) for his daughter!

I have been punishing him ever since ;)

Steve


So thanks to your father in law Steve ;) and thankyou for sharing your methods.

[bawley]

"take your 10k in savings, add 12K a year to it and invest all of it and you can retire in 10 years with a passive income of 80k a year in today's dollars". I was like, "sounds good to me":D.

Wow qaz - 10K + 12K per year and 80K passive in 10 years - can you elaborate??

For me I realised we were looking at an ordinary retirement if I didn't learn and ACT(ignore queasy feeling in stomach :confused: ). Like others I wish I had started many years ago.

Cheers Bawley

[julieo]

It has been mentioned in this thread a bit, however it is worth mentioning again. The main reason my husband and myself got into the property investment game was that we are always hearing friends and relatives who are close to retirement age spending all their time working out how they can hold on to the pension, i.e. how they can divest themselves of assets to get that bloody pension and the "to kill for" health care card.

What they are doing is making themselves broke so they can get a measily bit of money from the government as they believe it is their right as they have worked hard all their lives and paid their taxes!!

My husband and I want nothing to do with the pension. We will be self sufficient and as someone else in this thread mentioned, be able to make any financial decisons we want without worrying about how it will affect the pension.

[quiggles]

It has been mentioned in this thread a bit, however it is worth mentioning again. The main reason my husband and myself got into the property investment game was that we are always hearing friends and relatives who are close to retirement age spending all their time working out how they can hold on to the pension, i.e. how they can divest themselves of assets to get that bloody pension and the "to kill for" health care card.

What they are doing is making themselves broke so they can get a measily bit of money from the government as they believe it is their right as they have worked hard all their lives and paid their taxes!!

My husband and I want nothing to do with the pension. We will be self sufficient and as someone else in this thread mentioned, be able to make any financial decisons we want without worrying about how it will affect the pension.
This truly speaks to me. I bounded in excitedly to my Dearly Beloved yesterday and said "Look! We're ineligible for the aged pension and all that stuff!" she looked at me as if I was a little crazed - after all she has a couple of decades plus before she is eligible in age terms. Then it dawned - we were too asset rich to qualify! Another milestone achieved. :D

[shaunwalker]

i grew up in a very poor family, just mum and us 5 kids.
we never really had enough for anything bar surviving.
i'm not complaining, i'm sure my mother did everything she could for us. and although i wasted the first 12 years of my navy life spending every pay packet (and coming home from sea to an empty house, not once but twice!).
i still remember what its like to see kids in the street buy an icecream from mr whippy and having never had one (still havent by the way).
when i find myself not acting or doing, i just remind myself of those days, and how i would never want to be that poor again. for me its not about the money, its about the freedom that money will give me

[qaz]

["take your 10k in savings, add 12K a year to it and invest all of it and you can retire in 10 years with a passive income of 80k a year in today's dollars". I was like, "sounds good to me":D.

Wow qaz - 10K + 12K per year and 80K passive in 10 years - can you elaborate??

You'll have to talk to Steve Navra about the mechanics of it all. I don't understand them either.

[geoffw]

Wow qaz - 10K + 12K per year and 80K passive in 10 years - can you elaborate??If you could get 23% pa you would be able to do this. That presumably could be done with something like a combination of a good share fund and property investment.

[Steve Navra]

If you could get 23% pa you would be able to do this. That presumably could be done with something like a combination of a good share fund and property investment.
Well . . . :eek::eek::eek:

The answer is about STRUCTURE:
Dollar working 6 times at 5% less expenses = 15% and the Net portfolio value will double every 5 years.

I never project more than this; mainly to stay within a conservative range. (Property @5%; Shares @ 5% and cash @ 5%) And so as NOT to offer 'pie in the sky' expectations.

What Qaz is referring to is the projection of using the dollar 6 times with:
Property @ 7%
Shares @12%
Cash @ 5%

On this basis, the Net portfolio value would triple every 5 years. (Hence Qaz 10 year result)

Please note that I am NEVER predictive :) ; so will always prefer a conservative projection for the first year followed by REACTING at the end of each year to the previous years CG.

Regards,

Steve

[Jacque]

i still remember what its like to see kids in the street buy an icecream from mr whippy and having never had one (still havent by the way).


Hehe, Shaun. You're not missing out here, believe me! My family was similar and the Mr Whippy van was absolute torture for us five, as it always drove past our place and instead made a beeline for the family at the end of the street who often bought its wares.
I can still recall the first time I had one of their ice-creams yrs later and being substantially disappointed at the aerated mock cream like texture that I always thought should have tasted much better! Twas all in the appearance after all- still prefer good old Blue Ribbon from Woolies (when it's on special is even better!)

[Theresa]

[QUOTE=shaunwalker]i grew up in a very poor family, just mum and us 5 kids.
i still remember what its like to see kids in the street buy an icecream from mr whippy and having never had one (still havent by the way).



Mr Whippy brings back memories. My mother told my sister and I as kids that it was the MUSIC VAN ," LISTEN TO THE LOVELY MUSIC , SHE WOULD SAY".Well that worked for a while until a friend informed me otherwise.
Theresa

[likewow]

On this basis, the Net portfolio value would triple every 5 years. (Hence Qaz 10 year result)



If qaz can achive this for any length of time he'll end up owning half of Australia before long. Meanwhile back in the real world..............

[Thommo]

If qaz can achive this for any length of time he'll end up owning half of Australia before long. Meanwhile back in the real world..............
In the real world these results are achievable for a reasonable number of years.

There are many reasons none of us end up owning half of Oz, but the two which spring to mind are
1/ The Law of Diminishing Returns. I can punt on a junior miner and my $5k does not make it favourite. Fundies can't buy $5m though because they are not available.
2/ The Law of Diminishing Hunger. Most middleaged millionaires are in cruise mode.

That's what I reckon anyway :D

Thommo

[geoffw]

Mr Whippy brings back memories. My mother told my sister and I as kids that it was the MUSIC VAN ," LISTEN TO THE LOVELY MUSIC , SHE WOULD SAY".Well that worked for a while until a friend informed me otherwise.For a number of years, my children believed me when I told them the music meant that they were out of ice cream :D

[Pete]

HAHAHA, Geoff. I hope that is a joke .............

[quiggles]

I used to tell my elder boy, "Shh! Sit quietly and the music truck may come up our street!". Of course sitting quietly prevented him from going to the street to see the ice cream advertising on the van. :)

[JD]

If youth is wasted on the young, than retirement is wasted on the old!

I always have to fend off questions as to why I can do the things I do without a real job! Sometimes I feel I should refrain from wealth creation, get a job and satisfy the general vision (or lack of it) of our community. Yuk!

JD

[qaz]

If qaz can achive this for any length of time he'll end up owning half of Australia before long. Meanwhile back in the real world..............

Theres nothing unrealistic about Steve Navra's system.

http://www.navra.com.au/pdf/7percentgrowth.pdf

That was the spreadsheet that Steve put me in front of (with different input values obviously). Maybe you should consider checking it out before passing judgement.

[likewow]

Theres nothing unrealistic about Steve Navra's system.

http://www.navra.com.au/pdf/7percentgrowth.pdf

That was the spreadsheet that Steve put me in front of (with different input values obviously). Maybe you should consider checking it out before passing judgement.

Qaz

Maybe you should ask if i had seen the spreadsheet before assuming i hadnt. I have. What i was saying is unrealistic tripling your portfolio value every 5 years for any meaningful length of time. And investing should only be about a meaningful length of time.

[qaz]

Qaz

Maybe you should ask if i had seen the spreadsheet before assuming i hadnt. I have. What i was saying is unrealistic tripling your portfolio value every 5 years for any meaningful length of time. And investing should only be about a meaningful length of time.

You've seen it?.

Good. Then you can explain to me in which part of Navra's system he makes a bad calculation or an unreasonable assumption which makes his system "unrealistic".

[WillG]

Theres nothing unrealistic about Steve Navra's system.

http://www.navra.com.au/pdf/7percentgrowth.pdf

That was the spreadsheet that Steve put me in front of (with different input values obviously). Maybe you should consider checking it out before passing judgement.

Nice Spreadsheet,

Nothing unrealistic as long as you :-

1. Purchase 9 IP's in 10 years
2. Have growth of 7% or more
3. Continue to pay current mortgage and property holding costs.
4. Have an LVR of apx 80%
5. Can borrow money from the bank (I suspect a Navra cashbond will look after this)
6. Are comfortable haing $9.2mil in loans (The banks will love you. Perhaps an interest rate discount should be factored in for this amount of loans)

The spreadsheet is theoretical but gives a picture of how it could be done. There may be years of 3% growth and years of 10% growth. I suspect the funds will not be available in years of slower growth while 2 IP's may be purchased in years of 14% growth.

[likewow]

You've seen it?.

Good. Then you can explain to me in which part of Navra's system he makes a bad calculation or an unreasonable assumption which makes his system "unrealistic".


I think i have that spreadsheet on a cd somewhere. Navras system? It might be news to you that not everyone thinks Steve is god and follows his spreadsheets religously. In fact i know of a few forum members who agree with me on that.

I make better returns from shares and/or property than Steve's 'system'
or fund or property investing concepts because i do it my way and my way is best for me and therefore more successful then someone elses way.

But, not once did i say his system is unrealistic. What i did say was that tripling your portfolio value every 5 years for any length of time is. If you think its realistic because a spreadsheet tells you so, then good luck mate.

[likewow]

Nice Spreadsheet,

Nothing unrealistic as long as you :-

1. Purchase 9 IP's in 10 years
2. Have growth of 7% or more
3. Continue to pay current mortgage and property holding costs.
4. Have an LVR of apx 80%
5. Can borrow money from the bank (I suspect a Navra cashbond will look after this)
6. Are comfortable haing $9.2mil in loans (The banks will love you. Perhaps an interest rate discount should be factored in for this amount of loans)

The spreadsheet is theoretical but gives a picture of how it could be done. There may be years of 3% growth and years of 10% growth. I suspect the funds will not be available in years of slower growth while 2 IP's may be purchased in years of 14% growth.


Great in theory. You forgot to mention what yield you require to service 9.2 mill in loans. And what interest rates might be like in 5-10 years. And the prospect of negative growth for the next few years. And any amount of unkown variables the spreadsheet doesnt allow for in the next 10 years.


You might say that buying in good areas assures good growth but it also assures low yields as well, and that will be fun with 9.2 million in loans.

Buying 9 properties in 10 years sounds easy when looking at a spreadsheet but the reality is its a lot tougher when the market is dead flat or negative and interest rates are at an all time low with only one way to go.

I owned and IP with 17.5% interest rate, i could even contemplate buying one more at the time, not to mention 8 more. And does the spreadsheet ensure even 10% rates wont be around within 10 years?

[WillG]

I believe the net yield was set @ 4.5%.

There was no note that said 'it was going to be easy' or risk free but you've gotta take risks if you want to make money.

You have to start with some sort of plan. If you would have started with this plan 10 years ago you may well of been financially independant

[likewow]

I believe the net yield was set @ 4.5%.

There was no note that said 'it was going to be easy' or risk free but you've gotta take risks if you want to make money.

You have to start with some sort of plan. If you would have started with this plan 10 years ago you may well of been financially independant

1..At 4.5% gross yield you are already neg gearing with current interest rates at record lows. Like i said,neg gearing with loans of 9.2 mill will be fun.

2..Theres risks and theres risks. This plan is more than risky its something that an experienced investor would never take on as a fixed plan. But it looks great on a spreadsheet.

3..Aint hindsight great. Its easy to say that from this end of the biggest property boom ever but that strategy would have looked like total madness in 1995. They would have certified you.

[qaz]

OK, let me get this right.......

You've come out and said that one of the most experienced and respected investors on this site investing system doesn't work as specified. Supplied no real reason why at all and then expect people to take you seriously?.

Do yourself a favour. If your going to make big statements, back it up with something......anything.

[likewow]

OK, let me get this right.......

You've come out and said that one of the most experienced and respected investors on this site investing system doesn't work as specified. Supplied no real reason why at all and then expect people to take you seriously?.

Do yourself a favour. If your going to make big statements, back it up with something......anything.

Thats an easy one, read the above couple of posts.

Beside that to increase your portfolio value by 3 times every 5 years would require (i think) approx. 25% increase compounding every year, year in-year out.

qaz my man, If you can do that you will be outperforming just about every investor on the planet by a long shot and will be rich beyond your wildest dreams in say 10-15 years.

[always_learning]

Buying 9 properties in 10 years sounds easy when looking at a spreadsheet but the reality is its a lot tougher when the market is dead flat or negative and interest rates...



Very true, spreadsheets are not reality, spreadsheets should be used to model real situations. Funky spreadsheets are just that, cool! But do they represent general reality? After been burnt badly with buying into a property development "feasibility" study presented as achievable by a long standing "professional" development company...when after been 6 months late and many tens of thousands over budget, to be told "Oh that was just a feasiblity study you shouldnt have expected that as the outcome".... I have learn my lesson countless thousand$ ways. It may be possible but is it probable? is it reasonable? how many others have achieved a similar result?

I just love the quote.

Buying and committing to memory a "Flight Manual for the Model 6 Enterprise" at a Star Trek convention doesn't make you a pilot, nor the starship real.


Buying into a ideas contained in a investment spreadsheet or feasbiltity study doesnt make the result achievable or you rich. It is better to start with what is normally achieved with such an approach and work forward from that with conservative predictions.

[qaz]

Thats an easy one, read the above couple of posts.

Beside that to increase your portfolio value by 3 times every 5 years would require (i think) approx. 25% increase compounding every year, year in-year out.

qaz my man, If you can do that you will be outperforming just about every investor on the planet by a long shot and will be rich beyond your wildest dreams in say 10-15 years.


Likewow....

Say the real estate market is comming off a recession. You find a property yielding 6.5% and growing at 7% PA. Interest is 6.5% (I/O loan) and depreciation and maintainence are equal meaning the property is exactly neutrally geard. You buy the property for $200k and put down a 20% deposit ($40k). In fact such a deal would be positive cashflow because you only borrowing 80% not 100%.

Year 1: $200
Year 2: $214 (7% growth)

You made $14k off your $40k investment. Thats a 35% PA return. Will it be 35% every year?, no. But assuming the long term growth rate doesn't change, then you should get an average 35% PA return in the long term.

Steve Navra's spreadsheet only assumes 22% PA.

[likewow]

qaz,

Your talking about growth on your intitial investment due to gearing (or cash on cash return) where as i took it as total portfolio growth at that amount.

As you would know growth from gearing can be astronomical. EG: I bought a house a few years ago with a $100 deposit and funded with equity (borrowed 110%).

The property value has since doubled. If sold the house today and calculated my return from my original $100, well can you see the point im making.

In your example with a yield of 6.5% and growth of 7% thats a total return of 13.5% which is pretty good. But you lose 6.5% interest only repayments (higher in future) and say another 2% on maint,fees...etc..and get that back with depreciation allowance depending on your income.

[qaz]

qaz,

Your talking about growth on your intitial investment due to gearing (or cash on cash return) where as i took it as total portfolio growth at that amount.

As you would know growth from gearing can be astronomical. EG: I bought a house a few years ago with a $100 deposit and funded with equity (borrowed 110%).

The property value has since doubled. If sold the house today and calculated my return from my original $100, well can you see the point im making.

In your example with a yield of 6.5% and growth of 7% thats a total return of 13.5% which is pretty good. But you lose 6.5% interest only repayments (higher in future) and say another 2% on maint,fees...etc..and get that back with depreciation allowance depending on your income.

Good points. Then you can see that 22% per annum over the long term isn't outrageous?.

[lizzie]

getting back to the origin of the thread ...

purely and simply - freedom.

my reason for investing is the freedom of not having to save for anything i want/need, when i want/need it.

and if the fridge blows, the car needs major repair, i have to jump on an international plane for a family crisis, feel like takeout every night and i find a new diamond ring i absolutely cannot live without - all in one week - then i can darn well do it without worrying about how i'm going to pay for it.

however, the secret is not to be excessive in your wants so you're not eating the golden goose before it's laid the eggs ... el casko vino isn't too bad once you get used to it and we only upgraded the 15yr old tv recently because it had no dvd connections!

[alexlee]

Hear hear, Lizzie. My own goal is "to do whatever I want, whenever I want, wherever I want". It's all about freedom. And the more I experience, the more I want to do, and the goal is getting more and more expensive. Currently standing at $1m (i.e. my goal is $1m after tax income per year).
Alex

[LucasK]

"Cuz all the rich people are doing it"

[Bricks & Mortar]

"Cuz all the rich people are doing it"

Well most of us are doing it. So here's hoping we all get there

With people other than this site I've basically heard the Retirement line- little or no pensions available.etc. No rich wanna bees

We started by buiding a holiday house for the kids, spent two years building it up from the lock up stage without flooring.
When we ran out of money we went back to plastering, a hell of a lot of weekends passed before we finally finished it. Despite being near the beach the kids didn't want to go down, being teenagers I guess you can't blame them, so we rented it out :eek:
Revelations after two seasons, I just realised how much money slipped through my hands by not having it fully completed in the first place.
We always kept a eye on the property in the area, and having been stupid not to pick up some cheap land in the area (desipte being advised by the better half). I again saw that money had slipped away again.
Next find, we took ACTION :D that was the key.
Doing the sums we were out of the pension anyway as the beachhouse value is in excess of PPOR. So it has become our Pension, our security, our future incomes and hopefully the assets to pass to the grandies as I'm hoping to get our kids educated and involved in their own properties so they can have the create comforts and retire without being old. :D

cheers
Timm

[brisbane 04]

Hi All,
My father worked all his life and contributed to his super scheme, at age 53 was diagnosed with cancer but continued to work (which he enjoyed) up until he passed away at 58. His super was never going to provide him with the life he had earnt. Mother passed away with cancer at age 57. I have a wife and two young children if something happens to me I dont want them relying on social security because we all know how wonderful it is. I want to retire early to enjoy life and my family before age or illness takes it away from me and to ensure they will have a future ahead of them which is secure and free of worries.Sorry if this sounds fatalistic but I will tell you one thing it sure provides me with motivation. Martin

[Aceyducey]

Course it's fun!

Why else do anything?

Life is too start to spend 10+ years doing something you don't enjoy just to be able to afford to do whatever you want for the next 60 - isn't it?

;)

Cheers,

Aceyducey

[lizzie]

just as well we all love real estate - otherwise we wouldn't be here :p