Advice Please

[Aussie Battler]

Hi, i've just turned 30 and it's been a bit of a reality check. At the moment i'm living with Mum and Dad. I don't have any debt and i've saved $30,000 over the last 2yrs
Just wondering what the best way to invest this money would be?
I've been thinking of buying an investment Property but don't really want to put everything into the one basket. Or would I be better off buying a P.P.O.R since I don't own any property. At the moment i'm saving $1,000 every fortnight. I'm happy living at home for the moment but would like to get out in the next couple of yrs

Any ideas would be great!!!

Left my run late huh!!

 

[The Y-man]

When I was 30, I was living with mum and dad, and had NO money saved

Cheers,

The Y-man

 

[evand]

When i was thirty, i had been out of home for 12 years and well on my way to becoming wealthy. And i'd already spent a hell of a a lot on partying, cars, women and OS travel etc etc

This will probably not be a popular viewpoint but the way i see it is: If you cant stand on your own feet to get somewhere, how are going to stand on your feet when you're there.

An analogy is the kids trampolines with all the high netting around the outside and the springs covered with layers of padding etc.

How the hell are kids supposed to take a risk and learn? Kids develop character and grow only by taking a risks, albeit little ones but they all add up to develop a normal, achieving adult that will have a go.

Are both examples an example of negative modern parenting? Am i old fashioned?

As an aside i was at a conference a couple years ago and was talking to a guy in his late 50s who was telling me his kids were in their late 20s and don't want to leave home and he doesn't want them to leave because he and his wife "will miss them, and besides property and rent are too dear right now for them to leave!!!" Like its going to be cheaper in 5-10 years when the are nearing 40!!! He was dead serious.

I was dumbfounded to say the least. But that will do for now.

 

[vbplease]

its more a lifestyle choice between living with mum and dad / buying a IP or moving out and buying a PPOR.. you'd be better off financially living with mum and dad and having the IP.
But then again it may not be that much more expensive moving out to buy a PPOR and having a few hot chicks paying rent. You'd need to do the numbers.

if you don't want to throw all you eggs into one basket i.e. property, why don't you look into getting a regular savings program with shares. A financial advisor can sort you out with margin loan where you input say $100 a week and the loan inputs $100 a week. Its a great way of saving money.

 

[Perp]

I'm with you, evand. Being unwilling to allow your kids to make mistakes is a neglect of your duty as a parent; it doesn't equip them for standing on their own feet. Parents who say things like the presenter you mentioned are being selfish; it's about what the parents want, rather than what's in their child's best interests.

Unless there's a specific reason (eg temporary circumstances, or disability, or sole parent needing help, etc), I don't think it's a good idea for financially independent adults to live with their parents.

Aussie Battler, you've got to get out of home and start supporting yourself before you think about investing, because at the moment you don't know how much it will cost you to live. Great effort saving $30K, but once you have to pay your own rent, food, phone, electricity etc, how will your cash flow look then? Before you know that, I don't think you should consider investing. For example, what if you buy an IP planning to subsidise a $10K pa negative cash flow, then find when you move out that you no longer have that much free cash?

 

[GoAnna!]

How about start with an ip that might become a PPOR in the future? Then live in a share household as the most cost effective way to live. This should work out better cashflow wise than living in it by yourself.

You may want to live in the ip in the first 6 months or so to get the FHOG and to qualify capital gains exemption. You will want to go the nmbers on this to see if its a worth while exercise. Often its not because the FHOG is eaten up by the additional costs of living in the property.

If you set it up as ip you can of course claim the cost of interest, repairs, rates etc which is half the reason why it will cost less to hold (or allow you to hold a property of higher value).

Can I ask what your income is and what price property you are looking at?

 

[evand]

Its not just about whether to buy and IP or a PPOR. Its also about growing up, taking a risk, having a red hot go and learning to stand on your own feet and then decide between an IP or PPOR.

Its a false security saving while living with your parents. As ozperp says, one day you are going to have to pay real bills and deal with real life.

Whatever happened to the moving out of home, sharing with your friends/girlfriend, having fun and then getting serious about career, money and settling down etc?

if you don't want to throw all you eggs into one basket i.e. property, why don't you look into getting a regular savings program with shares. A financial advisor can sort you out with margin loan where you input say $100 a week and the loan inputs $100 a week. Its a great way of saving money.

 

[vbplease]

Aussie battler, sounds like your getting a lot of parental advice here about getting your butt out of home..

Remember there are still a lot of life skills to be learnt in managing a IP even if living at home.. a lot of new bills need to be paid, and they are indeed real.

If you draw up a budget comparing living at home and not, I don't think the savings will look false at all.



But for the record, there is no way I could manage living with mum and dad and I'm a few years short of 30.

 

[Aussie Battler]

Better clear it up, I was out of home for 10yrs before moving back to save for my own place. Mum and Dad offered so I thought why not?
I've rented in St. Kilda, Northcote & Fitzroy in the past... travelled Europe & Scandinavia twice with my old band. Toured around Australia about 20 or 30 times playing music. Been through S/E Asia...
Put it this way i've had my fair share of fun and now I want to get serious.

 

[Aussie Battler]

oh and being a Carpenter by trade i've been doing renovations on Mum & Dads place while i'm living here. Everyone is happy

 

[vbplease]

Seems to make sense staying at home for a bit to save some money and help your folks out.

Well done with the travels sounds awesome.

 

[Aussie Battler]

Good times thats for sure!
But turning 30 and having nothing was a bit confronting.
Anyhoo, i'm on the right path now!!!

 

[evand]

Aussie Battler,

I wasn't referring directly to you as i don't know your particular circumstances. I was referring to adults that stay at home well into their late 20s and some into their 30s.

Sounds like you've had some fun,good on you and good luck.

For me, I couldn't have lived with my parents at 30. I was too independent at that age, it would have driven me crazy.

 

[jaycee]

Put it on red

 

[Ridin-High]

Good times thats for sure!
But turning 30 and having nothing was a bit confronting.
Anyhoo, i'm on the right path now!!!

I wouldn't look at it as turning 30 and having nothing.... you soun like you have had alot of great experiences during ur life so far (travelling/playing in a band/having a good career and a good family). Don't worry about the people saying they are "X" age and have "<--------->" amount of assets. Just remember you are better off then most people in this world

but 30k sounds like a nice deposit on a small 3 bedder house in the suburbs, if i was you i would get in touch with a bank or mortgage broker and work out ur burrowing power, i would suggest purchasing a house and renting it out (still live @ home, if you don't have a partner then who cares), then you have a person basically paying half ur mortgage while your newly gained assest grows in value.

 

[kissfan]

I've been thinking of buying an investment Property but don't really want to put everything into the one basket. Or would I be better off buying a P.P.O.R since I don't own any property. At the moment i'm saving $1,000 every fortnight. I'm happy living at home for the moment but would like to get out in the next couple of yrs

Hi AB.

Personally, I don't think you've left your run too late.

Some people never think to invest, at least you're interested in making a start now.

Was just thinking than when you move out in in a few years time (if you do ), will you still be able to afford repayments.

Have you thought about areas you may want to buy in (for yourself) or invest in. The reason I ask is because if for example you have a loan for $400k, the repayments with an IO loan (assuming 9%) would be approx $700p/w. This is before rates, insurance, repairs etc. It may be a struggle to pay that for a ppor, but with someone paying rent it might be a walk in the park.

Of course it depends on your overall situation re salary, is there a partner that you buy with, or you may not want to spend that much which of course will alter the figures altogether.

Just trying to give you something to think about for now AND the future.

All the best.

Regards
Marty

P.S. the above figures are a guide only and have not allowed for initial deposit.

 

[Aussie Battler]

Thanks guys, would feel more comfortable borrowing max $200-$230k so my option would probably only be a unit.

 

[kissfan]

Thanks guys, would feel more comfortable borrowing max $200-$230k so my option would probably only be a unit.

Hi AB

That being said, IF IT WERE ME, I'd buy a unit that I would feel comfortable in (of, course, do your DD on future growth prospects etc) and move in straight away to take advantage of FHOG (although not necessary to move into straight away to qualify).

Although........you stated that you don't mind being at parents place for a while, so you could buy, rent out, and get rent to help you to get the place into a position of neutrally geared (positive even better) by paying down the loan OR putting extra into an offset account.

Food for thought.

Regards
Marty

 

[Aussie Battler]

Thanks Marty,
I'm a Carpenter by trade so I have some skills there to use.
I'm thinking maybe buy a unit then look at another property in another 2-3yrs.
I'm unsure should I positive or negative gear?
Thanks!

 

[kissfan]

I'm a Carpenter by trade so I have some skills there to use.
I'm unsure should I positive or negative gear?

The carpentry skills will definately come in handy and save you big bucks along the way.

Re positive or negative gearing, as crazy as it might sound, I wouldn't dwell on it, that will work itself out, but I'm sure that initially, your investment will be negatively geared

By that, I mean, it depends on how much you spend (can afford) and whether or not you move in or decide to rent it out instead.

If you go down the rental path, obviously the tenant will be footing a lot of the interest bill for you and as mentioned before, any extra that you pay (probaby into an offset account) will help reduce interest costs. That, combined with rental increases (over time) and pay increases (hopefully) will make life easier.

Don't get too caught up on all the figures, otherwise it can become daunting and possibly offputting. Do your sums on different amounts (talk to a broker & possibly an accountant that is IP savvy if unsure) and work out how much (in repayments) you feel comfortable with. This will obviously dictate on where you can afford to buy, and go from there.

Regards
Marty