Don't do anything just for the sake of 'doing something' with the $10k. Keep it as cash and keep growing it - it is an important part of your portfolio
Another house or share market
- Thread starter brocky05
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Don't do anything just for the sake of 'doing something' with the $10k. Keep it as cash and keep growing it - it is an important part of your portfolio
I would never claim that I know what will happen in the market but there is a fact that I have seen over the past decade or so.
Some economist will predict that house prices are going to decline, jobless rate will increase and Godzilla will also wake up and start walking around.
They said it back in 2009 (countless of the so called economists in fact made those comments). Now if it turns out to be true (which hasn't been the case over the past few years at least), they will suddenly write a book on how right they were and that people should listen to them. If it doesnt turn out to be the case, they are nowhere to be found. Its like throwing something in at random and claiming credit for it if it turns out to be the case.
Real estate agents are telling me that after the growth in 2013, they did not predict in their wildest dreams that we will have this much growth in the property market. And thats the arrogant know it all REA who has experience watching every move in the market!
Truth is no one can predict the future.
Some economist will predict that house prices are going to decline, jobless rate will increase and Godzilla will also wake up and start walking around.
They said it back in 2009 (countless of the so called economists in fact made those comments). Now if it turns out to be true (which hasn't been the case over the past few years at least), they will suddenly write a book on how right they were and that people should listen to them. If it doesnt turn out to be the case, they are nowhere to be found. Its like throwing something in at random and claiming credit for it if it turns out to be the case.
Real estate agents are telling me that after the growth in 2013, they did not predict in their wildest dreams that we will have this much growth in the property market. And thats the arrogant know it all REA who has experience watching every move in the market!
Truth is no one can predict the future.
Hi xactly and Terry
I've seen some of Peter Thornhill's charts, as I can't ask him the question i was wondering if you can answer?
He shows a period from 1979-2009 and the difference between term deposits and the all industrials index with the return on investment of $100,000
He says that there is no compounding with either, no dividends or interest has been reinvested over the 30 years, but during the period 2004-2008 the income or dividends is around $50,000 to $80,000 on $100,000
Surely there is some compounding going on? Are fees considered ?
Also, can you invest directly in this index he mentions
No, that's not right WASP. The charts are with income/divi reinvested...otherwise the fixed interest would never move
There isn't an all industrials ETF, so the closest approximation to that kind of thing going forward would be an ETF like VAS or STW with dividend reinvestment plan ticked. Fees are bugger all (0.15-0.30%) and you may have some top up tax on divis depending on your tax position. Index is about 60% franked from memory.
There isn't an all industrials ETF, so the closest approximation to that kind of thing going forward would be an ETF like VAS or STW with dividend reinvestment plan ticked. Fees are bugger all (0.15-0.30%) and you may have some top up tax on divis depending on your tax position. Index is about 60% franked from memory.
When comparing shares vs property I feel we have to compare a similar borrowing scheme/level.
What I mean by this is you can borrow approx 80% without LMI for IP.
The same we should apply on share investment ie margin lending.
Without it, property will always have the advantages with leverage.
The risk of margin lending is a seperate discussion all together.
If the value of your shares portfolio drop by 30% you have to top up.
If your IP drop by 30% you don't need to do anything as long as you still service the loan.
In reality more average/common people become wealthy from investing in properties than shares. That is saying something about IP.
What I mean by this is you can borrow approx 80% without LMI for IP.
The same we should apply on share investment ie margin lending.
Without it, property will always have the advantages with leverage.
The risk of margin lending is a seperate discussion all together.
If the value of your shares portfolio drop by 30% you have to top up.
If your IP drop by 30% you don't need to do anything as long as you still service the loan.
In reality more average/common people become wealthy from investing in properties than shares. That is saying something about IP.
For sure. The power of leverage in a rising market. Owning property is a key foundation of investment, if you want to invest in stocks there is your margin call free credit source..then if you want to add more punch you can margin on that or buy warrants, trade CFDs etc if you are keen to lever right up market noise always makes it harder to stay the course in equity markets too, combine that with the ease of entry/exit means that psychology is extremely important, I'd suggest more so than for the average property investor.
market noise always makes it harder to stay the course in equity markets too, combine that with the ease of entry/exit means that psychology is extremely important, I'd suggest more so than for the average property investor.
No, that's not right WASP. The charts are with income/divi reinvested...otherwise the fixed interest would never move
I think Thornhill talks about retained earnings (i.e. companies don't pay everything out in a dividend, they retain some of the income earned, hence over time the share price grows).
Ok, my recollection of his chart was wrong, I have now attached. Its quite a good chart actually showing the intersection of dividend income and capital growth. This is without dividends reinvested. I think there is also one for all industrials with all dividends reinvested and from memory its an absolute corker. I will be able to dig that up in the new year I think.
This is true, but he is a dividend and franking king However, you raise a good point, in Oz due to dividend imputation, business is really encouraged to pay out rather than retain. In the US, without dividend imputation many businesses never pay out (income is taxed both in the hands of the company, then in the hands of the investor), probably the most famous of these is Berkshire Hathaway. As they can redeploy capital so well they have been a compounding machine, there are a number of others like them too. Even businesses without the ability to effectively redeploy will buy back stock, and retire it, meaning that all shareholders value is increased. A great historical example is Henry Singleton at Teledyne who did amazing things to the share price by just buying back over decades...this method obviously has huge value when the share price is on the nose! Happens in Oz too but to nowhere near the same extent.
So for Oz investors, at top tax bracket rather than get fully franked divis and then have to pay top up tax of 17-18% per year, they could pay zero tax each year and then just discounted CGT when they sell these internally compounding machines. Something to consider
This is true, but he is a dividend and franking king
However, you raise a good point, in Oz due to dividend imputation, business is really encouraged to pay out rather than retain. In the US, without dividend imputation many businesses never pay out (income is taxed both in the hands of the company, then in the hands of the investor), probably the most famous of these is Berkshire Hathaway. As they can redeploy capital so well they have been a compounding machine, there are a number of others like them too. Even businesses without the ability to effectively redeploy will buy back stock, and retire it, meaning that all shareholders value is increased. A great historical example is Henry Singleton at Teledyne who did amazing things to the share price by just buying back over decades...this method obviously has huge value when the share price is on the nose! Happens in Oz too but to nowhere near the same extent. So for Oz investors, at top tax bracket rather than get fully franked divis and then have to pay top up tax of 17-18% per year, they could pay zero tax each year and then just discounted CGT when they sell these internally compounding machines. Something to consider
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I notice they say this when they know you are thinking of selling and want you to list with them
A agent friend of mine in Logan said that with the last boom, it happened within 6 months of Sydney heating up, now it's been 3 years without much momentum, however she did add that when there is usually a lag, the upswing when it eventually happens is a lot stronger
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