Has property changed your outlook towards money?
- Thread starter Peter Parker
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GIDDO said:
i am in 100% agreement with this point, i really believe for the average investor and more so for the astute investor that if you put the same time into investing as into your job you earn more per hour
investing is really producing efficient dollars, its working smart if you look at the $$ you gain compared the time you spent investing it totally blows away any job including a $200K p.a. job.
i think the only exception to this rule is if you are a top businessman like the google boys or gates or trump.
simonjulie said:Hi Folks
HELL YES! for me too.
We both left our jobs five years ago to embark on this journey down the Property Investment road. Back when we first jumped out of the "rat race" there were a few friends and family who were just waiting for us to fall over(financially that is) and come crawling back into the workforce. We have faced up to a number of hurdles and have been challenged on many fronts in regard to many aspects of investing and we are still here and still loving it.
In our other life we were governed by the lack of money and now in our new life we are only governed by our imaginations and Time( My number one factor in investing"how long till I get my money back?).
The real clincher for me was when I read something that Robert Kyosaki said " How many days/months/years wealthy are You?" and I believe when we came to terms with and fully understood that concept and felt comfortable with the answer and could still sleep at night then a brave new world emerged for the taking.
After all the worst thing that can happen if we fail is that we would have to go back to work
Simon
Life is an experience, so experience it!(I said that
Congrats I've always had a lot of respect for you two backing yourself and making a living out of investing (I don't think I ever could).
What's really exciting for me its with this recent new job I took (i'm prob still in honeymoon phase
) I really love what I do and even if I had enough to retire off right now I would still stick to my current job.I guess I just love working and climbing the corporate ladder which is lucky for me because after 2 crap jobs I think I finally stumbled onto the right one... (ask me again in a year) I can myself spending less time investing and more time concentrating on my career.
simonjulie said:The real clincher for me was when I read something that Robert Kyosaki said " How many days/months/years wealthy are You?" and I believe when we came to terms with and fully understood that concept and felt comfortable with the answer and could still sleep at night then a brave new world emerged for the taking.
simonjulie could you go into more detail of this RK statement to help me fully understand the concept.l keep reading it over and over, its really grabbed my attention for some reason.
cheers yadreamin
Yep! you are spot on Gerd
Having thought about it. It was not a book where I read that statement, but it was on one of his cassette tapes that came with a book. Can't remember the details but it was one of those gems that stick.
I fear that too many folk look at the concept of using equity from the opposite direction to my thinking.
I only use money that has become lazy (just like the way Steve Navra used to explain it) for investment. If there is an expectation for the drained properties to perform constantly then that is not a good platform to work from. I use my LVR as a guide to my investing strategies. There are factors that control its direction and so it is important to fully understand the underlying principals so that one can see a way to manage their portfolio in a positive direction with adequate safety nets and escape plans firmly in place. That is my SANF.
Simon
Having thought about it. It was not a book where I read that statement, but it was on one of his cassette tapes that came with a book. Can't remember the details but it was one of those gems that stick.
I fear that too many folk look at the concept of using equity from the opposite direction to my thinking.
I only use money that has become lazy (just like the way Steve Navra used to explain it) for investment. If there is an expectation for the drained properties to perform constantly then that is not a good platform to work from. I use my LVR as a guide to my investing strategies. There are factors that control its direction and so it is important to fully understand the underlying principals so that one can see a way to manage their portfolio in a positive direction with adequate safety nets and escape plans firmly in place. That is my SANF.
Simon
money to me is now no longer a physical object but a concept and a metaphor. i guess that comes from internet banking as well as shifting large amounts around in cyberspace rather than handling the cash.
the strange thing is - the more debt i owe, the larger the amounts i handle, the less stress it gives me. i guess that is called experience and trusting myself.
the strange thing is - the more debt i owe, the larger the amounts i handle, the less stress it gives me. i guess that is called experience and trusting myself.
sonic said:Congrats I've always had a lot of respect for you two backing yourself and making a living out of investing (I don't think I ever could).
What's really exciting for me its with this recent new job I took (i'm prob still in honeymoon phase
I guess I just love working and climbing the corporate ladder which is lucky for me because after 2 crap jobs I think I finally stumbled onto the right one... (ask me again in a year) I can myself spending less time investing and more time concentrating on my career.
What job is this sonic?
Personally, I too get a great deal of satisfaction from my job. Its the corporate ******** that I dont like... unfortunately it can be hard to avoid.
stretchy said:
yea i'm really junior so i guess i haven't had too much of the corporate politics but i don't mind the small bit of it that i've been exposed to.
i work in the investment banking industry. its quite interesting i'm personally glad i found the somersoft forum and read a lot of investing books before i got into the industry because in my personal opinion when investing your own $$$ i'd use the methods i've learnt from books rather than all these fancy risk models that investment banks use.
i believe their models work (i guess thats why in house traders make huge bonsues) but only if you have a crapload of money to invest like the institutions or you don't have to pay transacation costs like if you are a broker.
lowb said:...i think i have a lot to learn
Here's a shot at it......Hope it makes sense.....
Take a $100 note. The material to make it is not worth $100. Yet, we understand it to be “worth” or represent $100.
The full name for the ”note” is in fact a "promissory note". In the USA, it was a hand written letter signed by the Governor of the Fed Reserve. It PROMISED that should you front up with the letter, or "note", to the Fed Reserve Bank, it would be changed for you on the spot for silver. Hence the name "silver dollar" There were also "gold dollars" which could be converted to gold (I assume the pound sterling silver also came from this origin).
The paper itself was worth very little. But the PROMISE it held was worth silver or gold.
Fast forward to the late 20th Century - almost every country in the world DROPS what was known as the GOLD STANDARD. At this momentous point in history, all currencies became unpegged from the precious metals. No longer was the promise there, that the note could be converted to a fixed amount of silver or gold.
Put another way, the note was now a promise that it MIGHT be able to be converted to some UNKNOWN amount of precious metal (possibly zero).
Whatever the case, the value of the note in the modern world, is ONLY AS GOOD AS THE PROMISE OF THE GOVERNMENT BEHIND THAT PRINTED IT. So for example, if the world generally (at a particular point in time) trusts the US government more than say the Australian Government, the US$ would be worth more than the AU$.
The important bit is this - the value of the note (of whatever currency) is only as good as the implicit promise behind it.
Which leads on to the next question - is money "tangible" or "intangible"?
If the note is merely a "representation" of a promise, and does not carry equivalent material value – money is INTANGIBLE.
When you swipe your Credit Card, did money change hands? It did right? However, did you physically hand over something? NO, it was just bits of electronic data that went over the net. It was just INFORMATION that got transferred – it is INTANGIBLE.
Now, here's the really crucial part:
If you paint a picture, and someone gives you $500 for it – where did the “value” come from? Was your paint and canvas worth $500? No. You got $500 as a representation of the INTABGIBLE idea which you have depicted on canvas.
Where did your idea come from? You CREATED it! You CREATED MONEY from your MIND.
This is a very important concept to grasp. Money is INTANGIBLE – therefore it can be CREATED at will. MONEY is FREE.
You have been told (directly and indirectly) all your Life that money is real and tangible. It is not. Think about it. How can someone pay person A $20 for an item, then take it to Person B and sell it for $40? Happens all the time right? Where did that extra $20 get created? In the minds of all the people. “Monetary Value” is a perception.
Cheers,
The Y-man
Bank multiplier effect:
Start off with the bank and 3 people. Person A deposits $100 into the bank. Bank lends person B $90 to buy a house from person C, say. What does person C do with the money? Deposit it into the bank.
So at the start, you have:
Person A = $100 assets, Bank = $100 owed to A, Person B = nothing, Person C = house
At the end, you have:
Person A = $100 assets, Bank = $100 owed to person A, $90 assets (mortgage), $90 owed to person C, Person B = $90 house, $90 mortgage, Person C = $90 cash
The 'flow' in the system has increased purely because of 'creation' of debt / money by the bank.
NONE OF THIS IS REAL. It's all promises. The bank promises to pay person A and C back their deposits on request (though if everyone wanted their money back the whole system will collapse - 'run on the bank'). Person B promises to pay the bank back, but if asked to repay immediately would go bankrupt. Person C's house might have only been worth $80 before. Now it's worth $90 because person B said it is and $10 has been created.
The value of the mortgage is based on the property value, which is only as much as buyers and sellers think it is (hence negative equity in Sydney at the moment).
That 'cash' is only a few numbers in a computer. It has value because we think it does. If everyone decides it's not worth anything, it isn't (hence currency collapses, etc). Since going off the gold standard, everything is based on faith.
Alex
Start off with the bank and 3 people. Person A deposits $100 into the bank. Bank lends person B $90 to buy a house from person C, say. What does person C do with the money? Deposit it into the bank.
So at the start, you have:
Person A = $100 assets, Bank = $100 owed to A, Person B = nothing, Person C = house
At the end, you have:
Person A = $100 assets, Bank = $100 owed to person A, $90 assets (mortgage), $90 owed to person C, Person B = $90 house, $90 mortgage, Person C = $90 cash
The 'flow' in the system has increased purely because of 'creation' of debt / money by the bank.
NONE OF THIS IS REAL. It's all promises. The bank promises to pay person A and C back their deposits on request (though if everyone wanted their money back the whole system will collapse - 'run on the bank'). Person B promises to pay the bank back, but if asked to repay immediately would go bankrupt. Person C's house might have only been worth $80 before. Now it's worth $90 because person B said it is and $10 has been created.
The value of the mortgage is based on the property value, which is only as much as buyers and sellers think it is (hence negative equity in Sydney at the moment).
That 'cash' is only a few numbers in a computer. It has value because we think it does. If everyone decides it's not worth anything, it isn't (hence currency collapses, etc). Since going off the gold standard, everything is based on faith.
Alex
The posts above are part of the story.
Another part is that money is only worth what you can buy for it.
Nobody actually wants money, what they want are the things they can buy with money - and generally some things that can't be bought with it as well.
Everything that can be bought with money is made using the application of will and labour. It is extracted, created or conceptualised by humans and the tools that humans have developed.
Many of the things we use money to buy can be created through minimal exertion, and of course (as Y-Man pointed out) their value is a perceived value based more on it's utility for the buyer than it's value to the seller.
A good case in point is oil, which originally was the waste product of kerosene wells. Originally people paid for it to be taken away. However once a use was discovered for it, it's value increased.
So something to consider is whether the fastest and most effective way to get what you want is to pursue an intermediate step of making money and then buying it.
There may be more direct approaches which either don't require money, or treat money only in a virtual way as a relative measure of value to enable a transaction to occur.
Red Paperclip is one example. Creating a company is another.
Cheers,
Aceyducey
Another part is that money is only worth what you can buy for it.
Nobody actually wants money, what they want are the things they can buy with money - and generally some things that can't be bought with it as well.
Everything that can be bought with money is made using the application of will and labour. It is extracted, created or conceptualised by humans and the tools that humans have developed.
Many of the things we use money to buy can be created through minimal exertion, and of course (as Y-Man pointed out) their value is a perceived value based more on it's utility for the buyer than it's value to the seller.
A good case in point is oil, which originally was the waste product of kerosene wells. Originally people paid for it to be taken away. However once a use was discovered for it, it's value increased.
So something to consider is whether the fastest and most effective way to get what you want is to pursue an intermediate step of making money and then buying it.
There may be more direct approaches which either don't require money, or treat money only in a virtual way as a relative measure of value to enable a transaction to occur.
Red Paperclip is one example. Creating a company is another.
Cheers,
Aceyducey
The key concept is that value is based on perception only. Most things have very little intrinsic value. A loaf of bread is more valuable to a starving person than one who is full. $100 cash to a hermit living in a forest is less valuable than $10 worth of food.
Gold, when you think about it, isn't all that useful. You can't eat it, it's not a good building material because it's too soft and heavy, etc. It's valuable because people WANT it and are willing to exchange things for it. They want it because they think it's valuable and in the future someone else is going to trade them MORE stuff for it.
Therefore, everything is worth whatever other people think it's worth.
Applying this to investing, something is worth as much as another person thinks it is. Therefore, to create 'worth', you have to first understand what the other person values. e.g. when you do a reno, will the buyer value a new coat of paint, or a jacuzzi? A clean house can be thousands of dollars more valuable than a dirty one, even though it may only cost a few hundred dollars to clean it.
A house is worth more when people are optimistic about future values, and less when people are pessimistic.
Alex
Gold, when you think about it, isn't all that useful. You can't eat it, it's not a good building material because it's too soft and heavy, etc. It's valuable because people WANT it and are willing to exchange things for it. They want it because they think it's valuable and in the future someone else is going to trade them MORE stuff for it.
Therefore, everything is worth whatever other people think it's worth.
Applying this to investing, something is worth as much as another person thinks it is. Therefore, to create 'worth', you have to first understand what the other person values. e.g. when you do a reno, will the buyer value a new coat of paint, or a jacuzzi? A clean house can be thousands of dollars more valuable than a dirty one, even though it may only cost a few hundred dollars to clean it.
A house is worth more when people are optimistic about future values, and less when people are pessimistic.
Alex
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I'm beginning to understand that money can be created -because it is intangible, and it is just an idea, an idea of what something is worth. There is no true value, everything is image
However, (if we are not talking about property), money can not be made unless there is a transaction...
The difficulty I percieve is...
1. What sorts of things can you make/acquire so that you can add value to it? Depends on what you're good at... I suppose
2. In what way can you make that transaction to transfer the intangle percieved value of a customer into real money in your account?
3. (hi yman ) I think that money can be created with your mind... but I suppose not at will, for me! I dont have any special ability to... (not now?)
(a)transform something from nothing/cheap
(b)create perceived value
(c)make the transaction
4. With property, i think its terribly terrific that (3c) isnt necessary. With business (3c) is the main cost, you either have to have a shop or you have to set up online mastercard to sell your goods...
These are really great posts (your ones!!)...
However, (if we are not talking about property), money can not be made unless there is a transaction...
The difficulty I percieve is...
1. What sorts of things can you make/acquire so that you can add value to it? Depends on what you're good at... I suppose
2. In what way can you make that transaction to transfer the intangle percieved value of a customer into real money in your account?
3. (hi yman
) I think that money can be created with your mind... but I suppose not at will, for me! I dont have any special ability to... (not now?)(a)transform something from nothing/cheap
(b)create perceived value
(c)make the transaction
4. With property, i think its terribly terrific that (3c) isnt necessary. With business (3c) is the main cost, you either have to have a shop or you have to set up online mastercard to sell your goods...
These are really great posts (your ones!!)...
Try a refinancing. No transaction, the perceived value of other buyers in the market confers value on your property, and it puts real money into your account. Time it right and refinance at the top of the market, and even after the 'perceived' value at the top comes back down, the bank won't ask for the money back. As long as you keep making the payments, of course.
Alex
Great posts from Alex and Acey above.
No need for a shop or paypal when buying and selling shares
Cheers,
The Y-man
