HSC Over! Life Begins!

[batesc]

Hello to you all..

i stumbled over this forum a little over an 3 hours ago an have been flying through thread after thread of from what i can see very very knowledgible information.

2 weeks ago i finished my hsc. Completing english, maths, economics, business and accounting i have a broad and i mean very basic base of terms of the financial markets.

A few weeks before the HSC i applied for a accounting traineeship with a firm here in newcastle. After getting past the 70 or so applicants in resume form, i got to the 45 for phone interviews then 15 for actual interviews with a recruiting firm and finalling landing the job out of the 6 with the interview with the actual firm.

So starting in feb 05, i am looking to maximise my free time and start my new life with learning as much as i can everyday. Heres my problem, well opportuninity to start myself on my way to getting a popular word on here "equity".

I have inherited around $20k, i live in newcastle with no work, well will in january on a wage of around $330/week, low living expenses(still live with parents) and wish to get into the market as early as possiable to not waste money and time.

Can i grab anybody thoughts on what i should do with the money and my income which i can easily save a large percentage of without turning me into a hermit.

Thanks for your time.

 

[geoffw]

Welcome to the forum Batesc. Just by asking the questions you have you are showing a financial intelligence probably far ahead of many of your peers. Well done.

But patience grasshopper.

Take a little time to learn about your market. Identify a few areas which would be good. Get to know those areas well, and visit as many open houses in those areas as you can. You have free time until January.

Also speak to a mortgage broker to work out what you can afford. I don't know Newcastle, it may be difficult to find anything. Simon is a mortgage broker and investor in your area.

You may well need substantially more deposit, and/or a good genuine savings record. $20K will not go too far for a property these days, especially after acquisition costs.

Also investigate the First Home Owners Grant (FHOG). You would need to live in the property for a periond of time first- but the extra cash could well be worth while.

 

[Brenda Irwin]

Congratulations on your graduation and job apprenticeship thus far. Well done!

My advice is to buy or borrow as many property investing books as you can. The Jan Somers books are a good start as they are full of information in an easily understandable format.

When you are ready to start looking to buy, start on the less expensive side of a purchase. That way, you can get over the hurdle of paying for your own home as the interest payments are not tax deductable and it is not easy for a start.

If it isn't too bad living with your parents, consider staying with them and buying an investment property first which you can rent out. Being a budding accountant, you should be able to do some assessment figures on what is best for you. The PIA property analysis software from somersoft is a great medium to use and it is not as expensive as some. It should also help you to understand all the variables associated with property.

 

[kissfan]

Well done Batesc. I get excited when I see young people trying to advance themselves, it doesn't seem that popular these days. Have to agree with Geoff (again) when he says don't be in too much of a hurry. Read as much as you can, ask questions (no question is too silly), keep visiting this forum. Whilst you're learning you are still saving so the upside is a smaller loan. There are many mistakes to be made in investing (and life in general) and while we all learn from them it is good to make as few as possible which is where research etc comes into play.
Best of luck with your new job and your investment journey.

Best Regards
Marty

 

[quiggles]

I agree with the others, and especially in congratulating you.

Other things that may be useful: Look at your proposed current income, check how much you want in order 'not to be a hermit' and resolve to put the rest aside, by automatic deduction. Enjoy your life, don't put it off - just do as you are doing and prepare for a better one as well by delaying some gratification. Pay rises are to add to the amount put aside rather than to be spent.

If you are starting out without consumer debt, keep it that way.

Ask around at your new work - is anyone property investing? Nothing like finding a mentor close to home and especially with relevant skills like accounting. Check out meetings at meeting point, and try and attend some - you'll meet some fascinating people and hear some very interesting talk.

Above all, keep your mind open and your determination strong. Read the investing philosophy forum as well, and learn what makes YOU tick. Plan, research and plan some more.

 

[MarkB]

You may well need substantially more deposit, and/or a good genuine savings record. $20K will not go too far for a property these days, especially after acquisition costs.

Also investigate the First Home Owners Grant (FHOG). You would need to live in the property for a periond of time first- but the extra cash could well be worth while.

In addition to FHOG ($7k), you are probably also eligible for a stamp duty exemption (as a first home buyer) in NSW for a PPOR.

Check out this site for information on FHOG and the stamps exemption.

MB

 

[Jas]

If living with your parents isn't for you, try buying a house and renting out the rooms. That you're living in a group house, and you get to pick who lives with you

Jas

 

[geoffw]

Actually you may have to juggle your options between staying at home or moving into a house you buy.

Looking purely at the financil side:

Moving into the house you buy:
.You get FHOG
.You may get stamp duty exemption
.When you sell you will get at least partial capital gains tax exemption

Staying at home:
.Interest payments on the house are deductible
.You get more income from rent

I'd suggest that earlier in your working career, tax deductions won't mean as much to you. If you defer tax deductions now in order to get some in future years when you will be on a higher income bracket, it may well be worth while for you.

 

[topcropper]

Personally, I wouldn't touch residential property at the moment. Historically, it's way overvalued. Everything goes in cycles, and the run is obviously over. I know the stockmarket is at all time highs, but on valuations, it's as cheap as ever.

How about some BHP and Westfield shares. BHP is on a roll, with metals and energy booming. Coal contracts are about to be renegotiated, and good growth should be acheived. China is the key here.

Westfield is Australias most successfull company, and now that it's sort of a property trust, it's got a good yield. You would have to buy a rental property at Woop Woop to equal the yield. These companys are big and safe, and once you get more confident, try some smaller companys for some bigger but riskier profits.

Good Luck.

 

[astroboy]

Personally, I wouldn't touch residential property at the moment. Historically, it's way overvalued. Everything goes in cycles, and the run is obviously over. I know the stockmarket is at all time highs, but on valuations, it's as cheap as ever.

How about some BHP and Westfield shares. BHP is on a roll, with metals and energy booming. Coal contracts are about to be renegotiated, and good growth should be acheived. China is the key here.

Westfield is Australias most successfull company, and now that it's sort of a property trust, it's got a good yield. You would have to buy a rental property at Woop Woop to equal the yield. These companys are big and safe, and once you get more confident, try some smaller companys for some bigger but riskier profits.

Good Luck.

Well Toppcropper wouldnt advise resi r/e.
However in your area it has been the number 1 performer for the last few years - up to 10 - hands down. Look at gains made 'round the NCL beach areas over the last 10 years, Look at Lake Maquarie for the same. Or Stockton. Look at Port Stephens for gains outstripping SYD w/front and tell me it still hasn't got legs. You are in a great area, Simon or Jamie would be worth a chat to.
ab

 

[topcropper]

G'day Astroboy.

You probably think I have a hide to make my first post, on a property forum, saying residential property is overvalued. I've been a lurker on here for over a year, but since I've thought property has been overvalued for even longer, and I've been into shares, I haven't contributed. Plus, up to now I wouldn't have been game enough, as 12 months ago I would have been shot down in flames. Now it seems that most can see reality. I just felt I should reply to batesc to even things up a bit since everyone else seemed to suggest property.

I am not against property as an investment, as over the long term it has returns almost as good as the share market, but the big advantage is the huge amount of gearing one can make. I have geared into the sharemarket as well, but I would never be game enough to do it in a big way like property. As a result I, like many have made more from property than shares, but I just don't like property at this time, how it's presently valued.

I notice that you seem to infer that because property has been so good for the last 10 years in batesc's area, then it must still be the go now. That doesn't make much sence to me. It would be like saying in March 2000 that since tech shares had been the best investment for the previous 12 months, that tech shares must be the best investment going forward.

I don't know a lot about city and coastal residential property, but what has happened here in the bush has surprised me. I can understand why land in the city and on the coast has such a high capital growth, and low yields. It's because land is scarce in the good spots, so is in demand. In the bush however, I can look at a small rural town, that has a stagnent or declining population, and where house prices have doubled and yields halved in 18 months. There is land for 20 k's in any direction around these towns, so I think 'how can land ever be in demand here'. Of coarse, it wont. Then why has it now got a rental yield of 5%or 6%, when for the last 50 years rental yields have been 10% or more. I think some people are in for a nasty surprise in the next few years.

I have a share portfolio now that has an average forecast price to earnings ratio of 12. These companys have been growing stongly for years, and were super cheap just 20 months ago due to investors following the crowd, rather than looking at the valuations.

Anyway good luck to you, but just be carefull and watch the debt levels.

Cheers.

 

[np2003]

Great!, every man and his pet dog is getting into the market now, LOL. Now I know why we had the boom we HAD to have and no doubt we'll be in for another 'fake' market rise sooner or later.

While I find it "GOOD" that you are starting young and learning to invest, what I find hilarious is that everyone on this forum is behind the times, that is, they are still based on old stereotypes. How many times have we heard of "wow, that's good you're starting investing at a young age, well done! and are quick to add after that, "well at least you're a head start, unlike other kids who leave college, drunk up, party, booze around and just waste their life". Well people, this is getting to be the standard. Virtually EVERY kid who's left school is getting into the property market, buying their own property for investing, etc.

Get with the times and for starters, I'd start my own business with your 20k inheritence...

I know I started mine with just $4k initially and now I am a millionaire in just 3 years, all while attending uni at the same time. Beat that property investors! Yeah, wow weee..

Anyhow, the choice is yours but remember if you do anything well you will succeed.

Now, I'm ready for all the tall poppy mum and dad's to let loose their remarks on me.

 

[np2003]

Opps you said the wrong words here, "and wish to get into the market as early as possiable to not waste money and time. "

Remember, the only way money comes to you, is if you enjoy it. Sure, people make money working their jobs, but they are forced to, thus not a lot of it comes their way. Do something you enjoy and hate*, not because it's just purely for money but because you WANT to make it better than everyone else in your field of work.

(*YES like a relationship your business can suck at times to, but once you're over those periods you've strengthened your relationship with your business. Actually, your business is like a relationship, if you treat it will you will prosper, and remember if you jump into investing in IPs, its just like marrying. You've got to keep committed for decades. How many have lost money buying in the 1990's only to give up their IPs just before the boom? Remember, once the lights dim down, and the media focuses their attention to some other "get rich scheme", will you be around, dedicated to property investing..?)

 

[The Y-man]

what I find hilarious is that everyone on this forum is behind the times, that is, they are still based on old stereotypes. How many times have we heard of "wow, that's good you're starting investing at a young age, well done! and are quick to add after that, "well at least you're a head start, unlike other kids who leave college, drunk up, party, booze around and just waste their life". Well people, this is getting to be the standard. Virtually EVERY kid who's left school is getting into the property market, buying their own property for investing, etc.

Be gentle on us old folk....

I do find uni students who are interested in investing, but none in my classes yet who have anything to speak of, let alone a business like yourself. Perhaps it's the Uni I teach at or the subjects...


Cheers,

The Y-man

 

[The Y-man]

if you jump into investing in IPs, its just like marrying.

IP's don't get into an argument with you about who left their dirty undies lying around, or the state of the house, or.... oh #$@%! my wife's coming in the door!!

Cheers,

The Y-man

 

[np2003]

Maybe not the IP itself but who's living inside those Ips, much like a mind of a women, its not the outside thats of concern but whats inside that head.

IP's don't get into an argument with you about who left their dirty undies lying around, or the state of the house, or.... oh #$@%! my wife's coming in the door!!

Cheers,

The Y-man

 

[topcropper]

G'day np2003.


I notice on the

'How strong is the Australian economy thread',

you said you thought the economy was very weak. The economy has been booming for years. So you think things are going to change quickly. Yes? Well, considering the huge failure rate of start up bussiness's, in a failing economy, what bussiness would you suggest batesc start up with his 20k. I would be interested to here.

If you thought the economy was about to crash, wouldn't you suggest batesc put his money in a term deposit?

I think the economy is very strong, and will stay that way thanks to a booming Asia, China in particular, and our countrys great fortune in being blessed with huge amounts of natural resources and energy and land for agriculture.

Cheers.

 

[kissfan]

How many times have we heard of "wow, that's good you're starting investing at a young age, well done! and are quick to add after that, "well at least you're a head start, unlike other kids who leave college, drunk up, party, booze around and just waste their life". Well people, this is getting to be the standard. Virtually EVERY kid who's left school is getting into the property market, buying their own property for investing, etc.

Have to disagree that "virtually every kid" leaving school is investing in property etc. I see alot of my sons friends, male and female in the age group 17-24 and only a small percentage are thinking about their future wealth. Most seem happy to just get by every week by whatever means. Thats why I for one think it is fantastic to see any young person trying to get ahead and at least have the vision to ponder investing in some form. Good luck to you with your business venture but your alleged success does come across as fairly rare in this day and age. Not saying your feats are not possible, just unheard of in the main which is why I believe the younger generation should be encouraged to invest ( after much research).

Regards
Marty

 

[Andrew_A]

Hot air

Something I've found with bignoters is that if there is any substance to their claims then they are only too happy to reveal the details. Otherwise it's all vague bluffs of hot air.

My experience with teenagers (I work at 7 different schools) is that they really aren't that smart with their attitudes to investing and whilst they are very tech savvy and smart with the web (A lot of teenage web-designers out there). It's still all about consumption and lifestyle and definitely not about saving and the delayed gratification thing of investing. Our education system still doesn't teach kids the most important things in life. Wealth, Health and Happiness.

I think a forum like Somersoft would not be a good representation of young people in Australia! As those who find their way here are somewhat predisposed to the idea of investing.

WaySolid

 

[Jerry Maguire]

Hi Batesc,

Well Done on finding this forum and wanting to start your journey on property investing

If you were to email me on [email protected]
i'll be more than happy to email you the book called Think and Grow Rich
as well as a due diligence kit for you to find a property

Regards
Jerry