Sim said:
You're getting out of date with your platitudes Sim' .
Didn't you know that roses smell like poo poo poo....
See Change
Living off equity – a Reality Check
- Thread starter keithj
- Start date
You're getting out of date with your platitudes Sim' .
Didn't you know that roses smell like poo poo poo....
See Change
simonjulie said:I have not experienced 20 years. But down here in the "Promised Land"(ACT) we see some long periods of "Growth droughts" but fortunately rental yields have seen us ,personaly, through those times. We have historically seen slow growth and negative growth in some areas of Canberra through the early to late nineties.
I'm not scared. Just flexable
Kind regards
Simon
For what it's worth, I've lived with close enough to 20 years with very low or no and at times negative growth. This was in sections of the Townsville market from approx 1982 until 2003. Had I been smarter and maybe applied something like rental reality I probably wouldn't have been in that market in the first place. Never the less we survived on very good yield and are now reaping some rewards in the form of growth.
I like the way things tend to come back to the basics and as Simon says, put your hands in the air, oops, I mean "spend less then you earn and invest the surplus wisely".
Cheers
Sleeper
Hey Sea Change,
Your last comment has my wife and I laughing so much!
LOL
John
Your last comment has my wife and I laughing so much!
LOL
John
Question for Steve
Steve,
I am not looking for a whole load of free advice, But
Borrowings $750,000, (3 Inv, equity app $140,000) 1 x ppor (equity $360,000) , total value of property $1.25m. Gross income $95,000. We can't get any further money from the bank and our income will not change dramatically over the next five years. I am 47 and my wife is 33. Do we sell and then try to invest in other areas or what ?. The reason I ask is that we seem to be stagnating. I have attended your course in Brisbane. It was well worth it. We would like to get active again. The answer can be one line if necesary.
Baldrick
Steve,
I am not looking for a whole load of free advice, But
Borrowings $750,000, (3 Inv, equity app $140,000) 1 x ppor (equity $360,000) , total value of property $1.25m. Gross income $95,000. We can't get any further money from the bank and our income will not change dramatically over the next five years. I am 47 and my wife is 33. Do we sell and then try to invest in other areas or what ?. The reason I ask is that we seem to be stagnating. I have attended your course in Brisbane. It was well worth it. We would like to get active again. The answer can be one line if necesary.
Baldrick
Phone meBaldrick said:
Oh no it isn’t
I know I ain't gonna be popular, but........
......oh no it isn’t. Living off equity is a way of drawing down cash to live on against previous growth (if any).
What you have described is getting income to live off from a share fund that consistently returns 13% in dividends & distributions and also has capital growth.
Cheers,
Keith
I know I ain't gonna be popular
, but........Steve Navra said:
......oh no it isn’t. Living off equity is a way of drawing down cash to live on against previous growth (if any).
Steve Navra said:
What you have described is getting income to live off from a share fund that consistently returns 13% in dividends & distributions and also has capital growth.
Cheers,
Keith
Steve Navra said:
Building up a NET portfolio of $2,000,000 might take a very long time.
Another way of looking at things is to build up a NET portfolio of $1,000,000 and to live of the equity. (This will take HALF the time.)
Steve
My personal experience has been different to this Steve. In my experience the more money you make , the better you get at making it and the quicker you make it.
It took us about 16 years to get to a level where you told me where we could retire and live off equity , but that was because we spent the first 12 1/2 - 13 years thinking we had to save our way to wealth ( and rely on the natural growth in property in our PPOR ) and I only realised there had to be a better the day after my 40th.... From that point it took three 1/2 years to triple our equity and reach a point where you said we could retire by living off equity. By the end of this year we should have trippled ( possibly more ) it again ( about four years so a bit slow this time
.So in my experience the growth has been exponential rather than linear.
See Change
Hi Keithj,keithj said:I know I ain't gonna be popular
......oh no it isn’t. Living off equity is a way of drawing down cash to live on against previous growth (if any).
What you have described is getting income to live off from a share fund that consistently returns 13% in dividends & distributions and also has capital growth.
No problems with what you are saying
You ARE using your equity!
You are drawing your equity OUT of its lazy home and putting it to use in a more efficient way, whilst still retaining the leverage and CG.
Some people are too risk averse to do even this.
The use of this borrowed money enables you to fund the holding costs of the entire portfolio and provides living income. So you are living off it. (If it were left as equity in the property there would be NO INCOME to live off.)
Did you think LOE was spending your CAPITAL in the hope of future growth?
Remember NO Growth = NO SPEND
However
Should you have some years of good Capital Growth in either shares or property (Like we have had for the past decade . . . and are still having) then you can (once you have made it), blow a bit of capital on:
Overseas holidays
New car (Ferrari) ask Peter Span
Lifestyle . . . without effecting your portfolio.
Living off equity is not just about being able to pay the monthly bills, it about lifestyle, luxuries and getting a life!
Nothing gloomy or conservative about that
Regards,
Steve
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Hi see_change,see_change said:
Absolutely I agree with you!
And yet your particular method of buying and selling has taken some specialised skills . . . all credit to you.
It will make a very interesting post if you were to share the detail of your methodology with the rest of the forum.
But I warn you that there will be some who will attack most of what you do as being:
- Too risky
- Only happened in times of good growth
- The next ten years of doing the same will send you broke.
- Just will refuse to believe that property, shares, or any form of asset will EVER grow again.
- And even if there might be future growth, the baby-boomer retirement will kill this too
However, I will look forward to hearing about it anyway
Regards,
Steve
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Hopefully you can share your details see_change. It absolutely blows me away (and motivates) when I hear about how people have changed their lives through building wealth.Steve Navra said:Hi see_change,
It will make a very interesting post if you were to share the detail of your methodology with the rest of the forum.
However, I will look forward to hearing about it anyway
Regards
Marty
sensitivity
Many thanks for your posts, Steve.
Considering analytically the long term success of the investment strategy, I suspect the element that is most important is capital growth in the property portfolio. And that the long term success of the strategy is most sensitive to variation in this parameter.
Logically then, I would assume that one would seek to, as much as possible, sensibly target maximum long term capital growth in the investment properties. (Certainly this is what I aim to achieve, but I wonder if I'm on the right path. For example, I'm focussed on buying very near the beach, south of Perth. Just north of Mandurah.)
I appreciate you have the rental reality criteria and suspect that this is your method of achieving this goal. Although, to me this is operating on a shorter time frame than I prefer to consider. Maybe a slightly different goal and target market/audience?
[I can imagine that volatility in the equity investments could have a significant short term impact, however I'm really only thinking of long term - decades.]
Or are other matters more critical? For example, it does seem to be a bit of a fine balancing act between income and expenditure. Suggesting the basics of spending less than is earnt are always important.
Care to comment?
best regards,
Many thanks for your posts, Steve.
Considering analytically the long term success of the investment strategy, I suspect the element that is most important is capital growth in the property portfolio. And that the long term success of the strategy is most sensitive to variation in this parameter.
Logically then, I would assume that one would seek to, as much as possible, sensibly target maximum long term capital growth in the investment properties. (Certainly this is what I aim to achieve, but I wonder if I'm on the right path. For example, I'm focussed on buying very near the beach, south of Perth. Just north of Mandurah.)
I appreciate you have the rental reality criteria and suspect that this is your method of achieving this goal. Although, to me this is operating on a shorter time frame than I prefer to consider. Maybe a slightly different goal and target market/audience?
[I can imagine that volatility in the equity investments could have a significant short term impact, however I'm really only thinking of long term - decades.]
Or are other matters more critical? For example, it does seem to be a bit of a fine balancing act between income and expenditure. Suggesting the basics of spending less than is earnt are always important.
Care to comment?
best regards,
Hi Pete,Pete said:
From reading your past posts it certainly seems that you have achieved well and are very much on the right path
If I might suggest a concern; it is that if property is your major investment medium, then you might diversify between different post codes.
One of the most important investment criterions is:
KNOW YOUR MARKET
And I thus assume you know the Mandurah area well.
So this bodes well for success in that area.
Your investment strategy seems to be working very well, but I can't comment much more without knowing the full details. (Feel free to e-mail me and I will give you a better appraisal.)
Regards,
Steve
Thank you, Steve.
Your comments are appreciated and I'm sure spot-on, for me. I have the barest fraction of diversification - across a couple of postcodes down Mandurah way and also a couple of places in Perth itself.
I wrote earlier (separate thread?) that diversification is a subject I'd fail. Lots of eggs in one basket and watching like a hawk. Very happy with basket so far. It is working for now but will change with time. Such as, get my LOC lazy dollars into some shares. Ungeared into your fund sounds good. I am uninterested in investing directly into shares.
I'll aim to make an appointment to see you next time I'm over east. (As I wrote previously, I was booked into your Perth presentation about 18 months ago but called away for work at the time. Hence did not attend.) A cashbond may be useful to me and your comments on strategy would be very welcome.
I don't want to lead off thread; so, back to the topic.
Thank you again for your contributions.
Cheers,
Your comments are appreciated and I'm sure spot-on, for me. I have the barest fraction of diversification - across a couple of postcodes down Mandurah way and also a couple of places in Perth itself.
I wrote earlier (separate thread?) that diversification is a subject I'd fail. Lots of eggs in one basket and watching like a hawk. Very happy with basket so far. It is working for now but will change with time. Such as, get my LOC lazy dollars into some shares. Ungeared into your fund sounds good. I am uninterested in investing directly into shares.
I'll aim to make an appointment to see you next time I'm over east. (As I wrote previously, I was booked into your Perth presentation about 18 months ago but called away for work at the time. Hence did not attend.) A cashbond may be useful to me and your comments on strategy would be very welcome.
I don't want to lead off thread; so, back to the topic.
Thank you again for your contributions.
Cheers,
Steve Navra said:Hi see_change,
Absolutely I agree with you!
And yet your particular method of buying and selling has taken some specialised skills . . . all credit to you.
It will make a very interesting post if you were to share the detail of your methodology with the rest of the forum.
But I warn you that the will be some who will attack most of what you do as being:
- Too risky
- Only happened in times of good growth
- The next ten years of doing the same will send you broke.
- Just will refuse to believe that property, shares, or any form of asset will EVER grow again.
- And even if there might be future growth, the baby-boomer retirement will kill this too
However, I will look forward to hearing about it anyway
Regards,
Steve
Steve:
From my memory of See Change's Method, it is very practical with very low risk and maximum returns. Well, it still needs some skills and determination to implement it as well as some equity/deposit to begin with.
I am 100% IP person at that moment. My experience on stock market is negative. Your this post and another "quoted" post draw my attention on other investment options although I will make my IP portfolio big enough to let me retire more than comfortable. It is a good challenge to explore other investment methods although I fully understand that the best way to be successful is just to repeat what I am doing very well.
Very interesting on the concepts of DCT.
In the sample spreadsheet on the quoted post about stock price down from $20 to $18, it still has a nice profit. I am not sure if it is OK to ask you that how do you set up a trigger point of sell/buy price and volume. I notice it is $19, $18 and 1000, 2500, 6000. Why?
Finally, thank you very much for you to share your idea. Please keep posting.
Regards
TGP
Hi TGP,ToGetProperty said:
There is no real relevence to the 1000, 2500, 6000 figures, other than to suggest that you buy exponentially more the lower the price falls. The trading system works out what the exact purchase or sales volume will be based on many other factors that are taken into account by the algorithm.
These other factors would have required too much detail to explain . . . and basically they are the IP of the system.
IP = ask acey
Regards,
Steve
SteveN said:
keithj said:
SteveN said:
Hi qaz,qaz said:Sure it is, its just not living off it directly rather indirectly........whats your point?
The definition I believe is commonplace in this forum is as I stated above
'Living off equity is a way of drawing down cash to live on against previous growth (if any)'. It's also what I described in the initial post of this thread - with no disagreements. It's what I believe simon & julie (who practise it) described.
If this is not the case then almost any form of investment could be described as living off equity -
- living off rent from IP would own (the IP is equity)
- dividends from share (the shares are equity)
- interest from bank accounts (the money in the a/c is equity)
So Investing is not the same as Living off equity ?
A v. significant attribute of LOE is being tax efficient - you don't have income therefore you pay no tax. Chapter 3 above describes a share fund returning 13% as income which you live off - income is taxable.
What SteveN is describing is simply diversifying from IP into a share fund and using 50% gearing (using margin lending) on the share fund.
Does anyone else have views on what is and is not LOE ?
Cheers,
Keith
Unless you have an extremely broad definition of Living Off Equity ie Investing = LOE, then I would say that you are merely leveraging to provide more growth, which is something we all do already.Steve Navra said:You ARE using your equity!
You are drawing your equity OUT of its lazy home and putting it to use in a more efficient way, whilst still retaining the leverage and CG.
Some people are too risk averse to do even this.
No - that's living off INCOME, living off Equity is as described in post 1 of this thread.Steve Navra said:
Oh no, I agree that 'only a freaking moron would spend equity before growth occurs'.Steve Navra said:Did you think LOE was spending your CAPITAL in the hope of future growth?
Remember NO Growth = NO SPEND
As you said above no-growth=no spend. But what happens when growth doesn't occur ?Steve Navra said:
I'll repeat what I said above -
What you have described is getting income to live off from a share fund that consistently returns 13% in dividends & distributions and also has capital growth.
Cheers,
Keith
Steve Navra said:But I warn you that there will be some who will attack most of what you do as being:
- Too risky
- Only happened in times of good growth
- The next ten years of doing the same will send you broke.
- Just will refuse to believe that property, shares, or any form of asset will EVER grow again.
- And even if there might be future growth, the baby-boomer retirement will kill this too
However, I will look forward to hearing about it anyway
Regards,
Steve
I was thinking about your above list overnight , and realised that, while there are many different views on the forum on how to invest , most of the time people don't necessarily attack other peoples views on investing . Most of the time people seem to accept that there are just different ways to do things.
As far as methodology , the only person who seems to draw recurring negative comments ( as well as many adoring fans :0 ) .... is yourself.
See Change
