More new investors on Somersoft lately??
- Thread starter GIDDO
- Start date
yeah i'm a newbie - 27.
shares and property though, but more active with shares.
shares and property though, but more active with shares.
I'm a relatively new member too.
We're at a stage in our lives, with one child 19 months and another due any day , that it's time to take stock and realise that in 10, 15 and 20 years from now we'll still have kids!
Which before kids I never really thought about. It was a catalyst to do something NOW about our future. I imagine this happens to quite a few people.
We originally went to see a Financial Planner when our daughter was born to get all the life insurances set up as well as setting up a small managed fund with monthly contributions for our daughter.
We thought a FP that offered fee for service (and rebates on commission) was the best idea. When I got a pay rise and asked his advice, he said put it in ING for the next 6 months until our next appointment. It was at that point I realised there's only 2 people interested in our financial future and that's me and my wife.
So a friend at work lent me some books on Property Investment back in June. Since then we've been sponges, reading as much as we could on here and in as many books as the library would lend us!
We settled on our first IP this week and have a tenant already moved in.
I hope to be able to assist some of the future newbies on Somersoft as my experience (and portfolio) grows.
We're at a stage in our lives, with one child 19 months and another due any day , that it's time to take stock and realise that in 10, 15 and 20 years from now we'll still have kids!
Which before kids I never really thought about. It was a catalyst to do something NOW about our future. I imagine this happens to quite a few people.
We originally went to see a Financial Planner when our daughter was born to get all the life insurances set up as well as setting up a small managed fund with monthly contributions for our daughter.
We thought a FP that offered fee for service (and rebates on commission) was the best idea. When I got a pay rise and asked his advice, he said put it in ING for the next 6 months until our next appointment. It was at that point I realised there's only 2 people interested in our financial future and that's me and my wife.
So a friend at work lent me some books on Property Investment back in June. Since then we've been sponges, reading as much as we could on here and in as many books as the library would lend us!
We settled on our first IP this week and have a tenant already moved in.
I hope to be able to assist some of the future newbies on Somersoft as my experience (and portfolio) grows.
yes a lot of new investors and this is what i am worried about - they are getting a lot of encouragement to buy in "affordable" areas like salisbury (SA) and regional towns to chase the best yield
but as you can see from a recent post these places are not without their problems in the sorts of tenants, PMs and tradespeople that are available
but as you can see from a recent post these places are not without their problems in the sorts of tenants, PMs and tradespeople that are available
hi GIDDO,
with porfolio margining it's both a long term investment AND trading at once.
but i mainly use short term trades (3-5 days) at the very present with CFDs and naked puts etc to build my capital with very tight risk management.
after Feb/Mar 08 i will be looking for long term investments - much too choppy to be bottom fishing at the moment.
the SMSF will diversify into Art Equity and renting said art, CFD trading, Options, and eventually industrial / commercial investment when the kitty is big enough.
cheers.
Hello all, and to all those who are fairly new to investing - welcome to a whole new world of learning.
Softmonk, The old yields vs Cap gain argument will ever rage!
Very difficult to get both. I am in a regional city and getting 5.7%,5.5%, 6% and 6.3% on my 4 investments.
BUT cap gain will be less than inner ring Bris or Melbourne of course.
The bit better yields make it easier for me to hold these ones though because I am on a fairly low income myself.
I am just buying and holding at this stage and later may LOE I hope.
Regards
Giddo
Softmonk, The old yields vs Cap gain argument will ever rage!
Very difficult to get both. I am in a regional city and getting 5.7%,5.5%, 6% and 6.3% on my 4 investments.
BUT cap gain will be less than inner ring Bris or Melbourne of course.
The bit better yields make it easier for me to hold these ones though because I am on a fairly low income myself.
I am just buying and holding at this stage and later may LOE I hope.
Regards
Giddo
i would have said if you're chasing a tax write off, go for yield.
long term investment / SMSF go for CG.
what's the general concensus on that?
long term investment / SMSF go for CG.
what's the general concensus on that?
I sort of understand what you are saying but lesser yield investments have a higher tax write off, so i found your statement a tad confusing . .
I think for long term investing high yielding properties aren't too risky, as generally they have less gain, but over real long term they will grow
I think as an over all strategy, aiming for CG, but with a negative cashflow that is affordable (decent yield) i think it's hard to go wrong, especially when you throw in good location and amenities and a property that has a distinct selling feature. But it depends on your goals and what your willing to spend
ah so i gots it back to front.
here to learn!
here to learn!
I don't think it's quite so black and white! If you are after purely tax concessions it's important to take this into account.
a) Negative Geared Loans are tax deductible / Positive Geared Loans aren't (as you are affectively loosing money in an investment)
b) Newer properties (post 1986) are depreciatable. Meaning you can depreciate the building as a tax write off.
c) New fittings & any material goods are depreciatable. Meaning you can have an old property that has been fully renovated, and the reno can be set up as a tax write off.
(Generally speaking, you get more depreciation from newer properties and claiming the depreciation of the building rather than buying an old property that has just been renovated)
If you claim depreciation you will pay more CG if / when you sell the place, as you are reducing the cost base of the investment. Although, if the property is held for more than a year, this is discounted by 50%, and alot of investors are of the opinion that the best strategy is not to sell your investments.
So in summary, in terms of tax concessions, you would be looking for something that's new and expensive, and something that doesn't yield that great (although this has to have a reason for why it doesn't, i.e million dollar mansion on the water, not that the owner has been lazy and hasn't put the rent up)
In saying that not everyone invests for these reasons, and you can have a good property with good yields, but with great tax concessions anyway.
As for long term investing, I don't necessarily think it's about high yield vs c.g. Alot of the times you look for both qualities, as;
a) Good yielding properties help with cashflow. Cashflow allows us to keep investing year after year.
b) Capital gains is the bread and butter of our investments. You don't want to have a high yielding property for 10 years that's only gone up 40% in value. Because really you can make your money work harder elsewhere.
TO balance that, alot of people in the past have bought positive geared properties to create a cashflow, and then built up a large portfolio of these cash generating properties. Eventualyl what happened was the CG kicked in and the properties grew until the yields were, at market value, around the levels they are today. These residential properties were snatched up like pancakes which drove prices up, and one argues that it's a natural part of the property cycle, when prices snagnate but rents are driven forward.
If you are looking for commercial investments alot of the times people look for 10% yields or more. Commercial tenants cover all outgoings, and generally make improvements to the property. But the only downfall to these types of investments if that vacancy can be an issue between leases, especially when the economy might not be so strong. This is why investors like to make a killing when they do have a lease, because it's not uncommon to have 4-6months of vacancy between 5 year leases. Also you have to put up alot more cash up front to get financing 20-30% dpending on who you borrow off.
So in a more simpler response, it's hard to peghole what investments are best for your outlook on investing. There are different strategy's and different roads depending on what your goals are. Personally I have found the best success in finding good overall investments that help with my cashflow but show good growth. You might come to a different conclusion
A great post Stumunro,
You have a way with words.
There certainly are many many reasons why people have different strategies about yield and Capital growth.
Investor income, investor temperament are major variables I suppose.
I am guessing there would not be many people actively looking for 10%+ yield resi properties in small outback villages. Not much capital growth there and not much prospects for ever selling either.
Equally, the brave and the financially stable may be searching for the 1% gross yield resi bargain in inner Melbourne, but they would be in the minority I think.
Most of us are somewhere in the middle I guess.
I imagine that 90% of all the Somersofters would be looking for between 3.5% and 6% gross yield.
I have been going for the bit higher yielders to help with cash flow. I have low income so tax deductions have limited appeal.
Now that my equity has risen I will looking for a bit more variety.
You have a way with words.
There certainly are many many reasons why people have different strategies about yield and Capital growth.
Investor income, investor temperament are major variables I suppose.
I am guessing there would not be many people actively looking for 10%+ yield resi properties in small outback villages. Not much capital growth there and not much prospects for ever selling either.
Equally, the brave and the financially stable may be searching for the 1% gross yield resi bargain in inner Melbourne, but they would be in the minority I think.
Most of us are somewhere in the middle I guess.
I imagine that 90% of all the Somersofters would be looking for between 3.5% and 6% gross yield.
I have been going for the bit higher yielders to help with cash flow. I have low income so tax deductions have limited appeal.
Now that my equity has risen I will looking for a bit more variety.
