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From: Mark Leigh


Thanks to all of you for replying. I'm not necessarily diagreeing with you Crystal (first post to my question) but for all those who put up reasons for why property out perform shares, there appears to be an equal number on the other side. I look at Buffet/Berkshire Hathaway & would like to have got on board with his company early on. My current thoughts are whatever I invest in I need to feel comfortable with whatever risks I take.
 
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Reply: 1
From: Mark Leigh


I apologise, this post was meant to be in reply to my earlier post titled 'Investing in Uncertain Times'. Sorry.
 
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Reply: 1.1
From: Mark Leigh


Thankyou for your reply Les. I haven't actually invested in anything yet. I am probably like 95% of the population - I desire to plan financially for my future, but SOMETHING always get's in the way (children, talk of recessions, wars etc, etc, etc). I blame no one or anything but myself though. I was very keen on shares/trading & believed from those inclined that shares were the way to go. I also looked at property (particularly several of the investor clubs) & then developed an opposing view. I now sit & read a lot but don't do anything. It is probably a fear of the unknown.
 
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Reply: 1.1.1
From: Trina Blum


Hi Mark,

You sound a lot like I was. I too was undecided about investing in shares or property. I also have been reading alot but not actually doing anything until now. I have decided that personally I am more comfortable and have a little more understanding of property. I do like shares though and have a couple of managed share funds that I contribute to each month (more like a type of savings). I have decided that I wish to create my wealth through property and am now actually doing something about it by going out and looking and learning specifically about property. Later down the track I will probably buy into a few shares though.

As far as not doing anything, it is a big first step and very daunting but there will always be some reason why you can't start investing - as you said, kids, economy etc etc. The way I have decided to look at it though is that I am investing for the long term and even though things may go up and down hopefully in the end they'll be up. If you don't do anything at all then you've got no chance of creating wealth - you'll always be where you are right now and will regret not doing something about your situation. If something doesn't work out look on it as a learning experience and go on from there.

The first thing you need to decide is what really interests you the most - shares or property? Do you like going and looking at properties or do you prefer to watch the shares going up and down on the TV at night? Whatever takes your fancy stick to it and learn everything you can about it (but you will eventually have to actually get in and do it/buy something). Start small and work up.

Make sure you have a budget and allow for any losses and make some goals for yourself and where you want to be and work towards them.

Well I'll just finish off my rambling now and let someone else post a response.

Regards
Trina
 
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Reply: 1.1.2
From: Michael Croft


Hi Mark,

I didn't follow the previous thread and the share vs property thing has been done to death so I sort of lost interest - well almost ;^)

The thing that is mostly forgotten in the debate is leverage. Keeping it simple; with ten thousand dollars you can control $100,000 of property. With $10,000 you can control $30,000 of shares. Property might on average grow at 8% and shares at 11%, which would you prefer?

With the hypothetical average growth in property or shares, your net worth will increase $8,000 with property in the first year and with shares $3,300. The difference gets larger if you allow both to compound.

With investing success comes not from 'how much you own' but how much you can control - SAFELY.

regards, Michael Croft
 
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Reply: 1.1.2.1
From: Mark Leigh


To Trina & Michael, thankyou for your replies. You both make some very good points. I may receive great criticism but while I want to increase my assets, I don't want to spend inumerable hours on it. Shares have a certain attractiveness because my personality would be to buy & hold for the long-term. Therefore I would seek a brokers advice, purchase the shares & really only keep an eye on them but not much else (unless something dramatic was happening). Property appears to be much more labor intensive. Property appeals though because of the greater leaverage it has over shares (I know I can take out a margin loan for the same amount with shares) but I don't really want/or think I would enjoy looking at dozens of houses. I will probably never be rich then huh? I guess that is why the investor clubs are attractive. I would not mind sacrificing some gains to at least commence some form of investing.

Sorry to ramble. I guess those not interested don't have to read it but I do honestly appreciate others opinions. It will hopefully encourage me to 'take action'

PS what services do the 'Freestylers' group provide (I have looked at their website but would like some opinions from others involved)?
 
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Reply: 1.1.3
From: Terry Avery


Yet another case of analysis paralysis!!!

As Buffet says, he only invests within his circle of competence. For him it
is shares although he has dabbled in bonds, silver and other
instruments/assets over time. For those on this forum it is a case of
developing our expertise in property. Myself I am doing well with property
but believe in a balanced approach so I have shares as well. You have
identified the key and that is to do something. If you have been saving your
money then don't sit on it, make a decision, map out your plan and implement
it. I think one saying that has merit is "it is time in the market, not
timing the market that is important".

As to the fear of the unknown... yes I have made mistakes but my few good
decisions have far outweighed the bad ones so I am now ahead of the game.
Not being in the game is a big mistake. I regularly kick myself for mistakes
I have made through lack of knowledge. How did I get the knowledge...
through making mistakes!

You don't have to rush in and throw everything in at once, that is why you
need a plan. John Burley offers a sensible one, read his books. Jan Somers
offers a sensible plan too. If you haven't mapped out your strategy, do it
now. All it will cost you is a bit of time and some ink and paper. When you
have your plan written down then you can implement it. I started with Stuart
Moore's "How to start with no savings and get rich... safely". It is not so
much that one plan is better than another, it is a case of having a plan to
start with. Procrastination is not a plan, it is a wealth killer!

Cheers
 
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Reply: 1.1.3.1
From: Mark Leigh


Not to drag this out to much, but if I'm not interested in looking at 10+/100+? properties before purchasing, then am I foolish to purchase at all. I guess I'm referring back to the investor type clubs (which I've read the many posts here already)as a possibly easier alternative but obviously trading of some of the gains that could have been made if I was prepared to look through endless properties.

Maybe this site needs a 'Beginners'section so as not to bog down those more experienced?
 
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Reply: 1.1.2.1.1
From: The Wife


Hi Mark,

freestylers doesnt offer a service, it is networking, pretty much you get out of it , what you put in.

TW
~Life is a daring adventure, or nothing at all~
 
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Reply: 1.1.3.1.1
From: Felicity W.


Hi Mark
Hang in there! We were all beginners once. I invest in both shares and property, but for different reasons. I get long term wealth assets with property, shorter term cash with shares. That works for me, but doesn't mean it will work for everyone.
I think it's good that you ARE spending time sitting back and learning before you jump in, at least you should have enough knowledge to avoid some of the biggest traps for newbies.
As for property being more work, well, I guess that depends on what you're trying to achieve and how. If you want to be full time and make the best profits, yes, it's a lot of work, and it will be the quickest way to wealth.
But if you want to invest but not do the leg work, then you have to accept that some money has to go to someone else to do the legwork, and it will be a slower process.
Personally, I've bought a property through National Property Investors close to Brisbane, and been very happy with it. I also have another property I sourced myself, here in Melbourne. In the future I plan a mix of property (I'm in a cash generation phase right now). I probably will buy other properties through NPI, sacrificing some of my gain initially, because they know the market a lot better than I do in Brisbane. But here in Melbourne, I'd rather do it myself, and will probably look more for renovator specials.
Good friends of ours also want to invest in property, and have no intention of ever doing the legwork themselves, they're happy to pay not to do it. But they'll still get there in the end.
I'm rambling, I know, I'm just trying to say do your due diligence, then choose a strategy that suits your inclination and time. The reality is that at least if you start, you will eventually get where you want to go, even if it's slowly, but you'll never get anywhere if you do nothing about it.
Keep smiling
Felicity :cool:
 
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Reply: 2
From: Rolf Latham


Hi all

Usually I cease and desist on these because I have not made a million out of either (yet)

I have a very simple way of looking at this:

If you have cold hard cash to invest, then it is likely that on average "shares" will probably outperform property of most sorts.

If however you do NOT have an idle 500 000, and you have to borro,w then on average residential property will outperform "Shares".

Why, property allows you to get many times the leverage you can get on shares , and the median risk of property returns is much lower.

Before you suggest otherwise, I ask you to do the sums for someone that has 50 000 cash or equity to invest.

ta

Rolf
 
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Reply: 1.1.4
From: Brett Burt


This is a multi-part message in MIME format.

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Shares vs Property. I read somewhere in one of the many investment =advisory books, that if you had of purchased Manhattan from the Cherokee =Indians in 1700 whatever for a say 100 sovereigns (just guessing here) =and held that land til now you would be worth half a trillion (land =buildings on Manhattan). If you had of invested in shares with South =Seas /Dutch East Indies Company 1750 and kept moving those shares into =an average British Empire based shareholder portfolio as a private =cictizen and passing it down through the centuries (like the property) =you would be worth $100 trillion today - no one did this (well I think =no one actually did this!) and no one actually bought and held Manhattan =Island property for 3 centuries but the comparison on the 'potential' =return was very interesting. I am a property person though I can see how =you can make big money in stocks.

So don't buy Goat Island today by Buffet shares and in 3 =centuries........well we can dream

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Shares vs Property. I read somewhere in one of the =many
investment advisory books, that if you had of purchased Manhattan from =the
Cherokee Indians in 1700 whatever for a say 100 sovereigns (just =guessing here)
and held that land til now you would be worthhalf a trillion (land =
buildings on Manhattan). If you had of invested in shares with South =Seas /Dutch
East Indies Company 1750 and kept moving those shares into an average =British
Empire based shareholder portfolio as a private cictizen and passing it =down
through the centuries (like the property) you would be worth $100 =trillion
today- no one did this (well I think no one actually did this!) =and no one
actually bought and held Manhattan Island property for 3 centuries but =the
comparison on the 'potential' returnwas very interesting.I =am a
property person though I can see how you can make big money in =stocks.


Sodon't buy Goat Island today by Buffet shares =and in 3
centuries........well we can dream

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Reply: 2.1
From: Kpw <----


"Therefore I would seek a brokers advice, purchase the shares & really only keep an eye on them but not much else (unless something dramatic was happening)."

I'd be real wary about listening to broker's advise. There's a saying that goes " Traders trade and brokers go broke." People make the mistake of thinking that brokers know what they're doing but there is a big difference between knowing about a company and making money from the markets.

A good book to read if you haven't read it is "Stock Market Wizards" by Jack Schwager.
It interviews some of the top stock traders and is a good insight into what can go right and especially what can go wrong in the share markets.

Anyway, there's my 2c

Good luck
 
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Reply: 1.1.4.1
From: Michael G


Hi,

But if you have used one necklace of beads, and borrowed nine others from a friend, promising to add an extra bead to each of their chains each year, your bead-on-bead return would have been heaps, as opposed to the trout-on-trout return, where you can only borrow 70% more trout than you have caught.

See, shiny beads are better than slippery fish.

Michael G.
 
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Reply: 1.2
From: Les .


G'day Mark,

Do you realise you can "Delete" an inadvertent posting (maybe you want to copy it first, and re-post it in the proper place).

Allows us to censor our own work ;^)

And I'm with you on Warren Buffett - the graph from $66 per share (1977) to $20k per share in 1995, then $80k in 1998 is bloody phenomenal. Took a bath in '99 - did you get a bargain then? (Dropped to $40k per share around mid-year '00)

And, after clawing up to $70k by Aug 01, and dropping to $60k after Sep 11th, it is ALREADY back to $75k per share - did I say I think this bloke is phenomenal ????

Even his Chairman's reports are well worth a read - he is just a top bloke with a great sense of humour. And he also ONLY invests with what is comfortable for him - (sounds like you ;^)

Regards,



Les


- "Eschew Obfuscation" - ;^)
PS I'd made an error, so have (hopefully) re-posted this in the same place - fingers crossed ....
 
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Reply: 2.1.1
From: Donna Larcos


Mark, if you like Warren's approach, I
would have a look at the Aspect Financial
site which is a value approach to the
Austraralian Stockmarket. There are lots
of good articles on identifying value
companies. I attended a seminar in 1999
at Sydney University which pointed to this
site and explained the logic. I found it
excellent and certainly all the shares I
bought based on its principles have
increased between 15 and 40% in the
last twelve to eighteen months. Property
gives me that slabs of capital growth but
the shares are a lot of fun and if you need
a quick few thousand it's there overnight.
With shares, I leverage at about 50%. My
$14k borrowing had turned into $25k
(before Sept 11) its on about $21.5K at
the moment but only one share is less
than I paid. I'm about to buy more - some
are quite cheap. It also gives you
something to do when the **!!??! banks
won't give you any more money for a
while.

Donna L
 
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Reply: 2.1.1.1
From: Alan Hill


Donna, Aspect Financial sounds interesting. Could you post the Website address please.

Thanks
 
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Reply: 2.1.1.1.1
From: Donna Larcos


Aspect Financial

www.aspectfinancial.com.au
 
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Reply: 2.1.1.1.1.1
From: Sergey Golovin


Hi Donna,

Thanks for that link.

Sorry for such simple question but how do one borrow? Do one borrow it as personal loan, Line of Credit or against the property or some other way?

Other question - how do one pay it back (money you borrowed) is it weekly repayments or monthly or wait till the end of the year or till stock sold?

Once again sorry for asking, I was always interested how one pays money back borrowed while stock increases/decreases in value.

Let say if I borrowed $10K on 8% 7 years (same as car loan), repayments a month would be $156 ($36 week). So, I have to come up with $156 every month ($36 week) while I am waiting for the stock to go up/down or is it some other way to borrow it now and pay later? Is it weekly repayments or is it lamp sum repayments at the end?

Thanks in advance.

Serge.
 
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Reply: 2.1.1.1.1.1.1
From: Donna Larcos


I borrow against a line of credit (currently
around 6.3%. My $14k costs about $70
per month (tax deductible) interest only. I
don't "pay it back". The dividends and
imputation credits pay a fair proportion of
it - maybe about half to two-thirds a year.
Once the shares double to about $28k I
would borrow say another $6k. When the
total reaches $40k I would borrow maybe
$10k and so on. Each borrowing is 50%
of the previous capital growth so you go
up to maybe 60-70% and then wait for it to
drop back down to 50% again before
borrowing. You can trade the shares if
you are working on margins and just
keep paying it back into the LOC until you
are ready for next buy. When you look at
Aspect site you will see that the shares
are rated 1-5 for value. I try to buy them at
1 or 2 (best) and would start selling
down at 4-5 (getting overpriced).
However, the shares I have bought very
rarely go above 3 because the value is
worked out on the projected return from
the share and so far the projected values
have kept rising and rerating the value
down again. It's all a matter of looking at
the projected returns over 5-10 years just
as you would a property. Established
companies/established suburbs with
5-10 year histories to look at. Much the
same really. I'm hardly a stock wizard
though..... still learning the ropes - nearly
hung myself on them in the 87 crash.
 
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