Re-engaging with investing after a significant layoff

Hi all,

Long time SS member, but haven't posted in quite a few years.

I have been thinking a lot more about my investments & planning recently, but I have really taken a long break from that whole mindset.

I bought two IP's in Perth in 2006 & 2007, the second one coinciding very nicely with the peak of the Perth growth trends. There was a bit of equity at the time though, so having an aggressive tolerance I leveraged this equity into the sharemarket around 2H 2007. Seeing a pattern here???:rolleyes:
GFC wiped the shares effectively due to the leverage, and Perth property has since gone backwards for years then stayed very flat until a few months ago. I've read the Balga/Nollamara thread the whole way through, as my IP's are side-by-side R40 houses on combined 1642 sqm, so starting to finally register some growth there.
I used the last 5 years or so to focus on family and career, managed to marry and have 2 kids, and at least grow my income by 410% over the 5 years.

Now to my questions: Have you ever taken a long break from investing, and then tried to get back into it? I don't mean a pause between purchases, I mean a complete not-watching-the-market, or even thinking about it, type break.
If so, how do you re-fire that investor mindset?

I?m finding myself quite "rusty", like your first few swings of a golf club after not playing in a while! The concepts are all still there in my head, but putting them together into some sort of coherent strategy is more difficult.

Thanks for any advice, or similar stories!

Cheers, Chris :)
 
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There was a bit of equity at the time though, so having an aggressive tolerance I leveraged this equity into the sharemarket around 2H 2007. Seeing a pattern here???:rolleyes:
GFC wiped the shares effectively due to the leverage..........


Yep, pretty much what we did ............. Funny, we've just got back on our feet and getting back into replacing the IP's we had to sell to pay off some big debts.

As you say, being out of the market a while means going back out and reassessing how the investing landscape has changed.

It has the advanatgae however of hindsight and seeing how the properties that were retained and those that were sold off have performed.

I think it's about getting back into "having some fun" - as well as going back to the motive of say having enough prop's to live off rent, having cash in bank that earns all of 2% interest, having to pay huge tax, etc etc.

The Y-man
 
I lost six figures in shares in the GFC. And I was not leveraged. Just a few hundred grand used to buy shares directly. Two companies, BNB and ABC just dis-appeared. Others were paper losses from which I have still not yet recovered ASX and WPL. I still hold them for dividends and eventually will sell them to offset eventual hopefully capital gains from other investments.

That was 2008. In 2010, I bought PPOR which depleted most of my cash holdings. Thus I took a hiatus from shares until more recently when I have started to dribble some cash back in. I do this because I realise that there is no point keeping large cash reserves to profit the banks and watch inflation erode my hard earned.

As I wish to retire in about five to six years time, I need to fire up a mindset so that I can start investing properly again.
 
I do this because I realise that there is no point keeping large cash reserves to profit the banks and watch inflation erode my hard earned.
This - to me - is the wrong mindset.

Yes, we all whine about the Banks, but for almost all folk, they are a necessary business partner if you want to accelerate your investing plans.

Regarding deposits in their accounts; yes; they make money off us, but they are a business which has a purpose to make money.

So, you should be thinking of them as a win-win scenario.

My/our (currently minuscule) amount of savings are held in a few ING online accounts.

These accounts consistently return better than normal Bank interest and TD's, and are always above inflation, but I don't regard them as an "investment" anyway - it is purely a place to hold a little bit of cash, other than in my mattress.

The point is; don't begrudge anyone working with you getting rich to make you rich. My accountant (and yours) charges me a lot to make me rich. Good for him.

You have this mindset that you have to be in total control and do it on your own - there is no "team" in your thinking.

We've seen this with your attitude towards nurses, your office staff, and now the Banks.
 
We've seen this with your attitude towards nurses, your office staff, and now the Banks.

i'd add lawyers to the above list too. look at the amount of brilliant info terry has given him, it beggars belief that china hasnt made an appointment with him to get specific advice.
 
This - to me - is the wrong mindset.

Yes, we all whine about the Banks, but for almost all folk, they are a necessary business partner if you want to accelerate your investing plans.

Regarding deposits in their accounts; yes; they make money off us, but they are a business which has a purpose to make money.

So, you should be thinking of them as a win-win scenario.

My/our (currently minuscule) amount of savings are held in a few ING online accounts.

These accounts consistently return better than normal Bank interest and TD's, and are always above inflation, but I don't regard them as an "investment" anyway - it is purely a place to hold a little bit of cash, other than in my mattress.

The point is; don't begrudge anyone working with you getting rich to make you rich. My accountant (and yours) charges me a lot to make me rich. Good for him.

You have this mindset that you have to be in total control and do it on your own - there is no "team" in your thinking.

We've seen this with your attitude towards nurses, your office staff, and now the Banks.

Not really, banks are a business. Their one purpose is to make profit. So they will be acting in their best interests not mine.

Like with any service provider, we need to shop around for the best deal.
 
Thanks for all the reply guys,

I definitely know I'm not the only one to lose capital during the GFC, and for sure others lost much more than me both in absolute terms and maybe percentage terms. I do get frustrated more about the lost time than the lost dollars, and looking back annoyed about what it did to my risk aversion...the old "once bitten, twice shy".

I think I should learn from that experience, but I'm also trying to put it behind me so it doesn't impact too much on trying to build the nest egg back up. Even my property selection gets second guessed now, after IP2 dropped 10-12% on paper within 6months of purchase. So I'm considering using a BA for IP3 (which will be interstate as well), not sure if that will help rebuild confidence or not but I'm keen to jump back in.
Cheers, Chris
 
Do you still have the two side by side properties? They can give you some excitement as possible apartments or villas now.

I think hiatus are normal especially when family is involved.

Have a chat with a mortgage broker and get the lay of the land with what you can do now and look at your strategy from here on.
 
Thanks Westminster,

Yes still have the two adjacent IP's in Balga, they are virtually untouched except for a new kitchen in IP2. Pretty bog standard old places as I'm sure you know well. What are some of the main R40 changes in recent times, I'm very out of touch with the codes? I had 220sqm avg plots in mind, with min 180sqm?

Already got back in touch with the mortgage broker (from SS) with the updated details, so hoping to kick 2014 off on the right note. I still feel like the last couple of years have been a complete write-off portfolio wise, seeing some of the results people on this site have achieved is giving me the much needed kick in the bum!
Cheers
 
What are some of the main R40 changes in recent times

that would be minimum 180sqm and an average of 220sqm so 7-8 lots for your site with 120 odd sqm of build area per lot

or for apartments a plot ratio of 0.6 so 985sqm of build area for your site. Which could accomodate 14, 70sqm 2 bedroom apartments for example or a mix of sizes etc.

cheers
 
Not really, banks are a business.
Um; didn't I say that? :confused::rolleyes:

Their one purpose is to make profit. So they will be acting in their best interests not mine.
Correct.

Like all businesses. They are not there for a hair cut.

Yes; all businesses will do their utmost to give you the product/service you want/need, but they won't do it for free.

In the case of Banks; they are providing us with a LOT of money in many cases, so naturally it will be strictly on their terms.

I lend my son money all the time. The terms of the Lend are my terms, or he doesn't get any money. Only the zero's on the end are different.

Like with any service provider, we need to shop around for the best deal.
Correct.
 
Thanks Westminster,

Yes still have the two adjacent IP's in Balga, they are virtually untouched except for a new kitchen in IP2. Pretty bog standard old places as I'm sure you know well. What are some of the main R40 changes in recent times, I'm very out of touch with the codes? I had 220sqm avg plots in mind, with min 180sqm?

Already got back in touch with the mortgage broker (from SS) with the updated details, so hoping to kick 2014 off on the right note. I still feel like the last couple of years have been a complete write-off portfolio wise, seeing some of the results people on this site have achieved is giving me the much needed kick in the bum!
Cheers

Depending on your buy price it could be an excellent choice for apartments. The R codes for villas haven't changed much but apartments on a double block are a pretty new thing since you last looked. You can do apartments on a single block but a double really raises the bar in terms flexibility in design and options. You don't need to do it all at once you could do the DA for both sides to get the best out of the block then maybe do one half but it sounds like you might be up for a full on challenge - just remember that when you are green that you need an excellent team to ensure accurate pricing and feasibility.

My builder showed me an awesome double block apartment design and said to me if I had 2 x 728sqm it could be a great idea. I don't have 2 side by side blocks but you do ;). It would be worthwhile a visit to see the design and have a chat about the area as he does a lot of work in the area.
 
Thanks HD and WM,

You're right WM, the apartment option was never on the cards when I first purchased or ran the numbers - it was always villas or nothing.

Certainly opens up a whole new avenue for due diligence on, assume end product would be something along these lines?:
http://www.realestate.com.au/property-apartment-wa-westminster-115629299

It's probably a natural response, but definitely finding the idea of 14 x 2-bedders more daunting than 7 x 3x2's...especially for a first time builder.

To make things a bit more tricky - I don't live in Perth anymore, I relocated to Melbourne for work about 4 years ago...so would have to manage things remotely!

Cheers
 
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