The Abolishment of the Negative Gearing Debate
- Thread starter Rixter
- Start date
A portion of my capital is in Gold as insurance.
A portion of my capital is in profitable gold miners, some returning a dividend (investment).
A portion of my capital is in Gold and Silver riding their cyclical wave higher (speculation).
IMO even the cyclical holdings are less speculative than many property purchases today, I'm not leveraged so not out of pocket every week to hold.
You kidding???
Suggest you look at a gold chart for the last 10 years, and if you want leverage go derivatives.
God, to have sold property and bought gold futures in 2000, in my dreams!
Um... gold has gone from under $300 to over $1500, since 2001, you wouldn't really need a lot of leverage, but if you had leveraged, through futures or less risky options, with 50K you could have been a millionaire many times over.
Would it matter is I had $10,000 or $10,000,000? Either way I would want a good return on capital.
I think in the current environment keeping a low level of leverage is the best play, aiming for capital preservation or modest growth rather than leveraging to the hilt and going for big wins. A leveraged investment can work just as badly against you as it can for you if you make the wrong move.
errr, yawn.
The whole whether to buy gold discussion is only relevent if you have a large income.
And if you do; you don't need the gold; there's no yield; just the CG.
If you don't, then you can't have the gold because you need the cashflow.
If you can afford to buy gold just go out and buy it - you don't need to justify it to anyone, you have the money; what's the biggie?
It shouldn't even be a discussion here. Nothing more annoying than someone who doesn't have an income issue wondering and pondering and arguing the toss over something like this.
It's the same with IP's; you have blokes earning over $300k per year asking where should they buy, what should I look for and all this; it's academic; you don't even need an IP/s on those bikkies.
It (gold) is just another form of savings really.
At least my ING gets a yield, but it's not worth a discussion either.
The whole whether to buy gold discussion is only relevent if you have a large income.
And if you do; you don't need the gold; there's no yield; just the CG.
If you don't, then you can't have the gold because you need the cashflow.
If you can afford to buy gold just go out and buy it - you don't need to justify it to anyone, you have the money; what's the biggie?
It shouldn't even be a discussion here. Nothing more annoying than someone who doesn't have an income issue wondering and pondering and arguing the toss over something like this.
It's the same with IP's; you have blokes earning over $300k per year asking where should they buy, what should I look for and all this; it's academic; you don't even need an IP/s on those bikkies.
It (gold) is just another form of savings really.
At least my ING gets a yield, but it's not worth a discussion either.
Last edited:
Great point. 9 times out of 10 when Gold comes up (including this thread) I am simply defending my position after someone has tried to use it against me, rather than discuss the topic at hand.
As an investor you should not be so closed minded about opportunity.
I used to be a derivatives trader, and as a result am still in touch with people who recognizing the opportunity in gold, have made fortunes with very small capital outlays.
In fact I would say gold has been the outstanding performer in traditional investment classes, leaving all others in the dust.
Suggest you check out the margin cost of holding gold futures, and then track that back a few years, property doesn't even come close.
How about 10Ks worth of call options from a few years ago rolled over.
A good illustration of what I was getting at. If you can play that game, and $10k is a trifling amount; you don't really need the gold.
Or, you are a gambler with not a lot of money who likes taking big risks.
I'm not closed to it; I know gold has been a great performer, but I talk in terms of the average Mr. Joe Thong who is wanting to maximise his small amount of available investment funds.
He can't save a lazy $10k to chuck at a gold future every other year. He can't take that risk, and he won't like gold because it has no yields.
He may go for it if he is of the mindset that he will use it as his retirement nest-egg and allocate some funds each week towards buying some, knowing there is no return and hopefully it will go up in value - like superannuation. He may even have a 5 year plan to sell it and take the CG - but it's not the norm for average folk to buy gold.
In hindsight it has beaten property, but way back when; who would know what the best way to go would be, and the Joe Thongs probably wouldn't be attracted to something with no dividends or yields or tax deductions like property and/or some shares can have.
In a perfect world everyone would buy gold with their cash that they save, but because most don't know of futures, or can't afford to lose the cash, and gold has no yield - so they put the cash into investment vehicles with returns and yields which are relatively safe by comparison.
Futures are not investments; they are gambling.
Not saying you shouldn't do them, but suppose you were to tell someone who is new to investing with limited resources and not a high income to choose either property or gold futures (not yet knowing the outcome of them)....
Fair enough points, however more people these days do seem to be opening a small trading account, and getting involved in a few alternatives. It is not expensive, and with IG index and CFD etc not that complicated.
Leveraging into property at the wrong time has certainly brought financial ruin to plenty. Dangerous game if you get it wrong, very illiquid, no real stop losses.
From my experience it is not that dangerous; and I've stuffed up plenty, and I've never tried to time a market. But I'm not a property trader.
Having said that; I've only ever bought existing properties after doing some research on the area to establish the good spot to be, near to all the things that people want to be near etc.
The danger comes in the speculation/trading end of the game; OTP's, or flips which require timing the market more carefully, or reno and flips etc..
As for my PPoRs; I haven't ever really done much research on them other than trawled the area where we wanted to buy, and picked the house I liked at the time. They've all turned out quite well though....so far.
The two builds I've done were a different thing; they were vacant land that just happened to be in the areas I was looking. The second is the one we are in now, and it's too early to tell how it will go - especially in this current market
It becomes dangerous when the cashflows are wrong (for the buyer) and then later on the owner has to sell in a hurry, so the trick is to establish all those parameters first, and buy with an unforseen problem factored in..
That's far easier for sure than buying an IP; that's why many will do it and few will become PI's.
There's the difference I'd say between my mindset and yours; you are a trader and think in terms of trades; not so much the buy and hold or longer term investment?
That's part of the challenge of choosing the "investing/trading" vehicle that you do.
Whatever vehicle you choose at whatever point in time has to make sense to the individual for reasons, beliefs, goals etc.
I am boring....buy and hold pretty much all the eggs in the property investment basket...it's my current comfort zone.
The only time I speculated on shares was when I had little funds behind me as a 22 year old....it's ironic that that punt I took helped with the deposit for my first property purchase when the shares were sold.
Like all bullet proof 22 year olds with no financial responsibilities other than a $235 a month car loan and a house that cost $250 a month rent (it was a dump) shared with a mate...I had little to lose if the shares didn't work out.
Fast forward to now and there is no chance I would dabble in the sharemarket/gold/derivatives/commodoties etc, and not because I think they are poor asset classes.
I just don't have the lnowledge, confidence or belief in them like I do property.
Horses for courses I guess, based on your own experience and stage of life, investment horizon and end goal.
That's why we will never all agree on what is the "best" investment/ asset class....
There are too many variables associated with an individual's situation on every single possible level for it to ever be black and white.
That's what keeps these discussions on this forum interesting!
Cheers
Whatever vehicle you choose at whatever point in time has to make sense to the individual for reasons, beliefs, goals etc.
I am boring....buy and hold pretty much all the eggs in the property investment basket...it's my current comfort zone.
The only time I speculated on shares was when I had little funds behind me as a 22 year old....it's ironic that that punt I took helped with the deposit for my first property purchase when the shares were sold.
Like all bullet proof 22 year olds with no financial responsibilities other than a $235 a month car loan and a house that cost $250 a month rent (it was a dump) shared with a mate...I had little to lose if the shares didn't work out.
Fast forward to now and there is no chance I would dabble in the sharemarket/gold/derivatives/commodoties etc, and not because I think they are poor asset classes.
I just don't have the lnowledge, confidence or belief in them like I do property.
Horses for courses I guess, based on your own experience and stage of life, investment horizon and end goal.
That's why we will never all agree on what is the "best" investment/ asset class....
There are too many variables associated with an individual's situation on every single possible level for it to ever be black and white.
That's what keeps these discussions on this forum interesting!
Cheers
I don't think it matters so much what your income is. Resi IPs (if chosen wisely) still represent a good way to store and build wealth, just not quickly. Well located property is, I think, a great way to Get Rich Slow (which is my long term plan).
True!
I know a few employees out there on $300k plus who thought that level of income theyd be on easy street.....but dont forget every dollar earnt over $180k only gives you $0.52 in your pocket.
Makes Negative gearing more attactive in these cases also.
Most on high incomes i know would just love to be less in debt and would be happy on a lower passive income choosing how to spend thier time.
Obviously those on a higher income who are wise with thier bickies should get ahead faster...but it aint guaranteed.
I don't understand this statement at all. If the money is from a job, the money ends when the job does. Surely the investment is for when one doesn't have a job, yes?
Yes. It is still a good idea to be investing even on a high income.
What I was getting at was the angst, the hand-wringing, the OMG - what will I do?
that goes on here with this high earning group when it comes to their property and location selection etc.Seriously, on a $300k per year income, it almost doesn't matter where or what you buy (within reason).
You could virtually throw a dart at the Greater Melb/Syd/Bris/Perth city maps, and buy in the spot where it lands and you'd be able to make a silk purse out of a sow's ear cause yer've got the expendables to throw at it and make it CFP in no time even if it's a dud.
Not that you would really do this - buy just any old joint - but you know what I mean.
All you'd have to do is buy a clean and tidy nice property in a decent location and move on; you wouldn't need to D&D it to death, ask 50,000 questions here, hum and ha for 2 years and then think about it a bit more...like some have done/are still doing.
I would expect that sort of worry from a very low income earner who absolutely needs to make every single post a winner; not some dude who's cruisin' along, life's a doddle, but can't pull the trigger..
Last edited:
Marc,
Just wanted to note, that any employer willing to hand over 300K pa to some plonker, usually expects at least one testic1e and 18 to 20 hours of their attention every day.
It's rare that a job commanding that salary is a cruisy doddle.
Similar threads
