Signitificant corrections, go on...
The next 10 years: Prediction of the market
- Thread starter TMNT
- Start date
Signitificant corrections, go on...
Trey,
Yep, and then it will start working for you. At the moment it isn't its just ammunition in reserve.
Look at it this way, assuming you buy a $300K property with zero debt to keep it simple...
Cash: 3% interest on $300K taxed at 30% makes it a 2% return after tax.
Property: 3% capital growth (just tracking inflation) not taxed, plus 4.5% rental yield taxed at 30% makes it a 6% return after tax.
I know you're a sophisticated investor, but I'd think 6% beats 2% any day. By 300% actually...
But do your thing mate. You're 24, live a little, there's plenty of time to make some money out of your small change.
Cheers,
Michael
Yeah, trey thinks the way I used to think when I was his age.
Time to smarten up young fella.
BTW, if you do decide to smarten up and do it right, you can surf your whole life away.
But now, you are surviving on the oldies and your wages.
Will that last foreva...?
Just saying....from experience doing exactly the same as you are now when I was young.
Was lots of fun sure, but a few solid years getting yourself set up with decent investments and away you go.
Longer you leave it mate, the longer you will be working.
BTW, I can still surf and I'm 51. Just a longer board, you know it.
Time to smarten up young fella.
BTW, if you do decide to smarten up and do it right, you can surf your whole life away.
But now, you are surviving on the oldies and your wages.
Will that last foreva...?
Just saying....from experience doing exactly the same as you are now when I was young.
Was lots of fun sure, but a few solid years getting yourself set up with decent investments and away you go.
Longer you leave it mate, the longer you will be working.
BTW, I can still surf and I'm 51. Just a longer board, you know it.
Ive just turned 21 and the thought of putting my money towards something that is going to be of benefit me in the future greatly excites me.
i look forward to the times ahead, when my properties have doubled in value along with the rents, and im in a comfortable financial position.
However, how you spend your money is a personal Choice.
I don't think a property investment forum is a good place to be bragging about your 300k just sitting in the bank, as alot of these people would die to have that kind of money purely for more property
i look forward to the times ahead, when my properties have doubled in value along with the rents, and im in a comfortable financial position.
However, how you spend your money is a personal Choice.
I don't think a property investment forum is a good place to be bragging about your 300k just sitting in the bank, as alot of these people would die to have that kind of money purely for more property
Trey,
Yep, and then it will start working for you. At the moment it isn't its just ammunition in reserve.
Look at it this way, assuming you buy a $300K property with zero debt to keep it simple...
Cash: 3% interest on $300K taxed at 30% makes it a 2% return after tax.
Property: 3% capital growth (just tracking inflation) not taxed, plus 4.5% rental yield taxed at 30% makes it a 6% return after tax.
I know you're a sophisticated investor, but I'd think 6% beats 2% any day. By 300% actually...
But do your thing mate. You're 24, live a little, there's plenty of time to make some money out of your small change.
Cheers,
Michael
Hi Michael,
being a sophisticated investor (in your terms, not ASICs), can you please answer the following questions.
1. Your 3% interest is based on a term of how long? If it is only 6 months, then you will need to adjust your yield calculation of the house purchase with a entry and exit costs after 6 months for stamp duty, agent costs, settlement fees, etc. This will provide a apple for apple comparison.
2. Your 3% capital growth on the property is based on what assumption? Is it possible for it to be nil, or even worse negative?
3. Is your 4.5% yield on the house a gross yield or net yield? It seems that it is a gross yield and you will again not be comparing apples to apples.
Irrespective of whether there are flaws in your calculations above, is achieving NPAT of 6% instead of 2% a truly good investment?
Sophisticated investors buy and sell assets and wait for good opportunities, which requires considerable liquidity.
It is not good to call yourself a ignorant idiot, a young grasshopper is better.
He was being sarcastic. Having cash and no assets is not a sophisticated investor at all; far from it.
Oh, I reckon an grasshopper has more investing knowledge than me!
If all one has is 300k in savings account keeping its liquidity so that he has enough cash to buy a house outright, he is a sophisticated investor, right?
MichaelW has actually taken the time out to actually crunch the numbers so they are right in front of you and you still seem oblivious to what everyone is trying to say?
If someone with no Property is considered a sophisticated investor,
then that must make me a property Guru.
heck if i had 300 large id be reaching for the stars and trying to send the banks broke
heck if i had 300 large id be reaching for the stars and trying to send the banks broke
I'd be using it as a 5% deposit
Hi Singo,
I'm not sure that is what he is trying to achieve.
I think he is doing the most wise thing, protecting his nest egg first and for most, and at the same time trying to educate himself.
Jumping into an investment straight in without understanding the mechanics behind it would not be wise.
The first step is to learn how to protect it.
Having $300k cash in the bank shows he is far wiser than Joe Blogs jumping in buying the first house or investment they see.
Is he truly sophisticated yet? Probably not.
But at least he meets one of the criteria set by ASIC, which I'm not sure how many others on here can.
I'd be using it as a 5% deposit
just for a lazy 6m purchase in slumtown?
MichaelW has actually taken the time out to actually crunch the numbers so they are right in front of you and you still seem oblivious to what everyone is trying to say?
If someone with no Property is considered a sophisticated investor,
then that must make me a property Guru.
heck if i had 300 large id be reaching for the stars and trying to send the banks broke
Please don't get me wrong. I am just testing the theory and calculation to see if it is correct. From my initial analysis it seems flawed.
As an investor it is only prudent to do so.
Well, I don't know what he wants to achieve as well. But I remember him mentioning somewhere that he wants to own his house outright. If someone want a mortgage free house, that is their choice. But saving all the way so that he can pay it in full is not how cash works.
A 24 year old working hard, not wasting money, saving well and trying to learn before jumping in, yes, trey is a wise fella.
But with his serviceability, savings and time, he can do wonders. He actually seems to know what he wants. But he also mentions that he has missed out 3 times. That is a lot of misses.
Jumping into an investment straight in without understanding the mechanics behind it would not be wise. I agree. But not jumping at all won't make any difference either. IMHO when in comes to property, one won't learn anything without doing it.
From his other posts, he has said he is working up on the Gorgon Projects, and work is likely to dry up in 3 years time...
Given he is offshore most of the time, and doesnt need a PPOR, maybe the best strategy would be to save as much as he can so that when he is 27 years old (and no longer on the Gorgon Projects), he will have $750k cash saved up ($300k current savings plus $3k per week savings over 3 years as per his previous posts).
With that $750k he could buy a PPOR in cash, and all future income he earns i.e as a normal sparky $100k per annum? would be mortgage free.
27 years old mortgage free, earning $100k per annum, that would be a low risk good outcome.
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Horses for courses
I have a friend on a very decent salary with very little expenses
His philosophy is to buy a house, live like a hermit and pay the house off with PI
Once its fully paid off buy the next one
Considering it would be a bad strategy for most on here including me, he has done remarkably well, and onto ip number 3
I have a friend on a very decent salary with very little expenses
His philosophy is to buy a house, live like a hermit and pay the house off with PI
Once its fully paid off buy the next one
Considering it would be a bad strategy for most on here including me, he has done remarkably well, and onto ip number 3
Or the other option, as is popularly promoted here, is he can aim for the stars with borrowed money....
If things don't go perfectly to plan, then he will be broke , having no benefit of ever working up at Gorgon..
Investing is a game, it requires strategy and rational thinking, not just bravery.
If things don't go perfectly to plan, then he will be broke , having no benefit of ever working up at Gorgon..
Investing is a game, it requires strategy and rational thinking, not just bravery.
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