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the property and other assets are to provide the 'icing on the cake' (and I do like lots of icing on my cake! )
For me, the two most difficult questions underlying this are:
(1) How much growth and income is enough for you, and when do you need it?
(2) At what point do you change from a predominantly growth orientated portfolio, to a more income orientated portfolio?
LOL. Yes, you'd need to be a movie star or similar to be able to have your own one of those to play with. Maybe he could get friendly with John Travolta?But when your 'toy' is a Boeing 747-400, I guess you can hardly blame him
I really must do a portfolio update. Is it really 2 years already since I did one?
I really cannot see any value at all in not having property leveraged, after all it is one of the least risky of investments and thats the one the lenders prefer.
It is not just a question of property, but a balance of a portfolio overall.
Cash 62%
Shares 1%
Yeah, I know. One of the main problems has been not having enough time to work on things for a while, due to work, recent surgery, planning a holiday, and a few other things. I sold down most stuff back around the August correction, and haven't really had time to work on it much again. I have dabbled a bit with my trading account since then, but only relatively small quanitites of a few stocks and the odd warrant.That's a lot of cash GP
Well now that I'm almost out, I'm not keen to get back in too much right now, for any long-term positions, until I see a more definite direction to the market. I've still got my eye on some stocks for shorter-term trades, and trade index warrants occasionally (in fact, picked up a few hundred bucks from that yesterday), but am trying to get a few other areas of my life organised right now, so keeping up with shares is temporarily on the backburner. At this stage the plan is to start into it again after our holiday in March.But you seem to be holding your breath waiting
Maybe not, but that would only take it back to around $30, where it was back in May (and nearly dipped to back in August). You may have thought the same thing after the run up through 2005 and early 2006, but it nearly reached that draw-down in May & early June 2006, and in fact slightly exceeded 25% by Jan 2007. Of course, as a longer term hold, it more than recovered, thanks to the on-going bull.I doubt we will have that sort of draw-down [25%] on BHP
Nor would I, but I wouldn't want to be holding too many assets either if we run into a problem similar to what Japan had, or this sort of scenario.I would not want to hold cash during times of inflation anyway
Hi all,
This is an interesting thread with lots of good info, but nobody has done the simple mathematics of the original question.
Is this because peoples opinions matter so much more than cold hard calculations??
If the gross yield is $80,500, then to be a yield of 6% then the value of the property must now be $1,341,666. If we sold off $341,666 worth of property to return us to the $1,000,000, and paid CGT on the proceeds we would have the following.
$254,000 growing at 3% pa gives about $341,500. Given growth of $80,000 over 10 years (after REA expenses etc) then the tax payable would be ~$20,000.
This then leaves us with $321,000 plus $1,000,000 worth of property yielding 6% pa.
Basically, in answer to the original question, owning $1,000,000 of property now that yields 6%, with growth in rents of 3% pa, beats having money in the bank earning 6% over a 10 year period, by a proverbial mile.
bye
Currently 7.7% is possible with term deposits of 12 months or more.$1,000,000 at 6% in bank
With a family trust and two no-income beneficiaries, this would drop to $8,100 (based on $60K still).If this was the only income, tax would be about $13,400 per year (current rates)
While I'm sure this is possible in some places, around my neighbourhood 3%-4% is more typical.$1,000,000 property yielding 6%