What's the best reason you've heard for investing from people?

[qaz]

OK, let me get this right.......

You've come out and said that one of the most experienced and respected investors on this site investing system doesn't work as specified. Supplied no real reason why at all and then expect people to take you seriously?.

Do yourself a favour. If your going to make big statements, back it up with something......anything.

 

[likewow]

OK, let me get this right.......

You've come out and said that one of the most experienced and respected investors on this site investing system doesn't work as specified. Supplied no real reason why at all and then expect people to take you seriously?.

Do yourself a favour. If your going to make big statements, back it up with something......anything.

Thats an easy one, read the above couple of posts.

Beside that to increase your portfolio value by 3 times every 5 years would require (i think) approx. 25% increase compounding every year, year in-year out.

qaz my man, If you can do that you will be outperforming just about every investor on the planet by a long shot and will be rich beyond your wildest dreams in say 10-15 years.

 

[always_learning]

Buying 9 properties in 10 years sounds easy when looking at a spreadsheet but the reality is its a lot tougher when the market is dead flat or negative and interest rates...

Very true, spreadsheets are not reality, spreadsheets should be used to model real situations. Funky spreadsheets are just that, cool! But do they represent general reality? After been burnt badly with buying into a property development "feasibility" study presented as achievable by a long standing "professional" development company...when after been 6 months late and many tens of thousands over budget, to be told "Oh that was just a feasiblity study you shouldnt have expected that as the outcome".... I have learn my lesson countless thousand$ ways. It may be possible but is it probable? is it reasonable? how many others have achieved a similar result?

I just love the quote.

Buying and committing to memory a "Flight Manual for the Model 6 Enterprise" at a Star Trek convention doesn't make you a pilot, nor the starship real.

Buying into a ideas contained in a investment spreadsheet or feasbiltity study doesnt make the result achievable or you rich. It is better to start with what is normally achieved with such an approach and work forward from that with conservative predictions.

 

[qaz]

Thats an easy one, read the above couple of posts.

Beside that to increase your portfolio value by 3 times every 5 years would require (i think) approx. 25% increase compounding every year, year in-year out.

qaz my man, If you can do that you will be outperforming just about every investor on the planet by a long shot and will be rich beyond your wildest dreams in say 10-15 years.

Likewow....

Say the real estate market is comming off a recession. You find a property yielding 6.5% and growing at 7% PA. Interest is 6.5% (I/O loan) and depreciation and maintainence are equal meaning the property is exactly neutrally geard. You buy the property for $200k and put down a 20% deposit ($40k). In fact such a deal would be positive cashflow because you only borrowing 80% not 100%.

Year 1: $200
Year 2: $214 (7% growth)

You made $14k off your $40k investment. Thats a 35% PA return. Will it be 35% every year?, no. But assuming the long term growth rate doesn't change, then you should get an average 35% PA return in the long term.

Steve Navra's spreadsheet only assumes 22% PA.

 

[likewow]

qaz,

Your talking about growth on your intitial investment due to gearing (or cash on cash return) where as i took it as total portfolio growth at that amount.

As you would know growth from gearing can be astronomical. EG: I bought a house a few years ago with a $100 deposit and funded with equity (borrowed 110%).

The property value has since doubled. If sold the house today and calculated my return from my original $100, well can you see the point im making.

In your example with a yield of 6.5% and growth of 7% thats a total return of 13.5% which is pretty good. But you lose 6.5% interest only repayments (higher in future) and say another 2% on maint,fees...etc..and get that back with depreciation allowance depending on your income.

 

[qaz]

qaz,

Your talking about growth on your intitial investment due to gearing (or cash on cash return) where as i took it as total portfolio growth at that amount.

As you would know growth from gearing can be astronomical. EG: I bought a house a few years ago with a $100 deposit and funded with equity (borrowed 110%).

The property value has since doubled. If sold the house today and calculated my return from my original $100, well can you see the point im making.

In your example with a yield of 6.5% and growth of 7% thats a total return of 13.5% which is pretty good. But you lose 6.5% interest only repayments (higher in future) and say another 2% on maint,fees...etc..and get that back with depreciation allowance depending on your income.

Good points. Then you can see that 22% per annum over the long term isn't outrageous?.

 

[lizzie]

the best reason?

getting back to the origin of the thread ...

purely and simply - freedom.

my reason for investing is the freedom of not having to save for anything i want/need, when i want/need it.

and if the fridge blows, the car needs major repair, i have to jump on an international plane for a family crisis, feel like takeout every night and i find a new diamond ring i absolutely cannot live without - all in one week - then i can darn well do it without worrying about how i'm going to pay for it.

however, the secret is not to be excessive in your wants so you're not eating the golden goose before it's laid the eggs ... el casko vino isn't too bad once you get used to it and we only upgraded the 15yr old tv recently because it had no dvd connections!

 

[alexlee]

Hear hear, Lizzie. My own goal is "to do whatever I want, whenever I want, wherever I want". It's all about freedom. And the more I experience, the more I want to do, and the goal is getting more and more expensive. Currently standing at $1m (i.e. my goal is $1m after tax income per year).
Alex

 

[LucasK]

"Cuz all the rich people are doing it"

 

[Bricks & Mortar]

"Cuz all the rich people are doing it"

Well most of us are doing it. So here's hoping we all get there

With people other than this site I've basically heard the Retirement line- little or no pensions available.etc. No rich wanna bees

We started by buiding a holiday house for the kids, spent two years building it up from the lock up stage without flooring.
When we ran out of money we went back to plastering, a hell of a lot of weekends passed before we finally finished it. Despite being near the beach the kids didn't want to go down, being teenagers I guess you can't blame them, so we rented it out
Revelations after two seasons, I just realised how much money slipped through my hands by not having it fully completed in the first place.
We always kept a eye on the property in the area, and having been stupid not to pick up some cheap land in the area (desipte being advised by the better half). I again saw that money had slipped away again.
Next find, we took ACTION that was the key.
Doing the sums we were out of the pension anyway as the beachhouse value is in excess of PPOR. So it has become our Pension, our security, our future incomes and hopefully the assets to pass to the grandies as I'm hoping to get our kids educated and involved in their own properties so they can have the create comforts and retire without being old.

cheers
Timm

 

[brisbane 04]

Hi All,
My father worked all his life and contributed to his super scheme, at age 53 was diagnosed with cancer but continued to work (which he enjoyed) up until he passed away at 58. His super was never going to provide him with the life he had earnt. Mother passed away with cancer at age 57. I have a wife and two young children if something happens to me I dont want them relying on social security because we all know how wonderful it is. I want to retire early to enjoy life and my family before age or illness takes it away from me and to ensure they will have a future ahead of them which is secure and free of worries.Sorry if this sounds fatalistic but I will tell you one thing it sure provides me with motivation. Martin

 

[Aceyducey]

Course it's fun!

Why else do anything?

Life is too start to spend 10+ years doing something you don't enjoy just to be able to afford to do whatever you want for the next 60 - isn't it?



Cheers,

Aceyducey

 

[lizzie]

just as well we all love real estate - otherwise we wouldn't be here