Forum Replies Created
Hi Badger,
Depending what sort of asset level we're talking about here, I would recommend finding Financial Planner that charge 'fee for service' model instead of commission based. I had been let down before by an FP company, who was driven by the commission instead of my interest, but I still believe most FP's have good intention though.
At that time they looked after my investment property, margin lending, direct shares, super and taxation matter in a bundled service, which I found very convenient, BUT turned out to be it's not that hard anyway as long as you are willing to spend a little time learning, so I am doing it myself now. Most FPs making them sound difficult to deal with, which I must agree they may have some privillage access to some information.
Take into consideration in this current economy climate, earning commission is much harder so, if you have to go with commission based FP, please make sure you do your own homework, so they don't exploit you. Because majority of FP's make commission based on transactions, not based on the profits they make you.
Also, all FP's will recommend you to buy insurance products, mainly life, TPD and trauma insurance. While I understand the importance of having yourself insured (specially if you have a family that depends on you), but you do not want to change your insurance provider when you change your FP, mainly because it'll affect your benefits and eligibility, and also FP's who most of them are also insurance brokers get about 50% commission of your first annual premium.
I am not saying don't go with their recommendation BUT find out from the FP why he/she is recommending that particular insurance provider and will you get your insurance commission back.
That's all I have to say, so good luck !!
Regards,
Bluezinc
Hi Kenny and all,
My personal research is really based on analysts' comments, historical data presented by some youtube users, which probably half of those are rubbish, and also some discussion with few people who actually experienced recessions in other countries. I've taken into account that some analysts' comment are very extreme and very US centric, which can be very true in some ways for US but not so much for Australia (hence I believe the depression will not be as bad as in US, but it will happen).
The world economy is inter-connected, Australia prosper mainly because of the raw materials we sell to China which is still growing because she manufactures goods for the world consumption, but when the economy is bad, the demand is slowing down, manufacturing is slowing down and the need for raw materials is also slowing down, then it'll impact Australia.Current property price in Australia is un-realistic (over-inflated) based on the income ratio and, property investors are getting too complaisant believing the good days in property investing will never end. Share market volatility drives people to park their money in properties. Media does not help either, where a lot of articles are biased to encourage people to throw their money into properties.
Most likely those articles are written by property selling agencies, or anyone who benefits from increasing property price and transaction volume (which includes GOVT as well, from stamp duty and possible other taxes). GOVT will be forced to release more lands because of shortage of dwellings, in return they’ll be making money from stamp duties, taxes and land cost itself. GOVT, will might have to sell the land cheap to developer because the demand is slowing down as people are losing jobs and less capacity to purchase. They also might be forced to release more land to stimulate the economy, getting people employed particularly in property building industry.
Anyway, maybe we should not argue whether the recession will or will not happen, because every individual has their own view and interpretation of available information. What I need assistance for is to understand is the concept of relation between dollar value, property price and mortgage.
During hyper-inflation, dollar will lose its value, hence everything will go up in price significantly and property is no exception, BUT because people are defaulting on their mortgage, the bank will want to claim their money back hence those properties will be back to the market at possibly much lower price just enough to cover the remaining mortgage balance, on top of that because not many people will have the capacity to buy properties during recession/depression then the demand will be low, driving the price down.Kenny mentioned while in relativity it is true having an existing loan will be cheaper during hyper-inflation, because while the debt of $500K is still $500K on paper, but in reality that $500K could only worth $100K in value, hence if we can maintain our loan servicing power (if we can keep our jobs, or maybe leveraging our buying power through gold and silver), that means having that $500K debt in the first place is not a bad idea at all. Am I correct to think that way ?
So, based on my thought above, there’ll be some correction in property prices but I don’t think it would be as extreme as what Prof Steve Keen says of 40%, because the drop in dollar value will push the price up. My thought is the 2 opposite direction factors will drive the correction around 20-30% from current median pricing. Would you be agree with my numbers ? If not, what sort of property price drop you reckon we will experience in the next 2 years or so ? or you just don’t think the property price will drop at all ?Regards,
Will
