All Topics / Creative Investing / You have $12,000 all up, where and how would you start?

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  • Profile photo of Alliance_22Alliance_22
    Participant
    @alliance_22
    Join Date: 2009
    Post Count: 9

    Hi Guys,

    As the title suggests, if you have 12K freed up, and you don't need to pay off a loan or mortgage. How would you use this money effectively to accelerate your wealth in today's market (Property, shares or business)?

    Thanks :)

    Profile photo of jwishart77jwishart77
    Member
    @jwishart77
    Join Date: 2006
    Post Count: 3

    As always, totally depends on your individual circumstance – but here are my two cents.

    I would consider business as the number one option but only if i had a good idea and a way of getting enough extra start-up capital. It is definitely the riskiest option but the lessons you learn even in a failed business of your own are invaluable. Plus, if you are in the tiny minority who actually succeed business-wise on your first go (or second go…or third go……) then the potential for earnings far eclipses shares or property. Generally though, it is not a great economic climate to be starting a business.

    This current period seems like a golden opportunity to invest in either shares or property. No one knows if we have hit the bottom yet though and with the recent official confirmation we are heading into a recession, plus unemployment forecast to hit 7% later this year it is quite possible that both shares and property have further to fall. It is tempting to say that with a long term view that you can’t really lose, however I personally believe it means there is just no reason to rush into anything as the turnaround is not yet upon us. It is worth keeping an eye out for bargains and seeing how things play out over the next 6-12 months.

    Property or shares? As you only have a small amount of cash to play with, if you can get a big enough mortgage from the bank I like the property option. The reason being simply that you are leveraging your money for higher potential earnings. For example, $12k in shares is only $2,400 even if you make an extremely good return of 20%. If you buy a $300k apartment, even a 5% rise is worth $15k. With low interest rates, very high rents and flat or falling prices, if you can find a bargain property, especially things like a forced sale, you could be on to something good.

    But – you need to ensure it is either positively geared, or you have enough earnings (that are also stable) to cover the payments. Plus you also need to think about whether you will want access to your cash for anything in the near future as once it’s in property it’s much harder to access than just by selling a few shares.

    Without really knowing your specific details, I like the idea of putting your cash in a high interest account and trying to add to it while becoming familiar with the property markets so you are ready to strike when you see the right place for the right price…

    James.

    p.s. being that i’m not a financial adviser or property expert, take this advice with a grain of salt. I’m interested to see what other people have to say too.

    Profile photo of Alliance_22Alliance_22
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    @alliance_22
    Join Date: 2009
    Post Count: 9

    Thanks jwishart77,

    That was very informative and you have some great ideas too. Basically, the scenario is that i will have 12k or so freed up shortly, its been in a termed deposit of 8% for 6 months or so, and instead of putting that back in for another few months of termed deposit, i thought perhaps another type of investment would produce better results. (Mind you the 8% is now 4.99% termed… so its not that good of a return)

    Profile photo of WJ HookerWJ Hooker
    Participant
    @wj-hooker
    Join Date: 2007
    Post Count: 272

    Alliance_22
     5% return is excellent in todays world. Especially if you put in your wife or husbands name if they do not have an income, so you pay minumum tax.
     Or put it in your offset account and save the full amount on your mortgage 
     or buy shares today like a bank and get about 8-10% return effective with 100%imputation credits.

    You don't need to think big if you have a mortgage or an I/P with outstanding loans

    Profile photo of ErikHErikH
    Member
    @erikh
    Join Date: 2007
    Post Count: 118

    I'm with James, but take your time and make sure property fits with your longer term strategy. If you have the interest/skills look for something where you can add value. With interest rates coming down and rents going up its becoming easier to find cashflow +ve property with decent capital growth prospects.

    Profile photo of Playa ChickenPlaya Chicken
    Member
    @playa-chicken
    Join Date: 2004
    Post Count: 128

    Personally, if I had a spare $12K floating around looking for a home, I'd put it into SILVER.  Stocks or physical…. educate yourself here for starters …… http://goldsilver.com/videos/?ss=07f43aeba99e54130997ca384d207813

    and …… http://www.silverstockreport.com/index2.html

    It's an amazing time to buy with metals so low at the moment and don't forget, Gold and Silver are counter cyclical to things like the US$ and economy tanking.   Good times are coming :-)

    Happy learnings….
    Vicky

    Profile photo of js2js2
    Member
    @js2
    Join Date: 2003
    Post Count: 758

    I'd buy into something cheap under 100k (60k,80k,90k) in the Country with close to or positive cash flow now or with a little reno or something else like adding a self contained unit out the back or already has one out the back to rent as well, especially in the town I'm in with my anticipated rental squeeze closing in.

    More deals right now then i have time and money to get into.

    To me it's a no brainer – Invest in Property.

    Profile photo of ChizChiz
    Participant
    @chiz
    Join Date: 2008
    Post Count: 70

    Very interesting watching those Gold and Silver videos. Especially the bit in the ‘part 2’ about Silver going up by a factor of 40 (and gold by a factor of 5).

    Profile photo of dorkyboydorkyboy
    Member
    @dorkyboy
    Join Date: 2003
    Post Count: 16

     What a great question…..

     Well here is what I would do:
     
     1.  Spend about $5000  on starting a home services business (gardening/mowing/cleaning for example) There is a really 
     large market and are straight forward to start and operate. (I started one with about $2500 and had a thriving fulltime
     business 6 weeks later..that money got me a ute,some secondhand gear and 18,000 flyers and had most of them
     delivered).

     2. Go find a landlord who is happy to do a rent to buy for you, give $1000 for the option fee (about 4 weeks rent),  keep the
     balance for legals and to do a reno on the house before revaluing…..

     12 grand well spent/invested i think….

     Good luck,
    Gavin

    Profile photo of wildrahilwildrahil
    Participant
    @wildrahil
    Join Date: 2009
    Post Count: 9

    best idea is grab a few bottles of scotch and keep reading and saving . ur gut feeling will tell u when something extroadinarily good appears if u research enough as none of these so called experts predicted 12 months ago about todays economy. why not?surely 3,4,5 yrs etc at uni gave them enough study time 2 see this. …  u will know whats rite 2 invest in when u see it.. just beware of scams and so called  "experts"

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