All Topics / Help Needed! / Investing

Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of KerrieCKerrieC
    Member
    @kerriec
    Join Date: 2010
    Post Count: 1

    Hi, just after some financial advice. Both my husband & I are in our late 40's. We own our home worth
    $240k to $290k, currently paying off a shed I/O for the past year, it has a return of $25,ooo per year & have $200k to pay off it. We have four kids two of which are probably going to University ( first one next year). Our annual income is $110k. We're not really sure of our next step. Should we invest in shares or more property.
    Regards,
    Kerrie

    Profile photo of ouchiemamaouchiemama
    Member
    @ouchiemama
    Join Date: 2010
    Post Count: 27

    If it were me, I'd stick with property … have a look at the global financial crisis to give you a viewpoint on shares. Of course, picking the right shares and even the right property is a challenge in itself. I'm biased towards property but I also have some shares which I just let 'sit'.

    You have equity in your own home to buy an investment property but are limited on time till official retirement age (sorry to remind you!), if you get cracking, put your extra income into an IP (or aim for positively geared) then you'll be on the way to getting your retirement income happening. You may even be able to add another within a few years once you've earned some equity in that property.

    If you want financial advice, you need to speak to an advisor who can assess your whole situation and give you some pointers.

    Good luck!
    Cheers
    Michelle

    Profile photo of GeraldineMGeraldineM
    Member
    @geraldinem
    Join Date: 2010
    Post Count: 81

    Hi Kerri.

    We are just behind you in the age situation but the way I look at it you could easily have two real estate 'cycles' before you retire, over the next twenty years, bringing you to the new retirement age!  (older than now).

    Teenagers are expensive, as I can sympathize having 4 also, but at the same time the ones at Uni can pay their own HEX debts and can live at home perhaps, while working part-time? (That's what my two uni ones have done/are doing)  I am sure if they know your goals they will be supportive, and don't forget you are teaching them fantastic financial management skills for their future. 

    Your income seems quite good to me and it sounds as if the shed investment is paying its way??  I'd go for some more if it was me, depending on whether your skills are in budgeting, renovating, subdividing, building or whatever.  Perhaps set a long term goal of what you want to retire on then work backwards!  I think smaller families and plentiful retirees makes putting two properties on one block a good option.

    Regards,

    G

    Profile photo of Ryan McLeanRyan McLean
    Participant
    @ryan-mclean
    Join Date: 2010
    Post Count: 547

    Hey Kerrie,

    Firstly, if you go to a property forum and ask whether you should invest in shares or property you will get the same answer every time!!! Property!!! That is what the people in this forum specialise in so they will recommend it everytime. So if you are seriously weighing up shares vs. property don’t ask here.

    Property has some advantages to shares. With property you can leverage yourself a lot more. You can borrow 80% and only put down 20% but your get growth on the entire 100% of your property.

    If you put $20,000 into shares and they earned you 10% pa. that would be $2,000. Put that $20,000 in to buy a $100,000 property (assuming rent pays for all expenses) and you only get growth of 4% you will still make $4,000 or 20% ROI. So there is a great advantage there.

    One of the things I love about property (positive cash flow property in particular) is that rents tend to go up almost every year. Meaning each year your ROI gets better and better and better. Expenses such as electricity, rates etc go up too, but your biggest expense (your mortgage) doesn’t change (unless of course interest rates rise).

    This increasing of rents over time means that in 10-20 years (if you buy properly) your passive income will be able to fund your lifestyle.

    You can’t increase your wealth exponentially if you aren’t in the game. The more property you buy the more chance you have at growing your wealth.

    I specialise in positive cash flow properties. I am NOT a financial advisor. But if you have any questions you want to ask you can contact me at http://cashflowinvestor.com.au/contact

    Ryan McLean | On Property
    http://onproperty.com.au
    Email Me

    Profile photo of GeraldineMGeraldineM
    Member
    @geraldinem
    Join Date: 2010
    Post Count: 81

    Hi Again Kerrie.

    Everything Ryan mentions is good advice.  However, I believe you can borrow to leverage into shares. While they may pay some dividends but won't have the stability of the rental return.  Also, you hear a lot about margin calls!  As with property, it would pay to do some research into shares, rather than following the crowd.

    Regards,

    G

    Profile photo of Ryan McLeanRyan McLean
    Participant
    @ryan-mclean
    Join Date: 2010
    Post Count: 547
    GeraldineM wrote:
    Hi Again Kerrie.

    Everything Ryan mentions is good advice.  However, I believe you can borrow to leverage into shares. While they may pay some dividends but won't have the stability of the rental return.  Also, you hear a lot about margin calls!  As with property, it would pay to do some research into shares, rather than following the crowd.

    Regards,

    G

    You can borrow in order to invest in shares. But usually the absolute maximum you can borrow is 50%. In property you can borrow up to 95% (you will have to pay lender’s insurance though).

    For me, property is much easier to control. With shares there is nothing I can do to increase the value of my shares, I am at the mercy of the market. In property, I can increase the value of my property by doing renovations or developing. You are still at the mercy of the market a bit, but there are things you can do to add value. So the smarter you are the easier it is to make money in property.

    Ryan McLean | On Property
    http://onproperty.com.au
    Email Me

    Profile photo of god_of_moneygod_of_money
    Participant
    @god_of_money
    Join Date: 2008
    Post Count: 970

    Sorry to disagree with u again Ryan

    You can borrow up to 70-80% with standard margin loan.
    There is always pros and cons investing in share market including fully franked dividend, liquidity, etc.
    Buying bluechips = buying with top management, not the dodgy CF+ve that will get trashed :P
    You can start as little as A$500… plus others

    My suggestion – Diversified…Diversified… shares, property, managed funds, and income securities (preference shares & bonds)

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Even more with a Guarantee Capital Loan albeit at a slightly higher interest rate.

    Richard Taylor | Australia's leading private lender

    Profile photo of Ryan McLeanRyan McLean
    Participant
    @ryan-mclean
    Join Date: 2010
    Post Count: 547
    god_of_money wrote:
    Sorry to disagree with u again Ryan

    You can borrow up to 70-80% with standard margin loan.
    There is always pros and cons investing in share market including fully franked dividend, liquidity, etc.
    Buying bluechips = buying with top management, not the dodgy CF+ve that will get trashed :P
    You can start as little as A$500… plus others

    My suggestion – Diversified…Diversified… shares, property, managed funds, and income securities (preference shares & bonds)

    I disagree with you. You can borrow 70-80% with a standard margin loan, but they are not easy to get for the average person. It is much easier for someone to go into the bank and ask for an 80% loan for a property than it is to ask for an 80% loan for shares.

    Yes there are advantages to investing in shares, but you really need to know what you are doing. It is the same with property…the more you know what you are doing the more money you can make.

    I think it is interesting that the fund manager who claim to be ‘the experts’ in the stock market can rarely beat the average.

    Diversification is protection against ignorance. Diversification is only good if you don’t know what you are doing, it protects you against your own ignorance. If you take the time and learn and get experience then focus will make you the most money. Take Steve McKnight for example…he focuses on positive cash flow and commercial real estate…he is focused and because he is focused he is rich.

    Ryan McLean | On Property
    http://onproperty.com.au
    Email Me

    Profile photo of god_of_moneygod_of_money
    Participant
    @god_of_money
    Join Date: 2008
    Post Count: 970

    Sorry Ryan to keep disagree with you

    It is NOT difficult to get margin loan 70% LVR on top ASX 50
    (i.e. not dogdy company)

    Yes.. diversification is ignorance… to whom who does not know the world of investment!!!
    Eventough the richest man in the world… Warren Buffet has quite diversified portfolio in his Berkshire Empire.

    Sorry to disagree with u again and again. Warren Buffet vs. Steve McKnight :)

    Richard,
    Yes.. capital protected loan.. but I think there is a limit in terms of claiming the deductible interest rate(ATO ruling).. correct me if I am wrong

    Profile photo of Ryan McLeanRyan McLean
    Participant
    @ryan-mclean
    Join Date: 2010
    Post Count: 547

    But it was Warren Buffet who coined the phrase “Diversification is protection against ignorance”.

    I would assume that Buffet has a focused diversified portfolio. By that I mean, he would have a team of people working for him. Each team would be focused on making money in one area. But he would have a lot of teams.

    I guess the question is, would diversification work for the average investor who doesn’t have the genius and teams of Warren Buffet?

    It seems a little limiting to me to only be able to easily get a loan for the ASX 50. To only be able to invest in 50 companies easily doesn’t allow for a lot of creative investing, or the ability to invest in high growth areas. If I am wrong about this let me know.

    ps. God of Money, don’t mind you disagreeing with me, it stimulates conversation and helps everyone learn.

    Ryan McLean | On Property
    http://onproperty.com.au
    Email Me

    Profile photo of GrantH_1974GrantH_1974
    Member
    @granth_1974
    Join Date: 2004
    Post Count: 190

    Hi Kerrie C

    My advice would be to talk to an appropriately quaified financial planner, with a good reputation. He or she will be able to discuss your financial and other goals and recommend strategies that are suitable for you, in the context of the current economy and 'cycles' for property and shares.

    I am guessing that if you are in your late 40's and own your own home outright, that many planners would encourage you to be contributing more to superannuation. Considering super preservation age limits and being late 40's, I would assume you could access your super closer to age 55 than age 60, so you wouldn't necessarily be locking your money away for years and years. They will also probably suggest that you keep some cash aside for a 'rainy day' or unexpected adverse events, like ill health. Different planners would have varying views on what to do with the shed.

    Best of luck with whatever way you choose to go.

    Cheers
    Paul

     

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    80% Margin Loan on ASX 50-100 is fairly standard now with the right Margin lender,

    GOM Yes you are correct about the nominal interest rate you can claim under a GPL.

    Richard Taylor | Australia's leading private lender

Viewing 13 posts - 1 through 13 (of 13 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.