All Topics / Help Needed! / How Much Money Do I Need Saved To Start Investing?

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  • Profile photo of latorgaterlatorgater
    Participant
    @latorgater
    Join Date: 2012
    Post Count: 14

    I am 27. I have made some bad financial decisions in my time and probably have a bad credit rating. What are my options?

    I have not much money at the moment and literally just surviving and am on the verge of literally being homeless.

    The way I see it is that the only way is up for me now… I’m going to knuckle down and get my life sorted and start making the right decisions.

    I guess the first thing for me to do is have a stable income through employment, a stable living arrangement, and start saving.

    How much money should I be saving?

    How much money do I need saved before I can even think about investing?

    Should I join a club such as the Investors Club?

    Will my credit rating get in the way of things?

    I have many more posts and many more questions to discuss… but let’s start with these… :)

    Profile photo of crustycrusty
    Participant
    @crusty
    Join Date: 2010
    Post Count: 127

    Doesnt matter how much you save it is what you do with it that counts. I started with none when I was in primary school school ,I got ballons at a show given away for free then walked around and sold them. I bought  something like 10 Pivot shares for  something like $50.00.  I would be wary of the investor club, but you may learn something there but if you do buy something do your own due dilligence.

    Profile photo of Karen and JuneKaren and June
    Participant
    @karen-and-june
    Join Date: 2012
    Post Count: 8

    Hi ozlat
    Is an investors club like somewhere you can put money and not take it out for a certain period. if so that vwould be good for a lot of people I know
    Karen

    Profile photo of peiranyupeiranyu
    Member
    @peiranyu
    Join Date: 2012
    Post Count: 15

    Hi Ozlat,

    save as much as possible. when I graduated 5 years, I simply had nothing. I have slept in one garage for 2 years, lived in a boarding hourse for one year with other 7 people. I don't have a decent job/income. But I managed to save quite a lot to pay for 3 IPs deposits.

    So make a plan, start it today!

    PEIRANYU

    Profile photo of NHGNHG
    Member
    @nhg
    Join Date: 2010
    Post Count: 198

    Could you make use of low-doc loans if you have a bad credit rating?

    The millionaire next door book says 'invest' not save… 20% of your income as a minimum as a rule of thumb. I'm at around 40%, everyone is different and has different priorities.

    If you have trouble saving, perhaps a place to start is long-term deposits, other wise buy some shares and keep it, reinvest the dividends to buy more shares, etc.

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

    Sorry lodoc loans are not an answer to poor credit.

    Whilst there are a few valuable contributions to date i would do nothing until you have a copy of your Credit report.

    You can order it from Veda.com.au.

    Without this you are wasting your time. Show it to your mortgage broker and see what options you have going forward.

    Then read and educate yourself. Avoid organisations like Investors Club who have one goal in mind and that is to make money out of you by selling you property.

    It is never too late to start but you need to have the right stucture and foundations in place.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of NHGNHG
    Member
    @nhg
    Join Date: 2010
    Post Count: 198

    Hi Richard,

    Purely out of curiousity:
    1. do they check credit rating for low-doc loans;
    2. if so, what is the benefit of a low-doc loan? for those who don't have initial deposit?

    Regards
    NHG

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

    Hi NHG

    1> Yes a credit search is done on all Lodoc loans. (Lodoc loans have nothing to do with poor credit applications).
    2> A Lodoc loan is not for clients with limited deposit and are aimed at self employed clients who are unable to supply normal Tax return documentation for the last 2 Years.

    With a limited deposit / equity you will not get a loan lodoc or full doc.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of grimnargrimnar
    Participant
    @grimnar
    Join Date: 2010
    Post Count: 86

    G'day Ozlat,

    I wouldn't be so worried about your borrowing capacity just yet. Or your credit rating.

    At this point in time it is probably more important to focus on developing good habits and money management, and getting your situation sorted out before you start worrying about investments that carry risk and commitments above what you could reasonably support if they draw 0 income.

    Make sure you have a roof over your head, food in your stomach, and give yourself realistic (but not easy) targets from day 1. 

    Maybe start with 10% savings, for example. And if you can do that alright for a few months, bump it up to 15%, and so on.
    I guess the point being, if you rush into it and start trying to dump 40% into your savings, you will probably break and pull it back out to spend on other things that 'come up'. And once you dip into it, it's hard to stop!

    Maybe even have a look at something like 'smartypig' to drive it for you. I think it's offered through ANZ, but just google it.

    Basically you give it a goal for an item you're saving for (i.e. deposit for a house), a $ amount for that goal, and a timeframe you want to achieve it within. It will then dictate how much you need to contribute each week to make it happen, and you can set it up so the money automatically gets deducted from your account each week. It gives you a progress meter, and other tools and things to keep you motivated, all the while earning a bit of interest. In exchange, they pretty well treat it like a term deposit. i.e. you can't access the money you put in there until you reach the saving target.

    Once you have done that, maybe look at asset classes that you can buy with your savings. Like corporate bonds on the ASX, which are fixed income investment types that offer good yields and low entry cost.

    These sorts investments can help you boost the earnings on your savings, and put together a reasonable deposit quicker than leaving cash in the bank.

    Plus, I am not sure on this one, but I believe you can use Bonds that you own as leverage too, which would probably help your borrowing capacity situation.

    Anyway, you're cutting your own path here mate. But hopefully some info here on what you could possibly do to get it off the ground.

    Profile photo of xdrewxdrew
    Participant
    @xdrew
    Join Date: 2010
    Post Count: 479

    There is no quick fix for starting up your investment other than .. resources .. credibility .. and ingenuity.

    One will start the others. You can do collaborative projects to share expenses and rewards .. you can do vendors terms on buffing a place up for a better price at sale …

    All you need to remember is that when the banks go to your record they will want to see

    Assets – Something they feel they can lend against .. bricks .. mortar .. bluechip shares …
    Income – A job .. preferably a steady long term job .. and maybe rental income or share income.
    Clean Record – if that means you have to wait for it .. then thats the time to save.
    Responsible saving – Some idea that the money for a deposit has been saved up and not foisted upon someone to get a loan.

    How you get to that stage is up to you .. but the recommendations i've suggested earlier might make good sense.

    Things to remember – ALL PROPERTY IS FOR SALE … AT THE RIGHT PRICE
    and of course … when a vendor wants to sell .. he wants a conclusion at an acceptable outcome. Negotiate.

    Build your bank .. step by step .. profit by profit … and you should be able to do some amazing things in no time.

    Profile photo of latorgaterlatorgater
    Participant
    @latorgater
    Join Date: 2012
    Post Count: 14

    crusty – thanks for that advice… i just hear that many people go to the investors club… but after the responses I am getting here and the support… i feel that this forum will probably become my “club” when dealing with property investments.

    Karen and June – i was actually referencing a particular property investment club that helps people acquire investment properties… but what you have mentioned definitely sounds like a good idea.

    peiranyu – that’s encouraging news and i have already started my progress by getting a job that I start training for tomorrow… it is commission only sales position for “Aussie Farmers Direct”… so time to roll those sleeves up and get going forward.

    NHG – so continuing from my comment above… if i start by putting 20% of my weekly income into my etrade account and then invest $1,000 at a time… that would be a good place to start? i did have some success and failures with small cap stocks… would you recommend that since I literally have nothing to lose and everything to gain to get back into small cap stocks? or blue chips? or something all together different? and how easy is it to use those investments to get more money to invest into further investments such as property? if i was to get back into shares I would probably buy a subscription to one of their newsletters and follow their advice whilst also conducting my own due diligence… some of the publications they offer are: * AUSTRALIAN SMALL-CAP INVESTIGATOR * DIGGERS AND DRILLERS * AUSTRALIAN WEALTH GAMEPLAN * SLIPSTREAM TRADER * SOUND MONEY SOUND INVESTMENTS.

    Qlds007 – Ah yes… have heard of Veda and will be ordering my credit report once I get my first paycheck either this or next thursday. Thanks for reminding me… and if it isn’t so good… is it true that there are people or companies out there that can help fix it? And in terms of mortgage brokers… since I am in Melbourne… is it best to find a local broker or use someone like yourself?

    grimnar – yes it does seem that i do need to get money smart and life smart before worrying about bigger investments :) i am set to make things work from here on in and will find a proper accountant and do my tax every year (going to try find one on this forum in Melbourne)… i have an account with ing direct that i can start using again… would you recommend smartypig over ingdirect? and in terms of fixed income investment types and corporate bonds… i think i need to do more research as a quick glance in google confused me a little lol

    xdrew – one step at a time… so much great advice from all of you with most of it overlapping and making great sense… my first steps of a steady income and a steady savings plan seem to resonate with all… and then to build build build in every way possible :) thanks for the advice and I will keep you all updated and with my commitment and your support I am making things happen as we speak!!

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    I have to admit, and I will upset some forumites by saying so…. that it does upset me that when newcomers come to this PROPERTY investing site to seek advice on investing in PROPERTY, that they are encouraged towards the stock market.  That is not the investment strategy they came here for and it is quite unlikely they have enough knowledge of how to make their money grow on the stock market.  I worry their money pile will reduce, and that yes, in many cases it would be safer saving furiously in a bank account…

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

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

    Hi Ozlat

    Yes indeed we deal with a couple of Credit repair companies and certainly depending on the depth of your issues could be an alternative.

    Personally i have hundreds of forum client in Melbourne and other parts of OZ.

    JacM is Melbourne based and she is a client.

    Hope she doesnt mind me saying so as it is not like the exclusive Millionaire's only club lol.

    Feel free to drop us an email and be happy to throw in my 5 pence worth.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of CintakuCintaku
    Participant
    @cintaku
    Join Date: 2012
    Post Count: 30

    Ozlat,

    Money is consequence of actions not the other way around. So investing is also consequential outcome of actions and the outcome of investing can be positive (money grows) or negative (money go).

    My advise. Do not concentrate on money concentrate on your actions. If you change your actions money comes as a result.

    Actions and ultimately decisions leading to $$ or loss are driven by many hings (determination, focus, education, knowhow, vison but also in negative sense lazyness, choice of riends, wanting things too early before we can afford, credit cards etc.)

    So how much money do you need? Zero. In some cases it is negative (debth) so in this case if you debth today is minus X and tomorrow your depth is less by even $1 than you are in business of investing. How quickly you reduce your depth or by how much you increase your savings (even is it is $4) is a matter of actions. Money in sense of profits are consequential. 

    Many peple say you need money to make money. No that is not a correct statement. Money is only junk of paper, plastic or set of binary codes or 1 and 0 in computer systems of banks. Nothing else.  

    Only actions and decisions are influential. So even in case where people invest "money" to make money people do not realise that someone else you give money to decides on actions that makes profit and these people than pass small portion back to you or in many instances they simply tell you "Bad luck mate the fund, venture, … did not perfom this year you made and "investment" loss..marlet is flat,… while they make money as consequence of their actions you make loss… 

    Find your own wind and focus on actions, win more often loose less often and be carefull who you decide to accept as a mentor. 
    Pick a mentor based on his/hers actions not based on how rich they are. . . Evaluate risk and learn how to calculate and judge risk correctly…make habit to make risk register when acting (indirectly investing).

    Sorry if I sound like a father giving advise to his son but this is it. Money do not exist only actions behind the money producing consequence do exist. 
     
    I picked up on the fact that you liked crusty's responce. There was a hell of an example of determination in what he did after he refused to accept situation he was in. Followed by consistency. 

    Do not measure success of your investments by $$$ always measure it in %%. It is far more encouraging and is far better and more accurate measure of your success. Crusty's initial decisions were by the way producing 200% results or more when you realise that deciding to share rent for instance would straight away produce extremly hoigh % "investment" results. Because decision of sharing rent with other or accepting temporarily very low comfort is drasticaly reducing costs. Provided that you know what to do with consequential savings.

    Profile photo of NHGNHG
    Member
    @nhg
    Join Date: 2010
    Post Count: 198
    ozlat wrote:
    NHG – so continuing from my comment above… if i start by putting 20% of my weekly income into my etrade account and then invest $1,000 at a time… that would be a good place to start? i did have some success and failures with small cap stocks… would you recommend that since I literally have nothing to lose and everything to gain to get back into small cap stocks? or blue chips? or something all together different? and how easy is it to use those investments to get more money to invest into further investments such as property? if i was to get back into shares I would probably buy a subscription to one of their newsletters and follow their advice whilst also conducting my own due diligence… some of the publications they offer are: 

    Hey Ozlat,

    The common theme here is learn to save and create a steady cashflow. Learn about delayed gratification etc, Baby steps. Something to aim for really helps you meet your goals quicker, just make sure you don't loose sight of the end result your after.

    What is your aim? Financial stability?  A property to call your own? What do you need to do or know to get there?
    Perhaps use this period to learn more about investment tools and find what suits your level of risk vs reward, while saving money and as mentioned previously learning good habits.

    I had 'analysis paralysis' for 2 years before i made my first move in the property market, and still made plenty of mistakes :p One step at a time.

    JacM wrote:
    I have to admit, and I will upset some forumites by saying so…. that it does upset me that when newcomers come to this PROPERTY investing site to seek advice on investing in PROPERTY, that they are encouraged towards the stock market.  That is not the investment strategy they came here for and it is quite unlikely they have enough knowledge of how to make their money grow on the stock market.  I worry their money pile will reduce, and that yes, in many cases it would be safer saving furiously in a bank account…

    JacM,

    I completely agree stocks can be dangerous, I just sold up all my stocks last week and reinvested it into property. It sounds like Ozlat is asking about how to get on his feet tho, not about property per se.
    I personally used stocks to build up the deposit on my first property, tho it is not a 'strategy' i would recommend to everyone, I happened to have had experience with the stock market well before property even registered on my radar, now I much prefer property :). They are both tools to an end result.

    Profile photo of RazzRazz
    Member
    @razz
    Join Date: 2012
    Post Count: 14

    Well to start investing you should budget between 10-15% of the cost of the property. 10% for the deposit and the other 5% for costs. If you have more than the minimum required deposit you can play around with LVR to reduce your LMI. It’s not easy saving but having a steady job and remaining focussed will help.

    Profile photo of latorgaterlatorgater
    Participant
    @latorgater
    Join Date: 2012
    Post Count: 14

    JacM – nice point, i will be saving half, and investing half… so that i am always moving forward… i decided my first $500 investment will be a PAMM forex account… the other half will be in my high interest savings account :)

    Qlds007 – thanks, it sounds like you know what you’re talking about and i will email you as soon as I get my veda report which i will be ordering this week… by the way… by the way, know of any good accounts in Melbourne?

    Cintaku – you make a lot of sense and i had to re-read it a few times to make sure i understood properly… and in terms of looking at numbers, it took me a while but now I see why percentages are so important, so from here on in I will make sure I calculate profit and losses and everything else that can be quantified in a percentage… I’d probably have a better idea of where things are going right or wrong :)

    NHG – we all make mistakes… some people say it’s the only way we learn… i think it’s just one way lol… financial stability backed by wealth and time freedom are my goals at this present time… but before that it is to systematically start saving a portion of my income… i should start getting my pay cheque mid next month and have already set my budget (now just need to follow it)!

    blairedavis – thank you for pointing that article out… i will be saving and investing at the same time.

    Razz – wow so for a $200,000 property I need at least $30,000 to get in the game… now I see why there are many advocates on the forum encouraging me to not only save, but invest as well… I have started looking into property investment strategies and it seems there is a way to combine vendor financed and positive cashflow properties to get in the game with no money down… back to the books i go :)

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi Ozlat – I think I mentioned James from House of Wealth as a good accountant in a previous thread. He’s a specialist in IP related stuff and is in Melbourne.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Eddy123Eddy123
    Member
    @eddy123
    Join Date: 2012
    Post Count: 24
    Jamie M wrote:
    Hi Ozlat – I think I mentioned James from House of Wealth as a good accountant in a previous thread. He's a specialist in IP related stuff and is in Melbourne. Cheers Jamie

    Meet James once, seems like a nice guy and he had some IP himself so he knows what he's talking about. Give him a call or drop him an email.

    Profile photo of latorgaterlatorgater
    Participant
    @latorgater
    Join Date: 2012
    Post Count: 14

    Jamie M and Eddy123 – thanks for the tip, i will get in touch with James as recommended :) I just received my new phone in the post today… cost me bugger all and looks real nice and works real nice… now just need top up and start calling all the right people :)

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