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Author Topic: Investing and personal finance  (Read 26560 times)
Mr Anabolic
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« Reply #25 on: June 26, 2016, 09:32:57 AM »

Gold is great if you can time the "flight to quality" aspect of it. Since nobody can time the market, it's easy to say buy gold AFTER this large move. If you want to go ahead and invest in gold when it's flirting with its 2 year highs, go ahead, but as a buy and hold strategy for the stereotypical inactive investor, you're better off throwing your money in the SPY or some low cost index funds and adding to it over time if you're not watching the monitors everyday like a getbigger in Dubai, India. 

Large move?  You ain't seen nothing yet Mr Rambone.
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el numero uno
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« Reply #26 on: June 26, 2016, 09:41:54 AM »

And if you bought in 1999 when gold price was $250 ish?  Timing is important.  Derivatives market is going to implode and a majority of the banks out there today will not exist in a few years.  It will make what happened with Lehman Bros. and Bear Stearns look like a picnic.

Over long periods of time as wealth storage and inflation protection, physical gold (and silver)wins.  No counterparty risk like with paper assets either.  It's a no brainer.

When the S&P gets obliterated again down around the 600 level, (hopefully we all won't be fucked back to the stone age), that will be the time to start buying stocks.

Ha! If you could time the market, you'd be a millionaire overnight. 
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Mr Anabolic
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« Reply #27 on: June 26, 2016, 09:47:03 AM »

Ha! If you could time the market, you'd be a millionaire overnight. 

I've gotten close with timing, but I'm always a tad early.  I've done fairly well because I hardly ever use margin.  A couple trader friends of mine blew up their trading accounts... some lost millions.
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Grape Ape
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« Reply #28 on: June 26, 2016, 09:51:46 AM »

LOL - I'd like to see the bogus data points used to plot this chart.  Gold was around $35oz in 1972.  It's now $1320... a 3800% gain.  No gold or silver for you!  

Chart is measuring from 1802 and using Real rate instead of nominal rate, so it's adjusted for inflation an other stuff.

The spike you mention from the 70s appears to be there too.
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Mr Anabolic
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« Reply #29 on: June 26, 2016, 10:06:36 AM »

Chart is measuring from 1802 and using Real rate instead of nominal rate, so it's adjusted for inflation an other stuff.

The spike you mention from the 70s appears to be there too.

Still bogus.  Jeremy Segal is a banker/government/Fed reserve shill.
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Grape Ape
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« Reply #30 on: June 26, 2016, 10:44:53 AM »

Still bogus.  Jeremy Segal is a banker/government/Fed reserve shill.

I hear you.  Tough to trust anything.
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« Reply #31 on: June 26, 2016, 10:52:35 AM »

And if you bought in 1999 when gold price was $250 ish?  Timing is important.  Derivatives market is going to implode and a majority of the banks out there today will not exist in a few years.  It will make what happened with Lehman Bros. and Bear Stearns look like a picnic.

Over long periods of time as wealth storage and inflation protection, physical gold (and silver)wins.  No counterparty risk like with paper assets either.  It's a no brainer.

When the S&P gets obliterated again down around the 600 level, (hopefully we all won't be fucked back to the stone age), that will be the time to start buying stocks.

I don't disagree with you, but do you have any sources for your opinions about the derivatives market?

I know nothing about derivatives
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« Reply #32 on: June 26, 2016, 12:05:59 PM »

Gold and silver, I've been saying it for years....PHYSICAL. Not some bullshit on a piece of paper that will mean nothing when, not if this house of cards falls.
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« Reply #33 on: June 26, 2016, 12:35:07 PM »

Interesting reading and watching.
A little advise from years of experience - derivatives are basically a suckers game - she's an incredibly rigged market in most cases and you are basically betting against the house (the house that has all the resources to destroy you). I traded the broader indexes during 1999-2001 and made some serious dosh and also lost some very large amounts. Watched friends of mine lose everything literally in a few hours (I'm talking amounts of 2 million +). Having said that it was an incredible ride - I learned alot about myself during those times - almost bankrupted twice. But you live and learn. If you are still reasonably young and have the potential to ride things out and can afford to lose big when the time comes then I reckon you should give it a go. But you need to be able to learn from it - I mean really learn from it. I found I got screwed - not just because of my own actions or inactions but equally because my own brokers often would manipulate and screw me in behind the facade of working for me. Also I learned, often the hard way, that when you are not entirely certain of what you are doing (ie: your belief in your own talents wains) you open yourself to incredible vulnerability to the whims of others (believe me it is subtle and incredibly costly). I have many stories about the one that got away but on balance looking back I would change anything because it taught me alot - stuff that I could never learn from reading books etc or not actually physically being in the market and totally exposed. I learned, deep down I am too emotional to be a successful short term trader but if I hadn't learned that I wouldn't be where I am today and would probably have lost a lot more over the years.
Would I trade the index futures again - most probably - but I'm not crazy enough to go full on - I'd trade options on the futures and limit my exposure to margin that way. Have a wife and house and family now so its not just all about me if I was to fail. But I tell you what - this market is starting to look ripe for interesting turn - mmmm....taking me back all those years...we shall see.
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badlad
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« Reply #34 on: June 26, 2016, 12:52:09 PM »

Forgot what I was intentding to say - two places I would recommend absorbing as much information from now especially if I was much younger - read and understand Warren Buffet's investing philosophy and also someone like Marc Faber. Put the bulk of your money into long term sensible risk adverse holds based on the former and seek out true contrarian plays based on the latter - where you can limit yourself to only small plays with minimal risk because the amount you may lose is only a fraction of your portfolio but if you get it right the rewards can be stratospheric especially if your enter the market at a point where you genuinely believe it is near the tipping point (which isn't that hard to determine if you learn the lessons of Dow theory etc). The broader markets are much easier to guage than individual stocks or packets of stocks.
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« Reply #35 on: June 26, 2016, 01:03:16 PM »

Oh and one more thing - if yospend time working up a reasonable and tested investing strategy - ie: one that your have paper traded over a significant time frame (at least historically) DON'T deviate from it. Trust it and stick with it no matter whatever anyone else says. The biggest mistake you will make is breaking your own godamn rules. If your rules worked 90% of the time when you paper traded they will work 90% of thereabouts when you are actually in the market. But if you compromise, even slightly because you get jittery and seek advice of others you will almost invariably lose out. The reason I say this is because I would estimate that I would have traded some 3000-4000 times over my life and I would not be lying to say that all my winning trades were only when I followed my own advice to the letter - my losing trades were all the result of either my own rules not working (usually as the result of false timing signals - getting in too early or too late or out too early or too late or averaging down or some such other stupidity) but the bulk of bad trades were because I'd either actively seek advise of someone else or passively engage in unsolicited ramblings of others (who were probably doing worse than me but because I was emotional I let myself be swayed).
Ie: trust in no one but yourself.
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Wiggs
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« Reply #36 on: June 26, 2016, 01:09:17 PM »

Why is it still wise to invest in the market when it's due for a huge correction?
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Tapeworm
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« Reply #37 on: June 26, 2016, 01:15:07 PM »

A casino.  Talk to any gambler.  There's always a 'system' and everyone you talk to is 'up'.  Overall, you understand.  Roll Eyes

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FitnessFrenzy
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« Reply #38 on: June 26, 2016, 01:27:23 PM »

Oh and one more thing - if yospend time working up a reasonable and tested investing strategy - ie: one that your have paper traded over a significant time frame (at least historically) DON'T deviate from it. Trust it and stick with it no matter whatever anyone else says. The biggest mistake you will make is breaking your own godamn rules. If your rules worked 90% of the time when you paper traded they will work 90% of thereabouts when you are actually in the market. But if you compromise, even slightly because you get jittery and seek advice of others you will almost invariably lose out. The reason I say this is because I would estimate that I would have traded some 3000-4000 times over my life and I would not be lying to say that all my winning trades were only when I followed my own advice to the letter - my losing trades were all the result of either my own rules not working (usually as the result of false timing signals - getting in too early or too late or out too early or too late or averaging down or some such other stupidity) but the bulk of bad trades were because I'd either actively seek advise of someone else or passively engage in unsolicited ramblings of others (who were probably doing worse than me but because I was emotional I let myself be swayed).
Ie: trust in no one but yourself.

what is your investment strategy?
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badlad
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« Reply #39 on: June 26, 2016, 01:49:20 PM »

Basically a handpicked selection of fairly basic technical indicators. Over the years I modified these as I found that they would become less reliable in range bound markets. What I found was that chart trading, in my experience, relies heavily on using the right sets and applications of indicators in the right market conditions. Took me a long time to get this - was always looking for the silver bullet - a set of indicators that would work in all conditions. Because of that 'holy grail' apporach I got burned severely - often repeatedly making the same mistake again and again but not really understanding why. My strategy, if I can call it that, really was about doing what I found emotionally counterintuitive and sticking to it. Took me along time to make sense of things - I'm not a smart guy by any stretch and its been years since I have traded actively but looking to may be get back in so just starting to refamiliarise myself.
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« Reply #40 on: June 26, 2016, 01:53:49 PM »

Hence my advice for what it is worth - work things out yourself and then once you are satisfied you have got the best possible scenario (thanks Mr Piana) apply it and only trust in what you have done - nothing else.
There are heaps of technical indicators that I have found now, in the last few days that looks mightily impressive but I have absolutely no idea how they work. My basic rule of thumb is if I can't understand it then I don't look at it - too much like witchcraft  Grin
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« Reply #41 on: June 26, 2016, 01:56:52 PM »

Basically a handpicked selection of fairly basic technical indicators. Over the years I modified these as I found that they would become less reliable in range bound markets. What I found was that chart trading, in my experience, relies heavily on using the right sets and applications of indicators in the right market conditions. Took me a long time to get this - was always looking for the silver bullet - a set of indicators that would work in all conditions. Because of that 'holy grail' apporach I got burned severely - often repeatedly making the same mistake again and again but not really understanding why. My strategy, if I can call it that, really was about doing what I found emotionally counterintuitive and sticking to it. Took me along time to make sense of things - I'm not a smart guy by any stretch and its been years since I have traded actively but looking to may be get back in so just starting to refamiliarise myself.

so you are a stock picker and not a macro investor?
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« Reply #42 on: June 26, 2016, 02:04:26 PM »

As I said before I would only ever 'invest' in shorting a market if I was 100% I was close to a tipping point. I have done it twice - the first time in 1999 and then in 2000. However whilst doing well in 2000 (I think it was 2000) I didn't take into account Greenspans intervention when I think he slashed interest rates and I watched a significant amount of paper profit vanish in seconds. But as said the bulk of my trading was at that time was put options of futures contracts. I did actively trade some futures but didn't fair too well in the end.
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badlad
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« Reply #43 on: June 26, 2016, 02:11:30 PM »

Wouldn't pidgeon hole myself either way - but back in the day I would guess I would be a stock picker and only ever shorting the broader market. I lie - now that I think about it I did use to short a number of big name Australian stocks  but found that the market was severely open to manipulation  - not the liquidity that I guess you have in the US.
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badlad
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« Reply #44 on: June 26, 2016, 02:17:16 PM »

PS:have never traded physical gold or silver - but did in extension by trading explorer stock etc. Liked the idea of it but don't really understand that market. Had a 'friend' who did - was the nearest thing to a real Gordon Gecko i have ever personally witnessed. All he ever talked about for three years - gold and silver - amazing chartist - used to come in with these A3 hand drawn things and convinced alot of peeps to invest on his analysis. But in the end alot of people lost a lot of money because of that.
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« Reply #45 on: June 27, 2016, 02:33:09 PM »

let us see how high VIX will go after these brexit problems:

http://finviz.com/futures_charts.ashx?p=d1&t=VX
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« Reply #46 on: June 29, 2016, 12:58:45 PM »

from reddit about owning houses that you rent out:


So keep in mind I'm in a very different market to the USA (Australia)

My preferred properties after trial & elimination are 1 storey town houses or stand alone houses. Reasons for this:

    Don't have to fuck around with body corporate meetings

    Don't have to worry about whether or not the building has a big enough sink fund & is collecting enough to cover stuff like elevators, power sub stations, pools, etc.

I don't do any renos, you can make good money doing that but I'm a "slow & steady" kinda guy, so I aim to buy 3-4br family homes within 2km of a good school and 10-15km of a major metropolitan area or CBD.

Rental yield should be around 5.5-6% of purchase price pre-expenses. e.g a $400,000 place should rent for $24,000 pa / $2,000 month / $500 week

My rough long term yearly expenses work out to be:

    Property Manager, $1,200 - $1,400 pa
    Maintenance, $200 - $1,500 pa. At a minimum I get stuff like air conditioners, gutters & smoke alarms checked yearly. preventative maintenance is a great way to avoid long term big $$ repairs & its all deductible anyway..
    insurance, $1,400 pa (I have both property & landlords insurance.. e.g. if a tenant fucks the place, that's great news for me as i still get paid rent & the insurance company pays to renovate my property, woohoo! 99% of the investor sob stories are idiots who don't have insurance.)

So as a typical example: Purchase price: $400,000. I'm not going to do the break down of year 1 acquisition fees (stamp duty + conveyancing/legal) Lets say my total costs were $15,000 to buy. as per below, 20% cash down = $80,000 so we're talking about a $95,000 purchase price.

Loan 80% lvr (20% deposit) = $320,00 loan. I borrow always "interest only" & then put the cash into an offset account against the loan (I can explain how offset accounts work, but basically it means I can pay down the loan into a flexible account that means I don't need the bank's permission to pull all the $$ out and into another prop). Currently I pay around 4.2% as I have $1m+ in loans. so on this prop, would be $13,440 a year

Profit: (rental income) $26kpa. I work on a 50 week per year occupancy, my actual long term average is more like 51.something, so I'd calculate this as $25,000

Expenses: $3,600 pa in management, fees, insurance, maint, etc. + home loan cost $13,440 = 17,040

Depreciation of fittings and fixtures - not sure if this is something you can do in the states, but in Aus, stuff like dishwashers, carpet, paint, etc all have a reasonable lifespan (carpet is 7 years.. nobody replaces carpet every 7 years..) & you can depreciate them on your tax. for a $400k place, I'd expect $3,500 a year.

So the result is: $7,960 Profit pre-tax. Without boring you with the lengthy math on my tax, the end result is I lose about another $1,450 of that in tax... Year 1 would actually be better than that because my $15k costs are 100% deductible, so as 32.5% tax bracket, I get $4,875 of that back, but moving on..

= $6,510 cash in my pocket.

Now you're probably thinking "johnau, you threw down $95,000 to get $6,510 after tax profit, that's shit. your after expenses & taxes rental yield is 1.6%"

Here's the thing though...

    Rental values go up. I've never worked out what my long term growth is here, but I have places I've paid $200k for a decade plus ago that started out at $200 week ($800 month) now pulling in $500+ a week ($2k+ a month).

    Capital gains. My long term average for capital gains is 2.5% per annum. Which sounds shit.. until you do the math and realise that to get the same result as 2.5% on $400k, over 10 years, that original $95k would have to have returned roughly 7.9%pa.. Also ignoring that I've made about $65,100 in after tax income over that 10 year period too.

What I'm now doing with my portfolio is basically the Warren Buffett "never sell" approach & I chip in bugger all of my own money anymore. The first few properties are hard. Finding say, $380,000 to buy 4 places ($1.6m portfolio) is no easy feat, but then you sit on them for 10 years & now you've got a $2,053,000 portfolio... At this stage you could do a re-draw on your loans, buy another 4 places & have a $3.6m portfolio giving you $52,000+ a year in convenient fortnightly installments & appreciating at around $91,000 a year, ensuring that you'll have a nice nest egg to leave the kids.. The alternative approach for people who hate dealing banks is to say.. Buy 10, sit on them for 15 years, sell all 10 for say around $4.8m after expenses ($350k ish in tax & expenses.. haven't done the exact math), pay back the bank their $3.2m, with the remaining $1.6m, buy 4x new $400k places with cash, collect $100kpa in rent, minus management, maint & insurance = around $85,000 pa forever & rent should track inflation.. Personally I wouldn't do that as you end up paying a bunch of unnecessary tax, but I see loans as numbers on a spreadsheet vs for a lot of people, having $0 in bank debt has a solid "sleep at night factor" to lower their stress.

Getting the initial deposits is a bitch. Once you've got 4-5 places, you should find that the rental cash flow + ability to do a refinance every 5-10 years funds all your future acquisitions.. Put it this way, if you've got 0 props, saving $95k = pain in the ass.

if you've got 4 props.. every 3 years you should've made around $125k in capital gains + $78,000 in after tax "cash in your bank" rental profits... that funds purchase 5 & 6 + gives you $13k to take the kids on a family holiday... 3 years later you've put in another $0 & you've got $196k in capital gains + $156k in rent = that funds buying property 7, 8 & 9 + buy yourself a $50k BMW + take the family on a $17,000 holiday.. The vast majority of people never manage to perform the feat of saving up their $95,000 3-4x in a row to start the snowball... That's where 99% of people fail at prop investing, they either can't or wont ever manage that... but keep in mind it gets easier every time once you've got more bringing in $$.

Then it just becomes a decision about what your magic number is (how many props you want/how much $$ you want in retirement + how much time you've got..) then sit back and wait.
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« Reply #47 on: June 29, 2016, 01:30:43 PM »

a $400,000 place should rent for $24,000 pa / $2,000 month / $500 week

It doesn't & his 400k POS house is now worth 340 but he'll take 300 since it's better than he'll get at a bank auction.  Everybody knows it, so next month he'll get some sub-300 offers.  The arse is just barely not falling out of the Australian market due to 1) Chinese investment and 2) banks that don't want to take their medicine.

Suits me.  I love a bargain.  Let the river of blood in the street flow.
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« Reply #48 on: June 29, 2016, 01:37:16 PM »

It doesn't & his 400k POS house is now worth 340 but he'll take 300 since it's better than he'll get at a bank auction.  Everybody knows it, so next month he'll get some sub-300 offers.  The arse is just barely not falling out of the Australian market due to 1) Chinese investment and 2) banks that don't want to take their medicine.

Suits me.  I love a bargain.  Let the river of blood in the street flow.

do you own property that you rent out?
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« Reply #49 on: June 29, 2016, 01:38:02 PM »

from reddit about owning houses that you rent out:


So keep in mind I'm in a very different market to the USA (Australia)

My preferred properties after trial & elimination are 1 storey town houses or stand alone houses. Reasons for this:

    Don't have to fuck around with body corporate meetings

    Don't have to worry about whether or not the building has a big enough sink fund & is collecting enough to cover stuff like elevators, power sub stations, pools, etc.

I don't do any renos, you can make good money doing that but I'm a "slow & steady" kinda guy, so I aim to buy 3-4br family homes within 2km of a good school and 10-15km of a major metropolitan area or CBD.

Rental yield should be around 5.5-6% of purchase price pre-expenses. e.g a $400,000 place should rent for $24,000 pa / $2,000 month / $500 week

My rough long term yearly expenses work out to be:

    Property Manager, $1,200 - $1,400 pa
    Maintenance, $200 - $1,500 pa. At a minimum I get stuff like air conditioners, gutters & smoke alarms checked yearly. preventative maintenance is a great way to avoid long term big $$ repairs & its all deductible anyway..
    insurance, $1,400 pa (I have both property & landlords insurance.. e.g. if a tenant fucks the place, that's great news for me as i still get paid rent & the insurance company pays to renovate my property, woohoo! 99% of the investor sob stories are idiots who don't have insurance.)

So as a typical example: Purchase price: $400,000. I'm not going to do the break down of year 1 acquisition fees (stamp duty + conveyancing/legal) Lets say my total costs were $15,000 to buy. as per below, 20% cash down = $80,000 so we're talking about a $95,000 purchase price.

Loan 80% lvr (20% deposit) = $320,00 loan. I borrow always "interest only" & then put the cash into an offset account against the loan (I can explain how offset accounts work, but basically it means I can pay down the loan into a flexible account that means I don't need the bank's permission to pull all the $$ out and into another prop). Currently I pay around 4.2% as I have $1m+ in loans. so on this prop, would be $13,440 a year

Profit: (rental income) $26kpa. I work on a 50 week per year occupancy, my actual long term average is more like 51.something, so I'd calculate this as $25,000

Expenses: $3,600 pa in management, fees, insurance, maint, etc. + home loan cost $13,440 = 17,040

Depreciation of fittings and fixtures - not sure if this is something you can do in the states, but in Aus, stuff like dishwashers, carpet, paint, etc all have a reasonable lifespan (carpet is 7 years.. nobody replaces carpet every 7 years..) & you can depreciate them on your tax. for a $400k place, I'd expect $3,500 a year.

So the result is: $7,960 Profit pre-tax. Without boring you with the lengthy math on my tax, the end result is I lose about another $1,450 of that in tax... Year 1 would actually be better than that because my $15k costs are 100% deductible, so as 32.5% tax bracket, I get $4,875 of that back, but moving on..

= $6,510 cash in my pocket.

Now you're probably thinking "johnau, you threw down $95,000 to get $6,510 after tax profit, that's shit. your after expenses & taxes rental yield is 1.6%"

Here's the thing though...

    Rental values go up. I've never worked out what my long term growth is here, but I have places I've paid $200k for a decade plus ago that started out at $200 week ($800 month) now pulling in $500+ a week ($2k+ a month).

    Capital gains. My long term average for capital gains is 2.5% per annum. Which sounds shit.. until you do the math and realise that to get the same result as 2.5% on $400k, over 10 years, that original $95k would have to have returned roughly 7.9%pa.. Also ignoring that I've made about $65,100 in after tax income over that 10 year period too.

What I'm now doing with my portfolio is basically the Warren Buffett "never sell" approach & I chip in bugger all of my own money anymore. The first few properties are hard. Finding say, $380,000 to buy 4 places ($1.6m portfolio) is no easy feat, but then you sit on them for 10 years & now you've got a $2,053,000 portfolio... At this stage you could do a re-draw on your loans, buy another 4 places & have a $3.6m portfolio giving you $52,000+ a year in convenient fortnightly installments & appreciating at around $91,000 a year, ensuring that you'll have a nice nest egg to leave the kids.. The alternative approach for people who hate dealing banks is to say.. Buy 10, sit on them for 15 years, sell all 10 for say around $4.8m after expenses ($350k ish in tax & expenses.. haven't done the exact math), pay back the bank their $3.2m, with the remaining $1.6m, buy 4x new $400k places with cash, collect $100kpa in rent, minus management, maint & insurance = around $85,000 pa forever & rent should track inflation.. Personally I wouldn't do that as you end up paying a bunch of unnecessary tax, but I see loans as numbers on a spreadsheet vs for a lot of people, having $0 in bank debt has a solid "sleep at night factor" to lower their stress.

Getting the initial deposits is a bitch. Once you've got 4-5 places, you should find that the rental cash flow + ability to do a refinance every 5-10 years funds all your future acquisitions.. Put it this way, if you've got 0 props, saving $95k = pain in the ass.

if you've got 4 props.. every 3 years you should've made around $125k in capital gains + $78,000 in after tax "cash in your bank" rental profits... that funds purchase 5 & 6 + gives you $13k to take the kids on a family holiday... 3 years later you've put in another $0 & you've got $196k in capital gains + $156k in rent = that funds buying property 7, 8 & 9 + buy yourself a $50k BMW + take the family on a $17,000 holiday.. The vast majority of people never manage to perform the feat of saving up their $95,000 3-4x in a row to start the snowball... That's where 99% of people fail at prop investing, they either can't or wont ever manage that... but keep in mind it gets easier every time once you've got more bringing in $$.

Then it just becomes a decision about what your magic number is (how many props you want/how much $$ you want in retirement + how much time you've got..) then sit back and wait.


so you bought any $100 properties in detroit?
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