Author Topic: Investing and personal finance  (Read 119558 times)

FitnessFrenzy

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Re: Investing and personal finance
« Reply #100 on: November 16, 2016, 03:40:56 AM »
if you look at a historical gold chart, it has some weird price moves sometimes. I don't own gold. Maybe I should?

Mr Anabolic

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Re: Investing and personal finance
« Reply #101 on: November 16, 2016, 04:13:37 AM »
Gold went from $20 in 1913 to $1233 today, a 61 times capital gain.
Dow Jones index went from about 86 in 1913 to 18900 today, a 220 times capital gain, if you reinvested dividends, the return is 17,770 times!!!

You're only looking at it in nominal terms.  The USD has been severely devalued since 1913.  In 1913 the dollar was worth a dollar (100 cents), now it's worth about 2 cents... get it?

In 1913 the USD was backed by gold, today it is backed by nothing.

Tapeworm

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Re: Investing and personal finance
« Reply #102 on: November 16, 2016, 05:20:51 AM »
Didn't know my dad posts on getbig :o

Go to your room.

Marty Champions

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Re: Investing and personal finance
« Reply #103 on: November 16, 2016, 05:46:40 AM »
i read 1st half of post so far hes on the white track
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.

A

FitnessFrenzy

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Re: Investing and personal finance
« Reply #104 on: November 21, 2016, 08:46:14 AM »
I own the USA small cap index, and it is up 16% since I bought into it!  8)


DroppingPlates

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Re: Investing and personal finance
« Reply #105 on: November 21, 2016, 12:25:06 PM »
I own the USA small cap index, and it is up 16% since I bought into it!  8)



Well done, this index looks like a good long term investment. I assume it's a futures contract?


FitnessFrenzy

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Re: Investing and personal finance
« Reply #106 on: November 21, 2016, 12:32:22 PM »
Well done, this index looks like a good long term investment. I assume it's a futures contract?



to be honest, I have just been lucky. I thought they would tank when Trump won. I just own the ordinary stock index.. so no futures.

Hypo

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Re: Investing and personal finance
« Reply #107 on: November 22, 2016, 12:37:55 AM »
i read 1st half of post so far hes on the white track

He can't do that now. No more interest-free loans.

Australian property is overheating and dare I say it, bubbling as bad as the US.

He's obviously hoping property prices don't fall, which was exactly the reasoning behind the sub-prime burst.

Apartment prices in capital cities are already dropping hard.

gib

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Re: Investing and personal finance
« Reply #108 on: November 22, 2016, 06:42:57 AM »
He can't do that now. No more interest-free loans.

Australian property is overheating and dare I say it, bubbling as bad as the US.

He's obviously hoping property prices don't fall, which was exactly the reasoning behind the sub-prime burst.

Apartment prices in capital cities are already dropping hard.

Sydney and Melbourne in Australia are quite expensive for sure. The really big money next decade in Australia will be in Gold Coast Queensland property. At a high level the amount of growth and investment and infrastructure there planned is phenomenal. I would say land and property there will easily rise 15%pa for each year on average over the next decade. So very decent compounded gains to be made there if you buy now.

denarii

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Re: Investing and personal finance
« Reply #109 on: November 22, 2016, 10:21:50 AM »
im surprised equities up since election. everything else has been sold. outlook for corp margins under trump is poor.

http://www.zerohedge.com/news/2016-11-19/difference-between-gaap-and-non-gaap-q3-earnings-dow-jones-was-25



Erik C

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Re: Investing and personal finance
« Reply #110 on: November 22, 2016, 10:39:24 AM »
im surprised equities up since election. everything else has been sold. outlook for corp margins under trump is poor.

Trump's tax cuts, for investors and corporations, will spur the economy, and create more profit. Cutting out government regulations, will help too.

denarii

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Re: Investing and personal finance
« Reply #111 on: November 22, 2016, 10:59:45 AM »
Trump's tax cuts, for investors and corporations, will spur the economy, and create more profit. Cutting out government regulations, will help too.


it wont make that much difference and rising interest rates would more than offset that. the more important factor is wages growing faster than gdp which will shrink margins significantly. trump is just transferring wealth to rich people with corporate tax cuts.

Erik C

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Re: Investing and personal finance
« Reply #112 on: November 22, 2016, 11:20:25 AM »
Laffer Curve works every time.

Trump will create more jobs, with his tax cuts, and regulation cuts.

denarii

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Re: Investing and personal finance
« Reply #113 on: November 22, 2016, 11:23:19 AM »
Laffer Curve works every time.

Trump will create more jobs, with his tax cuts, and regulation cuts.

the laffer curve only works from a high tax/ regulation starting point.

Erik C

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Re: Investing and personal finance
« Reply #114 on: November 22, 2016, 11:29:22 AM »
the laffer curve only works from a high tax/ regulation starting point.

That's where we are starting from, a high tax/ regulation starting point, that Trump will annihilate.

FitnessFrenzy

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Re: Investing and personal finance
« Reply #115 on: November 22, 2016, 11:29:41 AM »
Laffer Curve works every time.

Trump will create more jobs, with his tax cuts, and regulation cuts.

lol.. those tax cuts mainly benefit the rich.

Erik C

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Re: Investing and personal finance
« Reply #116 on: November 22, 2016, 11:31:52 AM »
lol.. those tax cuts mainly benefit the rich.

Only because the welfare bum parasites don't work, nor pay taxes.

denarii

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Re: Investing and personal finance
« Reply #117 on: November 22, 2016, 11:33:08 AM »
That's where we are starting from, a high tax/ regulation starting point, that Trump will annihilate.



according to this ^ each USD cut in taxes wont create a USD in gdp...

investment requires a profit opportunity, whether corp tax rates go up or down a few percent hardly makes a difference. the outlook is structurally low growth as baby boomers retire who will then impose themselves on state spending such as obamacare.

USA is probably the least regulated large developed market.

denarii

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Re: Investing and personal finance
« Reply #118 on: November 22, 2016, 11:34:08 AM »
Only because the welfare bum parasites don't work, nor pay taxes.

you are arguing for 'corporate welfare' where taxes are cut for the rich, ie the owners of capital. you dumbass.

Erik C

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Re: Investing and personal finance
« Reply #119 on: November 22, 2016, 11:37:12 AM »


according to this ^ each USD cut in taxes wont create a USD in gdp...

investment requires a profit opportunity, whether corp tax rates go up or down a few percent hardly makes a difference. the outlook is structurally low growth as baby boomers retire who will then impose themselves on state spending such as obamacare.

USA is probably the least regulated large developed market.

The chart is horseshit. Socialist nonsense. The USA has the highest corporate taxes on Earth now. That will change under President Trump. And, Obamacare is history! Won't cost the taxpayers anything any more.

Erik C

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Re: Investing and personal finance
« Reply #120 on: November 22, 2016, 11:38:31 AM »
you are arguing for 'corporate welfare' where taxes are cut for the rich, ie the owners of capital. you dumbass.

You are arguing for robbery. Taxation is theft! You Dumbass!

denarii

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Re: Investing and personal finance
« Reply #121 on: November 22, 2016, 11:41:21 AM »
The chart is horseshit. Socialist nonsense. The USA has the highest corporate taxes on Earth now. That will change under President Trump. And, Obamacare is history! Won't cost the taxpayers anything any more.

that is a CBO estimate chart. also trump already said he will not implement many campaign promises inc scrapping obamacare. you guys got rolled by trump who will work for the wealthiest americans.

Erik C

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Re: Investing and personal finance
« Reply #122 on: November 22, 2016, 11:46:15 AM »
that is a CBO estimate chart.

Yeah. As I said: "Socialist Horseshit!"

Trump will work for the benefit of the useful and productive people. Fuck the Parasites, Predators, and Pervert Hillary supporters.

SaintAnger

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Re: Investing and personal finance
« Reply #123 on: November 22, 2016, 12:57:39 PM »
I'm able to save about $10,000+ a month into my account after my living expenses, but I have a hell of a time not spending some of it, because I get bored and tempted to start new projects.  For the start of the new year, I'm going to "make money" by just saving all of it from here on out. 

Question is, is it best to just keep it in cash in the bank?  I don't know anything about the market, gold or whatever.

Erik C

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Re: Investing and personal finance
« Reply #124 on: November 22, 2016, 01:01:15 PM »
I'm able to save about $10,000+ a month into my account after my living expenses

How many fake welfare account names do you have?