People who wish to buy multiple properties do so with IO loans to maximise cashflow and tax deductions.

They aren't worried about owning them all 100% until much later.

Inflation reduces the debt.  30 years ago property cost $30K – would you be upset if you owned 10 properties with $300K debt between the lot?  Sell one place on retirement and own 9 fully paid off?

Your concerns are normal and are a mindset taught by our pareents and grandparents.  get past them – times are different today.

Does this make sense?

Cheers,

You can even get capital protected 100% loans to buy shares.  At the end of the period if the shares are worth less you can just give them to the lender and walk away. 

All your spare income could be going into your own PPOR to reduce this debt.  By all means redraw it via a new split or LOC to fund investments rather than save for deposits.  This will see your nondeductible interest become lower and lower.  This will make a small but significant difference to your situation.

If you buy properties with little prospect for CG then of course you will run out of money.  How can this thing start to snowball unless it actually does grow.    You cannot be relying on another once in a lifetime boom as we had recently!

I don't mean to be negative – I am impressed by what you have achieved and admire your boundless energy!

I also reckon you should spend an hour on the phone with Richard Taylor and see what he can suggest for you.  He may well come up with some significant improvements to your situation.

All the best,

You know it wasn't aimed at you specifically.  Was more a knee jerk reaction I have to everyone who believes shares are inherently dangerous.  An atitude that is usually fostered by a well meaning parent who knew someone who speculated once out of greed and got burnt.  It is an attitude that gets reinforced daily in forums like this.  I would never say that shares are better than property or vice versa.  Only that they are a perfectly valid avenue in themselves.  If anyone believes they are "risky" and akin to "gambling" then they should reasses where that belief comes from and be honest with themselves. 

When I fist started borrowing to buy shares my peers thought I was insane.  They knew what borrowing was for – it was for buying cars and going on holidays.  Even whitegoods etc.  But not to blow on a share that might go down in value.   What if I lost money they asked?

I must admit that when I first read your comment that I fail to help people I thought it lacked a bit of recognition to the effort I put into this forum and I felt bad.  I reckon I give advice within my area of expertise and qualifications quite a bit.  Possibly more so by email.  Helps a disabled fellow like myself to feel useful and passes the time  

But I reckon you weren't referring to that stuff I do – rather that I can be relied upon to comment whenever anyone trots out the old chestnut that shares are risky.   I get your point that I don't offer any examples so here is one.

In 1994 I bought my first shares in the Woolworths float.  I bought $2000 worth which was a lot of money to me then and I don't mind admitting it caused some marital friction.  Now a decent house could have been had in Melbourne (where I lived at the time) for $100K.  Had I the guts to buy $100K worth of Woolworths now where would I be?

Would now be worth $1.1M.  it would be paying me a annual dividend worth $27K pa.  This dividend would be fully franked as the company has paid 30% tax on it already.  So I get that tax credit.  Compared to my initial price I am earning 27% on my outlay with tax credits and that grows every year!

If I had elected to join a Dividend Reinvestment Program (DRP) where I can take additional shares instead of cash then it would be worth quite a multiple of that.  I don't know how to calculate it.  I am guessing as least three times as much?  Quite likely more.

What has it cost me?  well an interest bill of $8550 pa assuming I had never paid any principal.

Not a single cent extra.  No land rates, insurances, repairs, land tax, nothing.  I can read an annual report if I choose but that is the full extent of it.

Now I guess you are thinking that I chose an example to prove my point.  Do the sums with any of the banks.  CBA would have been a good float to get in on…  CSL – wow that was something special.  Doesn't even need to be a float.  I bought NAB for $10K and sold a few days later for $14K.  A 40% profit and I thought myself pretty clever but do you think I wish I had kept them today?  Not just the price but the growing dividend yield!  In fact I suggest that a growing dividend is of as much importanceto the buy and hold investor as capital growth.

I am sorry I cannot make a suggestion as to a share that has the potential to do that today.   This is a property forum.  We are not licensed to discuss specific shares etc.  I am not a financial advisor and am neither licensed nor insured to give such advice.  As a Moderator I would delete such a post and you would be right to suspect the motives of anyone who does ramp up a specific share publicly.

But if you wish to discuss generalised investment strategies I am happy to do so.  Perhaps a better place to do so is another forum?  Here is a thread where I contributed as a fellow investor and I would welcome your input there on any of the threads.  Some of you might even find it as useful a site as this one and I hope I am not breaking any unwritten rules by suggesting another website .

I hope you understand my position.

Do I think shares are better than property? 

Nope.  They complement each other well and with the different boom cycles it allows you considerably more rising market opportunities.

Good luck to you all.

You know that depends on your longer term plans.  Many investors and brokers reckon xcoll is a terrible thing to be avoided at all costs.  I think it depends on your plans.  If you wish to extend yourself as far as possible then it may become an issue later on but it is nothing that can't be sorted.

If you just wish to hold 2-3 properties and can easily service the debt then don't sweat it.

You can borrow within a Pro Package and not xcoll the loans – having all loans fee free is handy.

So my answer in a nutshell – it depends. 

…. and here I am naively making hundreds of thousands of dollars on the stockmarket over the years, blissfully unaware that I am only one day away from disaster.  You reckon I should stop it?  Seriously?

What about Gates and Buffett, they have so much to lose.  I better email them this thread so they can sell up and save themselves!  Maybe get a few regional pos cashflow properties instead.

Come on guys … just because you ar ignorant of something is no reason to write it off.  Why not cede controle to an expert?  I reckon the CEO of Woolworths and ANZ knows more about making money in business than you and I do about property put together!

Either learn about the sharemarket then make a decision or stick to what you know – and admit it.  Taking a middle ground and publicly arguing it just makes you look a fool

Quoting Enron, HIH etc is just picking out solitary examples to prove a sweeping generalisation.  I might argue that going to the beach is courting death because I read about the guy in South Australia who was taken by a shark!  Doesn't prove a rule my friends.

For those that want to learn – go to http://www.asx.com.au and find some wonderful education resources.  Buying shares is not a whole lot different to property.  Do your due diligence, make an offer, settle the deal, hold them until your goal is achieved and sell for a profit or sit back and enjoy a strongly growing rental income.  You don't have to make it harder than that. 

By the way a lot of value can be added to shares without ever picking up a paintbrush, ripping up a carpet or picking up a shovel.  Can double your money without even getting off your bum!

You already know a lot about some shares.  Woolworths, Telstra, ANZ, NAB, Coles, etc etc  You know what strengths and weaknesses these companies have.  It doesn't have to be much harder than that!

All the best to those of you who have open minds,

What are your medium term goals for your investing?

I use http://www.depreciator.com.au

Time will help a lot especially as they see that the world didn't end and in fact you are financially better off with the capital growth.  Just don't overwhelm the partner by doing too much too soon.  They have as much right to their feelings as you do to yours.  Remember that if you want a situation to change then you must change.  Cannot change another person. 

I remember buying $2000 worth of Woolworths shares when first married.  My wife felt I had just blown my savings down the race track.  Now I can buy $50K of something and she doesn't even listen to me and steers the conversation back to her day at work.

I managed to squeeze five rooms into my place and that extra $120 a week makes it worth it for me.  I wouldn't think it was worth the effort for just 4 people.

Cheers