Hi All,
Believing it’s good to share information here’s two interesting site’s from one of Australia’s best financial advisers, Noel Whittaker.And two relevant articles to go with it.. “enjoy”
http://www.whittakermacnaught.com.au
http://www.noelwhittaker.com.au
Still Investing in Property
Property prices have been going up and young people wonder if it is better to buy than to rent. If this is your question, do your sums in this manner using your own figures. Assume your dream house costs $150 000, rent is $170 a week and the cost of finance is $9750 (6.5% per annum on $150 000). Add $2 000 at least for rates and maintenance, and the total cost of ownership comes to $11 750 a year.
Deduct the annual rent of $8840 (52 x $170), you save by buying, and the difference is $2910. If the house does not increase by at least $2910 a year, you are better off to rent, and bank the money that would have been spent on loan repayments, rates and maintenance.
It’s different if you can pay cash. Buyers who can pay $150 000 cash for the house must consider the effect tax will have on the $150 000 if it is invested at 4% per annum. Tax may take 30% of the $6000 interest leaving them with a net $4200. If they buy the house for cash they save $8840 in rent, but lose interest (after tax) of $4200, and have to expend $2 000 on rates, insurance etc. For them the difference between owning and renting is marginal and is almost certainly outweighed by the security of owning their own home.
This is why my preferred strategy is to buy your own home, pay it off quickly and then invest the money previously going on loan repayments into share trusts. However, unless there is a boom under-way there is often much to be gained by waiting till you have a substantial deposit.
GUARANTEED SECRET OF WEALTH
In late 1992, I stumbled across a concept I now call the ‘Guaranteed Secret of Wealth.’ This concept came to me when I was reflecting on investments that had worked for me – and a few that had failed. It suddenly became obvious to me that money is like time: you can either use it wisely or let it fritter away.
Most of us go through the same process:
We get paid.
We pay our bills.
We spend what’s left over.This leads me to the concept of the ‘Guaranteed Secret of Wealth’.
To become wealthy you must religiously set aside a percentage of every dollar you earn – and then invest your savings in secure appreciating assets.
What is the best way to invest this money?
If you are paying off a home loan now, and contributing to superannuation, you are already on the right track. However, to speed your wealth-creation process you could pretend the interest rates have risen, and raise your loan repayments accordingly. (Try increasing your repayments by 10%-20%.) As well as giving you a safety buffer in the event that rates do rise, this will save you many thousands of dollars in interest.
If you have paid off your home, you should commit the money you were making in repayments to an investment program. Time and time again I ask my seminar audiences to raise their hands if they’ve paid off their homes. Usually, plenty of hands are raised. I then ask the clincher, “Leave them up if you are now investing the money you were previously contributing to your mortgage payments”.
The arms drop and there are sheepish grins everywhere. Yes, they intended to invest the money but somehow they never got around to it. Now, three or four years have passed, and the $600 a month has seemingly vanished! Potentially, $20,000 to $30,000 have slipped through their fingers
REDWING
MERRY CHRISTMAS“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Well, how wonderful to see a wonderful person mentioned on this forum instead of the usual gang of get-rich shysters. Noel’s books are some of the best in the world. Anyone who has not read them is being deprived of some vital investing information.
The best thing about Noel Whittaker is his honesty. The worst thing is that he’s modest. Why is it always the way that the duds, such as those goons at Richmastery, make all the noise and the gems like Noel are so quiet?
Perhaps that’s how we can recognise the best advisors – they are modest.
Cheers
Bec
GUARANTEED SECRET OF WEALTH
Sounds like the richest man in babylon.[
]>>Assume your dream house costs $150 000, rent is $170 a week<<
Where is this house???? I want to buy it!!!!!!
The last dream house I looked at was worth about $500k[
] and I can rent it for about $300 per week![][][]Ahhh Noel baby!
The first financial book I ever read while working in PNG was Money Made Simple. I immediately demonstrated my new found financial acumen by losing $50000 in Estate Mortgage.
Not Noel’s fault of course, he would have said “If it looks too good to be true it probably is”…………and it was![]
I have a lot of respect for his books and advice. If I have one niggle it is his (and most financial planners) bias for managed funds. But that’s just me, I have always felt that I can lose my money as well as anyone, so why pay someone else to do it?Clive
“SMTM”
I read Noels books “Making Money Made Simple” and “More Money” many many years back when i was working on the boats up North (WA) helped me get into an investors frame of mind, over time i bought updated versions and even gave his “Retirement” book to my Father and Father in law when they notified me of thier intentions to retire.
Found Noels books ‘easy to read’ and very commonsense, his approach to managed funds and dollar cost averaging probally works well in the long run, but i’m still upset about my “super” ( funny name for something thats not) fund losing money, i too prefer to loose it myself then there’s only me to blame..
As someone in this forum pointed out Noel was well before R.Kiyosaki and even helped instigate the Fortnightly/weekly repayements with banks, from the Bad old days of monthly payments ( you get 4 more payments in for a weekly cycle )
Three cheers for Noel[^]MERRY X-MAS
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
many many years[/i] back when i was working on the boats up North (WA)Redwing
Boats up North? Are you referring to offshore supply boats, stateships or the grey funnel line?
I also remember now how Noel was very enthusiastic about a new product from Citibank called Mortgagepower (I think?) which was a line of credit.
Clive
Noel came up with the idea of paying a loan fortnightly instead of monthly which gave huge savings – premise was 26 fortnights = an extra months payment unnoticed. This was a big step in the 80’s.
His Making Money Made Simple book was my first investing book in 1987 and I went out and bought my first IP immediately after it did.
I will be always thankful to him for this. There are better books out there now but his was the first Australian one that I saw.
Met him a few times and he is a great bloke.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Showmethemoney
“pearling boats”.. worked as a pearl diver, from Broome and the 80 mile beach up through to Darwin and out..
Re-fits on the boat in Fremantle (WA), so whilst steaming around the place, had time to read, “Noels” books being my introduction to investing, compound interest, and in his “To Read list” that gem “The Richest Man in Babylon”
My father worked as an Engineer on the Pearling boats up to Papua New Guinea in the old days and his Father as a “mechanic” on the old luggers.
Now in Perth, working above the water ( much drier)
REDWING
Hi redwing, i too work on the boats but not pearling , i work in the offshore oil and gas indust on a dive support vessle ,basically work with deep sea divers puting in pipelines etc. Thats how i came upon the investing books as well heh ,nothing much else to do when i knock off so thought i might as well learn something else [
]Turned into a real information junkie on realestate investing and havent looked back:PNoel Whittaker also has a monthly newsletter which you can sign up to via his web site. It is pretty basic, but sometimes has some good info, and always some corney jokes.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Noel lives next door to my aunite & uncle in Brisbane. I/ve meet him a few times and he is a real down to earth bloke, I suppose that’s why his books are such a good read and make common sense.
Any one starting out investing (yes I to think he is a little bias towards managed funds, but then again he has a vested interest in them) his books are a really good read.[
]Ahh shucks, this Mr Whittaker sounds sooooo nice, I guess we should all marry him.
But wait, could there be any underlying currents. A fundamental shift of thought due to the dollar signs. Some, dare I say it, alterior motive.
Of course there is.
But lets quote from god, oops, Noel himself
Making money made simple, 1988. Chapter 24 “investment real estate” ninety percent of all millionaires became so through owning real estate (Andrew Carnegie).
Quote “My experience has been that WELL LOCATED, ACTIVELY MANAGED real estate will, IN THE LONG TERM, out perform every other investment. (the words previously capitalised were in italics in the book). He then goes on to further describe its points- scarcity value “they aint making any more land”, income producing, can be borrowed against, guaranteed inflation hedge, stability, etc.
Wait a minute, this guy is sounding more like steve Mcknight, Henry Kaye, and rick otton rolled together with Neil Jenman and all estate “its never been a better time to buy than now” agents.
Fast forward a couple of decades, and read his newspaper articles. Almost every single one had one of three pieces of advice. Buy managed funds, buy managed funds, or (the usual reply), gear into managed funds.
Now why would one want to do this. Well, three percent entry fee, rebated to the advisor (who would be, ummmm, ummmmmmm, ummmmmmm, noel), a trailing commisison of 1% a year (again to noel), and if you talk the client to gear into the fund, you get double the commission, while they take all of the financial risk!. Sounds like a great deal for the advisor, while the investor takes all the risk.
Asked my boss about this (had a financial ‘plan’ done by an FPA member- same thing, gear up, borrow, and invest in shares, but not directly- must go through their managed funds). His response was quite sobering. Said that if you get into bed with someone they are probably going to try to screw you, and especially with managed funds and two tiered property scams, there are so many people lining their pockets by dipping their hands into yours.
Obviously noel could not keep saying to buy residential property if there were no fees in it, now could he.
Incidentally, he shows how the average house price in sydney was predicted to be $290k by the year 2000! (wouldn’ mind picking up a dozen or so tommorow!)Imagine, thinking real estate was the best way to make money, putting it in a book, and making a prediction on house prices in 1988, and being only half the actual price. Makes his real estate advice (prior to him selling managed funds) look even more spectacular, and his sharemarket even poorer.
Even at the height of the tech boom, same response to readers, gear up, buy, buy , buy shares. Its ‘time in the market, not timing the market’ that counts. Certainly is, for the advisor, ten years of your money at 1% will nett them 10% of your net worth, won’t it?
And as for becs reply, “Well, how wonderful to see a wonderful person mentioned on this forum instead of the usual gang of get-rich shysters. Noel’s books are some of the best in the world. Anyone who has not read them is being deprived of some vital investing information.
The best thing about Noel Whittaker is his honesty. The worst thing is that he’s modest. Why is it always the way that the duds, such as those goons at Richmastery, make all the noise and the gems like Noel are so quiet?
Perhaps that’s how we can recognise the best advisors – they are modest.”
Come on bec, there are no virgins in the brothels and the biggest media whores (in any field) are usually the worst offenders.
Ouch wrapack !!..not a happy camper ?
“Come on bec, there are no virgins in the brothels and the biggest media whores (in any field) are usually the worst offenders.”
okayyyyy !!
There’s good and bad in everyone and the best you can do wrappack is to try and educate yourself, by reading what the media whores and others put out, hang on, are they all media whores or just the high profile ones ? do your research ( Due diligence ) and make the choices that suit you, those your comfortable with.. after all, it’s your money
I heard that a fool and his money are soon parted, the question is, how did a fool and his money get together in the first place..
Noel seems OK to me my friend : )
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Noel is the same as any other person with theories on investing – you take everything they say, churn it all together with a big pinch of salt, and come up with what suits you and works for you.
Keep smiling
Felicity
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] and I can rent it for about $300 per week
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