At times it surprises me how emotionally attached people get to a bit of dirt & the shack on top. Particularly during times like now when there are much better investment alternatives out there.
I challenge people to think about whether they are PROPERTY investors or property INVESTORS.
Personally I’m an INVESTOR first. Property is one of the vehicles I use – and right now it keeps coming up as a poor cousin to the other investments I can make.
When people now ask me if they should invest in property I say es you should – but look around, there may be better places for you to park your funds.
What do other people think? Property always, or the assets with the best return?
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
To me Acey, I look at history.
The stockmarket crash in the 80’s left so many with nothing. Various property slumps over the last 20 years have done the same.
I see the property market having many parallels with the technology boom of the late 90’s. There were people falling over themselves to buy shares of XYZ company, bit like +ve CF and other property at the moment.
Millions of $’s were wiped off these companies overnight. One in particular I know was at around $6.00 a share and 2 months later was around $0.14.
I guess what I am trying to say is that diversification is the safest way to invest. If you are after overnight success, then you could take your chances in one particular market. If you are after a long term strategy that will more than likely cover you in the event of a downturn in one area of the market then diversify.
There are so many different areas to invest in.
Yields will differ and usually be inversely proportionate to risk but as long as you spread your investments between low risk and high risk schemes, you should make out OK.
Personally I have been investing in the stockmarket since I was 18 and some of the windfalls helped with the deposit on our house.
“Life is not a journey to the grave with the intention of arriving safely in a handsome and well preserved body, but better to skid in sideways, thoroughly used, totally worn out and loudly proclaiming . …… Hell, what a trip !!”
Hi Ace,
As I have mentioned to you in our chats, I am a “bricks and mortar” girl, brought up to think of nothing else for as long as I can remember. Heck, I guess I’m living proof that maybe there is some truth in the saying “you can’t teach an old dog new tricks”!!!
However, I am not fool enough to think that property is the ONLY way to make money (just my way). I have the greatest admiration and respect for people such as yourself who are far more adventerous than I could ever dream of being!!! Although I have dabbled in shares, unfortunately it is not for me, as I think the daily up/down yo-yo roller coaster ride makes me dizzy to say the least!!! And between you and me, I like to be able to touch (my property) gate post!!!
Seriously, property has and will always be a “passion” for me and as such it is not just about making money (although that is a major mega bonus); it is about (financial) freedom, and as I have already achieved this level of comfort why be greedy and possibly risk it all??? Honestly, I just don’t see the need.
It may sound like the voice of ignorance to some investors who believe in diversification, and that’s fine, but for me the “if it ain’t broke, don’t fix it” philosophy works well.
Thanks for asking; makes for a very thought-provoking thread; trust you Ace !!!
Cheers,
Jo
…..it is not for me, as I think the daily up/down yo-yo roller coaster ride makes me dizzy to say the least!!!That’s where you have made you mistake. If you are a share investor who daily checks the asx.com.au site to see how many $’s they have made/lost each day you would go mad.
Like a buy and hold property, the lower risk (blue chip) shares move in very small increments. I have neither the time or the inclination to ‘watch paint dry’.
High risk shares (speccies) are a different story though but would probably still send me troppo!
“Life is not a journey to the grave with the intention of arriving safely in a handsome and well preserved body, but better to skid in sideways, thoroughly used, totally worn out and loudly proclaiming . …… Hell, what a trip !!”
Tell me about it !!!!!
Seriously, I know what you mean Rugbyfan, and you’re absolutely right. I was a nervous wreck [wacko]watching the changes from day to day, [rolleyes4][rolleyes5] and I remember thinking, this cannot be good for my health!!! So I did what any smart investor of shares would NEVER dream of doing, I panicked and cashed in (at a loss). [glum2]
Friends once asked hubby and I what the most heart-stopping adrenlin pumping spontaneous thing we’ve ever done. My “toy boy” gives that sweet cheshire cat smile of his and announces “bungee jumping” and when they all turn and look at me, I don’t hesitate for a second “I bought shares”!!![lmao]
Jo
Originally posted by Monopoly:
[My “toy boy” gives that sweet cheshire cat smile of his and announces “bungee jumping” and when they all turn and look at me, I don’t hesitate for a second “I bought shares”!!![lmao]Jo
I’ve done a Sydney/Hobart yacht race, bungee jumping and heli skiing. You know what was more scary – my wife and I buying our first IP!
“Life is not a journey to the grave with the intention of arriving safely in a handsome and well preserved body, but better to skid in sideways, thoroughly used, totally worn out and loudly proclaiming . …… Hell, what a trip !!”
Yep Rugbyfan, can’t argue with that!!!
But hey, it’s just that FIRST hurdle; it gets easier after that!!! [medieval]
I can’t say that any form of investing has ever left me amazingly scared.
I reckon that NOT investing is much scarier, I just don’t know how people can feel comfortable with that big a risk!
(my first time jumping out of a plane was pretty scary though)
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
Hi guys
acey i’m sure you are right. But on the other hand some people will make a packet from property inthe next 2 years and others will lose it.
I can’t get all excited about the stockmarket either but the right stocks will do very well for the informed investor.
Personally i like to see myself as an investor first, while i can make money from it property will always be a significant part of my investments, as i feel i can make money in up times, down times and flat markets.
If it turned out you could make good money from breeding Rabbits (as someone here said) then who knows i’d look into it.
regards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
I’d consider property part of my future but not my whole future. It wasn’t the first thing I invested in, and I have many other areas that interest me.
I have several business ideas kicking around in my head waiting for the full picture to become clear. Creating, building up and either leasing or selling is a keen interest of mine and my investing partner.
Westan,
On the basis of your post it sounds like you’re a PROPERTY investor under my definition.
An informed investor in any area should do well. It’s simply about where you choose to be informed.
If you focus on property (or indeed on any other investment class) & don’t inform yourself about te other investment options how do you know if you’re choosing the best vehicle for your investment goals?
Choosing to be blind to different investments doesn’t make you a more successful investor – it makes you less successful.
If you look at the most successful investors, very few are property specialists. They virtually all focus on being investment specialists – knowing how to use a dollar to make two, regardless of the asset.
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
Hi Acey,
IMHO, i very much agree with you, that there are better other investment/assets than property right now, as soon as the media hype about property bubbles bursting and property crashes occuring all that baloonie talk…
a few of us guys on the forum who network, began to start locking in profits and began to start channelling small amounts of money consistently into the stock market, and over the last few months… been having the best of both words…
… we didnt do anything, spectuclar or special, we could see where the property market was headed and were pro-active about it… the one thing that many of us who are happy about moving and channeling money in to the stock market is, were now in a prime set up position (or cashed up position) ready and waiting (but consistenly and compounding returns in the stock market) to jump back in the property market were prices, become an investors bargain…
… though i do quite agree about, there are better investments than property at the moment, if you take a long around, property prices have been going backwards in some areas consistently for the last few months…. (now thats not an investment…)
What do other people think? Property always, or the assets with the best returns? – for me, the velocity of money, where money can be made and the compound effect and continue on, in some form of profit or capital/growth appreciation.
Cheers,
sisWhy its property and only property for me –
1. Look at the friends of your parents. All the ones who drive nice cars and live in beautiful houses have invested in property.
2. Property generates a higher value return. With my initial investment of $10,000 I can generate a greater return on property than shares.
Here is an example. You buy a $100,000 property with a $10,000 Deposit. Its worth $105,000 at the end of the first year. This is a modest return of 5%. This means your $10,000 has generated $5,000 in the twelve months.
Lets compare this to shares. You invested your $10,000 into blue chip shares and managed funds. You made a 20% return. Any fund manager who makes that would be very happy. So your investment is now worth $12,000. That means your $10,000 investment has generated $2,000 in twelve months. Your property investment has generated $5,000 – which is better than $2,000.
3. Time Value of Money
When I buy a property today that is the price I pay for it. In 5 years time you will think how cheap that price seems today. You will say I should have bought more of those properties. It looks so low today compared to what a similar property costs now. Do you remember as a kid how many mixed lollies you got for 50 cents. You can also compare the cost of that property to what your income is 5 years later. You will be able to service that debt easier as your income would also have gone up in 5 years
And I have another 15 reasons why – maybe its time I write a Book.
Originally posted by yack:
Here is an example. You buy a $100,000 property with a $10,000 Deposit. Its worth $105,000 at the end of the first year. This is a modest return of 5%. This means your $10,000 has generated $5,000 in the twelve months.Lets compare this to shares. You invested your $10,000 into blue chip shares and managed funds. You made a 20% return. Any fund manager who makes that would be very happy. So your investment is now worth $12,000. That means your $10,000 investment has generated $2,000 in twelve months. Your property investment has generated $5,000 – which is better than $2,000.
C’mon Yack that’s pretty silly.
If I thought I could get 20% p.a. on a Blue Chip share (highly unlikely), I would be negatively gearing it. It is exactly the same as your property example. I would borrow $100,000 and put it in the stock you mention.
You cannot compare a $100,000 investment to a $10,000 investment. What about the interest on your $100,000, that is about $7,000. So really you have gone backwards to the tune of $2,000 (plus the other holding costs like council rates BC fees etc)
I don’t know about you but I see a 20% ROI better than a 5% ROI.
P.S. I know I have not included rent in these rudimentary figures, but I have not included dividends either.
“Life is not a journey to the grave with the intention of arriving safely in a handsome and well preserved body, but better to skid in sideways, thoroughly used, totally worn out and loudly proclaiming . …… Hell, what a trip !!”
Yes its a simplistic example.
Let me make the following points. This is what I was trying to get accross.
1. You can leverage more in property hence $100k in the example.
2. Commentators always say shares and managed funds make a greater return than property – hence 5% v 20%
3. My simplistic example does not allow for costs etc – but over the long term – 5 to 10 yrs – you are heaps better off with property.Yack your soundin’ too much like Dolf De Roos, or was that Rolf De Doos ?
Anyway , Investing is a journey, I reckon everyoune HAS to do it, just like everyone should brush their teeth and maintain their car, It’s a part of life that is neglected by so many because of fear. FEAR OF FAILURE/LOSS/YOU LOOKING LIKE AN IDIOT COZ YOU ENTERED A TRADE AND IT WENT AGAINST YOU…
Know a couple in their 60’s with only their house as an asset (of course they have to live in it and try and live on the pension) when we tell them we are investing, their heads spin and the Crash of the 80’s the recession of the 90’s Paul Hogan dumping Nolene is all brought up and thrown at our face!
After reading ‘Rich Dad Poor Dad’ my response is remember the Alimo !!
JUST DO SOMETHING! (oh and educate thy self)Originally posted by yack:Yes its a simplistic example.
Let me make the following points. This is what I was trying to get accross.
1. You can leverage more in property hence $100k in the example.
Why is that? We have some shares negatively geared that are no deposit 100% borrowed funds. That’s pretty highly leveraged I think!
2. Commentators always say shares and managed funds make a greater return than property – hence 5% v 20%
3. My simplistic example does not allow for costs etc – but over the long term – 5 to 10 yrs – you are heaps better off with property.Possibly, but as long as you track trends in the market, you can do just as well if not better.
“Life is not a journey to the grave with the intention of arriving safely in a handsome and well preserved body, but better to skid in sideways, thoroughly used, totally worn out and loudly proclaiming . …… Hell, what a trip !!”
Well I can only go on my experience.
Back in 1997 my wife and I only had $10k. Now we have equity worth over $500k. And over $100k in redraw facilities – access by netbank.
I find it hard to believe anyone could have started in 1997 with $10k and have over $500k in shares now.
Not hard to believe at all Yack. Leverage works in all markets, and using margin loans, dividend reinvestment plans and reinvesting other dividends back into shares can quite easily make very good returns.
I congratulate you on your equity position (please note I am not attacking you here) but you didn’t have to be a rocket scientist to make money in property over the last few years. There are many people who purchased property that I wouldn’t call investors
Hi everyone,
Could someone please clarify the following definitions for me:
Property INVESTOR
PROPERTY investorThanx in advance
Pepper
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