Are you a nurse Christobell ? [angel]
As for this post..ResiWealth any thoughts on Reverse Mortgages advertised for the elderly.
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorThe Credit funded dream lifestyle is alive and kicking.
The availability of credit and poor financial education is to blame.
Life skills should be taught in all schools especially how to save, budgeting, investing and how finance and credit works and what happens if can’t pay you debts and how it can effect your whole future. There is many 19 year olds around with collection companies chasing them for large mobile phone bills and unpaid credit cards.
The worst case I’ve ever seen with credit cards is a guy who had 15 of them and they were all at or above there limits.
I started a Finance Help Line (free community service) about 12 months ago and the amount of bad cases I’ve seen due to too much credit being available and poor financial management are mind blowing. All I do is give people their options and point them in the right direction.
I had someone ask me about 106% loans and I told him to put his head down and start saving. I am totally against loans for the purchase price and costs as it puts people on the back foot to start with.
State Manager
0425 358 293Wholesale Mortgage Lender that deals only with brokers.
20 years in Finance Industry
Bofclark,
Interesting story about the nurse but I would see saving up money for each house to be a rather old-fashioned way of doing things (although I admire her discipline for doing that back in 1989). However, if that lady- of the same means- attempted to start off as a nurse and save wages to buy a house in 2005 in sydney for cash- say 500k… umm- I doubt that’s possible. What does a nurse earn? About 70K? 20k tax? She would have to live with her parents (not desirable to most of us), and nick the hospital food so she could save every cent to buy the house in cash.
Many people get cash via inheritance, a divorce settlement, or some such thing. Starting with NOTHING and saving that initial money for a deposit- with no backup, and noone to bail you out if things go wrong (like parents) is a whole different ball game.
Equity is OUR money- there is nothing wrong with using it. I achieved equity during the RE boom, from a poroperty I bought in a flat market. Had I sold it 4 years earlier, I would have lost money on it, the market was so flat. Then the RE boom came and I made some money- what else would I do with it but invest it?
How mny houses can people buy on a nurse’s wage and paying cash all their lives? As I said, good on her for doing that, but first home buyer DINKs are struggling now- not merely because they spend money on trinkets and toys via credit cards… but because houses are so expensive.
Let’s be real- equity builds wealth if one purchases well.
kay henry
There is absolutely nothing wrong with gearing if it is done well. Regarding the nurse example, I am wondering where she lived while saving and where did you live?
Some people forego saving to live in their dream home or at least something that is their own. There is more to life than the amount of cash being held or profit made.
The way some people talk about the importance of saving, no-one would ever go on a holiday because it is ‘wasted’ money. What is the point of saving when you don’t own anything and don’t have any fun?
Robert Bou-Hamdan
Mortgage Adviserout of interest, what is your definition of a productive enterprise?A business that produces a tradeable good or service. We can’t sell our overpriced houses to the rest of the world.
they typically outsource manufacturing offshoreSure, but the design, development and profit stays in the company’s country of origin.
Who compiled it?The Reserve Bank of Australa.
You can make your own chart by downloading a spreadsheet from here:
http://www.rba.gov.au/statistics/what currency is it denominated in?Australian dollars, it says so on the charts.
would be what is the definition of savings in the first diagram?Ask the RBA.
Has it been adjusted?Its in nominal dollars. If you want to adjust for CPI download the raw data from the RBA and do it yourself … but as you know inflation has been very low for the past 10 years so its not going to make much difference.
Makers of items like dishwashers must be loving itActually I believe Fisher & Paykel (yes Kiwi I know, but similar situation) are in serious trouble because the high Kiwi dollar means they can’t compete anymore, both in their export markets and locally (against imports that have become much cheaper)
Originally posted by dmichie:We can’t sell our overpriced houses to the rest of the world.
Actually, a huge number of new properties and specialised properties (the most expensive ones) are sold each year to overseas investors.
Established homes are not sold to overseas investors NOT due to a lack of demand but due to a Government department known as the Foreign Investment Review Board. They do not allow established homes be sold to overseas investors.
Robert Bou-Hamdan
Mortgage AdviserActually, a huge number of new properties and specialised properties (the most expensive ones) are sold each year to overseas investors.True I will concede this point (as I did previously) but I defy you to name a successful economy that built its wealth on selling off its real estate to other countries.
My point was that the FIRB exists to prevent the sale of all our real estate to other countries.
Your definition of a productive enterprise is also flawed. There are many productive enterprises who are not-for-profit providing a ‘non-tradable’ good or service.
Robert Bou-Hamdan
Mortgage AdviserMy point was that the FIRB exists to prevent the sale of all our real estate to other countries.So we’ve got nothing to sell to the rest of the world then (apart from commodities we dig up out of the ground)
You obviously consider your own product as ‘nothing’. How about the services provided? Aussies working overseas are also considered exports. There are also farmers products, aquaculture, processing of commodities, finished building materials, etc… None of these are commodities.
Open your other eye!
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by redwing:Are you a nurse Christobell ? [angel]
As for this post..ResiWealth any thoughts on Reverse Mortgages advertised for the elderly.
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorYes and I know quite a few registered nurses with healthy portfolios…they have up to 3 jobs to do so. We might be angels but we are smart angels.
You obviously consider your own product as ‘nothing’. How about the services provided? Aussies working overseas are also considered exports. There are also farmers products, aquaculture, processing of commodities, finished building materials, etc… None of these are commodities.Agricultural products are commodities also, but not in demand like coal, gas and minerals. The poor bloody farmers have to endure an 80c dollar and a drought while they watch their city cousins splurge on imported plasma TVs with “equity mate” loans.
Obviously I am aware that there are companies in Australia that export non-commodity goods and services (I am aware of my own existence I would hope). The point is, these companies represent a tiny (and diminishing) fraction of Australia’s overall export income. Many of these businesses (especially the farmers) will go bust soon if the AUD remains in the 80c range.
If you think that’s all fine and dandy then great. I don’t.
Maybe I should have quoted… I meant they were not commodities “dug out of the ground” as you seem to focus on. Australia exports a lot more than you seem to know about.
Robert Bou-Hamdan
Mortgage AdviserI’m back, Redwing “reverse mortgages for the elderly” and my views.
I am doing research at present on +55 developments which are now “senior living policy” estates , with Gaydens Lawyers. It is interesting to note that 77% of Australian retirees still live in their principle place of residence with poor savings and no investment properties.
These people r considered asset rich and cash poor, so i guess that reverse mortgages have a place in society and in this situation r a good thing. However if these people were better educated to investing in their 30’s or 40’s they would not need them
I agree with Robert that good debt with sensible purchasing is a good thing also but, what percentage of the population really applies sensible v’s emotional purchases.
If the average Australian can amass 1.2 million in assets not including the value of their home they will live a degnified retirement and be in the top 5% of held wealth.
Quite simply, if a person/couple buys 2 properties at $250k each when they are 40 or so then one would assume that at age 60/65 they would own over 2mill of investment properties, in a perfect world.
resiwealth
…just a quick reply to notabrokeranymore ..
you are against the 106% loan being given out and that is understandable in the current property investing climate . But I’m glad I was able to get one of those back in 97 on fairly low equity. I recently sold that property for more than double its purchase price . Those loans were a handy tool in boom times but now ….do people still offer them? and why would you ?
Cheers,
MichaelMLV
Originally posted by St Johns Ambience:…the 106% loan… I’m glad I was able to get one of those back in 97 on fairly low equity.
This makes no sense. The idea behind a 106% loan is that you don’t need any equity.
I do not support these products nor do I put them down. They have their place.
106% is ideally for the high cash flow individual who has never saved and wakes up one day thinking they better stop partying and buy a house or two.
They are considered relatively short term finance to allow someone the opportunity to enter a market without needing to find deposit money or fees. It is good to know these are out there.
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by resiwealth:
I want 2 go on record as saying that IMHO this is leading Australians of the future into financial turmoil.We r not teaching financial fundermentals of how 2 save and start small to build wealth, we r teaching laziness.
I agree. IMHO this is reflected in an article in May API, which features a portfolio that got me interested, especially the way they calculate “profit” on sale of properties.
I say, “profit” because the article does not list costs for interest on loans, rates, maintenance costs, CGT, etc.
I can see how equity lending for people who don’t understand how to accurately calculate the real return on an investment, could lead them into financial turmoil. As can a lack of understanding of CGT (see the “Budget: Impact on Capital Gains Tax” thread under General Property forum).
Cheers,
Jason.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
