Thinking of risk, it can be greatly reduced by experience and knowledge.
So, with enough experience and knowledge, you will have your low risk environment for high yielding proposition.
This can be one of the variations of the answer to your question. Enjoy the journey!simple wrote:One can consider it as your personal INFLATION ADJUSTED savings account outside banking system.This is my experience, other people would have different view. Probably depends on how you do it and what is the aim of the game.
This to me is the reason why investing in property is a good long term proposition. We live in an economy where the policy targets a minimum inflation level and this is why leverage into appreciating assets has to make sense. Ever since the 90’s the RBA has made targeted inflation a policy and this has resulted in much smaller inflation in comparison to pre-management times. Maybe in this managed inflation ere we might also see smaller growth in asset prices.5% appreciation in a 2% inflation range still gets you ahead in time.
Switching between assets types is not for me, I think I am a never sell type.
Nooob wrote:/>All I'm asking is; with the same amount of risk can we do better?I don't have an answer yet
Some would argue that investing in leveraged property in itself is wealth generating. Some investors have set themselves up that they have investments in shares, business and property and don’t actually work in the traditional sense and hats off to them as they would be in the minority.
Personally speaking I earn a wage in the traditional sense which supports my property portfolio. My super is in shares and not doing that well and I am considering a different approach in that regard. I have some equity in the company that I am with which could prove to be a decent wedge if things go to plan over the next three years.
Better investors than me could best explain the pros and cons of the various wealth building methods but I think the key is to save some seed capital and get started, set long term goals, don’t get distracted by the daily noise and doomsayers, have a cash buffer and keep learning and reading like you are now doing.
Thanks Bardon
if you had the chance please read this book.
It is by Peter thorn hill and it is extremely powerfulbardon wrote:This to me is the reason why investing in property is a good long term proposition. .A few graphs to ponder. The idea works well in theory but not necesarily in practice. If you happen to live during a growth cycle you’ll do well. If you live in a deleveraging cycle you’ll loose your shirt. 1890 – 1950 was a particularly bad time to be invested in property. We may well be entering another of these long deleveraging cycles. If that is the case then last graph suggests an over valued market. If we do go into a deleveraging cycle it could be substantial in correction and long in duration.
I imagine many are hoping that this is not the case, however, global fundamentals don’t promote any confidence in that position. Time will tell I suppose.
An interesting article on the subject of inflation, growth and property.
http://www.moneymanagement.com.au/analysis/investment-management/2012/is-there-a-property-bubble-in-australia
Freckle,
The article you linked to is a very good read !
Time will tell.
Freckle
I was wondering what are you investing in during these uncertain times.
(I'm quit lost as I can see the bubble in the charts but I don't see any sign of deflation)
Some more good numbers out recently on the housing market, affordability, GDP, interest rates, population and rents. The long term residential property investment fundamentals that were always there are hopefully a bit clearer to all now.
I suppose so if you choose to follow a govt spruiker who only tells you part of the story and quotes figures out of context or worse simply parrots massaged govt figures.
Sorry Bardon but I don't rate anything Koukoulas says as serious economic comment. It's in his interests to sell the establishment. After all it's where he earns his crust.
Freckle wrote:Sorry Bardon but I don't rate anything Koukoulas says as serious economic comment. It's in his interests to sell the establishment. After all it's where he earns his crust.
I don't know why you mention Koukoulas in reference to me.
bardon wrote:I don't know why you mention Koukoulas in reference to me.
You're saying your post is not substantially a point for point summary of one of the Kouks blogs.
http://www.marketeconomics.com.au/2164-australias-best-economic-fundamentals-since-1964
- Australia has GDP growth of 4.3%, at the same time inflation is running at 1.3%, at the same time the unemployment rate is below 5.5% (5.2% to be precise), at the same time mortgage interest rates are below 7% (6.85% for the standard variable rate).
Amazing coincidence if it's not.
I don't think there is any coincidence at all. We are simply drawing from the same economic facts, except I got a few more in than him and he was specific on his. A fact is a fact, no spin, no projections just facts that is the commonality.
bardon have a point, disregarding future projections and areas of tention that may/may not let go: Australia is in deed in the nice position at the moment as the whole country.
bardon wrote:I don't think there is any coincidence at all. We are simply drawing from the same economic facts, except I got a few more in than him and he was specific on his. A fact is a fact, no spin, no projections just facts that is the commonality.If I understand you correctly you are saying it's not a coincidence so therefore you are drawing from the Kouks blogs as part of your post. You do know why they call him The Kouk and no it's not short for his surname.
As to facts well….
I think they more accurately reflect opinion or engineered outcomes but facts is somewhat of a stretch.
Nope you don't understand me correctly. What I am saying is that we are both using similar data as I am sure many are doing and he doesn't own it, he hasn't created it and I don't follow this guy and I don't have an opinion if he is a cookie or not.
bardon wrote:Nope you don't understand me correctly. What I am saying is that we are both using similar data as I am sure many are doing and he doesn't own it, he hasn't created it and I don't follow this guy and I don't have an opinion if he is a cookie or not.Well it must be coincidence then that your parroting the same economic theme as the Kouk (and others) then. It's one of the reason I challenge your posts Bardon. They often reflect MSM or industry hype with little supporting comment of your own. You then draw conclusion from this low grade information which rarely matches real world conditions.
- Some more good numbers out recently on the housing market, affordability, GDP, interest rates, population and rents. The long term residential property investment fundamentals that were always there are hopefully a bit clearer to all now.
affordability – affordability has improved in some sectors of the market only because the market has fallen or stagnated but not all sectors by a long shot
GDP – our GDP is out of wack with our trading partners and most of the western economies. That should ring alarm bells as to its makeup and accuracy.
-
Treasury admits GDP used inappropriately
Shraysi Tandon September 17, 2010
A senior Treasury official has admitted that his department has been guilty of overusing gross domestic product (GDP), after recognising that it is a flawed measure of economic wellbeing and social progress. - another aspect of an out of wack GDP is the huge capital investment program in place within the resource sector. This currently contributes around 25% to GDP. Current GDP figures aren't likely to hold up given the likely down turn in resource expansion project
interest rates – interest rates are dropping because the economy is struggling. So why does an economy with a supposedly healthy GDP growth rate of 4.3% need to stimulate spending by dropping rates? Another warning bell.
population – I'm not 100% sure what your aiming at here but I'm guessing you're suggesting pop growth has a beneficial impact in RE price growth. I would consider that part of the picture if supply was an issue but its not so again I'm not sure where your going with this.
rents – rents (excluding Perth and Darwin) haven't risen however rental yields have. When yields rise that usually means asset values are dropping.
So my contention is the numbers aren't good once you lift the bonnet and dig a little deeper. You'll have to elaborate on the second part of your statement about fundamentals and it's all clearer now. Your statement was too vague to make anything clear that I can get my head around anyway.
Freckle, I dot really care that much about what you think of my posts and I am very sorry for you if your expectation of my posts is some sort of yooni thesis quoting references or a submission to the college debating society. Internet posts are worth as much as you paid for them. As far as MSM comment goes I would have thought that that was more similar to your doom peddling style.
Long term fundamentals are:
The wealth of Australian will grow following a lull, once gain.
Residential property will continue to be a store of this wealth.
Residential property will appreciate at a higher rate than inflation and those balls deep in leveraged investment in this asset class will make a motza due to their compounding growth in equity.
As for your points above:
GDP is a blunt instruments but nevertheless on a like for like basis it is the strongest in developed countries,
Once the current spate of mineral and hydrocarbon projects is complete and there are some more about to go FID, guess what, they start selling the product, it is not the end, ever since I have been in Oz, we have been bringing on new developments, those that think a drop off in new projects is an end are misguided.
Interest Rates, the RBA has a buffer and may have to drop, not to stimulate but to reduce the gap between the North Atlantic and hence the Aussie, my property cash flow and income for that matter has improved significantly, I am sure the rest are the same. The good bit is that they do have a mandate to stimulate as well if needed, so the inflation based economy is locked in.
Affordability means, more takers, less defaulters and it is back at 03 levels, ready for the next leg up, just remember it is only the minority that bought recently the majority have shit loads of equity at current values.
We have a very healthy population growth which is set to continue, its not a case of big or small Australia its a case of big or huge Australia, these new people prefer cities where there is less to no new land available
The numbers are bloody brilliant and my net worth is looking better by the day and that is all that matters to me.
Freckle VS bardon
Guys for outside observer, I think you are talking apples to oranges
Freckle is focused on short term probability while bardon on mid to long term.
I actually agree with both
While we may have fallout/recession/depression/what have you induced by primary or secondary factors, mid/long term Australia is still going to be digging out and selling for a long time. We not much different to Saudi Arabia in that respect. They did go thru few 'dips' but recovered nicely every single time regardless prices on OIL fluctuating a great deal.
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