How to not be average Joe?

[prawn_86]

I have had very similar thoughts TD. Paying interest does seem like a huge portion of a loan and possibly a potential waste in a market that is very flat. I think what you also have to do is focus on what you currently have intead of always wanting more.

Compared to a lot of my colleagues i have WAY more money (circa 50k and should be >6 figures in 2 more years)) saved than 95% of them and am disciplined with this saving meaning that it can only be used to buy assets (house, land, shares business etc) and for us now it is just a matter of continually adding to that and then waiting for the right opportunity.

Personally i am fairly resigned to the fact that a house will take a long time to pay off if bought in Australia, but if the right opportunity came along (positive geared rental property) then i would think long and hard about buying it.

At the moment though i think as long as you have a dedicated savings plan in place you will be OK. Or as MB says, if you aren't dedicated enough, a house can be a good forced savings plan

 

[MrBurns]

And ........when it's all said and done I think of what a wise man once told me...


"If you're happy with what you've got you're a wealthy man"

 

[Pager]

But I am thinking...if I do manage to accumulate a sufficient deposit, I'd be effectively selling my income-generating assets to buy an asset that doesn't generate my income, and then I'd have to spend the next 30 years paying it off.

I’m assuming if you don’t own your home you are renting at present ?, surely you need to add that into the equation ?, yes you will have sold your income producing assets but if you are going to live in the property you are not paying rent.......

That essentially dead money we pay when renting becomes for most of us the bulk of the interest we pay when we buy, still dead money in some ways, hopefully though the value of the property will increase, so far history suggests it will but nothing comes with a cast iron guarantee, only death and taxes have such.........

 

[tinhat]

I haven't read all the posts in this thread. I've dipped in a couple of times. If your aim is to have a deposit for a house in a two to three year time frame then I'd be looking to keep most of your savings in pursuit of that objective in cash (say a uBank account) and take a chance at risking only a small portion on the stock market. If you are an active trader already and your market time frame is a matter of hours or days or a few weeks well you might want to deploy more of your savings into trading. If you are not a trader then two to three years is a short time frame on the market. You run the risk of seeing your capital fall in value over that period and you have to decide is it worth the risk of losing say 20% of your capital over that period and what would that do to the aim of saving for a house deposit.

 

[Glen48]

IF you don't want to be an average Joe keep right out of the RE market for years.

 

[Starcraftmazter]

Not without the security of tenure they have in Europe you don't.

By the way, it's a bit of a stretch to categorize property as a depreciating asset. In fact only the improvements depreciate, the land itself is a potentially appreciating asset.

You don't need any security of tenure; it's just irrelevant. Worst comes to worst, they can't kick you out by law if you have nowhere else to go anyway.

As for depreciating assets, historically that is the case. It obviously is not the case in a big bubble boom - but we are past that, and such it is not worth talking about appreciating land prices anymore.

A mate of mine has been buying property since the 70's

If the only argument people can make about property is what happened many many decades ago, then it is quite obvious there's nothing going for property in the future.

 

[wayneL]

You don't need any security of tenure; it's just irrelevant. Worst comes to worst, they can't kick you out by law if you have nowhere else to go anyway.

That is just plain incorrect. Sorry, you have no idea what you're talking about.

As for depreciating assets, historically that is the case. It obviously is not the case in a big bubble boom - but we are past that, and such it is not worth talking about appreciating land prices anymore.

I have some sympathy with that point of view, but there is just as much probability that currencies will continue to be undermined, resulting in higher inflation. You don't need a 'boom' for property values to appreciate.

 

[Starcraftmazter]

That is just plain incorrect. Sorry, you have no idea what you're talking about.

Actually it is plain correct. Buy a unit in a bogan suburb, rent it out to a bogan family, and try and ask them to leave - see what happens.

I don't know whether you imagine the police will break in, arrest them and throw their crap out - but the reality will not match.

Although this is NSW I am talking about here, I am unsure if other states will be the same.

I have some sympathy with that point of view, but there is just as much probability that currencies will continue to be undermined, resulting in higher inflation. You don't need a 'boom' for property values to appreciate.

You do in real terms.

 

[wayneL]

Actually it is plain correct. Buy a unit in a bogan suburb, rent it out to a bogan family, and try and ask them to leave - see what happens.

I don't know whether you imagine the police will break in, arrest them and throw their crap out - but the reality will not match.

Although this is NSW I am talking about here, I am unsure if other states will be the same.

Eventually, though they won't be arrested, that is exactly what happens.

 

[IFocus]

I have some sympathy with that point of view, but there is just as much probability that currencies will continue to be undermined, resulting in higher inflation.

I wonder where the tipping point is as the central banks over reach?

 

[Tyler Durden]

I’m assuming if you don’t own your home you are renting at present ?, surely you need to add that into the equation ?, yes you will have sold your income producing assets but if you are going to live in the property you are not paying rent.......

I am living with my folks. I pay board and am currently helping them pay off their mortgage.

I haven't read all the posts in this thread. I've dipped in a couple of times. If your aim is to have a deposit for a house in a two to three year time frame then I'd be looking to keep most of your savings in pursuit of that objective in cash (say a uBank account) and take a chance at risking only a small portion on the stock market. If you are an active trader already and your market time frame is a matter of hours or days or a few weeks well you might want to deploy more of your savings into trading. If you are not a trader then two to three years is a short time frame on the market. You run the risk of seeing your capital fall in value over that period and you have to decide is it worth the risk of losing say 20% of your capital over that period and what would that do to the aim of saving for a house deposit.

I know it's risky, but I am willing to take that risk. I'm not saying I'm just going to blindly buy whatever shares at whatever price - but if the market tanks (in hindsight, should've bought in when the whole Greece thing first came to light) or some particular stock presents an opportunity (see Cochlear) then I will go in.

 

[Calliope]

Be an Average Joe and buy Telstra shares and you will be sitting pretty.

 

[tinhat]

Be an Average Joe and buy Telstra shares and you will be sitting pretty.

Actually, I agree with you there. Better be quick though. My average buy price is 3.20 (between Oct-Dec 2011). Should have bought more last week. Will happily buy more if the price pulls back below 3.40

Dividend of 28c good until 2014 then will rise as franking credits are available to pay out excess capital from NBN income stream.

 

[tigerboi]

already picked out a 5 acreage 3 bed home for $692,000...

had my operation on the 31st of march & seen my neurosurgeon today & i will only ever be able to do part time light duties.which means i cant work.

start physio next week & am expecting workers compo by october/december.

i like this property as its away from everyone but still only 1 hour ish from sydney.tigerboi

however if i get enough ive always wanted to buy a house in MY street...

 

[overit]

Get a fly in/ fly out job. Food and accom paid for. No rent if your crashing at your oldies place when your on RNR. Here on Barrow Island housekeepers are on about $108k + extras. Trade Assistants and peggy's (both glorified **** kickers) getting about $180k with all the bits and pieces (not including super.) 26days on/ 9days off. 10hr days.

Everyone tries to get onto operating mines driving trucks and stuff. But as you see some very good money in the construction side of things. I dont like my job but you can stash some cash very quickly.

 

[CanOz]

Tyler, why don't you learn to code. If you can learn Easy Language, or C#, you could make a few bucks coding up trading systems.

I haven't got the 'right' brain for it, but yo might.

CanOz

 

[Eager]

Everyone tries to get onto operating mines driving trucks and stuff. But as you see some very good money in the construction side of things.

More people have made more money servicing the mining industry than the miners themselves - FOREVER! It goes back to the gold rush days, and continues today.

 

[Julia]

With apologies for diverting the thread: Overit's photos are far from those of the Average Joe.

Any more to show us in the appropriate thread, Overit?

 

[Smurf1976]

Agree Julia.

Great posts here

I really dont understand the concept of people that rent, at least paying a mortgage there is an end.

I have had this conversation with a few people through the years, and it just baffles me, so I say, each to their own.

Rent will increase gradually with inflation and this process is endless.

Mortgage repayments are constant apart from changes in interest rates and are finite by their very nature.

Even ignoring the underlying economics, from a pure risk management perspective I'd rather have my housing paid for now than to be making an assumption that I can still afford the rent when I'm 70.

And there's the other huge downside of renting. You live on the landlord's terms, something I quite often hear mentioned in various contexts by friends who rent.

Thankfully I'm my own landlord - if I want a dog in the house then I'll have a dog in the house. If I want to paint the walls then I'll paint the walls. If I want to do this, that or something else then I'll damn well do it.

I don't doubt that there are more profitable investments than suburban houses. But there's a non-financial benefit to owning your own residence which, for me at least, is worth more than any profits I could have made elsewhere with the same capital.

 

[chrislp]

And there's the other huge downside of renting. You live on the landlord's terms, something I quite often hear mentioned in various contexts by friends who rent.

It's not that big of a downside IMO. So I can't paint the walls pink, big deal.

I can afford to buy a unit but I prefer the freedom of choice if I want to move & I prefer my capital to be free.

With a mortgage my capital is.... .