Ideas for establishing a capital base to begin investing - getting past first base

[pepperoni]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

"There are those who work for money and those who have money work for them"
Great how do I get enough money so it works for me in a meaningful way!

Work for it.

Ignoring inheritance (you either have it or you dont) 99% of people get rich from personal income. There many people making 200k plus, or contracting for 1k 2k a day, or running a successful low risk business. With that, and some discipined saving, its easy to save 120k a year every year. Every 5 years is another 600k.

A couple of those and then you have the type of money that will work for you ... but working for it will still yield more than it working for you until you are a multimillionaire. But continuing to work when you dont need to is when you really start to get somewhere.

Conclusion ... work hard or smart but work as much as you can stomach. There are no short cuts or easy ways out barring extreme lotto like luck.

 

[julius]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

You are deluded mr. pepperoni.

99% of people got 'rich' from personal income? Meaning salaries? BS in my opinion...

How many positions do you think there are paying $200k ? After how many years experience ? (1K/2K per day )

Saving 120k with a gross income of 200k p.a? er ?

 

[niknah]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Here're my ideas to get more capital...

Compound interest is really magical, save up lots "now". Not tomorrow, later, etc.

If you're in one of the higher tax brackets, take advantage of tax reductions, investment loans, health insurance, etc.

In the capital cities accommodation is probably a large cost, go for some shared accommodation or rent out a spare room to someone.

Don't buy the stuff yuppies buy, fancy cars, ipods, cafes, etc. it's a never ending chase for nothing. Cakes in cafes are a health hazard, they just sit there at near room temperature for days/weeks.


I've done alot of stupid things with my money, but I've gotten a good capital base mainly from not spending much, here's the list...
* Leaving my money in the bank for years earning plain old bank interest.
* Invested for 8yrs with a financial planner who invested in a master fund who invested into other funds. All three of them took a % commission!
* Not paying interest in advance when I received large lump sums/capital gains in a year.
* Recently moved moneys into the US to put into their stock market and the USD has since gone down even more & the US stock market has also gone down. On top of that I saw the US interest rate going down and I took out a margin loan to invest and lose even more!

 

[snabbu]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Time is everything.
look at your cash flow from your salaried job at an early age and prepare a budget. Reverse engineer the budget if necessary to make sure you have $100 per week spare, sustainable. If that means you have to live with your folks for a couple of years and cut back on booze so be it.

Because you are going to use this $100 for investment purposes there will be tax deductions probably in the 30 cents in the dollar bracket. So after you have set up your investment vehicle apply to the Tax department for a reduction in your weekly rate rather than wait till the end of the year.

We now have $130 per week to invest. This will service a 72,000 interest only loan at 9.25%. Historically if you invest this in blue chip growth stock over a diverse portfolio your return will be 7.8% per annum plus inflation. so that's going to be around and average of 10 to 11 percent.

Calculate the projected dividends for the stocks you have picked for the year, after taking into account franking credits you will have a number that you will have to pay tax on. Because the aim is to build a capital base use this dividend amount to fund margin lending to increase your stock holdings.

The object of the exercise is to break even on the share portfolio as far as income is concerned by converting it to greater capital growth.
You will probably find a gearing ratio of 60% achieves this.

You should now have around a $180,000 portfolio which is dividend neutral and after varying your tax down you have an ex wages commitment of $100 per week. In this calculation I have used stocks paying 6 percent divs and returning 5 % growth. If the growth is higher the gearing should be lower EG a stock paying 4 % divs and 7 percent growth would gear at 40 Percent.

Each year on the 180 K port folio I have used expect to average 5% growth
compounding. In five years this gives an excess over borrowings of $61,000
to which you have contributed $26,000 ( 100 per week for 5 years). If you continued for another two years you would add another 24K to your capital at a cost to you of $10.4 and so on each year the pace quickens.

I haven't spread sheeted the numbers to check them absolutely but they are there and there abouts.

Cheers

Gary

 

[cuttlefish]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Wayne,Numbers and Cuttlefish.

Why dont you give the thread a chance.There are young people who are out there on this board who are asking this question all the time perhaps even some not so young.

Of course money isnt the be all and end all.

But we live in Australia not Bangladesh we live in a capitalist society,we are encouraged to put as much as we can into Superannuation so WE can look after ourselves.Day in day out you see stories of pensioners who cannot buy food nor can they afford appropriate health care.I look at the MAJORITY of these people and I see people sitting waiting for death.Bloody morbid.If they had more financial freedom they would have most of those things you and I take for granted,better health,could afford to socialise,eat well,and have some comforts that they deserve at that age.Starting at 20 will give more opportunity to your retirement years than at 40---or NEVER

Give the thread a chance.

Its a genuine topic.

Surely you guys have some positive input particularly you Wayne,your self made arent you---whats the Wayne story,how would you do it all again?

Tech - I'm overseas at the moment and really should stop posting after a couple of bottles of wine like I did the other night - some of my comments probably don't make a lot of sense!

I'm about to hop on a plane so I'll post with some history and clarifying comments when I've got more time.

The simple summary and it is commonly acknowledged statistical fact is that THE MAJORITY of people in Australia do not like their job and if given a choice of going to work or not, would elect not to.

That is a very sad situation, and it is largely driven by the misconception that 'success' is the size of your bank balance and the type of car you drive and house you live in. The reality is that success is not that. I'm not advocating laziness, or short cuts, or easy paths - I don't believe that there are any. But I am advocating that people invest as much time in understanding what they enjoy, what gives them satisfaction, and pursuing a 'career'/life path that brings them closer to that.

If you enjoy playing or being associated with sports - then don't get a job sitting behind a desk. If you enjoy manual labour and working by yourself then go for that. If you love reading and analysing and spending time indoors then do that. When given the tools - and this thread is about helping people obtain them - achieving financial success is actually not that difficult - but achieving true success - contentment, spending every day in a way that is satisfying, being around people that are important to you and having constructive, positive relationships - is a far more complex thing to achieve and far more important.

 

[tech/a]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

The simple summary and it is commonly acknowledged statistical fact is that THE MAJORITY of people in Australia do not like their job and if given a choice of going to work or not, would elect not to.

That is a very sad situation, and it is largely driven by the misconception that 'success' is the size of your bank balance and the type of car you drive and house you live in. The reality is that success is not that. I'm not advocating laziness, or short cuts, or easy paths - I don't believe that there are any. But I am advocating that people invest as much time in understanding what they enjoy, what gives them satisfaction, and pursuing a 'career'/life path that brings them closer to that.

If you enjoy playing or being associated with sports - then don't get a job sitting behind a desk. If you enjoy manual labour and working by yourself then go for that. If you love reading and analysing and spending time indoors then do that. When given the tools - and this thread is about helping people obtain them - achieving financial success is actually not that difficult - but achieving true success - contentment, spending every day in a way that is satisfying, being around people that are important to you and having constructive, positive relationships - is a far more complex thing to achieve and far more important.

Job satisfaction is extremely important not only for the employee but for the employer.
Your right---when you genuinely enjoy what you do and take pride in your work and results--the money does come.---infact as you say the money doesnt become the primary reason.

Back to George
Did anyone take anything from my story on George?

 

[theasxgorilla]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Back to George
Did anyone take anything from my story on George?

Yes...selling HOPE to enough people brings synergistic returns.

Sorry to be so curt. Ponder the thought.

We all know that lotto is so pathetically unfavourable in it's odds yet stacks of people still enter it on HOPE alone. It's not worth their investment, but they do it. I don't see anything fundamentally different between this story and lotto. So George sold tickets instead of buying tickets. Is that your moral? I can't really see another to be frank.

ASX.G

 

[nomore4s]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Yes...selling HOPE to enough people brings synergistic returns.

Sorry to be so curt. Ponder the thought.

We all know that lotto is so pathetically unfavourable in it's odds yet stacks of people still enter it on HOPE alone. It's not worth their investment, but they do it. I don't see anything fundamentally different between this story and lotto. So George sold tickets instead of buying tickets. Is that your moral? I can't really see another to be frank.

ASX.G

Was his name George Tattersall?:

 

[BBand]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

George - he would make a good trader

1 He had the courage to accept risk - trying something new with no track record - BUT he understood the psychology of the crowd, so it was a risk worth taking

2 He had a system that worked - and kept using it

3 His system had a high probability of success with relatively low risk( if he for some abscure reason had a losing transaction - he would have (should have) the financial backing to cover his loss.

4 His risk /loss ratio was pretty good

5 His venture had a positive expectancy

6 etc etc etc

Much the same as trading really

Peter

 

[nizar]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Back to George
Did anyone take anything from my story on George?

YES. I did.

Dont be the punter -- Be the casino.

SHIFT the odds in your favour.
George was carrying no risk, and he made 3x his salary every year for several years.

As for the others -- well, they were the punters.

 

[nizar]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

I don't see anything fundamentally different between this story and lotto. So George sold tickets instead of buying tickets.

BIG difference actually.

The punter has to be lucky to win. And very lucky, just look at the odds.
George almost always wins. Look at his odds.
Much more favourable wouldn't you say.

 

[Wysiwyg]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

My second job was in a machine shop working the 6-10pm shift.Knocked of my main job at 5 then straight to the 2nd.
On my first day a Wednesday---my supervisor asked do you have a dollar.
He had a plastic bag filling with dollars.
"What for?"
"There is a tradition here which has been going on for 10 yrs.Pay day is Friday and each Friday GEORGES wages are raffled off,his pay is $120/week (At the time my total earnings----all jobs---- were $45)."

"Who gets the $s I asked"
"GEORGE---its OK even management get involved--and yes they did!"

Some quick calcs had me realising that George pocketed around $350-400 each pay day and had been getting 3x his wage for 10 yrs.

I`m surprised that others contributed to his higher income unless it was for sentimental reasons (war, car accident victim, abused etc.) or the obligation factor where everyone including management are involved.You would be surprised what you will do, because everyone is doing it.

 

[BBand]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Hi Nizar,
Your comment "Don't be the punter be the casino"

I think George had better odds than that of a casino - but I understand what you mean

Also George was carrying risk - he could lose his wage for that week - but he understood the risk and was willing to accept it.

What I do not understand is why he had a monopoly - where was his competition (everybody usually wants to jump on board "a good thing").
I think he must have carried some "heavies" as insurance (an additional cost of doing business)

In trading language - a stop loss

 

[mort52]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

To numbercruncher.

You hit the nail right on the head!!! Reduce your expenses, that is the one thing we all have control over. It doesn't mean going without fun or even entertainment, but perhaps --take lunch to work instead of buying it!!!
Not buying new clothes evry second week!! It does add up.

 

[tech/a]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Was his name George Tattersall?

No Dresmanis.

BBand
As this thread goes on I'm sure you'll be able to relate pretty well most aspects of business with Trading.But at the time I knew nothing about trading.

Nizar Yes true

ASX Yes true also but---Is that your moral? I can't really see another to be frank.--- no no morals here just observations.

Whether he identified these things or not doesnt matter

(1) The power of win win. He obviously won,Every punter won by having a small risk investment for a high win return no matter how slim the odds were---they saw VALUE.
Winners won they went home with twice their pay.

(2) He made 3 times his wage from being entrepreneurial.
He made this infinantly quicker than he did working for his base wage.

(3) He was the first and only one to do it---infact it was presented to newbies like us as a tradition! So he dominated his market.

(4) He captured near enough to 100% participation with low entry cost and a "percieved" high gain.

(5) He had a devoted network---everyone including management found Georges raffle as clever as many of you did here--no body copied--his originality protected his market share.

Which leads me to the continuation of my story.
By 20 I realised that my earning capacity was limited by time and that which my boss thought I was worth.
Working for myself was the best option-- in my mind.
Due to low capital and with a little help from family my choice of business was a Lawn Round.

Low entry,busy people,good demand,good earnings placed me at around $200/week clear when all my mates were on $80-125/week.

I found simple letter box drops along a street I was already cutting in gave me new clients often next door to old existing clients so time---my enemy--wasnt as much of an issue I could condense my round down often cutting a 3rd more than competition because I wasnt travelling as far.I could also then be more competative.

Business grew and grew and grew often working weekends if rain stuffed up a cut day.

Pretty soon I reached saturation.

Then a BLINDING light of the entrepreneurial kind.
Getting clients wasnt a problem servicing them was.The OBVIOUS was to employ more people.Which at times I did---hardly a blinding light moment!

But this was

Clients paid $5-$15 a cut.If I sold these clients on the open market they were valued at $15 in the Dollar 15 cuts worth nearly a years return.
So rather than employ someone to cut lawns I employed someone to go and sign up clients. Every cent I could muster went into letter box drops.

As a Lawnie I met others doing the same thing (Cutting lawns) I selected 2 who were switched on told them I had a guy signing up and delivering box drops and suggested that between us we could make up half a round each sell all our old equipment and sell a round every quarter.They paid 1/3rd wages and pretty soon we had 3 guys.
Soon I had 2 rounds going selling a 1/2 every quarter with each.
My own round was becoming so condensed I was doing 50% more turnover than the average---keeping those that were best payers and closest together. The others were doing the same.

One Zeek was more into the idea than the other and we pooled funds ($5000 each from each sale) and bought our first Industrial property.
The next stage of win win began here.

3 yrs in total.

Now after we had been doing this for 5 yrs Bill Viss who owned V.I.P car sales got onto the idea and V.I.P Lawn mowing was born.Bill was way ahead of us in marketing skill and at one time held the biggest franchise in Australia.His success was/is far beyond our wildest dreams but gee we had some fun and gave us the capital for stage 2
Jims Mowing and everything else that goes with it is an amazing success.

I still employ some of these ideas learnt then today in my own Construction Business---more later.
Just let me know when you get bored. I get passionate about this stuff (The way of thinking).
I'm hopeful that there maybe some taking things they recognise as worth while to employ in their lives.

Its simple and ANYONE can do it! Just ask Bill or Jim!

 

[robots]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

hello,

thanks tech.

keep it going

thankyou

robots

 

[julius]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

A+ tech/a, can't wait for more.

here's one I like;

The Million Dollar Homepage is a website conceived by Alex Tew, a then 21-year-old student from Cricklade, Wiltshire, England to help raise money for his university education.

The index page of the site consists of a 1000×1000 pixel grid (one million pixels), on which image-based links were sold for US $1 per pixel, in minimum ten by ten blocks. The purchasers of these pixel blocks provided tiny images to be displayed on them, a URL to which they were linked, and a slogan displayed when hovering the cursor over the link. The aim of the site was to sell all of the pixels in the image, thus generating one million dollars of income for the creator.

On January 1, 2006, the final 1,000 pixels left were put up for auction on eBay.[2] The auction closed on January 11 with a winning bid of $38,100.00, bringing the final tally to $1,037,100 USD in gross income.

http://www.milliondollarhomepage.com/

 

[BBand]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Hi Tech,

Good post.

"But at the time I knew nothing about trading"

So? I thought we were talking about George

I think I have misinterpreted the object of the thread - Sorry

I'll just wander back and pull more weeds from the front lawn

Another losing trade!!

Keep smiling
Peter

 

[chops_a_must]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Job satisfaction is extremely important not only for the employee but for the employer.
Your right---when you genuinely enjoy what you do and take pride in your work and results--the money does come.---infact as you say the money doesnt become the primary reason.

"Just as the horizon remains when things that surface within it and fall back into it again are constantly changing, so it is with this manifestedness of the world in its entirety..."

But this is perhaps the best thing I've read in a long time, from Cuttlefish:

But I am advocating that people invest as much time in understanding what they enjoy, what gives them satisfaction, and pursuing a 'career'/life path that brings them closer to that.

I always wonder why people want an early retirement, and work towards that. I couldn't dream of doing nothing. And I always ask people who want to retire early, "why the hell are you doing what you are doing now then?"

I have a similar story to tech, in that I no longer wanted to be a ****kicker. So a number of years ago, I decided to start TAFE training to be able to work for myself, while still at uni. The goal being to pay my way through uni, so I can spend as long as I want there. I wouldn't have been able to do this extra training however, without centrelink.

I now work weird hours and go without appropriate sleep perhaps. But, the point being I love what I do, so I don't really think about the drawbacks. And I'll work more if I can. If you enjoy what you do, you'll work harder and longer without noticing, and the money will come as a side affect of that.

There are a couple of other things I am involved in now. One I wont mention for bragging, but the other is a poster printing operation to service said business. I scalp concert tickets occassionally now as well.

I'm luckier than most, in that I enjoy a lot of simple things, and don't need luxuries. As long as I have a book I am happy. I listen to a hell of a lot of music, but I don't even have an ipod. I can't even remember the last luxury I bought.

Find something you love, and the rest will be easy.

My POV is that if you are working towards something completely different to what you are doing now, there is something wrong.

I only have a few goals in life. Namely, to leave enough money for a yearly scholarship at a University. Would be great if I could get to that well before I die. Make sure the brother is well off if I become well off. To have my then thousands of books donated to a library on my death. And to own and fly a P-51. That wont cut me up if I don't get there... but it'd be sweet.

But how many people have thought through these things? How many are just going through the motions because it's what they think they should be doing? We aren't robots, we are humans. People should live like it.

Cheers.

 

[tech/a]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Hi Tech,



"But at the time I knew nothing about trading"

So? I thought we were talking about George



Keep smiling
Peter

Meaning what I learnt from George's Wage raffle I couldnt relate to trading.
I wasnt really talking about George more about the way his brilliance worked and how simple things like this can be implimented by us all.Even on a small scale can have a huge result.

Just se Julius's post above.
Something out of fresh air!

This guy
http://www.graffitiremovers.biz/
John Rose owns an apartment next to mine in Moana Beach here.
What an amazing story his is.Talk about power of the internet.
In 2000 he developed a single formula for removing graffiti---he used to have a van and remove it (Graffiti) in Adelade.Typical small business.

He now sells underlicience his remover to most of the world.His typical day is opening his order book in the morning to see what was sold in the US and UK and ending his day doing the same in Aust and NZ.He makes around $5/litre sold anywhere in the world.Needless to say his company is a multi million enterprise run basically from a computer. A more down to earth guy you wont meet.

Chops
Man retirement scares the hell out of me.
I'm certain life is prolonged if your actively involved in what you love---for some that may well be retirement!

To me though if I can do what I want when I want with who ever I choose and if thats working at whatever I'm interested in then----I'm actively and perminently retired from the "Rat Race".