Securing your Financial Independance

[It's Snake Pliskin]

Snake:

Thanks for the message.

I would never argue that negative gearing is a better alternative to positive gearing but Fleeta has provided the answer to this question.

At the time I did it, I had sufficient funds for a deposit on an investment property but certainly couldn't have bought it outright, so negatively geared it which helped to offset the very high tax I was paying at the time.

The two approaches are both perfectly valid depending on all the circumstances at the time.

Are you suggesting that if you couldn't afford to positively gear an investment property you wouldn't buy it at all?

Cheers
Julia

Julia,

Yes, Fleeta's post is a good example of why people do it. As I said I know a lot of people in the same situation. It is also representative of people who buy but can't afford.

For me, I would do what the mainstream are not doing and build up my capital by compounding, trading etc. and then buy an income producing property. I have the money to buy outright, but I need that money for trading too. So at this stage I'm compounding my capital until I can buy and trade and receive passive income from my investment property.

I must note, I wouldn't buy for the appreciation alone, but would buy for the income it provides. So, timing and location are paramount; the cash flow aspect is what I like.

This generally tends to be the way of the rich - though in Australia there is a propensity to gear negatively. I don't consider myself rich, but I do see their way of thinking. Buy what and when you can afford, and enjoy the cashflow.

Please note: I do see the benefits of negative gearing as stated by you.

Cheers
Snake

 

[Julia]

Julia,

Yes, Fleeta's post is a good example of why people do it. As I said I know a lot of people in the same situation. It is also representative of people who buy but can't afford.

For me, I would do what the mainstream are not doing and build up my capital by compounding, trading etc. and then buy an income producing property. I have the money to buy outright, but I need that money for trading too. So at this stage I'm compounding my capital until I can buy and trade and receive passive income from my investment property.

I must note, I wouldn't buy for the appreciation alone, but would buy for the income it provides. So, timing and location are paramount; the cash flow aspect is what I like.

This generally tends to be the way of the rich - though in Australia there is a propensity to gear negatively. I don't consider myself rich, but I do see their way of thinking. Buy what and when you can afford, and enjoy the cashflow.

Please note: I do see the benefits of negative gearing as stated by you.

Cheers
Snake

Snake,

Your point of view is clear and obviously to be respected. I guess it's a matter of one's philosophy. My question about your idea would relate to whether your capacity to save on the basis of compounding returns can keep up with the appreciation of property.

I realise your argument would be that prices are dropping at present (no evidence of that where I live!) and if that is the case then your stance makes sense. Would you maintain the same philosophy if house prices started to show significant appreciation (which of course they will before long)?

All the best
Julia

 

[It's Snake Pliskin]

Snake,

Your point of view is clear and obviously to be respected. I guess it's a matter of one's philosophy. My question about your idea would relate to whether your capacity to save on the basis of compounding returns can keep up with the appreciation of property.

I realise your argument would be that prices are dropping at present (no evidence of that where I live!) and if that is the case then your stance makes sense. Would you maintain the same philosophy if house prices started to show significant appreciation (which of course they will before long)?

All the best
Julia

Julia,

Why did you give the thumb down? I thought you wanted good discussion / debate.

 

[happytrader]

Hi all

I just saw a preview for tonight on Channel 9's "A current affair" about a 22 year old woman making millions. Might be worth a watch.

Cheers
Happytrader

 

[Happy]

I understood it as ‘turnover’ or ‘sales’ to that value, maybe I got it wrong.

 

[Dan_]

here's where a lot of people get caught out with such ideas of being a "property millionaire". You want as much of the million (or all of it) to be in either growth or equity...anyone can become a "property millionaire" in debit, all you need is serviceability. and if u just scrape in and don't allow for such things as rate rises then..... :goodnight

I'm currently working on being as "neutrally" geared as possible. For example offsetting investment income into a -ve geared property (to make it neutral). Then as the income increases I'll use my expanding equity to maintain the neutral balance (buying more investments)

Just my (+1,-1)

 

[happytrader]

here's where a lot of people get caught out with such ideas of being a "property millionaire". You want as much of the million (or all of it) to be in either growth or equity...anyone can become a "property millionaire" in debit, all you need is serviceability. and if u just scrape in and don't allow for such things as rate rises then..... :goodnight

I'm currently working on being as "neutrally" geared as possible. For example offsetting investment income into a -ve geared property (to make it neutral). Then as the income increases I'll use my expanding equity to maintain the neutral balance (buying more investments)

Just my (+1,-1)

Yes I agree with what you are saying to a point. But the people who do get themselves in a sh*t are usually accidents waiting to happen.

1. They've never developed a saving habit, because they don't want to make cuts or work extra hours or anything else that going to help them save and get the investment off the ground.

2. Don't do their due diligence and talk to the wrong people
3. They dont really properly understand the concept or timeframe
4. They dont cover their downside
5. They dont know themselves or their risk profile
6. Theyre impatient and often pay too much
7. They reap before they sow

In effect they are not really taking responsibility for themselves. They're just fooling themselves and anyone else who believes them.

If however, the person has done everything they could have done, well, and unforeseen occurrances befall them, they should cut their losses and look for another opportunity and again do 'just so' resting assured knowing that they will eventually be successful imo.

I know stuff happens and but for the grace of God go I, but even the Bible tells us to first "count the cost"

These are merely my thoughts and are not to be take as financial advice or a recommendation.

Cheers
Happytrader

 

[It's Snake Pliskin]

Investing in yourself and your children are often overlooked when living a normal life. We work for money and fail to see the benefits of working to learn skills on the job. Short courses, seminars etc. can improve or broaden one's skill base and this can be passed on to your children and friends.

Ask yourself: "Am I working for money, or to get myself to the next stage of life"? This is for everyone to work out.

 

[Julia]

Julia,

Why did you give the thumb down? I thought you wanted good discussion / debate.

Snake:

I've just caught up with this thread again.

Why do you say I gave the thumb down?

I don't think I did at all. I simply stated my respect for your position, and asked if that position would remain the same in an appreciating housing market.

How is that giving you the thumb(s)? down?

Julia

 

[Smurf1976]

There's a thumbs down icon next to your post. I think that is what is being referred to?

 

[wayneL]

Snake:

I've just caught up with this thread again.

Why do you say I gave the thumb down?

I don't think I did at all. I simply stated my respect for your position, and asked if that position would remain the same in an appreciating housing market.

How is that giving you the thumb(s)? down?

Julia

Julia,

Somehow you are putting this thumbs down in your post (obviously inadvertently), as per screenshot below. This is what snake is refering to.

Cheers

 

[It's Snake Pliskin]

Snake:

I've just caught up with this thread again.

Why do you say I gave the thumb down?

I don't think I did at all. I simply stated my respect for your position, and asked if that position would remain the same in an appreciating housing market.

How is that giving you the thumb(s)? down?

Julia

Julia,

It wasn't anything you said, but the little red thumbs down post icon in the top left corner; the same as your electrical advice post.

Thanks Wayne for highlighting that. I didn't see it until after I posted.

 

[Julia]

Well, that will teach me to use icons without looking at them properly!

I thought it was a nice big red question mark.

Apologies, all, especially to you Snake, for causing unnecessary confusion.

Julia

 

[It's Snake Pliskin]

Well, that will teach me to use icons without looking at them properly!

I thought it was a nice big red question mark.

Apologies, all, especially to you Snake, for causing unnecessary confusion.

Julia

Julia,

Look at the left hand corner and I have given your apology the thumbs up.

Snake

 

[David123]

Hi, Just wanted to know if anyone out there personally knows someone living the the dream of financial independence? I personally dont know anyone.


cheers

 

[macca]

Hi David,

There are thousands of people in Australia living like that.

Most are self made, what's the secret?...................................................























You can only spend it once, but you can invest it over and over again

 

[Julia]

Don't think there's any "secret".
I guess with some there could be an element of luck, but for most it's a case of a lot of financial sacrifice in the early days, e.g. I decided to forgo the travel that most people regard as a necessity in favour of buying another investment property, chose to buy second hand clothes for a few years rather than designer stuff, etc. Then eventually the stage is reached where money simply makes money, i.e. the more you can invest obviously the greater the results. I've never used leverage and don't intend to.
For me this was the best way to go, but for others, they will prefer to have business class travel a couple of times a year to various parts of the world, others again will choose expensive clothes and entertainment etc.. It's simply a case of individual priorities.

The other thing I guess I would add is that finally I have understood how to learn from my mistakes rather than just beat myself up over them.

Julia

 

[NettAssets]

The other thing I guess I would add is that finally I have understood how to learn from my mistakes rather than just beat myself up over them.

Julia

Now ain't that the truth

 

[professor_frink]

Don't think there's any "secret".
I guess with some there could be an element of luck, but for most it's a case of a lot of financial sacrifice in the early days, e.g. I decided to forgo the travel that most people regard as a necessity in favour of buying another investment property, chose to buy second hand clothes for a few years rather than designer stuff, etc.
Julia

Sounds like you and I would have a bit in common julia!! The only difference for me was the money I saved from not doing these things went into the stockmarket instead of a property.
When I was 19, I was the only person in my group of friends that didn't spend all of my money on nice cars, clothes and holidays. I found out later that the majority of them thought I was a loser, because on the surface I didn't appear to be doing well- cheap car, cheap clothes, etc. most of those people aren't my friends anymore.Now at the age of 25, they are all starting to settle down and buy a house which means they are all working their butts of trying to keep their heads above water. On the other hand, I only have to work part time, and have the opportunity to do alot of the things that they did at 19 such as travelling, but I've got a capital base to come back to at the end of it. For me, not doing all those things that everyone else did at that age was the best thing I have ever done.

 

[Rafa]

you bought a house yet Prof? and have you made enough money from shares to buy one outright...

good point Julia re the learning from your mistakes...
my biggest mistake was not using stop losses... worked thru that one now..

still haven't worked out how to not get sentimentally attached to shares... currently I am in love with OXR!!!! gotta love the OX!!!