I just popped in to have a peep, to see if anyone was still here posting.
I see this forum is still alive, but only just.
I note the bears are still posting, nothing has changed.
Property has performed exceptionally well, interest rates at their lowest ever, and it is all roses and lolly pops.
Unfortunately the stockmarket has deteriorated, and taken a load of players, and gamblers with it.
I have discovered a novel way to beat the low deposit rates, using an offset account against a couple of the mortgages. You effectively earn 6% on your deposit, or the same rates as the mortgage. So by cutting the interest bill on the mortgage in half, it is easier to pay down the capital off the mortgage so much faster. It produces an almost magical result.
The offset accounts have become more popular, so that most banks offer them today. Of course it works both ways whether rates are high or low. But the ability to reduce the capital off the loan is magnified when the rates are low.
Super has also taken a huge hit, due to most funds being invested in the gambling den, or cash only. Unbelievable bad management by fund managers, without exposure to the property market.
Wonder how many people are still pouring their money into super, and salary sacrificing under these adverse conditions. I am also surprised so many people still think only of the lower tax rates, as their reason for putting more of their hard earned into super.
They have not kept up to date with the lower income tax rates. I think the average tax rate for income around $35,000 is now just under 10%, and around 20% for $50,000. Yet they will pay up for a contribution, paying 15% tax up front before the contribution earns any income, and they are stuck in the super funds until retirement age.
The same people, who have a choice, would be better off to not contribute to super, but save and invest it outside of super. A difference of 5% tax, and the ability to do whatever they choose, is in my view a far better option. But then again, there are many people who really cannot save, invest or manage their money very wisely at all.
That is one of the secrets that many first home buyers learn, if they follow their parents advice to buy their home rather than renting. This method provides a forced saving plan, with life benefits.
That path is not for everyone.
I came across just 2 clients in all my years as a tax accountant, who were not mentally fit for the exercise.
Both had become drawn into the buying property, but only because they felt everyone was doing it. Both were middle aged and were rent for lifers. Interesting that both had parents who were also renters for life.
One woman had bought a great little property, it was renting with a great return, never vacant, but she could not handle the stress,of what if something went wrong in the future. Luckily for her the market was still going strong, so when she sold the excess or profits covered her stamp duty and capital costs of purchase and sale.
The other client had a spouse on a very high income, and it was her choice to put her funds into property. It was a majestic property in one of the best locations. But she let her husband manage it, to give him something to do.
He was so out of his depth, and was stuffing it up big time. And boy, as a former life renter he was stressed.
He wanted to sell up and cash out the $50,000 profit. Luckily I advised the wife, to hang onto it, and employ professionals to manage the property. She was a financial professional, actually a guru, and the spouse was not, he was in IT. Last time I spoke to her, the property had exceeded one million in value over the purchase price, plus returning an enormous rental income.
ps
A friend just sold a house last month, it sold the first day on the market, at the asking price. Kidding there is not pent up demand out there. There is a load of money going into property, at the lower and middle end of the market. It has been taken out of the stocks, and cash is woeful.
Have a merry xmas, and a prosperous new year.
cheers