What type of trading would suit my situation?

[FxTrader]

-1:10 to the power of 50
Don't do this.

You say this without any justification whatsoever about super contribution and then you posit "Whilst I can't give advice..."

Sounds like advice to me and potentially very bad advice at that. And then you drop in more advice about negative gearing and buying into negatively geared property in a declining market to minimize tax! You should probably stick by your own declaration "Whilst I can't give advice..." since your "advice" here is so obviously biased and narrow in scope.

What Matt needs is investor education and a financial plan at this stage of his journey, not biased, blinkered advice on creating "structures" to minimize tax.

 

[Sir Osisofliver]

You say this without any justification whatsoever about super contribution and then you posit "Whilst I can't give advice..."

Sounds like advice to me and potentially very bad advice at that. And then you drop in more advice about negative gearing and buying into negatively geared property in a declining market to minimize tax! You should probably stick by your own declaration "Whilst I can't give advice..." since your "advice" here is so obviously biased and narrow in scope.

What Matt needs is investor education and a financial plan at this stage of his journey, not biased, blinkered advice on creating "structures" to minimize tax.

*Sigh*

My views on Superannuation on these boards have been stated before...a lot. Must I repeat myself....again?????? Must I justify everything again????

In anything OTHER than a SMSF, go look at the 2003 senate inquiry into super, specifically the report by PWC into superannuation that colated that the real rate of return for superanuants is less than 1% - Does this sound like a worthwhile investment vehicle to you?

In the same report an estimated 33% of contributions was taken in the form of administration fees, taxation etc etc. That would be a 33% sensitivity withdrawal...go have fun with that. Once again...is this a good investment vehicle?

In a SMSF he is dependent upon his own expertise as to his level of return. He is also limited in that his ability to use gearing to enhance his return is severely limited in a superannuation environment. If you are at all interested go compare ungeared rates of return with geared rates of return and then tell me he'd be better off. Still want to tell me it's a good investment vehicle?

Then there is the point that he's 40 so another 15+ years before he can access the money. In the 2010 Intergenerational report by 2050 there will be 2.7 people working for every 1 retired as opposed to our current situation of 5:1 Do you think that the incumbent government will allow us to continue with superannuation in it's current format or that it will be made more restrictive in the future so that we don't take all out money out, blow it and then be on the public teat? As Julia referred to there as moves to make a MANDATORY annuity part of every super fund (Self Managed or not).

Need I go on with my reasoning? I can if you would like.

And then you drop in more advice about negative gearing and buying into negatively geared property in a declining market to minimize tax!

Funnily enough I do believe I said "you may wish to look" rather than "you should go do". See one is a suggestion guiding him towards educating himself and the other is advice. Can you see the difference?

I mention property because it is a less volatile asset class than shares for the purpose of negative gearing. I find your comment that it's a declining market interesting. Is it a declining market around the whole country or just in your area? Please tell me where your property is that is declining in price over the longer term so I don't buy any there. Perhaps the entire country isn't a homogenous one and different areas behave differently depending upon factors that drive their price? Of course that might just be my view which is biased and narrow in scope as we know.


Cheers

Sir O

 

[mattryanshares]

1. Talk to a good tax accountant.
2. Have him/her explain your options: e.g. discretionary trust; tax advantages/ disadvantages of being a trader as opposed to investor; postponing CGT; ...
3. Those $9K - is that $9K/stock? or $9K spread across 7 stocks?
4. Why did you pick those 7 to buy exactly at this time?
5. Why did you choose to be so overweight in resource stocks?

9k over the 7 stocks.
Woodside because i've worked on and off for them for the last 10 years in australia and i believe there at the top of there game with safety, engineering an all that.
BHP because there a house hold name
RIO because i think china will buy there iron ore for another 20 years.
Metcash my wifes pick cause her dads FI said it was good
Woolworths as above.
Lynas because i read about them and figured it sounded promising
Iron ore holdings because i think iron ore will be in demand for a long time and worst case rio or bhp may buy there reserves.

Hello Matt and welcome. Not a bad job you have there mate, any openings? If I were you, I'd be putting the maximum contribution of 50k a year into super (self managed of course) to help lower that tax bill and in 20 years (unless the laws change) you can draw that out as tax free income.



Since you are doing well financially I suggest you attend Tate & Bedford's mentoring program. It will be one of the best investments you can make for now.

My job is a oil field saturation diver. If you can handle living in a tin can with 3 other blokes for a month do a course and see how you go. Its not for everyone hence the pay check! Course will take you 6 months cost 50k and then you'll need 4 to 10 years experience to get the good coin!!
Ill look into tates??

 

[mattryanshares]

Thanks again to everyone elses replies. But please dont argue on my behalf. Im happy to hear everyones point of view and even peoples view that differ from anothers.

This post and website is a great tool for people like myself and bluntly honest answers are what i need to hear. You wont offend me and i greatly appreciate the time it takes to post to another flash in the pan investor/ trader who knows bugger all!!!



Education is obviously the key and just being here has made me keen to do that.
Im definitely throwing darts in stock selection but that was the point. Its made me write this post, its made me look at the market and its made me get interested.

Ithink im suited to investing and ive read some of buffets book ages ago and i think i like the idea of trying to find under priced stock and buying and hanging on to.

Thanks again and please feel free to keep offering advice, good and bad because it gets us all thinking!!

 

[FxTrader]

My views on Superannuation on these boards have been stated before...a lot. Must I repeat myself....again?????? Must I justify everything again????

Honestly, I have no interest in reviewing your views on super since your bias against it is all to obvious, whatever the arguments. Advising against super contribution, as a blanket statement, is irresponsible financial advice IMO.

In anything OTHER than a SMSF, go look at the 2003 senate inquiry into super, specifically the report by PWC into superannuation that colated that the real rate of return for superanuants is less than 1% - Does this sound like a worthwhile investment vehicle to you?

I am an advocate for people getting a good financial/investor education and managing their own investments both inside super (SMSF) and outside of it. So stats on industry/retail super performance are of little interest to me other than as a curiosity.

In a SMSF he is dependent upon his own expertise as to his level of return. He is also limited in that his ability to use gearing to enhance his return is severely limited in a superannuation environment. If you are at all interested go compare ungeared rates of return with geared rates of return and then tell me he'd be better off. Still want to tell me it's a good investment vehicle?

Sorry but you're demonstrating your ignorance here with respect to the leverage options available in super that include CFDs, warrants, options, and (shock/horror) borrowing to invest in property. So you can't buy shares on margin, that hardly classifies SMSF as a "severely limited" environment. Given the general lack of sophistication of investors, limits on some kinds of borrowing make sense. Speculation is prohibited but the definition of this is vague and elastic.

SMSF imposes a type of discipline on the investor that's not rigorous enough IMO. Investment strategies should be much more robust and detailed than that required by regulation.

Your forecast the future of super regulation is pure speculation and should be regarded as such. The gov't continues to provide incentives for self funded retirement and this trend will likely continue since gov't funded pensions in the future are likely to be contstrained for reasons mentioned.

I mention property because it is a less volatile asset class than shares for the purpose of negative gearing. I find your comment that it's a declining market interesting...

Tell that to the hundreds of thousands of bankrupt American property investors pal. The cracks are already apparent in the Australian property bubble, the bursting of which will likely be ugly. Negative equity + negative gearing = bankruptcy for many. Ignore the warning signs at your financial peril.

 

[Sir Osisofliver]

Honestly, I have no interest in reviewing your views on super since your bias against it is all to obvious, whatever the arguments. Advising against super contribution, as a blanket statement, is irresponsible financial advice IMO.

Nice FX so just remind me which of us is biased and narrowminded again? I am suggesting, not advising. For the vast majority of people I suggest that adding the maximum they possibly can (which is what you suggested) to their superannuation when they are an unsophisticated investor is not beneficial to their net wealth over the longer term. Feel free to disagree here...I won't mind.

I am an advocate for people getting a good financial/investor education and managing their own investments both inside super (SMSF) and outside of it. So stats on industry/retail super performance are of little interest to me other than as a curiosity.

Cool

Sorry but you're demonstrating your ignorance here with respect to the leverage options available in super that include CFDs, warrants, options, and (shock/horror) borrowing to invest in property. So you can't buy shares on margin, that hardly classifies SMSF as a "severely limited" environment. Given the general lack of sophistication of investors, limits on some kinds of borrowing make sense. Speculation is prohibited but the definition of this is vague and elastic.

Perhaps I wasn't clear. AT THIS TIME his choices in realtion to gearing within a smsf are severely limited. Or do you suggest as a newbie with his vast levels of experience he should invest in CFD'S Warrants or Options?

In relation to purchasing property, Yes the amendments to the superannuation act state that from 7th July 2010 he can purchase real property in his super fund. 1 property...Only one property. And under some pretty tight restrictions....

So just lets think about this... If he buys a property in his super fund, and the superfund pays off say half of the property by the time he retires.... What are his options now? Can he take the property as a pension payment? - No

Can he use the unused equity in the property as security to purchase another property? No - (This one is the killer by the way - if he can't use this asset as a parent asset he is severely limited in leveraging the growth in this asset to purchase another asset - IE no ability to compound his returns).

If the property when paid off is more than 5% of the value of the fund does he breach in-house holding rules? Probably (Which means he'd be forced to sell the property at that time).


I am still considering whether to recommend to clients whether to use this or not. It may just be more trouble than it is worth.

SMSF imposes a type of discipline on the investor that's not rigorous enough IMO. Investment strategies should be much more robust and detailed than that required by regulation.

Your forecast the future of super regulation is pure speculation and should be regarded as such. The gov't continues to provide incentives for self funded retirement and this trend will likely continue since gov't funded pensions in the future are likely to be contstrained for reasons mentioned.

Yes they do. Wonder why they need to bribe you to do so? Wonder why they brought in borrowing (under limited circumstances) into superannuation? Have you actually ever compared super to other forms of investment over long term time frames. I have. It doesn't compare. As for speculation regarding the future, yes you are right I am speculating that in the future there will be changes to superannuation that I do not like. Since that has already happened I'm pretty sure it'll happen again.

Tell that to the hundreds of thousands of bankrupt American property investors pal. The cracks are already apparent in the Australian property bubble, the bursting of which will likely be ugly. Negative equity + negative gearing = bankruptcy for many. Ignore the warning signs at your financial peril.

Hey nice way to avoid my comment about a homogenous market. Of course I'd be a prick if I pointed out that "Your forecast [of] the future of property pricing is pure speculation and should be regarded as such. The population growth and density characteristics continues to provide upward price momentum for real estate investors and this trend will likely continue ...." : So I won't do that.

I will however say that property if purchased correctly is negatively geared for only a relatively short period of time. Is your impending disaster likely to happen before or after the property becomes positively geared?

Cheers

Sir O

 

[FxTrader]

For the vast majority of people I suggest that adding the maximum they possibly can (which is what you suggested) to their superannuation when they are an unsophisticated investor is not beneficial to their net wealth over the longer term.

What I suggested is what I would do with such an income. Since there are contribution limits each year and if one intends to self manage after appropriate research and education, then accumulation of a certain portion of one's income each year (depending on age) in an SMSF is a wise decision IMO. In hindsight, I wish I had contributed more to super when I was 40 than I did.

Perhaps I wasn't clear. AT THIS TIME his choices in realtion to gearing within a smsf are severely limited. Or do you suggest as a newbie with his vast levels of experience he should invest in CFD'S Warrants or Options?

No, you were not clear and I would never recommend a novice trade such instruments but thanks for the silly rhetorical question anyway.

Thanks for the recap on the pitfalls/limitations of property investment in an SMSF. Since I agree that it's probably not a wise decision for most people to do this there's no need to discuss further.

Have you actually ever compared super to other forms of investment over long term time frames. I have. It doesn't compare.

A curious question given that the few forms of investment I can't undertake in the SMSF I do outside of it. So your point is a moot one.

As for speculation regarding the future, yes you are right I am speculating that in the future there will be changes to superannuation that I do not like. Since that has already happened I'm pretty sure it'll happen again.

Well the gov't is never going to make everyone happy but the progressive changes to super legislation have been, for the most part, improvements.

Hey nice way to avoid my comment about a homogenous market. The population growth and density characteristics continues to provide upward price momentum for real estate investors and this trend will likely continue ...."

There are other threads on the forum discussing the state of the property market in Aus, best if you post your rosy forecast there.

 

[mattryanshares]

Ive got a couple of dueling pistols if you want to borrow them???

 

[Sir Osisofliver]

What I suggested is what I would do with such an income. Since there are contribution limits each year and if one intends to self manage after appropriate research and education, then accumulation of a certain portion of one's income each year (depending on age) in an SMSF is a wise decision IMO. In hindsight, I wish I had contributed more to super when I was 40 than I did.

No, you were not clear and I would never recommend a novice trade such instruments but thanks for the silly rhetorical question anyway.

Ok FX I will say that for an experienced and consistently returning short term trader the super environment in pension phase cannot be beaten by any other structure. It's great, its fabulous even.

So why don't I recommend that all my clients do it?

a) Because not everyone can become an experienced and consistently returning short-term trader.
b) Because as a general rule people become more risk averse the older they get and short-term trading is viewed as a high risk activity.
c) Because who wants to be chained to a desk for good portion of the day instead of fishing/golfing playing with the Grandkids etc activities when they are retired?

That's not an exhaustive list either but I'm sure you get the idea. Most people when they retire seem to want to just have the money sitting in a very safe investment providing them with an income sufficient for them to enjoy their retirement. The thirty + years of being unable to gear (except through highly specialised instruments requiring considerable expertise) means 30 years of potential compounding on that money that you will never get back. ERGO for the NOVICE putting maximum amounts of money into super = not something I would suggest. Generally when you tell a novice to do this...it ends up in the tender care of a "professional adviser" IE parasite. Hence my "don't do this" comment.

Thanks for the recap on the pitfalls/limitations of property investment in an SMSF. Since I agree that it's probably not a wise decision for most people to do this there's no need to discuss further.

There are other threads on the forum discussing the state of the property market in Aus, best if you post your rosy forecast there.

Sooo any comment about the important bits which you ignored?

a) future movements in price are pure speculation on your part - which is what you lambasted me for doing....

And

b) When your impending disaster will occur.

And

c) Is it a disaster of the same magnitude if the property is positively geared?

Cheers

Sir O

 

[Sir Osisofliver]

Ive got a couple of dueling pistols if you want to borrow them???

Sorry Matt it just raises my hackles when someone implies that I give bad advice.

Sorry if it's been hijacking your thread

Cheers

Sir O

 

[Julia]

Ok FX I will say that for an experienced and consistently returning short term trader the super environment in pension phase cannot be beaten by any other structure. It's great, its fabulous even.

Why the emphasis on the 'short term trader'? There's no reason a different type of strategy, even buy and hold if that's what the investor is comfortable with, isn't also 'fabulous' in pension phase.

So why don't I recommend that all my clients do it?

a) Because not everyone can become an experienced and consistently returning short-term trader.
b) Because as a general rule people become more risk averse the older they get and short-term trading is viewed as a high risk activity.
c) Because who wants to be chained to a desk for good portion of the day instead of fishing/golfing playing with the Grandkids etc activities when they are retired?

I may have missed something in the preceding posts which has declared anyone using Super has to ipso facto be a whizzbang short term trader, but I suspect the current argument is doing little to enlighten the OP.

 

[FxTrader]

Ok FX I will say that for an experienced and consistently returning short term trader the super environment in pension phase cannot be beaten by any other structure. It's great, its fabulous even.

A grudging concession on your part, but your focus on just short term trading in pension phase is misplaced. I know several investors who have accumulated significant sums in super through contribution and essentially buy and hold strategies. To prepare for pension phase you should accumulate a significant sum, quite hard to do if the only contribution is the compulsory employer levy.

I actually enjoy trading, am not "chained" to the desk all day and not interested in being put out to pasture on a golf course like a retired race horse.

My 80yr old father fits your description of retiree, every few months he hunts around in the U.S. market for his next CD purchase, gets 2% return on his money (banks must be safe after all) and can only afford to go out a couple times a month - no trips to the golf course for him. He also bought a home in the U.S. 6 years ago which is now worth $250k less than he paid for it yet he still has a $300k mortgage (real estate always goes up does it not). His net worth, thanks to real estate is 0. Share that all to common picture with your clients.

Advise your clients as you will, but gearing is a double edge sword - it magnifies gains and loses. 30 years of gearing into property has paid off in the past, the future is another story.

What you should tell your clients is, get an education in investment principles and give them a roadmap on how to proceed with this education, not just "don't do this."

a) future movements in price are pure speculation on your part - which is what you lambasted me for doing....

Hardly, since it's not my speculation but the forecast of many reputable sources. Believe what you will, but if you believe that Aus property prices are not in bubble territory then your not paying attention to trends and market cycles. Keep buying those properties though since Aus property surely can only go in one direction, up and up. LOL

 

[tech/a]

A grudging concession on your part, but your focus on just short term trading in pension phase is misplaced. I know several investors who have accumulated significant sums in super through contribution and essentially buy and hold strategies. To prepare for pension phase you should accumulate a significant sum, quite hard to do if the only contribution is the compulsory employer levy.

More importantly your "Significant sum" should supply passive income as well as a hedge against the dreaded inflation.

I actually enjoy trading, am not "chained" to the desk all day and not interested in being put out to pasture on a golf course like a retired race horse.

To me trading is as boring as watching paint dry while listening to a commentary of a chess game.Your right in that you can "these days" basically set and forget ---- even set a system fund it and forget!

My 80yr old father fits your description of retiree, every few months he hunts around in the U.S. market for his next CD purchase, gets 2% return on his money (banks must be safe after all) and can only afford to go out a couple times a month - no trips to the golf course for him. He also bought a home in the U.S. 6 years ago which is now worth $250k less than he paid for it yet he still has a $300k mortgage (real estate always goes up does it not). His net worth, thanks to real estate is 0. Share that all to common picture with your clients.

Maybe in the US.
But 6 yrs ago his AUD was worth 50c I find it very strange that someone his age would have been buying R/E in the US. Particularly that he has been double hit---hes way worse off that you depict.(I smell a story made to order!)

Advise your clients as you will, but gearing is a double edge sword - it magnifies gains and loses. 30 years of gearing into property has paid off in the past, the future is another story.

The future will tell the exact same story as it did 30 yrs ago and did 30 yrs before that. We haven't had a good dose of inflation yet and when we do you had better have your money ANYWHERE else than a bank!

What you should tell your clients is, get an education in investment principles and give them a road map on how to proceed with this education, not just "don't do this."

Disagree---not everyone wants to become a financial expert many are willing to pay for that expertise---just as most of us dint want to become a doctor---and many try with results commensurate with experience and knowledge!

Hardly, since it's not my speculation but the forecast of many reputable sources. Believe what you will, but if you believe that Aus property prices are not in bubble territory then your not paying attention to trends and market cycles. Keep buying those properties though since Aus property surely can only go in one direction, up and up. LOL

Some are in bubble territory.
Some aren't.
Demand is still high and like Trading there are different Property strategies which suit different periods in a cycle.
Now its selective development (What I do along with running a civil construction company).

I think the passive income aspect of setting up a Super package has in this argument (discussion) been over looked.

 

[FxTrader]

To me trading is as boring as watching paint dry while listening to a commentary of a chess game.Your right in that you can "these days" basically set and forget ---- even set a system fund it and forget!

My routine is that I trade maybe 3-4 hours a day scattered between market sessions with about 1 hr of market analysis at the start. Staring at charts is boring no doubt, however I don't do that much, use alarms and read most of the time.

Maybe in the US.
But 6 yrs ago his AUD was worth 50c I find it very strange that someone his age would have been buying R/E in the US. Particularly that he has been double hit---hes way worse off that you depict.(I smell a story made to order!)

He's always lived in the U.S. tech/a and his dream was to retire in Hawaii. He has but not exactly with the life style he hoped for. He made money in property throughout his lifetime (that's all he ever invested in like many in the U.S.), but did not plan for a black swan event.

The future will tell the exact same story as it did 30 yrs ago and did 30 yrs before that. We haven't had a good dose of inflation yet and when we do you had better have your money ANYWHERE else than a bank!

A bold prediction and I am sure boom and bust cycles will continue. The bust is still playing out in the U.S. and after the Chinese stop building empty cities and roads to nowhere we shall see how the Aus economy, based significantly on digging minerals out of the ground and selling them to the Chinese, holds up.

Disagree---not everyone wants to become a financial expert many are willing to pay for that expertise---just as most of us dint want to become a doctor---and many try with results commensurate with experience and knowledge!

True enough, but I'm not advocating for expert status, just financial/investment literacy. Sure you can pay "experts" to manage your portfolio but my interaction with them indicates they are only experts in products they advocate that generate a commission. No doubt Storm clients thought they were dealing with experts, but then if you're not financially literate there are Storm like entities all over the place happy to separate the naive and poorly informed from their money.

I think the passive income aspect of setting up a Super package has in this argument (discussion) been over looked.

Perhaps, I have touched on this aspect of super investment but then if one has little interest in self education then SMSF is not going to be of much benefit, probably the opposite.

 

[Sir Osisofliver]

A grudging concession on your part,

Er no - I've said that before actually.

but your focus on just short term trading in pension phase is misplaced. I know several investors who have accumulated significant sums in super through contribution and essentially buy and hold strategies.

Cool...compared to what? You see without a comparison your statement is... meaningless. I know someone who deposited $1,000 into a 30 year term deposit and ended up with over a million dollars. Was that a good idea? You can't answer that question because you have no idea of what rate of return it could be compared to. Similarly your statement that you know people who have accumulated significant sums in super through buy and hold strategies has no basis of comparison. You are not comparing apples to apples. You only have one apple.

Superannuation in its current format for the vast majority of superannuants restricts their ability to compound gains. IE the example I gave you already in relation to Property in a Super Environment. You are comparing a straight line equity growth, 1 asset growing over 30 years, compared to an exponential compounding line, multiple growing assets over 30 years. In ANY comparison over the longer term the exponential line will vastly outperform the straight line.

Is that clear?

To prepare for pension phase you should accumulate a significant sum, quite hard to do if the only contribution is the compulsory employer levy.

Your making a huge false assumption here. When we retire what do we want? We want an income that is independent of our personal self exertion - a passive income stream to support us when we no longer have our employment income to support us. Your assumption is that Super is the only environment in which we can/should do this. Since super restricts our ability to compound our gains, we need to compare our real rates of return within super, with our real rates of return outside of super. Even after tax the lack of the ability to compound our gains loses every time. Straight line versus exponential compound line.

The only time this is beaten within super is when we use a system that internally compounds. IE a short-term trading strategy. It's only then that the taxation benefits within super outweigh the taxation detriment outside super.

Clear?

I actually enjoy trading, am not "chained" to the desk all day and not interested in being put out to pasture on a golf course like a retired race horse.

Great! I'm happy for you. I enjoy it too. I suggest however that we are not the norm.

My 80yr old father fits your description of retiree, every few months he hunts around in the U.S. market for his next CD purchase, gets 2% return on his money (banks must be safe after all) and can only afford to go out a couple times a month - no trips to the golf course for him. He also bought a home in the U.S. 6 years ago which is now worth $250k less than he paid for it yet he still has a $300k mortgage (real estate always goes up does it not). His net worth, thanks to real estate is 0. Share that all to common picture with your clients.

Ok three things.

1) I'm very sorry to hear about your Fathers financial situation. Needless to say your father doesn't fit my description of a self-funded retiree. I hope you can see why.

2) Australia is not China, UK, or Mongolia either. Your comparisons between us and the U.S. are of limited use. It's like me saying don't invest in the Australian share market over the last 30 years because of what's happened in Japan's share market.

3) I can stack your father's example with plenty of opposing examples. What now? You're taking a single data point and drawing a conclusion from it and emotionally investing significance.

Advise your clients as you will, but gearing is a double edge sword - it magnifies gains and loses.

Which means we use risk management techniques to control our losses....which is the part that a lot of people don't do.

30 years of gearing into property has paid off in the past, the future is another story.

Yeah yeah the sky is falling I get it we're all going to end up eating each other when the world ends. You're not doing your side of the debate any good by fearmongering.

What you should tell your clients is, get an education in investment principles and give them a roadmap on how to proceed with this education, not just "don't do this."

Yeah well we are also an RTO and request our clients do courses before we engage as their advisers, so we already do that.

Hardly, since it's not my speculation but the forecast of many reputable sources. Believe what you will, but if you believe that Aus property prices are not in bubble territory then your not paying attention to trends and market cycles. Keep buying those properties though since Aus property surely can only go in one direction, up and up. LOL

Cool. Source me up. Give me data, stats and fact that you're basing your argument on rather than opinion. I'm not contending that property In Australia only goes up. As you've pointed out property is cyclical and has trends. So what may be bubble territory in Sydney for example may not mean a rats **** in Darwin, which is subject to a completely different set of drivers. Which is kinda similar to my example of not buying shares in Australia because Japan's share market has been declining for 30 years.

Cheers

Sir O

 

[tech/a]

Mind you I have one rule (for myself) with Money matters.
If I cant control it then I dont get involved.
While not fail safe as I have to deal with Banks and Debtors I have avoided the temptation of a Quick Fleecing (Err buck!).

Im suprised your father wasnt in the position after investing in property for so long to be well geared---enough to supply passive income.
I have friends in the US who have taken a hit if they sell now but who are generating excellent income from apartments and some Commercial property.
The aim always was and in their case is to supply passive income.

Their kids however arent too happy with the slashing of their property holding values!
They need to be educated in passive income!

 

[Trembling Hand]

The only time this is beaten within super is when we use a system that internally compounds. IE a short-term trading strategy. It's only then that the taxation benefits within super outweigh the taxation detriment outside super.

Sir O what sort off short-term trading strategy are you talking? I thought trading was not allowed, my type of trading that is, as its deemed to be carrying on a business which isn't allowed within super.

 

[tech/a]

Sir O what sort off short-term trading strategy are you talking? I thought trading was not allowed, my type of trading that is, as its deemed to be carrying on a business which isn't allowed within super.

If its not your principal means of income then could it not be seen as "investment" of funds in the Super Fund.

Investment in property is also limited to established property and you cannot take out a loan to improve the property either. You must use funds generated by the Fund (Talking SMSF).
LVR is 65% so your limited here as well.

 

[Sir Osisofliver]

Sir O what sort off short-term trading strategy are you talking? I thought trading was not allowed, my type of trading that is, as its deemed to be carrying on a business which isn't allowed within super.

Sorry TH - not exactly sure what it is you do. Mind you there have been some changes recently so it might be worth checking again with a tax lawyer (Which I am not).

Plain 'ole equity system seems to work just fine.

Cheers

Sir O

 

[FxTrader]

You are not comparing apples to apples. You only have one apple.

What do you want here, a detailed analysis of the equity trading and contribution profile? Could they have made more by trading on margin? Perhaps, but if anyone has all their eggs in one basket it's the property bulls you herd with.

Superannuation in its current format for the vast majority of superannuants restricts their ability to compound gains. IE the example I gave you already in relation to Property in a Super Environment. You are comparing a straight line equity growth, 1 asset growing over 30 years, compared to an exponential compounding line, multiple growing assets over 30 years. In ANY comparison over the longer term the exponential line will vastly outperform the straight line.

Hmm, more condescending waffle, as if I don't understand the difference between linear and exponential growth. If the price of an equity is growing 15%/yr, is it compound or linear growth? Give me a break.

When we retire what do we want? We want an income that is independent of our personal self exertion - a passive income stream to support us when we no longer have our employment income to support us. Your assumption is that Super is the only environment in which we can/should do this.

Not at all, what I'm saying is that super should be a component of a wealth creation strategy for a variety of reasons.

Since super restricts our ability to compound our gains, we need to compare our real rates of return within super, with our real rates of return outside of super. Even after tax the lack of the ability to compound our gains loses every time. Straight line versus exponential compound line.

Repeating your error that there is no componding effect of investment within super. The borrowing limitations within super does have an impact on returns if you only invest in instruments like equities where leverage requires a prohibited loan facility or where you want to pyramid into property investment by borrowing against existing (on paper) housing equity. I can leverage an investment 100:1 (or more) in and ouside of super if trading is allowed for that asset class in my investment strategy.

You seem to be an advocate of the power of OPM (the banks) - the false security of would be property millionaires. The familiar refrain, I own 10 income producing investment properties. The reality, I owe the bank 2 million dollars but in another 5 years I hope to owe the bank 10 million dollars by buying another 20. But wait, if the property market falls 10% and/or you lose your job can you still make the mortgage payments? Do you sell into a declining market?

The only time this is beaten within super is when we use a system that internally compounds. IE a short-term trading strategy. It's only then that the taxation benefits within super outweigh the taxation detriment outside super.

Sigh, more nonsense.

Australia is not China, UK, or Mongolia either. Your comparisons between us and the U.S. are of limited use. It's like me saying don't invest in the Australian share market over the last 30 years because of what's happened in Japan's share market.

We exist in a global economy, do you not understand the implications of this. Do you think Australia would prosper without a robust Chinese economy?

I can stack your father's example with plenty of opposing examples. What now? You're taking a single data point and drawing a conclusion from it and emotionally investing significance.

Actually, my father's situation is mirrored by millions of Americans (outnumbering the entire Australian population actually). Worse yet, many have been forced out of their homes and survive only on gov't subsidy. At least he has a pension and interest income to survive on. Many of these hapless souls thought as you do, property is a reliable wealth creation vehicle. It's actually a confidence game and the game is up in the U.S., Ireland, England etc. Of course Aus will always be immune to such a shock. LOL

Which means we use risk management techniques to control our losses...

Really, and just how do those geared up property investors risk manage their way out of another GFC event. Hang on to those investment properties for dear life and wait for an upturn or sell them into a declining market and hope for a decent price that covers your loan payments for a time.

There is a key difference between the U.S. mortgage market and ours. In the U.S. most of the housing loans were non-recourse, so if you can't make the payments you leave the keys on the doorstep and walk away. The bank gets the property and you lose the loan and your credit rating.

In Aus, no such luck. You can leave the keys behind but the bank has legal recourse to recover losses against your assets. So a significant downturn here is even more potentially devastating to the "I own 10 investment properties" crowd.