80% of Australians sinking in debt
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TheEnd said:
Oh I agree mate, I'm not at all stupid and understand what's going on. I'm simply more risk and debt adverse than many other investors (which is why I chose the safe haven of PMs in the first place I guess).
I can see how the 90s/00s property boom was a slam dunk for many (and good on them for having a go and winning) but I'm really agonising about where the next real 'boom' market is going to be and if/when you should place your bets.
Like it or not, being in the position of not having a paid out PPOR in this country puts you behind the 8 ball. I know right now I cannot afford full market rent in retirement, so I'm looking at my options on what to do in order to ensure that I'll be okay down the line.
I'm sure many other Gen X / Gen Y are in the same boat. The game has changed in the last decade and a half, so I'm pretty much treading water right now trying to find a path to get me to where I want to be.
I'm taking a careful approach right now because I have a lot to lose in the event of making a bad mistake. So I'm just sitting idle and saving for 'a rainy day' as it were because I'm not yet convinced that big leveraged debt will be the path to wealth that it has been for the last decade, especially for the average FHB like myself with no experience.
I fix and program computers for a living, not a property investor. I would just be shark bait in the markets if I jumped in now.
We'll just have to wait and see I guess.
I hate to say it aus but leveraged debt is really the only way to wealth in any market or decade .Theres very few businesses or people that can do it with their own money.auspm said:
Its more about choosing your investments wisely & feeding profits back into it .
Its not the only way but more money can be made faster with bigger sums of money that can be made with small amounts ..Regardless of where it came from. A wise man once said to me people are scared of the actual amount owed instead of focusing on the amount to be paid at the end of the month .
The moral to the story i guess is focus on the monthly payment not the amount borrowed .If you can service the monthly payment no problem the rest is just numbers on paper.It doesnt matter how many digits are in the amount you borrowed .
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renovator said:
Yeah, good advice.
The only problem is a) getting hands on that level of credit in todays market (especially if you lack collateral like... oh... a little bit of property? lol!) and b) having the education to know where to put it.
Without a doubt the last decade has been easy for investors, just go property and you can't lose. But the current market has definitely shifted on many levels and if you make a bad choice, you'll do your dough quickly.
I don't doubt for you industry experts cash is easy to turn over, but for us 'wanna be's' it's a LOT harder, especially in the current market to make a good call - assuming of course that you can secure the capital for investment in the first place!
For the life of me, I can't see where the next boom market is going to be in the current climate. Whilst Aussie remains blissfully ignorant of international storms brewing, the outlook globally looks rather bleak and I'm really worried that making a bad choice now 'going for it' will simply make you cannon fodder for those who already have their position.
I really don't like the stock market right now and the shine on commodities (like our metals) short term will probably be hammered in a global retraction / deflationary period.
Is the Australian property market really safe as houses anymore? I'm not convinced
I think the big opportunities looking ahead would have to be businesses that thrive in downward trending markets or in inventions that can be sold to the masses.
I wonder if investing in a brewery might be an option? Looking at the last depression, the brewers turned a wonderful trade
hehe
Bargain Hunter
Active Member
I ten to agree with Warren Buffett that in relation to debt "If your smart you don't need it, and if your dumb you have no business using it". If your smart you'll eventually get rich if your patient enough (sure debt could speed up the process) and if your not smart you'll get yourself into trouble (hell even if you are smart you might get yourself into trouble anyway).
Just remember "a banker is a fellow who lends you his umbrella when the sun is shining and asks for it back the minute it starts raining".
There are plenty of people who get rich without debt.
Just remember "a banker is a fellow who lends you his umbrella when the sun is shining and asks for it back the minute it starts raining".
There are plenty of people who get rich without debt.
Bargain Hunter
Active Member
Fishball history has shown that a 'concentrated' investment approach e.g. think wealthy businessmen with one main business as their primary asset, or property moguls, or Warren Buffett during his younger years, etc has been key to building large fortunes whilst a diversified approach is often better for preserving fortunes (e.g. second or third generation wealthy families).
Putting all your eggs in one basket (or very few baskets) although riskier is often the way that huge wealth is acquired (and on the flip side it is the way huge wealth is often destroyed).
Putting all your eggs in one basket (or very few baskets) although riskier is often the way that huge wealth is acquired (and on the flip side it is the way huge wealth is often destroyed).
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Bargain Hunter said:
I love that anecdote
As for getting rich without debt, I would love to learn how!!!
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boston said:
I got back less than 0.5% of the total tax I paid last year which was in the tens of thousands.
Needless to say, I have a very dim view of the system as it stands.
The rich don't pay tax.
The poor don't pay tax.
People like me pay the country's tax.
:/
I personally know people that do not pay tax. The ATO takes them to court, and they (the individual) wins. They represent themselves without legal eagles.auspm said:boston said:
I got back less than 0.5% of the total tax I paid last year which was in the tens of thousands.
Needless to say, I have a very dim view of the system as it stands.
The rich don't pay tax.
The poor don't pay tax.
People like me pay the country's tax.
:/
Apparently, and I have no need to look into the matter, paying tax is voluntary and contrary to what we have been told, is not a legal requirement.
Bargain Hunter said:
There are plenty of rich diversified (investment-wise) people as well though.
There is no one true path to becoming 'wealthy'.
It is true that you could get wealthy by betting it all on property or stocks but you could also do that at Crown or Star City on roulette. But that is hardly sound advice in the current financial climate.
boston said:
You can sue the ATO and win by claiming they aren't authorized under the Australian Constitution or something similar (I think - not legal advice!).
There are a few forum members who have given advice on this before, I think one of them was Mr Medvac.
Never tried it myself though.
Bargain Hunter said:
He was also credited with saying that he does not believe in diversification. He puts all his eggs in one basket and watches the basket very closely. The business owner who puts all his eggs in one basket isn't foolish, he's committed. The same applies for the individual.
Diversification in stocks is fine when you know your in a bull market that still has time on the clock, 1980~2000.
Diversification in RE is fine too, 1970~2005.
Diversification in PM's too 2000~????
Current mainstream advice for diversification suggests you buy shares+other shares+RE+Bonds perhaps. But NEVER gold. Obviously if you followed their advice in the current market you would be well on your way to going bankrupt. People diversify into different classes of asset when they are afraid and don't trust their own judgement, or when they are fooled into working all their lives and trusting the wealth accumulated from that effort to the judgment of strangers. The secret to winning is obviously looking for the long term trend, getting in at the start and getting out before the collapse. It doesn't have to be that way, but under a fractional reserve money/debt system of boom and bust it is guaranteed it seems.
The trouble with this system though is that it has a long time frame, and most people want to see double digit profits every year just to keep ahead of inflation. I would assume that very few here bought PM's in 2001, 2002, 2003. At the beginning in other words. Most probably came in just a year or two ago but this bull market is getting old now.
Let's not forget Warren Buffet's stance on Gold: http://www.telegraph.co.uk/finance/markets/8488086/Warren-Buffett-shuns-gold-as-an-investment.html
He might be rich and he might have done well for himself, but his advice is just that, advice. Not gospel.
He might be rich and he might have done well for himself, but his advice is just that, advice. Not gospel.
boston said:
Can you give us a hint as to some of the tactics they use, so we can investigate ourselves (I'm assuming you've quizzed them, I know I would)? I think that would be a very interesting topic on the forum. I've heard interesting things from some in America but nothing yet that would convince me it's a good idea to pursue.
hawkeye said:
I found this on Google:
http://www.clrg.info/2010/08/australian-tax-office-not-a-legal-entity/
High court says that the ATO is not a legal entity lol.
Anyone who thinks that the truly wealthy pay their fair share of tax is seriously mistaken probably from a misplaced frame of reference.
Probably the most succinct way I could put it is to paraphrase Lady Thatcher "If you have to tell people that you are wealthy then you are not" (she said "lady")
Probably the most succinct way I could put it is to paraphrase Lady Thatcher "If you have to tell people that you are wealthy then you are not" (she said "lady")
hawkeye said:
Hmm... dunno about that. These people are often mysterious figures, moving in the twilight. In ATO parlance they are known as "the untouchables", and the Australia government is doing everything in their legal power to ensure that this elite circle of players does not grow in size. The most you can expect from those of us who know, is enigmatic hints.
Hint 1: You must know your rights.
nonrecourse
Well-Known Member
fishball said:
Hi fishy; That advice didn't come from me it came from one of the worlds greatest investors Dale Carnegie;
http://www.famousquotes.com/author/carnegie/2
The only man richer than him was John D Rockefeller
http://www.uh.edu/engines/epi177.htm
Your right about my distaste for the share market I despise it but I don't go onto the share site here and bait people about how stupid they are because they choose to "play" the market.
In my humble
opinion the share market is no place for orphans, mum and dad investors, super annuantes or retirees full stop. The only way I'd be interested in entering the share market would be if I was floating a new company and issuing IPO's to those who are not in the know:lol:When you consider that the average super fund was "diversified" totally in paper equities prior to the GFC you would have to conceed that was nonsense.
For 20 years I hammered away at that issue with my accountants and auditors regarding our concentration in property. If your good at paper equities fine stay with it but......
Just dont't kid yourself that your diversified, its all paper
Kind Regards
non recourse
nonrecourse said:
When he died the US Public were drooling over the moolah they were going to reap from his estate. They were shocked to find out that he wasn't the majority player in his empire. Nor did they find out who the majority player was.
Whist talking about taxation give it some real attention. If the Government can print money - WHY DO THEY NEED TO COLLECT TAX?