Inheritance $30 000 shares should i sell and buy $30 000 of PM
- Thread starter Noogsy brown
- Start date
DoolBrevlis
Member
I like this^^^madaw1 said:
On the other hand, one must look at the current spot price of PMs and decide when is best to jump in, now or later.
I personally wouldn't wait.
silverman47 said:
Bad advice -Australian real estate is way over priced and we have a long way to go before it becomes attractive. Negative gearing is great if you are earning big numbers but if you are not or lose your job it is not so attractive. Getting deeper into debt and leveraging it up with more debt for real estate is how most Australians lost their wealth and will continue to lose wealth into the future. Pay off debt as inflation will not save you from it and secondly buy undervalued real assets like PM.
Dabloodymess
Active Member
That mortgage is a ball and chain around your neck, it should be dealt with first.
I find it a bit worrying that you are looking to go into PM's with an intention to sell at least some in just 2 years to fund your home upgrade. Who knows where PM's (especially silver) will be in 2 years!?
A 2 year time-frame for buying, holding and then making a reasonable profit on physical metals is too short imo and falls more into speculation, rather than a well thought out investment strategy.
I find it a bit worrying that you are looking to go into PM's with an intention to sell at least some in just 2 years to fund your home upgrade. Who knows where PM's (especially silver) will be in 2 years!?
A 2 year time-frame for buying, holding and then making a reasonable profit on physical metals is too short imo and falls more into speculation, rather than a well thought out investment strategy.
silverman47
Active Member
So you rather pay down a mortgage and free up less cash, rather than spread your risk, generate more cash flow which could be paid off the mortgage and faster anyway?
If values drop significantly you might be talking about having to put up more money as a deposit for the property your already in. As what happened in the us which is why alot of people went under. You can buy plenty of good real estate here around the 100k mark, 20% down great cash flow and capital gains as well. Then there is mortgagee sales to look at which you can do even better on.
Metals are great for savings and investment but they don't generate cash flow.
Always better to buy more real estate and use that cash for that, diversify, spread your risk, and bring more cash in, than pay down a mortgage.
If values drop significantly you might be talking about having to put up more money as a deposit for the property your already in. As what happened in the us which is why alot of people went under. You can buy plenty of good real estate here around the 100k mark, 20% down great cash flow and capital gains as well. Then there is mortgagee sales to look at which you can do even better on.
Metals are great for savings and investment but they don't generate cash flow.
Always better to buy more real estate and use that cash for that, diversify, spread your risk, and bring more cash in, than pay down a mortgage.
silverman47
Active Member
I might point out also that I know people who lived in Zimbabwe through the hyperinflation, and real estate was a safe haven and did not go down in value, it went up.
If your banking on hyperinflation, you'll do we'll with real estate too, and generate cash flow along the way. Look at all forms of investment don't be naive and think PM's are the be all end all of investing.
If your banking on hyperinflation, you'll do we'll with real estate too, and generate cash flow along the way. Look at all forms of investment don't be naive and think PM's are the be all end all of investing.
silverman47
Active Member
trew said:
If the value goes down enough you may have to fork out more cash and if you drop below 20% equity you may have to fork out for LMI as well.
People should be mostly investing for cash flow not capital gains. You get less cash flow paying down a mortgage than buying more real estate. Invest for cash flow and your never poor, even if you end up carting a wheelbarrow of money around.
B
Byron
Guest
silverman47 said:
I take it you are talking about buying in a regional/rural area for $100k. Where have you got in mind?
As for the OP, some shares are returning a nice dividend yield. I'd look at holding on to those (depending on other factors as well).
silverman47
Active Member
You dont have to even look in this country for instance, emerging economies, and even new zealand, 30 grand you dont even need a loan in most of these places.
Theres plenty of places in rural australia that are going to get excellent capital growth, look at somewhere like port pirie in south australia where i believe they have found the largest deposit of shale oil in the world i believe. (its just up the road a bit, but port pirie will benefit.) It also has a lead mine, now think about that for a second, investing in somewhere that has a LEAD mine. Its had a few troubles that area with the environment, but dont buy right near the mine and you'll be ok. Even broken hill.
Theres plenty of places you can safely get at least 14+% annually on that money without even trying. you work out what you'll save every week by paying it down on your mortgage it wont be any where near that, unless you have a million dollar mortgage which 30k would barely make a dent in anyways.
Dont restrict yourself to buying close to you, you get far better deals buying mortgagee sales, deceased estates etc. Also industry in the areas at the moment, lots of talk about agricultural investing last few years from lots of the big names, so its a fair bet that small towns with good farms are going to be great long term investments. And if you can get one with potential for mining as well your laughing. Either way its a small mortgage and you'll have a big deposit, you wont loose on it.
Lots of places around dubbo etc. rural nsw, tamworth, warwick, theres places in qld. Personally i would forget rural WA, south australia looks good to me, Tasmania. So much to choose from. AND DONT FORGET OFFSHORE.
Theres plenty of places in rural australia that are going to get excellent capital growth, look at somewhere like port pirie in south australia where i believe they have found the largest deposit of shale oil in the world i believe. (its just up the road a bit, but port pirie will benefit.) It also has a lead mine, now think about that for a second, investing in somewhere that has a LEAD mine. Its had a few troubles that area with the environment, but dont buy right near the mine and you'll be ok. Even broken hill.
Theres plenty of places you can safely get at least 14+% annually on that money without even trying. you work out what you'll save every week by paying it down on your mortgage it wont be any where near that, unless you have a million dollar mortgage which 30k would barely make a dent in anyways.
Dont restrict yourself to buying close to you, you get far better deals buying mortgagee sales, deceased estates etc. Also industry in the areas at the moment, lots of talk about agricultural investing last few years from lots of the big names, so its a fair bet that small towns with good farms are going to be great long term investments. And if you can get one with potential for mining as well your laughing. Either way its a small mortgage and you'll have a big deposit, you wont loose on it.
Lots of places around dubbo etc. rural nsw, tamworth, warwick, theres places in qld. Personally i would forget rural WA, south australia looks good to me, Tasmania. So much to choose from. AND DONT FORGET OFFSHORE.
silverman47
Active Member
another thing i would say is i have no idea what shares you have either, so check what cashflow you are getting on those too. BHP isnt going out of business any time soon. Real estate in my opinion is the easiest business to be in, requires the least amount of time to look after. Real estate is generally set and forget if done right, stocks not so much.
silverman47
Active Member
trew said:
Its not total rubbish. This is the process the banks should be following. Now plenty arent going to do that, but some will. And its the reason alot of people were foreclosed on in the states because they could keep their 20% equity or whatever in check. They were asking people to put up more money which they of course did not have, and were then foreclosed on.
If banks followed this process as they should alot more banks would be solvent. I havnt heard of it happening here in australia, but we havnt had a big drop in property prices like they had in the states either.
silverman47 said:
Is this based on anything in reality or just your personal opinion of what banks should be doing ?
A mortgage provides a loan amount and terms on how the loan will be repaid.
Provided the payments on a mortgage are maintained, the mortgage runs it's course of 25 years or whatever the terms are.
Banks don't revalue properties during the life of a loan. They don't care what the property value is as long as they get paid their money.
silverman47 said:
Even in the US, foreclosures do not happen because property values fall below the loan amount - they happen because the borrowers stop making the loan payments.
Do you have a reference of banks in the US doing the above ?
silverman47
Active Member
Its years since i read the article, i think it might have been in the Australian. Was back when they were having those massive waves of foreclosures the first time around.
silverman47
Active Member
trew said:
The terms are, when you sign 20% deposit any less its LMI. Have a read through the fineprint on your mortgage documents its probably in there. Banks do care about the value of your property. I'll have a read through mine and see if i can find it now i've said that i bet its in there somewhere.
silverman47 said:
The 20% deposit etc. are just the conditions that must be met before the loan will be given - they are not part of the loan.
I have actually read through my mortgage document but it was many years ago and can't remember the details.
But I'm sure I would have remembered something like needing to maintain a property value/loan amount ratio or anything like that.
silverman47
Active Member
Well let me put it to you another way. Compared to whats going on in cyprus, banks asking people to put up more money when the value drops cant be anywhere near as bad as that. Im going to wrack my brain trying to remember what i read in the article, but it was along the lines of what i've said. And i remember my reaction was probably similar to yours when i read it.
Bottom line, you cant beat cash flowing real estate in my opinion, and if its cash flowing means you have plenty of equity. Neg gearing is for suckers or doctors.
Bottom line, you cant beat cash flowing real estate in my opinion, and if its cash flowing means you have plenty of equity. Neg gearing is for suckers or doctors.
silverman47 said:
I'm with you silverman, why pay off the principal place of residence? Its function as a wealth generator is poor when compared to an investment property, keep the mortgage, keep the shares or buy property. PM's won't help you with your daily bills. You need to arrange a visit to a solicitor first though noogsy and investigate nr's four pillars before you make any decision. It's a bit too late once you've sold the shares.
Ona side note, the OP has not been back to check these pearls of wisdom since his initial post. Time waster???