silverman47
Active Member
gcsun said:
Why the hell would you want limited cash flow? do you enjoy going to work every day? if so then great limit your cash flow.
Cashflow makes you rich, and it doesnt matter how you do it.
Inheritance $30 000 shares should i sell and buy $30 000 of PM
- Thread starter Noogsy brown
- Start date
Why the hell would you want limited cash flow? do you enjoy going to work every day? if so then great limit your cash flow.
Cashflow makes you rich, and it doesnt matter how you do it.
silverman47
Active Member
mmm....shiney! said:
Thanks
B
Byron
Guest
mmm....shiney! said:
Unless the money you invest makes a greater return than your home loan interest rate, then it IS better to pay down a mortgage.
At the moment getting a 5.5% to 6% return (average variable home loan rates) on an investment after tax, isn't that easy. But i'm open to suggestions!
Byron said:
You pay down your mortgage byron, in what 10 years you'll live in a 400K house you own outright after having paid back more than 400K. What then? Will you only then consider investiing your hard earned in cash flow enterprises?
What you are basically saying is that the sole purpose for going to work each day is to pay off a mortgage. I think there are enough ant-RE people on this forum who would question the wisdom of this folly.
Remain a wage slave and pay back your mortgage, or look beyond the the box and make your earnings work for you.
B
Byron
Guest
mmm....shiney! said:
I'm not against other investments but what kind of cash flow enterprises are you referring to? Can you be a little more specific? I'd like some ideas as good investments are difficult to find these days.
As for the home, land value is constantly increasing. As the population grows and cities expand, land (and property) in general will also go up. At least i believe it will.
Yes i will pay back a lot of interest but by paying more into the loan i am hoping to have 10-15 years slashed off the term. The alternative is to pay almost the same amount in rent, not an inviting prospect.
Byron said:
Geez man. You need to set your bar a little higher - you are honestly selling yourself short.
5-6% is actually really easy.
20% is OK.
60% is a pretty good year.
Disclaimer: I would mention these returns are through paper trading, but I'm not going to advocate that on this forum, as apparently it's a mugs game.
B
Byron
Guest
wrcmad said:Byron said:
Geez man. You need to set your bar a little higher - you are honestly selling yourself short.
5-6% is actually really easy.
20% is OK.
60% is a pretty good year.
Disclaimer: I would mention these returns are through paper trading, but I'm not going to advocate that on this forum, as apparently it's a mugs game.
You are probably right. However i don't have the expertise to paper trade. Where does one start? What kind of trading are you into? Options and the like?
Have a look here: http://forums.silverstackers.com/topic-22773-i-don-t-wanna-stack-i-wanna-tradeplease-help.htmlByron said:
Byron said:
There was an old thread hanging around here for a while about alternative investments, some that provided regular returns, others you may have to wait a year or two. I'll see if I can locate it.
Investments are indeed difficult to find, if you are not educated, now I'm not much more enlightened than you byron, but I do know that using any spare cash I have to pay down my mortgage will not make me wealthier, it may make my life less stressful, but it won't improve my retirement. Creating opportunity and cash flow is the key: this may be done through shares, RE, owning or starting a business (which is nr's first pillar) or other investments e.g. ATM machines, carpark spaces, market stalls on weekends, investing in alcohol (VVD or Nant) etc etc. PM's do not provide cashflow, therefore they alone cannot build wealth. Ask yourself why the bloke that started SilverStackers also began a bullion business. Have a look at some of the oldest members here, many of them have their own bullion trading business - there must have been valid reasons why they would decide that owning PM's alone would not be enough to help secure their financial future. They buy and sell the stuff because it amkes money for them, pays their bills and helps toward setting up their financial future.
I know this is old hat to you, I'm still learning. We have a business, which is a bonus, but all I really understand about investing is limited to our business, PM's and RE. I've splashed out in a couple of other areas but haven't realized gains yet.
As far as housing goes, it is not true that RE prices will always rise, sure I believe the Oz RE market is vastly different from the US, but no market can provide perpetual growth.
Noogsy brown
New Member
Thanks for lots of good feedback. I am trying not to be a time waster just a dad of two young kids and a shift worker so spare time is a little precious.
I will try and give some more info, i have lurked for a while here and like the honest and genuine opinions of most people and the variety or responses not just PM biased. I dont do the internet/social media/blog thing much so i am a little reserved/hesitant, but here goes.
Shares are with WBC, TLS, CSR, WOW and WES.
I am new to investing and are trying to educate myself quickly. I am new to the concept that the world economy has a huge part to play in our local economy but i am loving learning.
The house we are in is very small with a mortgage that is luckily still under my guessing value if sold today. I originally borrowed 100%.
I started buying some PM's last August and have watched them rise then drop in price and being new to investing is a little scarey. I am still young hopefully with 30 more years of working life ahead of me. I am buying PM's with the intention of putting some wealth aside for my two kids so (long term) but i am hoping they will provide a greater return in the next couple of years then putting all my spare cash into my mortgage. Why only couple of years? Because we need a bigger house primary residence so we dont kill each other.
I am currently paying mortgage fortnightly with extra repayments. I understand that it would probably be the safest and smartest idea to just keep putting all money into mortgage and pay all debt off first, but i will not learn anything about investing by doing that so i am willing to be a little more speculative or look at other avenues of investments but have limited knowledge.
PM's have sparked my interest and opened up a whole new world out there.
Sorry for my ramble but it feels a little therapeutic. Basically i think i am wanting to know peoples opinion if they think that PM's will give a better short term (2 year) return than putting money into shares or mortgage?
Cheers and thanks if anybody reads this.
I will try and give some more info, i have lurked for a while here and like the honest and genuine opinions of most people and the variety or responses not just PM biased. I dont do the internet/social media/blog thing much so i am a little reserved/hesitant, but here goes.
Shares are with WBC, TLS, CSR, WOW and WES.
I am new to investing and are trying to educate myself quickly. I am new to the concept that the world economy has a huge part to play in our local economy but i am loving learning.
The house we are in is very small with a mortgage that is luckily still under my guessing value if sold today. I originally borrowed 100%.
I started buying some PM's last August and have watched them rise then drop in price and being new to investing is a little scarey. I am still young hopefully with 30 more years of working life ahead of me. I am buying PM's with the intention of putting some wealth aside for my two kids so (long term) but i am hoping they will provide a greater return in the next couple of years then putting all my spare cash into my mortgage. Why only couple of years? Because we need a bigger house primary residence so we dont kill each other.
I am currently paying mortgage fortnightly with extra repayments. I understand that it would probably be the safest and smartest idea to just keep putting all money into mortgage and pay all debt off first, but i will not learn anything about investing by doing that so i am willing to be a little more speculative or look at other avenues of investments but have limited knowledge.
PM's have sparked my interest and opened up a whole new world out there.
Sorry for my ramble but it feels a little therapeutic. Basically i think i am wanting to know peoples opinion if they think that PM's will give a better short term (2 year) return than putting money into shares or mortgage?
Cheers and thanks if anybody reads this.
Mortgage may be the safest, but may not end up being the smartest (time will tell).Noogsy brown said:
Bravo for having some balls and having a go at better than average returns. There is no better investment tutorial than staking your hard-earned.
My opinion (and it is highighted that it is only my opinion) is that shares are at an extremely risky level of risk:reward ATM. I have traded shares for years, and they just don't look attractive at current levels.Noogsy brown said:
Gut tells me PM's will out perform mortgage over the next few years, but the can may end up being kicked down the road for years more to come - so who knows? Personally I have punted a fair stake on PM's over mortgage - however, I also protect the downside of that position using derivatives.
I would agree that Mortgage is the safest and probably smartest currently.
PMs have done nothing recently and there is every possibility that will continue, or worse, fall.
Is the bull market over? probably not, but don't discount the possibility.
At least paying off debt is guaranteed to positively impact your life.
PMs have done nothing recently and there is every possibility that will continue, or worse, fall.
Is the bull market over? probably not, but don't discount the possibility.
At least paying off debt is guaranteed to positively impact your life.
depends...
If you think you will need the $30K to help upgrade your house then sell the shares now and pay down your mortgage.
If you think your mortgage is too large for comfort, then sell the shares now and pay down your mortgage.
If you see the $30K as long term investment material then perhaps sell half the shares and buy some PMs and keep some in cash for emergencies.
Better work out any tax implications first though.
One point to make is that learning about investing does not require you to actually be invested.
I know share market investors that started out by spending 2 or 3 years paper trading (ie. pretend trading) while they were learning, before putting their money on the line.
If you think you will need the $30K to help upgrade your house then sell the shares now and pay down your mortgage.
If you think your mortgage is too large for comfort, then sell the shares now and pay down your mortgage.
If you see the $30K as long term investment material then perhaps sell half the shares and buy some PMs and keep some in cash for emergencies.
Better work out any tax implications first though.
One point to make is that learning about investing does not require you to actually be invested.
I know share market investors that started out by spending 2 or 3 years paper trading (ie. pretend trading) while they were learning, before putting their money on the line.
hyphenated
Active Member
That's really quite an impressive core portfolio. Pretty strong dividends, some franked, and it is unlikely to explode in your face. I heven't done the math, but it will probably comfortably exceed a term account returns right now, and it has probably risen in value substantially over the last year. US market is in record territory, but these are all stocks that people will buy in Oz, and the market is well away from highs. There are plenty of free portfolio managers that will allow you to enter the amounts and value and date of aquisition, and see what they've done for you against the broader market.
Sometimes it makes sense to keep the hole and the soil to fill it separate. Have a close look at your mortage - can you make capital repayments? Is it competitive? Can you switch? Are there better deals?
I would spend some more time examining your budget, outgoings, emergency provisions, and maybe buy small packets of PMs as a savings vehicle - just enough trouble to change that you don't spend it, but liquid enough to convert if crisis hits.
Sometimes it makes sense to keep the hole and the soil to fill it separate. Have a close look at your mortage - can you make capital repayments? Is it competitive? Can you switch? Are there better deals?
I would spend some more time examining your budget, outgoings, emergency provisions, and maybe buy small packets of PMs as a savings vehicle - just enough trouble to change that you don't spend it, but liquid enough to convert if crisis hits.
Jrandom
New Member
What is wrong with renting? Especially since you don't feel that your current house is good enough.
The only money I personally would have in stocks is the money I could loose. You have too many counter-parties with it and the company can print up shares diluting your ownership.
The mainstream media spends so much time brainwashing you into stocks for a reason, and it isn't because they care about you.
The only money I personally would have in stocks is the money I could loose. You have too many counter-parties with it and the company can print up shares diluting your ownership.
The mainstream media spends so much time brainwashing you into stocks for a reason, and it isn't because they care about you.
hyphenated
Active Member
Just following up on the renting approach: The big problem with house ownership is that the money is 'dead' unless there is capital appreciation. You don't get tax relief on interest, you don't get to claim on repairs - you own a liability, not an asset (again, unless the market rises *and* you sell). On the other hand, you have security for your family.
If you rented out your property at a reasonable return (first question - does it pay the mortgage?) and were able to secure rental accommodation for less, then you might be able to move the yield curve in your favour. Moving everyone to a caravan in Aunt Maud's garden is one extreme, renting a mansion is the other, but it may be worthy of consideration. Lot's of risks and implications - not for the fainthearted - but if you really are running out of room, a possibility to consider.
If you rented out your property at a reasonable return (first question - does it pay the mortgage?) and were able to secure rental accommodation for less, then you might be able to move the yield curve in your favour. Moving everyone to a caravan in Aunt Maud's garden is one extreme, renting a mansion is the other, but it may be worthy of consideration. Lot's of risks and implications - not for the fainthearted - but if you really are running out of room, a possibility to consider.
silverman47
Active Member
hyphenated said:
Rent is also a liability. You can rent out rooms in a house, and live in it yourself. It can generate income for you many ways, home based businesses etc. You can claim home office deductions and all kinds of things in your own mortgaged home.
capital appreciation is most of the time the complete wrong way to invest in real estate. Capital appreciation should be secondary to cash flow. And renting vs owning, owning is far more beneficial than renting if the costs are similar. If you have cash flowing real estate and it drops in value it doesnt concern you. But it does concern you if your primary reason for buying is capital appreciation.
IMO this debate of rent vs mortgage is moot unless you look at things from the current context, which is a RE market that is at generational high, in a global Super-Crisis.
In that context, you want to be liquid with a minimum of liabilities and leverage.
As an asset, a mortgage is serious liability, very illiquid and highly leveraged.
BTW a mortgage is a paper asset that is a derivative of a physical asset. ouch.
The Gman and the banksters do everything they can to put you in a position of maximum pain = As a property "owner".
familiarize yourself with the Exter pyramid. That won't make you richer but IT WILL save you from ruin.
In that context, you want to be liquid with a minimum of liabilities and leverage.
As an asset, a mortgage is serious liability, very illiquid and highly leveraged.
BTW a mortgage is a paper asset that is a derivative of a physical asset. ouch.
The Gman and the banksters do everything they can to put you in a position of maximum pain = As a property "owner".
familiarize yourself with the Exter pyramid. That won't make you richer but IT WILL save you from ruin.