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Investments

Hi,

Don't reply if you don't know anything please.

In 2 years (when I finish uni), I'm going to be looking to buy my first cheap property. By that point, I will have about $30,000 (+$7,000 first home owner grant) for a downpayment. Obviously, I need somewhere to live, first and foremost. Rather than sink all my money into a house, my plan is to buy a cheap apartment. This way I can pay it off quickly and avoid paying massive interest, then focus on assets that will actually produce income for me.

In the mean time, I am looking into alternative things to do with my money. At the moment, I only have about $10,000, but I would like to do something with it. If I put this into a typical savings account, I'll get 7-8% p.a. with basically no risk. Is it worthwhile looking into shares? Is it worth the effort of devising my own portfolio, or should I just dump my money in a securities index or managed fund?

For the future... is real estate or stocks the better investment, in general? A few considerations:
- We have tax imputation in Australia
- I'd have to take loans for real estate ($interest!), whereas I can just use idle funds in shares
- I'm pretty risk averse
- I cbf watching stocks for 4 hours a day

Cheers.

If you're wanting to invest long term (5+ years), buy shares now, because the Australian market is extremely low, and you will be in a position to make a good profit when it eventually bounces back.

If you are looking for a short term return (18 months or so), put your money in a high-return interest account.

So, yeah, I'd go with an interest account.

Shares could pay off within two years, but if this is your first investment it's probably not worth the risk.

Usually economics or business professors in the university have good advice on what to invest in.

Oil is down right now but back in May/June i made a lil over $2000 in 2 months time on oil. Silver is also low right now.

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Originally posted by Beat Blog If you're wanting to invest long term (5+ years), buy shares now,

pretty much.

fuck managed funds, they've taken a hiding recently. i prefer to trust my own judgement when investing my money. if i had the spare cash id be buying bank and mining stocks like they were going out of fashion. alas im mortgaged up to the hilt so no more spending for me...

Re: Investments

quote:

Originally posted by echosystm Hi, Don't reply if you don't know anything please. In 2 years (when I finish uni), I'm going to be looking to buy my first cheap property. By that point, I will have about $30,000 (+$7,000 first home owner grant) for a downpayment. Obviously, I need somewhere to live, first and foremost. Rather than sink all my money into a house, my plan is to buy a cheap apartment. This way I can pay it off quickly and avoid paying massive interest, then focus on assets that will actually produce income for me. In the mean time, I am looking into alternative things to do with my money. At the moment, I only have about $10,000, but I would like to do something with it. If I put this into a typical savings account, I'll get 7-8% p.a. with basically no risk. Is it worthwhile looking into shares? Is it worth the effort of devising my own portfolio, or should I just dump my money in a securities index or managed fund? Cheers.

Check out the Tranceaddict Investment Club (CLICK). We can help you out..

It really depends on your investment objective. Are you looking for capital appreciation, or capital preservation. This is what you should do, according to your investment objection...

Capital Appreciation: If your objective is to increase the value of your capital, then I suggest you invest this capital in higher return assets, most notably stocks. If you decide to invest in stocks, I suggest you refrain from any speculating. Don't invest on a gut feeling. I suggest you invest in stocks whose business is excellent and with the financial results to prove it. When you buy the company, you should be buying it at a low price. I suggest the stock should also pay a dependable and increasing dividend. If you need help with any of this, I have a specialization in stock analysis, and I can help you greatly.

Capital Preservation: If your objective is to preserve your capital while still receiving a return higher than the prevailing inflation rate, then I suggest buying treasury bonds of Australia or the United States (www.treasurydirect.gov). You could also buy a Certificate of Deposit or a high yield money market saving account.

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In whatever you do, if you don't know what you're doing, you shouldn't be doing, b/c it'll cost you money. A lot of people ask me what I think about stock before they buy, because I design, develop, and maintain financial algorithm models, which I use for my stock analysis, and basically tells me the financial quality of the stock's underlying business, and how much the business itself it worth. It's like before you buy a car, you want to make sure the car is in tip top shape. You want good tires, engine, paint, etc. You also want to know how much that car is worth before you buy it, so you know you won't be paying a high price for it. The same thing applies to the stock market, and I use sophisticated mathematics to gauge these qualities and values..

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Originally posted by pkcRAISTLIN if i had the spare cash id be buying bank

do you think the finance sector can go any lower? the value of a lot of banks is still "ok", compared to ~2003ish. If we're headed for a bit of a recession, won't banks be the first to take a decent bit of rape?

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Originally posted by echosystm do you think the finance sector can go any lower? the value of a lot of banks is still relatively high, compared to ~2003ish. If we're headed for a bit of a recession, won't banks be the first to take a decent bit of rape?

It's knowing which ones are going to come out of it alive more than anything.

Frankly I feel that investment in the financial sector, at least in the US (might be different in Australia) is too risky right now. We are still on the downward slope. Better to keep a keen eye on the sector and wait for the first signs of an uptick, that way you know who to invest in and you wont be in as much risk as if you do when things are still sliding down hill.

quote:

Originally posted by echosystm do you think the finance sector can go any lower? the value of a lot of banks is still relatively high, compared to ~2003ish. If we're headed for a bit of a recession, won't banks be the first to take a decent bit of rape?

It all comes down to how long youre looking. Whilst the banking sector is taking a battering, the aussie banks are still posting pretty hefty profits and dividend payments. If I had some liquid I would have no hesitation in sinking the lot into 2-3 of the big banks.

Im certainly no market analyst or expert, so I cant really say how the banks are gonna be in the short term.

And considering that india and china show no chance of slowing any time soon, I reckon that BHP and rio tinto are well worth their hefty share prices.

Honestly, you cant lose with blue chip stocks. If the market takes a battering, you just ride it out. Only idiots dump stock less than they paid for it, and its not like rio tinto or CBA are gonna go out of business. Id buy now, and if I hadnt seen a decent return in 2 years, id just wait a little longer.


Personally I have favoured property, because that way I can get a bank to lend me hundreds of thousands of dollars to invest which they wouldnt have given me otherwise.

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Originally posted by know you It's knowing which ones are going to come out of it alive more than anything. Frankly I feel that investment in the financial sector, at least in the US (might be different in Australia) is too risky right now. We are still on the downward slope. Better to keep a keen eye on the sector and wait for the first signs of an uptick, that way you know who to invest in and you wont be in as much risk as if you do when things are still sliding down hill.

its way different in australia. we realise that markets need regulation which is why our banks, whilst doing it tough, are in a far better position than the US banks.

Here is a list of stocks you might be interested in. No financials here unfortunately. If you want to speculate on a financial, I'de look at GKK, which is a property management, mortgage, and loan company that I believe will survive the current financial crunch. For being in the sector its in, it still is making a profit and increased revenue all the way through the sub-prime collapse.

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Originally posted by Krypton Here is a list of stocks you might be interested in. No financials here unfortunately. If you want to speculate on a financial, I'de look at GKK, which is a property management, mortgage, and loan company that I believe will survive the current financial crunch. For being in the sector its in, it still is making a profit and increased revenue all the way through the sub-prime collapse.

Uh...this is the Australian share market we are talking about.

Echo, if you decide to buy bank shares, go Westpac. I bought some back in October for $30 a pop, and they have since plunged to $19, but are back up to $24 today. They are the only bank who seems to be doing okay at the moment, and the almost certain merger with St. George is likely to do wonders with them.

Just remember that earnings on shares in Australia are taxed at 50% if you own them for a year or less, and 25% for more than a year.

quote:

Originally posted by Beat Blog Uh...this is the Australian share market we are talking about.

Almost all of these companies are international. EXM is Greek. PTR is Chinese. AUO is Taiwanese. TKC is Turkish. ESEA is Greek. TNE is Brazilian. HIMX is Taiwanese.

From my own lists, no Australian company is at the top. The only ones I'm thinking of are the commodities sector of Australia. Like BHP and Rio Tinto. Currently, commodities are going through a recession after explosive growth. If one is to invest in Australian mining companies, be careful you don't pay too high of a price.

Re: Investments

quote:

Originally posted by echosystm For the future... is real estate or stocks the better investment, in general? A few considerations: - We have tax imputation in Australia - I'd have to take loans for real estate ($interest!), whereas I can just use idle funds in shares - I'm pretty risk averse - I cbf watching stocks for 4 hours a day Cheers.

shares have outperformed property in australia over the last decade. but not by much.

definitely property, for reasons i said before. it might be nice making 15% on your shares, but if you only have $10,000 invested, that's still pretty small fry when compared to 8% growth of say, $370,000.

the advantage of property is that you can easily borrow heaps of cash to invest in it. taking a long enough viewpoint, property always goes up. property in tasmania has doubled every 9 years since 1972.

i bought a unit in 2006, and its already got about $50K equity. one of my best friends became a millionaire in 6ish years from investing in property.

shares are great if you have the necessary $$ to play around with. if you dont, buy some houses! there's all the small tax incentives with property too. analysts have said that given australias population growth, there simply isnt enough homes for everyone, meaning rent and property price increases over the longer term.

quote:

Originally posted by Krypton PTR

I bought them when they were at $158 a share.

quote:

Originally posted by echosystm For the future... is real estate or stocks the better investment, in general? A few considerations: - We have tax imputation in Australia - I'd have to take loans for real estate ($interest!), whereas I can just use idle funds in shares - I'm pretty risk averse - I cbf watching stocks for 4 hours a day Cheers.

Stocks have always outperformed all other investments you could buy over the long-term.

quote:

Originally posted by jonSun I bought them when they were at $158 a share.

When did you buy? January? If I were you, and this is my opinion, I'de tell you to hold it for 5-10 years at least. To be honest $158 isn't that bad of a price. You will be collecting an almost 4% dividend yield, which isn't bad at all. Reinvest those dividends, and your loss can be more than made up for with 10 years of dividend reinvestment at lower prices, and capital appreciation over that 10 year time tframe. Think long term. Don't le short term market movements drive you insane.

Re: Investments

quote:

Originally posted by echosystm For the future... is real estate or stocks the better investment, in general? A few considerations: - We have tax imputation in Australia - I'd have to take loans for real estate ($interest!), whereas I can just use idle funds in shares - I'm pretty risk averse - I cbf watching stocks for 4 hours a day

Managed accounts are a crock for the most part unless you're sticking a great deal more than 30k into them.

At some point in your life you'll have to take out a loan and its nothing to be overly scared of doing provided you don't waste the money, I'd revise that at the 2year mark rather than now as interest rates are quite high due to the US shooting themselves in the face, at present I'd forecast that they'll be in a mess for at least another 3-4 years from now before things settle down and get a bit better.
If you cant be bothered managing your money in a share market then stay away from it, the alternative there is to get a broker but you're taking a gamble with them as well.

Real estate is a slower game which takes slightly longer sometimes to develop money out of and it really depends where/what you invest into as to how much.
Cheap property where no one really wants to live won't ever appreciate in most cases so pick where you buy very carefully.
Throw money down and move in for awhile on a small unit for a year or two and while you're working it'll be worth it, don't think that you should carry that property for the life of the loan, soon as it appreciates in value past the point of interest rate repayments and into a decent enough profit you may as well sell it. Or you can have it on the side as an investment property and lease it out, plus use the net worth to buy something else more substantial a bit later, your parents might also be interested in investing in a property and if they own a property could use that as security when it comes to the time of the loan and reduce its interest rates.
I'd also remind you that properties also cost money in terms of rates, maintenance into their upkeep when you're factoring in what you can afford per-annum in repayments.

I started buying property when I was 20-21, its a much better dumping ground for cash than spending it on crap that most morons seem to end up lashing out on (expensive cars, tv's, clothes, world trips etc) might mean you have to live fairly frugal and work very, very hard for a few years but later on when you're secure it all makes sense.
Make no mistake though when I said work very hard... may as well do it now while you're young and healthy.

quote:

Originally posted by Krypton Almost all of these companies are international. EXM is Greek. PTR is Chinese. AUO is Taiwanese. TKC is Turkish. ESEA is Greek. TNE is Brazilian. HIMX is Taiwanese.

Very few of those are available on ASX, provided the codes are the same. TNE is the only one I could find.

I agree with pkc in that property is a superior investment to shares, especially in times of economic hardship.

Negative gearing is a load of crap though.

If you can afford it, it's always good to diversify though. I spent the last two years buying up shares and all my current savings from 2008 are going into a high interest account to buy property at some stage next year.

rental yields are the best they've been in a long time. increasing rents along with decreasing or static value. and you can borrow on shares just as well as with property, just the value of shares is more volatile.

gold has been an incredible performer over the last 10 years. I was working on a pre-purchasr study on a gold mine in 1998, where the lowest price model was based on $300, and the top model on $350, at a time when it was trading at 280. Now it's about 900 and likely to keep climbing.

back on topic, how much risk are you willing to take with your money? shares will go up over time, but maybe not much in the 2 years you are looking at until you want to take your money out again. Even professional investors such as fund managers have lost money in the last couple of years.

So you could put in a cash account at 8%, and come out with $12,000 or so (depends on how much you add over that time), or invest in shares and come out with anything from $8-15K.

Re: Re: Investments

yeah, what lilith said.

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Originally posted by Lilith soon as it appreciates in value past the point of interest rate repayments and into a decent enough profit you may as well sell it.

this is the only bit i didnt quite understand. why would you sell it if it wasn't costing you anything? why not leverage it to buy something else?

quote:

Originally posted by Krypton Stocks have always outperformed all other investments you could buy over the long-term. When did you buy? January? If I were you, and this is my opinion, I'de tell you to hold it for 5-10 years at least. To be honest $158 isn't that bad of a price. You will be collecting an almost 4% dividend yield, which isn't bad at all. Reinvest those dividends, and your loss can be more than made up for with 10 years of dividend reinvestment at lower prices, and capital appreciation over that 10 year time tframe. Think long term. Don't le short term market movements drive you insane.

It was sometime in may i think. I think it might have been $155 or $156. I sold 2 days later after it dropped about $8 a share. I had 110 shares too.

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Originally posted by Beat Blog Very few of those are available on ASX, provided the codes are the same. TNE is the only one I could find.

Here in the states, foreign companies are able to be listed on our domestic exchange through a process called American Depository Receipts (ADR)...CLICK

Australia doesn't have a similar system? Also, where are you going to look at the Aussie market?

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Originally posted by Beat Blog Negative gearing is a load of crap though.

no way! every little bit helps

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Originally posted by jonSun It was sometime in may i think. I think it might have been $155 or $156. I sold 2 days later after it dropped about $8 a share. I had 110 shares too.

sorry, thats too funny.

Re: Re: Re: Investments

quote:

Originally posted by pkcRAISTLIN this is the only bit i didnt quite understand. why would you sell it if it wasn't costing you anything? why not leverage it to buy something else?

Early on you have to be fairly aggressive in your purchasing, if you can find something for the right price, get it and then move onto something which is going to bring in a higher overall yield then you may as well cut and run onto the better option.
By all means use its net worth to get the better property, but its one of those things (unlike shares where you have to make a spot decision sometimes) you do get a bit of time to think about it. I maintain a couple of high appreciating, high demand rental properties simply for that reason, when I want to buy something which is a smaller investment I use them as collateral. Find something I think will make money, buy it and rent it out, if/when it appreciates I'll sell it for a profit and move onto something else.
But that's basically 'what I do' when it comes to a job and it also requires a volatile housing market to do a lot with. If you're in a sedentary market and have to work as well you're basically restricted to what it will hold up with and how much time you can invest into looking.

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