|
Investments (pg. 5)
|
View this Thread in Original format
| Beat Blog |
| quote: | Originally posted by Krypton
That is insane. I simply don't believe it. At Bank of America, the interest rate on the basic savings account if .20% (http://www.bankofamerica.com/deposi...te=save_regular)
Getting an 8% would involve either buying junk bonds, ultra-high yield dividend stocks, etc. No money market, no treasury bond, no certificate of deposit goes higher than 5%. That's why it's so hard for me to believe a basic savings account in Australia can get 8%. How do the banks make money?? They must charge very high interest rates on loans if they want a profit. |
Interest rates on home loans are currently around 10% per annum.
Average savings accounts are 7% per annum.
Top right:
http://www.westpac.com.au/internet/...ent/PB+HomePage
:) |
|
|
| pkcRAISTLIN |
| quote: | Originally posted by Beat Blog
I do, but I don't have a wife and kids to support, which makes it hard for some people. |
fair enough. and what about inflation? have you factored that into how much youre REALLY making.
| quote: | Originally posted by Beat Blog
I'm pretty sure you can get fixed interest accounts like loans? The converse is also true though, if an interest account can go down to 2%, a loan can go to 15% if you're not on a fixed rate, like it was in the 80's. |
but you cant get fixed terms for like 5 years (or if you do, the % is awful). and i always lock in my rates ;) so i know i can afford that investment for at least 5 years.
| quote: | Originally posted by Beat Blog
That's admirable, but it's only one example. |
but its not though man. i am following in the footsteps of a good friend of mine who is now a millionaire following these basic steps. there are many people i know (or know of) that made their fortune in property.
ask lilith to tell you about her success stories. i wouldnt be so adament if i thought i was a special case, im not and my income is (very) average.
you have also failed to include any and all tax costs into your compounding interest formula.
| quote: | Originally posted by Beat Blog
We've totally ing hijacked this thread anyway. I think we can both agree on the fact that echo should just plonk his money into an interest account at 7 or 8% and in 2 years he will be laughing. |
nah, that. you need to risk to make the big pay offs. id sink it into (aust) banks and mining companies for the next 2 years. and then see how he's travelling. |
|
|
| Beat Blog |
| quote: | Originally posted by pkcRAISTLIN
fair enough. and what about inflation? have you factored that into how much youre REALLY making. |
Neither have you, on the house 10 years down the track.
| quote: | Originally posted by pkcRAISTLIN
but you cant get fixed terms for like 5 years (or if you do, the % is awful). and i always lock in my rates ;) so i know i can afford that investment for at least 5 years. |
Are you kidding?! The longer you lock an account in for, the better the rate they offer! You can get term deposits with westpac for more than 8%.
| quote: | Originally posted by pkcRAISTLIN
but its not though man. i am following in the footsteps of a good friend of mine who is now a millionaire following these basic steps. there are many people i know (or know of) that made their fortune in property.
ask lilith to tell you about her success stories. i wouldnt be so adament if i thought i was a special case, im not and my income is (very) average. |
I'm following in the footsteps of my old man who started with nothing in 1970 and now owns the freehold on biggest pub in Melbourne outright, the second biggest tourist attraction in Victoria, and a multitude of other properties in the hospitality, retail, commercial and residential sectors that I can't even keep track of.
| quote: | Originally posted by pkcRAISTLIN
you have also failed to include any and all tax costs into your compounding interest formula. |
| quote: | Originally posted by Domesticated
$229,000 less tax. |
Did I?
I don't recall you citing capital gains tax on your own property story? |
|
|
| pkcRAISTLIN |
| quote: | Originally posted by Krypton
That is insane. I simply don't believe it. At Bank of America, the interest rate on the basic savings account is .20% (http://www.bankofamerica.com/deposi...te=save_regular)
Getting an 8% would involve either buying junk bonds, ultra-high yield dividend stocks, etc. No money market, no treasury bond, no certificate of deposit goes higher than 5%. That's why it's so hard for me to believe a basic savings account in Australia can get 8%. How do the banks make money?? They must charge very high interest rates on loans if they want a profit. |
beat blog is referencing termed deposit rates. my regular savings account gets .01% interest. |
|
|
| Beat Blog |
| quote: | Originally posted by pkcRAISTLIN
beat blog is referencing termed deposit rates. my regular savings account gets .01% interest. |
No, I'm talking about regular savings accounts? :conf:
Mine pays me 7.05% per annum, or .58% per month.
We are talking interest per year, yeah?
Mine doesn't have any conditions like minimum balance or monthly deposit either. |
|
|
| pkcRAISTLIN |
| quote: | Originally posted by Beat Blog
Neither have you, on the house 10 years down the track. |
what? houses are immune to inflation; in the sense that an inflationary economy is not going to erode the value of my house.
| quote: | Originally posted by Beat Blog
Are you kidding?! The longer you lock and account in for, the better the rate they offer! You can get term deposits with westpac for more than 8%. |
i did research recently coz i had to decide what to do with my $10K. with rates looking like they may fall sooner rather than later, trying to lock in 24 month accounts gave me 4%.
| quote: | Originally posted by Beat Blog
I'm following in the footsteps of my old man who started with nothing in 1970 and now owns the freehold on biggest pub in Melbourne outright, the second biggest tourist attraction in Victoria, and a multitude of other properties in the hospitality, retail, commercial and residential sectors that I can't even keep track of. |
and im sure a large fraction of that wealth has come from capital growth in various types of property, and not from hoarding everything he owned in a term deposit ;)
| quote: | Originally posted by Beat Blog
Did I? |
my mistake!
| quote: | Originally posted by Beat Blog
I don't recall you citing capital gains tax on your own property story? |
because capital gains only counts at the end of the cycle, so i dont need to think about it on a weekly or even yearly basis like you do with a term deposit. |
|
|
| pkcRAISTLIN |
| quote: | Originally posted by Beat Blog
No, I'm talking about regular savings accounts? :conf:
Mine pays me 7.05% per annum, or .58% per month.
We are talking interest per year, yeah?
Mine doesn't have any conditions like minimum balance or monthly deposit either. |
really? CBA is jewing me! |
|
|
| Krypton |
| quote: | Originally posted by pkcRAISTLIN
beat blog is referencing termed deposit rates. my regular savings account gets .01% interest. |
It says ESavings. What is the difference between this eSavings thing and a regular savings account?
I wonder if I could open up an off-shore banking account in Australia... |
|
|
| Beat Blog |
| quote: | Originally posted by pkcRAISTLIN
what? houses are immune to inflation; in the sense that an inflationary economy is not going to erode the value of my house. |
No, of course not, but an interest account increases at a faster rate than inflation does too.
| quote: | Originally posted by pkcRAISTLIN
i did research recently coz i had to decide what to do with my $10K. with rates looking like they may fall sooner rather than later, trying to lock in 24 month accounts gave me 4%. |
Your bank is pov.
| quote: | Originally posted by pkcRAISTLIN
and im sure a large fraction of that wealth has come from capital growth in various types of property, and not from hoarding everything he owned in a term deposit ;) |
Of course - I'm not preaching bank accounts vs property, I'm preaching conserving your money if the property isn't going to give you a positive rental return and you're not going to renovate or sub-divide.
He is stoutly against negative gearing and was the one who convinced me against it when I first learnt the concept and was drooling over it as you are now. |
|
|
| Beat Blog |
| quote: | Originally posted by Krypton
It says ESavings. What is the difference between this eSavings thing and a regular savings account?
I wonder if I could open up an off-shore banking account in Australia... |
eSavings is just one of a few different account types that they have - it's another name for "regular".
Check it out pkc:
http://www.westpac.com.au/internet/...ent/PB+HomePage
Apparently WBC is the only Aussie bank not affected by the US market, because they got ed over in 1990 and decided not to enter that market again. Perhaps that's why they're good now? |
|
|
| Arbiter |
| I'm a big fan of index funds personally. Residential real-estate as a long-term investment in the U.S. is a fool's game -- that might be different in Australia, though. |
|
|
| tubby |
| quote: | Originally posted by pkcRAISTLIN
really? CBA is jewing me! |
a bank screw over a customer? not in this country surely.
Property can be good, no doubt about it, but it has pitfalls.
Stamp duty is a big one, and the all-or-nothing nature of it, you cannot sell some of your house to fund other things.
However, it's relatively safe, and won't go down much. You do get the benefit of negative gearing, but then get hit with CGT. shares get some benefit there if you hold them over a year.
Lots of things to consider before you commit.
As for this comment:
It's funny; people treat property differently to a business or shares. Would you ever buy a business (a cafe or bar for example) that you knew was going to be losing money weekly, in the hope that your tax would be reduced and that you may be able to sell the business for more later on?
No-one would ever start a business with this attitude. Every business has startup costs that you take on for eventual profit. Property is only different in that the pay-off only comes in one hit. |
|
|
|
|
