Shares

[Red_Devil]

Melton fish fingers go alright.

Does Sarah have good fish fingers?

 

[dees_best]

Does Sarah have good fish fingers?

Nah she has a good wang though.

Double the size of sexy exxies.

 

[Gaz_87]

Nah she has a good wang though.

Double the size of sexy exxies.

How do i buy in these shares boyz.

 

[dees_best]

How do i buy in these shares boyz.

Call 03 9663 2523 for more details and ask for Master Tristan.

 

[BlueBoy83]

I'm shattered, I was going to buy into Seven Network when there shares hit $4.60ish which was liek close to there low for the last 12 months... but being the young person I am, I didn't have the money.
When i looked at the shares yesterday they were already back up to $5.33 and if Seven wins the Footy rights next year I will be one shattered and angry person at my parents for not buying shares for me.

considering the money they'd have to invest to get the footy you wouldnt expect them to make much money from it .... its more likely they would lose money from buying the rights to the footy ... i thinkn the olympics made a loss for them as well.

trust me if their shares go up it wont have ne thing to do with the footy rights ...

 

[BlueBoy83]

All fair points in some way i guess. Big wins on shares only usually come for those involved in the company who's shares are being traded though, would you agree? The days of people making 10 times their money on the sharemarket within a year or two are few and far between. But the right business can do that, and remember you are pulling wages the whole time the business is increasing in value. Invest 50k in the right business and within 5 years you could have a multi-million dollar operation on your hands, and all sorts of cars homes boats and stuff being paid for in your name (or a subsidiary's name, 2nd or 3rd company being beneficiaries of the trading trust, if you set it up right).

i suppose ... but something like 90% of small businesses fail within the first 3 years (dont quote me on this figure?) ... so its very high risk investing in a small business ... your right about the 10 times money gains in shares ... unless your very very lucky!!!!

 

[Dr Who]

First invest in a financial education. No I don’t mean a formal education, books, forums, paper trading ect are all part of education. Rich Dad Poor Dad series is a good start, then Jan Somers’ property book (and forum) and Stan Weinstein’s book for shares are good follow ups to ‘start’ with.

Deej 10 or 20 years might be too long for you and the stock market and property too slow, but its fine by me. Although it could be argued ive made investing my business.

Most people believe shares out perform property, but theres more to it than that:

Investor A buys 100k of shares, it doubles in 10 years and he has 200k, a nice 100k profit.

Investor B uses the 100k to buy a 500k property; it doubles in 10 years, a nice 400k profit.

Historically property doubles every 10 years (doesn’t mean it will anymore however) so 20 years it maybe worth 2mill, a profit of 1.9m. Not bad!

Clearly property has a leverage advantage over shares, while investing in a traditional sense. Yes one can margin lend on shares, but you may face a margin call if you pick and manage your share portfolio poorly.

Personally I prefer both and believe they complement one another. Ive worked my way into a situation where I can buy a property outright, I then draw down a loan and use those funds to buy shares (actively trade) with it.

An example maybe I buy a $400k house, get loan for 80% or $320k. Yes I pay say 6-8% interest on that, but its tax deductible. Ill also receive around a 3-4% rental return pa plus a 3-4%pa dividend return as I use it to by shares, loan pretty well taken care of! Then I aim to make 30%pa off that $320K. So my house still doubles every 10 years, and my $320k in shares will double roughly every 2.5years, allowing me to buy another house in roughly 3 years and start again.

However as value in the property grows I can refinance and draw out extra funds to put into shares, making the process even faster. The more property the faster it works again, until you buy 1 every year, then every 6mth. Then of course I could use margin lending as well, my $320k might buy me $800K of shares, now we’re really motoring!!

Of course you'll also need what if strategies. What if property crashes? What if the stockmarket crashes, what if both happen at once? Are you competent enough to short the market (ie make money when a stocks price falls), competent enough to seek out performing sectors (ie oil, nickel, gold ect).

Don’t invest because everyone is, plenty fail at this game because they haven’t the education or the plan. Too many people follow the herd blindly, know why and how you are going to do it!!! The earlier the better.

 

[Frodo]

First invest in a financial education. No I don’t mean a formal education, books, forums, paper trading ect are all part of education. Rich Dad Poor Dad series is a good start, then Jan Somers’ property book (and forum) and Stan Weinstein’s book for shares are good follow ups to ‘start’ with.

Deej 10 or 20 years might be too long for you and the stock market and property too slow, but its fine by me. Although it could be argued ive made investing my business.

Most people believe shares out perform property, but theres more to it than that:

Investor A buys 100k of shares, it doubles in 10 years and he has 200k, a nice 100k profit.

Investor B uses the 100k to buy a 500k property; it doubles in 10 years, a nice 400k profit.

Historically property doubles every 10 years (doesn’t mean it will anymore however) so 20 years it maybe worth 2mill, a profit of 1.9m. Not bad!

Clearly property has a leverage advantage over shares, while investing in a traditional sense. Yes one can margin lend on shares, but you may face a margin call if you pick and manage your share portfolio poorly.

Personally I prefer both and believe they complement one another. Ive worked my way into a situation where I can buy a property outright, I then draw down a loan and use those funds to buy shares (actively trade) with it.

An example maybe I buy a $400k house, get loan for 80% or $320k. Yes I pay say 6-8% interest on that, but its tax deductible. Ill also receive around a 3-4% rental return pa plus a 3-4%pa dividend return as I use it to by shares, loan pretty well taken care of! Then I aim to make 30%pa off that $320K. So my house still doubles every 10 years, and my $320k in shares will double roughly every 2.5years, allowing me to buy another house in roughly 3 years and start again.

However as value in the property grows I can refinance and draw out extra funds to put into shares, making the process even faster. The more property the faster it works again, until you buy 1 every year, then every 6mth. Then of course I could use margin lending as well, my $320k might buy me $800K of shares, now we’re really motoring!!

Of course you'll also need what if strategies. What if property crashes? What if the stockmarket crashes, what if both happen at once? Are you competent enough to short the market (ie make money when a stocks price falls), competent enough to seek out performing sectors (ie oil, nickel, gold ect).

Don’t invest because everyone is, plenty fail at this game because they haven’t the education or the plan. Too many people follow the herd blindly, know why and how you are going to do it!!! The earlier the better.

Well you can leverage shares exactly the same way as property.

Now shares have averaged 14.1% pa growth on average. Your 10 years for property to double is at least not the 7 year story ? Quite frankly it's complete rubbish. I'll tell you why later in this message. But you see doubling in 10 years is less than a 7% pa return. Then you need to subtract the dead money of management fees, stamp duty etc. Yes you can leverage but that's just gambling, amplifying gains or losses as they appear. I know a lot of people who leveraged for shares and property and had to be bailed out.

Now to property returns. Do you think we will ever see 17% mortgage rates again? If you think yes, then maybe you will get those high returns, but in any case will they be worth it?
It's a simple story. If house prices double then your take home pay must double or people wouldn't be able to afford to buy houses. If wages rise then there is a correlation directly with interest rates and inflation. So not only does your loan cost go up but the buying power of the house value is no more in day one than year ten unless you make a steal.
You can make a bit of money on your own home, as capital gains are tax free, but who wants to downsize!!!

Want to leverage then go for stock options and futures. Depends on how much of a gambler you are.

BTW. On your scenario after year 1 you lose over $16K for an investment of $400K. Better off putting it in the bank maybe


cash (k) loan (k)
$ 400.00 $ 320.00 income $ 14.00 $ 11.20 purchase loss -$ 22.00
interest
-$ 25.60 tax benefit
$ 5.43 gain/loss -$ 8.00 -$ 8.97

purchase loss = fees, settlement and stamp duty.

 

[Dr Who]

Well yes, I already made mention of margin lending on shares.
In Melbourne property has averaged 10% pa for the past 40 years, again I made mention we this may not continue into the future, but who knows? Perhaps those returns or more will be available with higher density living planned for the future?

Your wages may only justify a $300K home, doesn’t mean I wont be allowed to subside my block or build 2-3 or 4 units on it which in turn makes the gains. Australia has much scope to increase immigration and may well be a strategy used to combat our aging population. People have to live somewhere.

Im not talking about my own home, im talking about an investment property.

Very basic figuresYear1:

$400k house grows @ 7% = 21K
Rent @ 4% = 16k

Plus $320k worth of dividends @4% = 12K
$320 shares at 30% trader return = 96K
or $320K and using margin buys $800k of shares @20% (to account for extra interest) = $160K

Total loan = $320K @ 8% interest = $25k
Setup costs for property = $25K guestimate (1 off)

Total gains = $145K less 50K (loan and 1 off setup costs) = $95K on a $400K investment

Now Vs putting money in the bank?

$400K at 5% = $20K

I wont say much about the tax, other than I have trusts and company setups that will see me pay about the same tax as the person with the bank interest.

Now we are past year 1 and its 1 off setup costs, let the compounding kick in

Futures, options and CFDs have their place, but I don’t include them as the are higher risk and only the very experienced should touch them. They are the cream and not the cake in my plan.

Yes feel free to pick holes in my figures, they are very rough. Im not going to go it depreciations, rates, management fees, taxs, tax deductions (trusts) exact historical returns ect ect, in detail. Its only meant as a rough plan, one which I know works.

 

[Frodo]

Well yes, I already made mention of margin lending on shares.
In Melbourne property has averaged 10% pa for the past 40 years, again I made mention we this may not continue into the future, but who knows?

####We know that monetary control is here, Australia is no longer a babnana republic.

Perhaps those returns or more will be available with higher density living planned for the future?

Your wages may only justify a $300K home, doesn’t mean I wont be allowed to subside my block or build 2-3 or 4 units on it which in turn makes the gains. Australia has much scope to increase immigration and may well be a strategy used to combat our aging population. People have to live somewhere.

#### Subdivision is a strategy that can win if you are experienced in that game. Australia has plenty of space to build houses

Im not talking about my own home, im talking about an investment property.

Very basic figuresYear1:

$400k house grows @ 7% = 21K

### If it grows at 7% then the buying power of the $400k will average 7% less. No gain at all

Rent @ 4% = 16k
### Accepted but you need to deduct management fees and tax at 48.5%

Plus $320k worth of dividends @4% = 12K

#### Some will have franking credits but the 48.5 tax rate will dilute that figure

$320 shares at 30% trader return = 96K

#### I don't understand this unless you are a day trader and that is what you make, if so then why bother with property?

or $320K and using margin buys $800k of shares @20% (to account for extra interest) = $160K

#### Gambling,,,no guarantees there, you may just as well forecast a $160k loss

Total loan = $320K @ 8% interest = $25k

##### agreed

Setup costs for property = $25K guestimate (1 off)

#### agreed

Total gains = $145K less 50K (loan and 1 off setup costs) = $95K on a $400K investment

#### As per my comments above the equation is flawed

Now Vs putting money in the bank?

$400K at 5% = $20K

#### Yes, money in the bank is bad news. The key is that tax rate. Pay 48.5% and you get 2.6%. Inflation is really over 3% so you go backwards. Ie your buying power decreases each year.



I wont say much about the tax, other than I have trusts and company setups that will see me pay about the same tax as the person with the bank interest.

####But that's 48.5% the bank interest person pays. Now I have companies and this year my personal tax rate will be less than 15%. I'm not sure that you really are kosha

Now we are past year 1 and its 1 off setup costs, let the compounding kick in

#### It will improve but only marginally. Your $400k is still not a real asset

Futures, options and CFDs have their place, but I don’t include them as the are higher risk and only the very experienced should touch them. They are the cream and not the cake in my plan.

#### But all you say is for the very experienced (30% day trading gains!!!)

Yes feel free to pick holes in my figures, they are very rough. Im not going to go it depreciations, rates, management fees, taxs, tax deductions (trusts) exact historical returns ect ect, in detail. Its only meant as a rough plan, one which I know works.

#### In all seriousness, I don't think you do and it concerns me that others may be persuaded by you and lose their hard earned cash. Sorry, I don't mean to be offensive but I live this game every day in property, shares and cash.

 

[Frodo]

PS

Your $400K at 30% day trading and $320K at $20% ofter interest makes $184k a year in gross profit..........plus dividends at 4% making $212k plus.

You'd eat me alive with that return!!

 

[Dr Who]

In all seriousness, I don't think you do and it concerns me that others may be persuaded by you and lose their hard earned cash. Sorry, I don't mean to be offensive but I live this game every day in property, shares and cash.

Yeah right whatever, that’s why I said invest in education first.

Investing my own money is my job. My accountant has no problem with my investing. I paid him 10k in service fees and he saved me 250k just in tax last year. Needless to say we are both happy.

 

[Frodo]

Yeah right whatever, that’s why I said invest in education first.

Investing my own money is my job. My accountant has no problem with my investing. I paid him 10k in service fees and he saved me 250k just in tax last year. Needless to say we are both happy.

How did he do that? You have $400k to invest and borrow the rest ($320k) and you pay out $10k for a $250k saving. Bullcrap.

If you knew much about investing you would be teaching your accountant, not the other way around, and if he was so good he'd not be bothering being a low paid accountant when he could make a fortune otherwise.

Read Rich Dad , Poor Dad again and you'll maybe figure out the rubbish your spouting.

 

[Dr Who]

Geez you’re an idiot, I used the 400k and 320k as examples only. I invest much more than that, 400k is pocket change.

My accountant doesn’t teach me, all your good for is twisting words. I make the damn money, he does his job and saves me money. Clearly its pointless continuing this, I should’ve known better than to discuss this stuff here.

 

[Frodo]

Geez you’re an idiot, I used the 400k and 320k as examples only. I invest much more than that, 400k is pocket change.

My accountant doesn’t teach me, all your good for is twisting words. I make the damn money, he does his job and saves me money. Clearly its pointless continuing this, I should’ve known better than to discuss this stuff here.

agreed, try discussing it with primary school kids...they'll probably believe you


ps let me know which boxes you fill in for your bas , and frequency and I'll give you a bit of credibility.

 

[hoss]

In any case, mortgage rates will NEVER hit 17 -18 % in the future. Just won't happen. Why?

 

[Frodo]

In any case, mortgage rates will NEVER hit 17 -18 % in the future. Just won't happen. Why?

Because the ignorance of Paul Keating will be remembered and not repeated.

 

[Robin Hood]

Very basic figuresYear1:

$400k house grows @ 7% = 21K
Rent @ 4% = 16k

Plus $320k worth of dividends @4% = 12K
$320 shares at 30% trader return = 96K
or $320K and using margin buys $800k of shares @20% (to account for extra interest) = $160K

Total loan = $320K @ 8% interest = $25k
Setup costs for property = $25K guestimate (1 off)

Total gains = $145K less 50K (loan and 1 off setup costs) = $95K on a $400K investment

Now Vs putting money in the bank?

$400K at 5% = $20K

Your calculations are very simplistic and forget compound interst and rely on basic simple interest for a start. So simple supply and demand puts a break on house prices.

A return on shares interms of dividend you are looking for around 5-6% of the CURRENT market price Franked dividend - meaning 30% tax has already been taken out. Thats about standard dividend. As for houses yes you are looking at 4-5% rent minus associated expenses such as repairs, maintainece etc.

The average house price has dropped by around 5-10% in the last year for a start while the share market has on average for the last five years risen amounts between 10-15%.

Rental properties offer greater security but for a lesser return. Shares offer greater risk but greater return.

Rental properties are like betting on the favourite at the TAB at 2/1 while shares you can chose your risk you could pick a share at 2/1 or a share at 100/1 but the same thing happens as at the TAB. If you bet on a dog at 100/1 and it wins your going to get a lot more money than if you bet on a dog at 2/1. The TAB analogy may not suit all that well because in MOST time you dont lose your money in either.

 

[Dr Who]

Hi RH, yes I kept everything very basic as that’s all my time can give. It’s a massive subject to get into. Besides, if anyone was serious enough to look into this type of investment/s I take it as a given that they (a) have done their own research (b) have good advisers (c) don’t take financial advise from a footy forum.

I like interest only loans as im comfortable I can beat interest rates. And that’s really the bottom line, using other peoples time and money to make a positive return.

As argumentative as I find Frodo, he/she brings up some very valid points that require follow through by readers. At the end of the day, we have to be comfortable with our investment style (our tolerance to risk is as individual as we are), which basically comes down to our understanding and education of the risks/ rewards.

For me, doing nothing is the biggest risk of all.