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Discussion in 'Introductions' started by AdelaideInvestor, 8th Sep, 2008.

  1. AdelaideInvestor

    AdelaideInvestor New Member

    Joined:
    8th Sep, 2008
    Posts:
    4
    Location:
    Adelaide
    Greetings to everyone!

    I am 23 years old (in October) and interesting in the finance/planning/accounting industry.

    I am a new investor and also just finished my Diploma of Financial Planning! How exciting! =)

    I am eager to get into the Adelaide investment market and i want to grow my wealth, i have visions of where i want to be (5 years from now, 10 years from now, etc)

    However, my problems lie in stragies for myself. I current have a mortgage of $417,000, this is my only debt, no credit cards/personal loans/nothing. My repayments are around $3300 a month which i can safely pay off with enough to spare. (the $417,000 mortgage is for a home we just finished building which is worth approx $850,000 at least going by other house/land prices in same area of same size)

    My question is, should i be paying off my loan and reduce my entire debt before i start getting into investing (shares/property/funds/etc) or should i be putting money away to get into that market sooner and just pay off the minimums?

    I have been told (by reading books, many many books) that i should not try to pay of my house entirely and instead invest in some income producing investment to produce an income for me to pay off the loans, but i am scared that i will get myself into debt that i will not be able to get out of!

    Its all very scary, and at the age of 23 im don't want to "kill" my financial future by doing silly things.

    What i really need is for someone with knowledge or experience in this area to guide me as to whether i am going in the right direction here. I know i am a qualified financial planner now and i should know the answers to these questions but i dont have the experience in these areas and i have always said "the person who asks questions looks stupid for a minute, the person who doesnt ask will be stupid for life"


    Thank you for reading my post and any advice is good advice and yes i know the advice will be general advice and not tailored to me etc etc =)
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    The first question is - do you think you will live in that house forever?

    If you can foresee a situation where you may choose to move out, would you keep it as an investment property, or would you sell it?

    If you think there is a chance you may move out, but keep the property as an investment, then I wouldn't be making principal payments on the loan - I would pay interest only, but accumulate the additional money you save from the lower repayments into an offset account (which achieves the same effective result as paying the principal) ... because this will make things far more tax effective for you in the future.

    That's just one option anyway - there are many others to consider too (which I'm sure other people will be able to suggest).
     
  3. AdelaideInvestor

    AdelaideInvestor New Member

    Joined:
    8th Sep, 2008
    Posts:
    4
    Location:
    Adelaide
    I am currently doing that at the moment (Loan is IO because it was a construction loan but will turn to P/I soon).

    I will not live in it forever, i can see my self moving in the next maybe 7 years, if everything goes to plan =)