New Financial Plan! (please advise)

Greetings!
I won't bore you with all the background info, but basically I'm looking to change my financial/investment plan.

I would really appreciate any input you might have.

So, here's what I've come up with so far.

Goals (long term, lofty, non-specific goals)
- To build and maintain my net 'wealth' through accumulation of cash and assets.
- To create a stream of passive income to supplement my wages
- To not have to worry about money

More Specific Goals (slightly)
- Build net wealth to $200k in cash and assets (3-5years?)
- Create passive income stream of $300 per week (2-3years?)
- Buy my own property
- Be comfortable enough to still afford to travel

Strategy (or lack thereof)
- Sell out of all managed funds (good riddance!)
(have $45k in funds)
- Pool money into high interest/term deposit account
(about $60k total)
- Contribute as much as possible to build a good cash base
(6 months at most. Could save to $75k probably)

Buy investment property
- $150k. Small apartment near Caulfield University for steady returns, hopefully.
- Borrow at 100% if possible and use savings in an offset account to reduce interest repayments. Pay off loan and build savings in offset account simultaneously.
________________________

It's obviously a work in progress. I don't really know much about anything. I don't know how/if I'll be able to buy a property of my own as well.

A few extra notes.
I'm a bit of a bum. I ride a push bike. I still live my parents. I don't buy nice things. I lead a simple life. I save most of my money.
I like to travel and give money to charity.
I want enough money to own my own home/car, feed myself, and travel. Any additional money will hopefully go to a good cause one day.

I'm smart enough to try and secure my future financially. But not smart enough to do it on my own.
I'm not financially motivated enough to dedicate the time it would take to do this on my own. As I have proven in my past failures
I was thinking of using 'InvestorsDirect' or a similar company to manage things for me. I don't mind paying for peace of mind and quality management.

So, that's about it I think.
You guys have all been tremendous over the years offering advice and helping me find my way.
I thank you all.!

 

Hi Compleks,

Turning 45K into 200K over 5 years is a tough one!

200,000/ 45,000 * 100/ 5 = 88.8% growth every year.

I don't know where returns are that high, without extreme risk.


"- To not have to worry about money"

I think you can not be an investor without any worries


"I'm smart enough to try and secure my future financially. But not smart enough to do it on my own. I'm not financially motivated enough to dedicate the time it would take to do this on my own."

There are plenty of financial adviser's out there, ready to take your money. It might be an advantage to talk to some( fee per hour), but don't expect miracles from their plans. Professionals have as much idea about the future as you.

It's your money, so it is important you have some control over it. Google 'Storm Financial' to see what can happen when all control is given away.


"Small apartment near Caulfield University for steady returns"

I don't think property will go like the last 20 years, but I could be wrong.


All you can do is educate yourself and not give up.



Best of luck,
Johny.

 

Hi Compleks

I totally agree with Johny that there are plenty of financial advisers out there ready to take your money.

However, there are also some good financial advisers (happy to put myself in that category), who provide advice in their clients best interests and charge on a fee for service basis.

I am happy to have a chat with you if you are interested.

Kind Regards

 

Passive income is just a synonym for low/no returns.

I think the average Australian should be happy if they don't go backwards over the next 3 - 5 years. So the idea of doubling or tripling your money over that period with "passive" strategies is unrealistic.

The cash rate is already back to GFC levels and the Australian economy has still yet to enter recession...

Bonds yields all around the world at record lows...

People are basically giving up on the ideas of getting a "return on their capital" and are simply hoping for the "return of their capital".

I think you need to work on understanding that "compounding" growth isn't something that JUST HAPPENS.

If you don't want that capital base to be eroded by inflation and your own consumption you are probably going to need between $300,000 and $450,000 for that sort of weekly return.

You're in luck on this front. If you don't own a property already, houses around the country are already about 6% cheaper than they were last year (probably closer to 10% - 12% in real terms).

With any luck they will continue to get cheaper over the coming years.

That said if they fall back to the long term trend it will still put you out a good $200,000 to $250,000 for your average 2 - 3 bedroom home.

$300 a week will go a long way in a lot of countries - just not an developed countries!

Why try and catch a falling knife!



Property prices are falling, just stay out of their way. Leveraging yourself at 100% into a falling market sounds like a great strategy to bankrupt yourself.

Have you read this thread yet?

http://www.invested.com.au/85/leverage-strategy-37587/

If you don't know much about anything I recommend working on the "knowing more" part first before jumping into big life changing investments.

These forums are great places to post ideas, and lot of people will be able to give you a few insights that you might not have thought of that might be worth considering. So just keep asking questions and talking through ideas.

First secret of investing - don't be impatient.

You're not a bum, you are prudent with your money.

Then I recommend getting smart because a fool and his gold are quickly parted.

Find the motivation.

My personal belief is that there are 4 things in life you can't outsource - your health, your finances, your relationships and your education.

Unfortunately success in any of these areas is 100% up to you.

Just accept it and set time aside for each.

Um there isn't a person on these forums who hasn't made bad investments. You learn from them and move forward. You don't give up.

So how is this different from a managed funds that you apparently hate.

Let me tell you something about human nature, when push comes to shove there are very few people in your life who will consistently prioritise your interests over theirs. None of them are fund managers or financial advisors, unless your mother also happens to be one of the above.



Please note I'm not having a go at these people or these professions, their services are utilised and appreciated by many people, I'm just saying you are kidding yourself if you think these people are going to go above and beyond for you if they aren't also handsomely compensated, and that "compensation" comes out of your returns.

Fund managers are financial advisors are meant for people who truly can't be assed, and as a result you will generally get average results at best, and you will have to pay for even those average results.

You clearly give a ****, and are willing to learn or you wouldn't be here. Just keep plugging away mate. Keep asking good questions. Keep reading and learning - and make sure you avoid trashy finance magazines, get rich quick schemes or anyone who tells you it's easy or recommends you borrow lots of money.

Making money is SIMPLE but that doesn't mean it's EASY.

 

Firstly, thank you once again for lending your expertise. This forum is full of very generous people!

Obviously I have a lot to think about and plan.

I should clarify that I wasn't really planning on turning $45k into $200k in 5 years. I was more thinking about having $200k to my name, as in savings and assets. Which is still probably a bit far fetched.
Realistically I don't really know what I want. I just know that everyone says I should have specific goals. In many areas of my life I do, but I honestly can't really put a figure on what I want financially if that makes sense.

I just redeemed all my managed funds, and finally realised about a $17k loss over about 7 years or so. Expensive lesson. Hopefully I understand what I learnt one day


In the mean time!
I'm thinking a high interest savings account for a while. Pool all my savings ($60k) and contribute about $400 per week while I can.
Then reassess the situation.

There seems to be a lot of banks offering accounts with 5 - 5.75% interest savings accounts.
This seems to be the highest (if criteria is met, which I can do comfortably at the moment).
RAMS :: Saver Account

 

If you can earn $50,000 a year after tax, and can live on $15,000 a year or less - $200,000 is less than 5 years away.



Sometimes the old fashioned way is the best.

I honestly believe 97% of people are going to make FAR more money by not trying to optimise their investments and just diversifying and accepting average returns, and then focussing on increasing their day job income through working more hours or getting further education.

Sometimes the best investments are in oneself.

I think the "why" you want something is just as important if not more important than the "what".

Take some time to work out what you want and why.

My goal is to get to about $400,000 in equity. For me that's the amount of money I need to be secure in the fact that if I couldn't work another day in my life I still have more than enough to live off, which will mean I can work on ANYTHING I want to without it needing to be for money or FEAR that I won't have enough.

For me the only thing I hate is the fear that holds me back at times. Removing this would be a dream come true for me.

If that's what makes you most comfortable then good for you. You definitely don't want to be sacrificing a wink of sleep for the sake of investments that are meant to be working for you not stressing you into an early grave.

Just remember, parking your money in cash isn't a cure all.

Cash is an investment position just like any other position. You still need to be continually working at getting a financial education because at the end of the day central banks can print money can cause inflation which can run rampant and destroy cash savings, just the same as stocks, real estate, commodities, bonds can all go down. The only way to protect yourself is to understand the system.

Anyway best of luck with it all.