Tired of sitting on my hands!

Hi all,

First of all, I hope you all had a nice Xmas and New Year break, I've made a pledge this year to stop sitting on my hands and move forward with an investment, any investment! In this post I'm looking for guidance/suggestions to pave the way forward.

Previously I had been looking closely at moving into property with Canterbury Properties but I have since moved away from that at this point and am looking at other places to put our money. Our situation has improved quite a bit this year as we are free of crippling childcare fees!

Our aim:

Ofcourse, our aim is to be rid of our 330k mortgage ASAP followed by building a strong foundation to hopefully retire a bit earlier than usual.

Our situation:

We have about 200k in equity that we would obviously tap into and about 15k of spare cash per year. I had been looking at two things lately and they are;

1: Debt recycling, buying shares aiming for capital growth, reinvesting dividends and making the most of tax deductions. My understanding of the share market isnt as strong as the property market which worries me slightly.

2: Property, buying or building a house/duplex in growing areas near where we live, again aiming for capital growth My main concern here is cashflow with low rents and costs involved in holding the property while its built or when tenants are hard to find

I'd really appreciate some experienced opinions on amounts to invest that isn't sticking our necks out too far and even suggestions on something else we should take a look at.

Cheers,
Rockett

 

totally left field , but since you have a property already ( well at least you share it with the bank )

i put a solar array ( about 4.5Kw the maximum allowed on a residential building in my area , ORG came to the party arranging the installation ( and connecting to the grid ) you might also consider a battery back-up for when the grid goes down ( the solar array is switched off automatically as a safety measure , ... i don't do that ..yet , but i see the wisdom now )

this will reduce your power costs ( i am pretty frugal so was using the cash back to pay off the solar array loan , quickly )

the market seems ( mostly ) over-priced , unless you are talking rural or smaller towns , QLD ( imo ) is still over-priced

personally i would reduce the mortgage while you can ( and while better investments are hard to find ).

interest rates will have to go up eventually making debt harder to repay , but also giving better investment opportunities as rates rise ( in shares , term deposits and interest-bearing securities )


cheers and good luck

BTW i am NOT a professional advisor in any form ( but some members are )

 

We have put a quality solar system on the roof. Saves us about 2k a year and we can leave the aircon on all day and all night when its hot and humid!

I agree with the house prices. I hope Im wrong but Im starting to see some similarities to 2008 when the sh$t hit the fan.

Does anyone know reputable advisors/ planners on Brisbanes northside by chance?

 

OK , nice to see you have thought of that ( solar )

no i can't recommend any advisors ,

however please research and think , that way you can ask your advisor questions that may give you a ( better ) winning strategy , and also understand the risk factors you will be asked about ( say extra insurance strategies , are they needed or not ?? )

good luck

 

Peter Thornhill talks about debt recycling and growing dividends along with some common mistakes, get his book here, Welcome - Motivated Money

Very generally he speaks about using Listed Investment Companies (LICs) as part of a debt recycling strategy. He narrows the LIC field to old (50+ years) and low fee (below 0.5%). These filters will restrict you to only a handful of LICs and protect you from major mistakes. AFI, ARG and MLT (stock codes) are the three biggest and meet the filter among others.

Also consider looking at Index investing (either unlisted or ETF) as these are low fee and don't require as much thought and knowledge. Vanguard, State street and Blackrock are some of the majors.

Keeping things simple and fees low are the best places to start (and often stick with for good). Getting a small amount into the market is the best way to get comfortable with the process and the market IMO.

Speak to your accountant to ensure they are happy with your debt recycling processes. If they have no idea about it get a new accountant that does. Getting the setup wrong will cost you.

Not advice.

 

in a current over-valued market ( like we have currently ) i would prefer a ( filtered ) LIC to an ETF ( utilizing the fund manager's expertise and experience )

( i do not hold any of those listed LICs , but then i am not desperate for extra market exposure , currently )


not advice either

 

Thanks folks, some food advice there. I think the best way to go is to meet with a financial advisor and discuss options.

We have a small amount of shares in Lithium Mining and TLS.

 

i don't understand lithium ( or graphite ) well enough to invest cash there


TLS should be OK for the long game ( i hold TLS and will accumulate if it dips under $3.20 )

but try to get a little knowledge so you can ask the appropriate questions ( for you )

good luck

i originally saw a ( bank employed ) financial advisor who was keen to sell in-house products ( as now being discussed by the regulators ) but was wise enough to see i could do better than that by going it alone ( who wants to buy share packs and insurance products .. aka low yield bonds , i didn't )

 

mind you i didn't totally ignore the advice .. i did open a Commsec account , and bought shares and interest-bearing securities ,

rather than CBA ( around $50 at the time ) i bought and averaged down MQG ( av. SP $26 .74 .. i still have some of them , i stated selling down after the SYD bonus divestment ) and bought heavily into MQCPA in 2011 , which paid 11.5% on face value until they were redeemed.

MQG is still my second largest holding ( after the sell-down )

i could see the core logic on the advice , but realized with only a 10 year target date i needed to FORCE growth .. and CBA wasn't going to grow enough

but that was 2010 and 2011 , the playing field has changed much ( since then )

( THOSE MQCPA are no longer available and i would NOT suggest MQG now )

 

I feel the same about the current market, but I wouldn't count on it, too often experts have picked tops and the market hasn't corrected for some time, hence DCA'ing throughout a bull is good enough even if I end up buying some parcels above future lows. My belief is that it is easier to pick times of obvious gloom than market peaks and those (rare) times are opportunities to make the most of.

 

i thought ( and planned ) for a correction circa 2013 , so i admit i am the last voice you would listen to predicting specific times ,
HOWEVER , i still don't see convincing data to suggest this rally has sensible foundations to support another 10% gain ( it may still gain that 10% just the same though , just look excessively risky )

i use straight mathematics to select when to reduce , if a ( div. yielding ) stock rises more that 120% ( over my buying price ) i put on the thinking cap and crank up the calculator , to assess my next move do i wait , or do i reduce , and if i reduce at what price . ??

i believe in the saying ' no-one ever went broke taking some profit ' ( a little early )

(IMHO ) it is a tough time to make sensible investments and to make it worse i am under ( time ) pressure to get that money working and growing .

( my target date is February 2020 , where i hope to have grown another 50% to 80% in assets AND have a sustainable income set-up .. i have had and outrageous amount of luck to get where i am , but will need a little more and some skill to get into the target area )