Young Investors (<30) Thread

From my experience, I would say yes, it would be a mistake. Although you think it will make you happy and it is what you have been striving to achieve for many years, you will probably regret it later on, when you realise what that money could be doing for you. Wait until you have enough passive income to buy your toys and not use your capital.

All of this is my opinion on the matter. You need to weigh up where you sit on your own.

BR

 

thats the thing, i understand how material it sounds and is... but the other thing is that i have worked so hard towards it, and i am still young.

i have been enjoying trading my shares and am very close to achieving my goal. now its really starting to drive me crazy because, although i feel as if i will be 'buying the fish before i the tank', i want the car now (whilst i can enjoy it...),

the one thing im glad is that i wont be financing it (which was always an option) ..

i really dont know...but i can see myself making a biiiiig mistake...

 

There's your answer.

Listen to your head, not your heart

 

ive brought this thread a little off topic, but can anyone justify me buying my car??

 

Just because something is ego-based doesnt mean it is inherently wrong. A great amount of what we do in life is ego-based, the ego is part of what makes humans what they are.
Will a car, boat, etc give you eternal happiness? Probably not, but you sure can enjoy it, and enjoying things is part of what makes up a happy life.
Many people live a life of constantly buying things and always having to work harder/earn more to keep up with the things they want - is this any less valid than the people that accumulate money for the sake of accumulating money?
Some people get the same ego boost from accumulating some more shares or real estate that others do from getting the latest plasma or a new stereo system in their car. At least you can enjoy the plasma and stereo system.
I think it is a little bit judgmental to say that because people want to surround themselves with things they enjoy they are part of some "herd mentality" that makes them lesser beings because of it.

To me, the argument is about whether or not to buy good things, it is about whether to delay some gratification now so later on you can have much more gratification.
Each choice is just as valid - just remember that it is a chocie, dont whinge in 15 years because you are stuck in a dead end job for another 5 years because you purchased a car when you were 20 instead of an investment property.
Otherwise there is absolutely no point accumulating wealth for its own sake - unless you are Scrooge McDuck and enjoy swimming in a vault of your money.

 

Having said what i just said, stop looking for other people to justify your own decisions.
It is your life, your choice, and your responsibility.

A very good piece of advice one of my bosses gave to me was "drive the cheapest car your ego will let you afford".

 

Have you crunched the numbers?

If you buy the car, how long before you get back to your current position?

In the same time frame, if you DO NOT buy the car, how much better off would you be? (The compound growth curve is very unforgiving to those who step off of it.)

Once you really understand the consequences of each option, sleep on it and go with your gut feeling when you wake up.

Tailcat

 

Never said it made them lesser beings - and I don't think it is judgmental at all - a simple observation.

I think it is fair to say that our society is largely driven by consumerism. Nothing right or wrong about that - it just is what it is.

And as consequence of this consumerism I find a lot of people do whinge or are unhappy because they are stuck in a dead end job for longer.

There are no right or wrong choices -just choose the one that suits you.

Most people generally make decisions based on pleasure and pain. Consider the outcomes of each choice. If you buy the car, will the pleasure of having the car outweigh the pain of having to work longer in your job.

For some it will for some it won't - assess the pro's and con's and make the choice that is best for you.

 

The pleasure/pain thing is probably his biggest problem - he is a student so doesnt know the pain of working for the man!

 

Delayed gratification and licking the marshmallow:

The Whole Delayed Gratification Thing - Somersoft Property Investment Forums

Lets get back on topic though.

 

hmmm...thanks for all the opinions, anyways...i'm 90 percent sure i will go through with it at the end of this year. i currently work part-time for a bank, and like i stipulated earlier i wont be financing the car - thank god for that (i think that driving the car knowing i worked for it will give me the most satisfaction - i hate seeing ppl in dadies car/or finance...yuk), and i will be able to afford running it on my own merits.

now back to the topic - sorry bout the little sidetrack, but i couldnt resist

so a bit of background on my current situation

i graduate uni next year (commerce - finance and accounting) , and with a full time income (and no uni costs) i see myself truly begin working towards my financial goal.

little background to my current situation. i grew up with 3 siblings in a sole parent family. so financially things were always pretty tough growing up. like so many i have read about it all started with rich dad poor dad - i think mum got me it for my 16th bday... thats when my interest in investment began

this website has also inspired me a great deal (from memory i actually stumbled accross this website through the glossary when doing a uni assignment.. havnt really posted much - but a lot of late nights reading heaps.)

my current investment situation
i currently have approx $20k directly invested in the market.

it began with a trade of $2k...BHP was the first stock i bought...dont know why, just did it to get that first trade out of the way! and boy did it feel good!

as im only 22 i feel i am fairly risk adverse (i have no dependants and so fourth), so i have some funds invested what some would say are fairly speculative shares. and so far so good - luck has been on my side (the only experience before this was the ASX schools sharemarket game!). with a bit of advice from a good friend, and some of my own research i invested a split $10k in lihir gold (LGL) and nufarm (NUF)....and i cant complain there.


so as you all know, i'll be going pretty much back to zero to buy a car.

short term as i enjoy the actively watching markets i am begining to learn about CFDs.. so for the next year or two i would like to begin CFD trading

i will be working full time as of 2010 and aim to have my first IP by 2012-13.

the long term plan - only god knows right know, my endevour will be just to do the best with what i have...

pretty happy where i am with myself right now. i have a good part-time job with one australias big 4 banks, and am enjoying studies (holidays now!)

we'll just have to wait and see what happens after i graduate

 

Always good to hear from someone who is risk adverse who owns some speculative shares.

 

Why wouldnt you consider financing it? Debt is your friend. While its not best to have bad debt, it would be better to have bad debt and still have exposure to the share market than no exposure.

My bank offers new car loans to memeber at an interest rate of 8.2%. With home loans at about 7.85% and margin loans at 9.5%, if you believe your share selections will go up more than 8.2% for the year then you would be better ahead with a car loan

 

or he could consider buying the car cash, and getting the same value loan to buy shares.. that way his loan becomes tax-deductible.

 

log onto the ING website, use their compounding savings calculator. insert the deposit, ongoing payments etc you will commit to the car, over say 7 years.. and you will see how much REALLY the car will cost you..

insert about 14% PA return.

I worked out the VT I bought when I was young, combined the deposit I paid ($10,000) and the $20,000 loan, I would have had something stupid like $300,000 after 7 years.. now would you rather have a old car at the end of 7 years, or $300k where 10% return would buy you a new car each year?

Think carefully about the opportunity cost of spending!

 

Just remember if you only invest then when you get to the day when you want to purchase that new car (or whatever)....

Murphy might be around the corner and 'run over you!'

You have to smell the roses sometime or money will rule your world....

 

my situation

Age: 24 (partner's age 33)

Work: self employed running web development company Polinet > Home

PPOR: $1.5 mil with $1.2 mortgage

IPs :
1. inner Syndey freestanding home - value $800k with $640 owing
2. 7 unit block in the county NSW - value ??? nothing owing yet (bough for land value of $130k a year ago, it was burnt out and unlivable)
3.off the plan unit in Townsville settlement coming up value $290k

No shares or super or cash (lost about $5k in options trading and since then steer clear). My parents are investing some money in Russian shares for me in Russia but I make no direct investment decisions. They doubled my $50k investment in Russian real estate market last year but I lost most of the gain while transferring the money back to Oz because US dollar dropped so significantly - bummer

Started only a year ago after attending a seminar, me and my partners combined income was around $30k at the time, but he owned his inner Sydney house outright for several years by then and did absolutely nothing with it because of lack of income. Used that equity to start buying up, I believe made heaps of mistakes although I though I was pretty educated and read heaps and attended seminars. Since it was all only a year ago we haven't had a chance to revalue anything yet, currently living in debt off credit cards and parent's donations

My partner was self employed doing handyman work so I told him to quit it and renovate the properties we buy for equity increase rather than payment from people. Our first reno project with the units in the country took 8 months instead of the 3 as he originally thought, all the while the million dollar PPOR is standing empty while we are living in the dogboxes in the country
... only recently came back. The untis would be valued sometimes this week to finally give us some equity to pay off some debts, will let you know what the valuation comes to.

Next big project is to renovate PPOR, planning to make a hefty profit and sell to take it all tax free in about a years time.

Other plans include signing up as a mortage broker part time to learn the nitty gritty of property financing because I firmly believe as Bill Zheng says it's not the property that makes you money, it's how you finance it. Plus I want to direct the fees from all my mortgages into my own pocket rather than someone else's. If anyone know an outstanding investor focused brokerage they can recommend let me know.

Another short term plan: We are starting a property syndicate with people from another seminar I recently attended, which includes quite a few very proactive and very experienced investors, so really looking to do big million dollar developments and subdivisions together shortly. Plus I finally get myself a sounding board instead of it just being the two of us making decisions and doing every single mistake in the property investing book.

At the moment it's tough, but I don't complain, at least I have started investing and started big, now it's just a matter of learning as I go.

Polina

 

Polina,

Wow, that's quite impressive. Do you mind me asking how you're managing to service almost $2M in debt on a combined income of $30K, especially when your partner has taken 8 months off to reno your unit block in the country?

That's a lot of debt to be servicing on what looks like negligible income...

Cheers,
Michael.

 

servicing debt from equity

Well we are servicing our debt from equity. We left ourselves several months of equity worth from the original PPOP to pay off mortgage interest while doing the reno in the country. Mistake number 1 - need to leave at least a years worth if not more, since it took 3 times longer to complete then we expected. Hence we are currently finding ourselves in a jam. But then as soon as the new loan comes through we'll use that equity to buy more renovation materials and pay off mortgage over the next year while my partner renovates our PPOR, he is not going back to working for other people any time soon I don't think. I don't renovate myself, I keep working in my business, which has doubled last year to bring us around $40k for living expenses. So all the equity my partner is making goes to make more purchases and pay off existing ones.

It is quite aggressive and we are not planning on building our whole investment plan around raising debt strategy but I would rather go at it aggressively in the beginning and then ease off in a couple of years, at least we are building a big asset base. My plan is to have our combined NET worth at $1m by my 25th birthday which would be in a years time.

It has also got to do a lot with a mindset for me. I thought that if I put us in a position with a lot of debt and force myself to figure out how to pay it off and live that way then I am training my subconcious to ask these better bigger questions and expand my horizons. Otherwise we would have been happily plodding along with our small incomes just paying enough for the living expenses but not really getting anywhere, that dreaded "comfort zone", you know. I have spent my first 2 years out of uni in it. Forcing myself to think big by taking on all this debt does bring its stress but it also opens up a lot of doors and opportunities for me that I would not have otherwise even through of at my age.

Polina

 

Hey Polina,

Firstly, nice work with your web development business. You have some good clients.

My mind however is scattered after reading your post, with the numbers you have thrown out there.

How the hell do you purchase a PPOR worth $1.5 mil with only 30k income. the interest alone at 1.2 would be about 90k per year! Was it received as an inheritance??

I don't think i could have such an aggressive strategy while;

The following is very interesting. I imagine that Russia becoming an emerging economy again, there would be plenty of potential to make money, but also plenty of risk to people who are unfamiliar with the territory. Are they living there?

Anyways, great to have your input into this thread. ;-)