BUY PROPERTY NOW - 12/01/2009 - If you are a first home buyer, you will not have a better opportunity than right now to get into your own place courtesy of the Federal Governments generous grant, and low interest rates, with the prospect of more rate cuts in February and March. Most experts are predicting borrowing rates to reduce to about 4.5% variable and in the low fives for fixed rates of 2 to 3 years. I am now seeing strong demand for low priced homes, and many are selling within a few days. Result - prices will increase although probably by only $20,000 or so. But still by buying now that is an extra $20,000 that you won't have to pay for your house, and with lower repayments for the next 30 years.
Calculate what repayments would be, and compare that to your rental now, and then add an extra 10% to your rent to allow for increases over the next two years. How does it compare? If your rent is more or much the same as the repayments, then what are you waiting for, grab a house now. If renting is still much cheaper than perhaps you should wait for now, but these market conditions won't last forever. The good times don't last forever, and neither do the bad times. Plan ahead for the next 10 years now. Use our free calculator at http://www.rescueme.com.au/calculators.html to see whether renting is cheaper than buying for you. If you do decide to buy then try to get an experienced negotiater to advise you with your contract offer and negotiations.
Sunday, January 11, 2009
Sunday, January 4, 2009
MAKING MONEY OUT OF THE FINANCIAL CRISIS
What's that you say? How can anyone make money at the moment?
Easy really, the two best drivers of wealth are still property and the sharemarket. Both of these are down at the moment, although property is not down very much apart from property owned by financially distressed vendors.
Let's look at PROPERTY first - There is good buying pressure on lower priced homes in the first home buyers are of the market, so let's avoid that area. If you look around carefully and talk to as many real estate agents as possible, then you will find homes in the bracket just above that level. (Agents will chase deals for cashed up buyers at present) For example if the entry level in your area is $350,000 then look at homes in the $500,000 bracket. You should be able to pick up one of these for around $430,000 if you are prepared to wait and negotiate hard. That will give you a much better buy in the long run for that extra $80,000.
You must buy with your head using all of the logical measures rather that just picking a home with colours that you like. A house needs to be a sound building displaying some worthwhile architectural features that make it stand out, and importantly it must be well located. Paint colour, age, and other superficial characteristics will in the long run have little bearing on what you can achieve with a house. In fact I always consider a house or property that is a bit run down as an advantage as less people will be interested thus offering a better buy. Really paint is cheap. This market has brought prices back to a realistic level and ensured that they don't race off leaving everyone behind. You do need to take a long term view, and with the current interest rates you can afford to hold a property that brings in reasonable rent. Yields should be in the vicinity of 5% or more. If I buy for $520,000 then I look for $520 per week or close to that. Interest rates will shortly be around 5% so a positively geared property is not out of the question if you have a small deposit.
PROFITS - give yourself at least 5 years, but I suspect that you may earn an easy $100,000 out of a $500,000 house over that time as well as taking some tax benefits along the way, and you will only be taxed on half of the capital gain as long as you hold for more than 12 months.
Now lets look at the SHAREMARKET - This market has taken an absolute hammering over the last 18 months, in particular the latter half of 2008 when many were predicting the end of the world as we know it. and truly it was the end of the world for many banks and related financial concerns. We now have some stability in this market, banks are again lending, Obama is promising to fix the ills of the system and has brought on many good people who appear capable of doing that given time, and the more normal market conditions means that investors will again look at the fundamentals of the companies rather that just looking for the nearest exit to run through. Many of these companies will receive solid upgrades once we realise that they still have good earning capacity. Look for CASH earnings, and not just revaluations of assets to drive income. Values of warehouses, breweries, retail property etc. can go up or down, but a company with sound cash earnings can ride out storms and fluctuations in the economy. I can't and won't tell you what companies to invest in, but ask yourself if people will still need to eat, have a beer, drive a car (and what sort of a car) go to the movies etc. Regardless of the situation people will still need necessities, but perhaps champagne and caviar will be off the menu for a while.
Think carefully about the industry that you are putting money into, the company, the people running the company, and the strength of the company. If you are unsure ask your stockbroker for advice, but always be involved in the decision yourself. Never invest in any company that you don't understand.
Invest with intelligence and win in this credit crisis.....
www.rescueme.com.au
Easy really, the two best drivers of wealth are still property and the sharemarket. Both of these are down at the moment, although property is not down very much apart from property owned by financially distressed vendors.
Let's look at PROPERTY first - There is good buying pressure on lower priced homes in the first home buyers are of the market, so let's avoid that area. If you look around carefully and talk to as many real estate agents as possible, then you will find homes in the bracket just above that level. (Agents will chase deals for cashed up buyers at present) For example if the entry level in your area is $350,000 then look at homes in the $500,000 bracket. You should be able to pick up one of these for around $430,000 if you are prepared to wait and negotiate hard. That will give you a much better buy in the long run for that extra $80,000.
You must buy with your head using all of the logical measures rather that just picking a home with colours that you like. A house needs to be a sound building displaying some worthwhile architectural features that make it stand out, and importantly it must be well located. Paint colour, age, and other superficial characteristics will in the long run have little bearing on what you can achieve with a house. In fact I always consider a house or property that is a bit run down as an advantage as less people will be interested thus offering a better buy. Really paint is cheap. This market has brought prices back to a realistic level and ensured that they don't race off leaving everyone behind. You do need to take a long term view, and with the current interest rates you can afford to hold a property that brings in reasonable rent. Yields should be in the vicinity of 5% or more. If I buy for $520,000 then I look for $520 per week or close to that. Interest rates will shortly be around 5% so a positively geared property is not out of the question if you have a small deposit.
PROFITS - give yourself at least 5 years, but I suspect that you may earn an easy $100,000 out of a $500,000 house over that time as well as taking some tax benefits along the way, and you will only be taxed on half of the capital gain as long as you hold for more than 12 months.
Now lets look at the SHAREMARKET - This market has taken an absolute hammering over the last 18 months, in particular the latter half of 2008 when many were predicting the end of the world as we know it. and truly it was the end of the world for many banks and related financial concerns. We now have some stability in this market, banks are again lending, Obama is promising to fix the ills of the system and has brought on many good people who appear capable of doing that given time, and the more normal market conditions means that investors will again look at the fundamentals of the companies rather that just looking for the nearest exit to run through. Many of these companies will receive solid upgrades once we realise that they still have good earning capacity. Look for CASH earnings, and not just revaluations of assets to drive income. Values of warehouses, breweries, retail property etc. can go up or down, but a company with sound cash earnings can ride out storms and fluctuations in the economy. I can't and won't tell you what companies to invest in, but ask yourself if people will still need to eat, have a beer, drive a car (and what sort of a car) go to the movies etc. Regardless of the situation people will still need necessities, but perhaps champagne and caviar will be off the menu for a while.
Think carefully about the industry that you are putting money into, the company, the people running the company, and the strength of the company. If you are unsure ask your stockbroker for advice, but always be involved in the decision yourself. Never invest in any company that you don't understand.
Invest with intelligence and win in this credit crisis.....
www.rescueme.com.au
Monday, December 15, 2008
AND NOW THE SCAMS APPEAR
One good thing this credit crisis has done is flush out many of the scams as investors try to move funds out of these schemes only to be told that really there is no money there at all. Often investors are long term and have received excellent returns for many years, all funded by new investors who also want higher than normal returns. Whilst they will be horrified about their money, at least by finding out the truth earlier the damage will be limited. With the Madoff "Ponzi style scheme" in New York to cost investors in excess of $50 Billion, and many other scams and frauds in the UK, Australia and elsewhere, the overall figure will be much higher that people realise.
What can we learn from this experience? How many times have you heard the saying "If it sounds too good to be true, then it is too good to be true" There is no way that you can earn more than other investors without taking a higher risk, or worse still investing in something that later turns out to be illegal or a scam.
Scammers rely on one ingredient, and that is the greed of the investor will override his or her common sense. That coupled with some charm and an air of "trust me" and your hooked. Always remember that the return of your money is more important than the return on your money.
Sure everyone knows that these confidence fraudsters are bad people who should be jailed for their sins, but if I can just say something controversial here and suggest that most of those people who got hooked are victims of their own greed and stupidity, and in all probability they would have lost that money anyway because they were governed by the worst of all human investment traits, and that is greed. It is a characteristic that we all have, but we need to suppress it if we want to survive in a tough world. Greed pushes us to take risks which eventually start to resemble gambling more than rational investment strategies. If stupid greedy investors did not exist then nor would scammers profit from them.
Sit down now and look at your investments, savings, superannuation, properties owned, and any other form of investment that you may be involved in. Ask yourself why have I invested money in this, what are the risks, and what are the benefits. What would happen to me if this investment failed and I lost it all. Examine everything and if necessary make gradual changes to your investment strategy.
I hope this advice hasn't come too late.
What can we learn from this experience? How many times have you heard the saying "If it sounds too good to be true, then it is too good to be true" There is no way that you can earn more than other investors without taking a higher risk, or worse still investing in something that later turns out to be illegal or a scam.
Scammers rely on one ingredient, and that is the greed of the investor will override his or her common sense. That coupled with some charm and an air of "trust me" and your hooked. Always remember that the return of your money is more important than the return on your money.
Sure everyone knows that these confidence fraudsters are bad people who should be jailed for their sins, but if I can just say something controversial here and suggest that most of those people who got hooked are victims of their own greed and stupidity, and in all probability they would have lost that money anyway because they were governed by the worst of all human investment traits, and that is greed. It is a characteristic that we all have, but we need to suppress it if we want to survive in a tough world. Greed pushes us to take risks which eventually start to resemble gambling more than rational investment strategies. If stupid greedy investors did not exist then nor would scammers profit from them.
Sit down now and look at your investments, savings, superannuation, properties owned, and any other form of investment that you may be involved in. Ask yourself why have I invested money in this, what are the risks, and what are the benefits. What would happen to me if this investment failed and I lost it all. Examine everything and if necessary make gradual changes to your investment strategy.
I hope this advice hasn't come too late.
Tuesday, December 9, 2008
CREDIT CRISIS
Yes we are in the throws of a credit crisis, but could this be the start of your wealth building in 2009.
All change brings opportunity, so if you have the determination and endeavour, you will place yourself in a position to take advantage of that opportunity and profit from it. Anyone who has secure employment or income will be in a position to buy at bargain prices whether that is a new plasma TV or a $1M commercial property, there will be bargains appearing over the course of 2009. You may not get a steal, but if you search hard enough for the right bargains then exceptional investments at the right price will appear in 2009.
Read our discussion on the "credit crisis" on www.rescueme.com.au/creditcrisis.html and then leave a comment on this blog. We want your feed back. If you are angry then tell us, if you have plans then tell us. Whatever you have to say then please say it so that all can share in your thoughts.
All change brings opportunity, so if you have the determination and endeavour, you will place yourself in a position to take advantage of that opportunity and profit from it. Anyone who has secure employment or income will be in a position to buy at bargain prices whether that is a new plasma TV or a $1M commercial property, there will be bargains appearing over the course of 2009. You may not get a steal, but if you search hard enough for the right bargains then exceptional investments at the right price will appear in 2009.
Read our discussion on the "credit crisis" on www.rescueme.com.au/creditcrisis.html and then leave a comment on this blog. We want your feed back. If you are angry then tell us, if you have plans then tell us. Whatever you have to say then please say it so that all can share in your thoughts.
Sunday, December 7, 2008
Spend, Spend, Spend
The words of advice from K.Rudd for pensioners and for anyone with children is spend, spend, spend. But before you do that, look at your credit card debt. You may be a lot better off paying it off your credit cards, and then burying the card in the backyard so that you leave it alone.
Australians have a lot of credit card debt, and it won't go away by itself. If you don't have any debt, and are in a great position financially then take the PM's advice, but for the rest of us perhaps we should be a little more prudent.
Merry Xmas.
Australians have a lot of credit card debt, and it won't go away by itself. If you don't have any debt, and are in a great position financially then take the PM's advice, but for the rest of us perhaps we should be a little more prudent.
Merry Xmas.
Monday, December 1, 2008
Christmas Gift of 1% Interest Rate Reduction
INTEREST RATE REDUCTION OF 1% - 02/12/2008 - The RBA has today given the economy a full 1.00% reduction in the official interest rates. This will save a borrower with a $250,000 home loan $2500 per annum in interest which is over $200 per month extra cash they will have in their pocket. We are now getting to a point where potential new home buyers really should look at their options to purchase instead of renting. We have been predicting a surge in new home buyers coming onto the market ever since the two pronged stimulus of interest rate reductions and very generous first home buyers grant of up to $21,000
With variable rates at 6.00% and the likelihood of more rate reductions in February and March 2009 then I can't remember a better time to buy that first home. Don't forget that the First Home Buyers Grant will reduce back to $7000 on 30/06/09 and if it the government choose to maintain that grant, then it will give a stimulus to the market and increase home values across the board. Either way you really can't afford to miss out on that grant if you are eligible for it.
With variable rates at 6.00% and the likelihood of more rate reductions in February and March 2009 then I can't remember a better time to buy that first home. Don't forget that the First Home Buyers Grant will reduce back to $7000 on 30/06/09 and if it the government choose to maintain that grant, then it will give a stimulus to the market and increase home values across the board. Either way you really can't afford to miss out on that grant if you are eligible for it.
Wednesday, November 26, 2008
THE START OF A REAL RALLY???
DOW UP FOUR DAYS IN A ROW - IS THIS THE START OF A TURNAROUND? - 27/11/2008 - What a difference four days can make. Since Obama announced his team of economic advisors and administrators, and with the Citigroup bailout, the market has responded positively. Such is the perceived quality of the team that Obama has put in place. Unlike Paulson who has yoyo'd on key measures to the point that the market had all but lost faith in the Bush administrations ability to control the future of the US economy, the market can now see that a team with the right experience and skills has been assembled by Obama, and that team will take over the economy in January 2009. As long as the now discredited Bush team don't fumble too much between now and 20th January next year, things may just hold up ok.
We now need a reasonable Christmas sales period in the US especially for this Friday (called Black Friday because that is the day when most stores actually start making a profit and move from the red into the black). That will set the trend for the next 12 months, and will either signal a prolonged deep recession, or if sales are seen as good in this climate, then the stock market will move higher. You may ask what does this mean to an average Aussie paying off a home and working 40 hours a week. Well the stock market predicts the future, and will rise or fall on what is about to happen. So even if things are a bit tough on the ground, if the market is rising then better times are ahead. Conversely if the market is falling as it has for the last 14 months, then bad times are ahead. Our stock market runs parallel to Wall Street because we are just a minnow in the real world, and whatever happens in the US will happen to our market as well. Interest rates are predicted to decrease again in December, perhaps by 1% again, and further decreases will probably happen next year after January.
This will be a good time to either re-visit your home loan to see if a better deal can be arranged, and/or aggressively look to see what bargains are out there in both real estate and shares.
Those with courage and intelligence will make money in these situations.
If you would like advice on a refinance of your home loan visit www.rescueme.com.au/refinance.html You may be able to save a huge amount on your monthly repayments by an intelligent re-finance.
We now need a reasonable Christmas sales period in the US especially for this Friday (called Black Friday because that is the day when most stores actually start making a profit and move from the red into the black). That will set the trend for the next 12 months, and will either signal a prolonged deep recession, or if sales are seen as good in this climate, then the stock market will move higher. You may ask what does this mean to an average Aussie paying off a home and working 40 hours a week. Well the stock market predicts the future, and will rise or fall on what is about to happen. So even if things are a bit tough on the ground, if the market is rising then better times are ahead. Conversely if the market is falling as it has for the last 14 months, then bad times are ahead. Our stock market runs parallel to Wall Street because we are just a minnow in the real world, and whatever happens in the US will happen to our market as well. Interest rates are predicted to decrease again in December, perhaps by 1% again, and further decreases will probably happen next year after January.
This will be a good time to either re-visit your home loan to see if a better deal can be arranged, and/or aggressively look to see what bargains are out there in both real estate and shares.
Those with courage and intelligence will make money in these situations.
If you would like advice on a refinance of your home loan visit www.rescueme.com.au/refinance.html You may be able to save a huge amount on your monthly repayments by an intelligent re-finance.
Subscribe to:
Posts (Atom)
