Prevention is better than cure!
Do you remember when the GST was introduced into Australia? It was July 2000. Since then, most working singles and couples could have managed to secure (at least) half a dozen well researched residential investment properties. If you did this; congratulations! No doubt, with falling interest rates and a seriously growing housing shortage… the global slowdown would be delivering you more benefits than challenges right now!
Reaction is all too common! Why wait for drastic times to push us to those “drastic measures” that the politicians keep spruiking?
Doesn’t it make more sense to conduct our financial affairs during the good times in preparation for those drastic times… that always find us sooner or later?
Now while we can’t change the past, it is unwise… perhaps irresponsible… not to learn from it!
More…
Last week the Reserve Bank of Australia (RBA) made the decision at it’s monthly board meeting to leave the official cash rate on hold. That means no adjustment to interest rates this month.
But Did The RBA Get It Wrong?
It will be interesting to watch what they do with interest rates in the months ahead. Their actions will be an indication of whether this months decision to leave rates on hold was the right one or not.
At the beginning of 2008 the RBA put interest rates up twice. At the time the opposition argued that the decision to do so was wrong and a reaction to Kevin Rudd & Wayne Swan talking up inflation; citing it as the # 1 enemy to go after. What they failed to recognise was that the negative economic impact coming out of the USA had already begun to work its way through the system and here in Australia the economic slowdown was just about to bite.
The numerous interest rate cuts later in the year is clear evidence that monetary policy in the early part of 2008 was wrong.
More…
The following graph shows the history of interest rate movements in Australia from March 2001 to March 2009. The official cash rate currently stands at 3.25 per cent, which is a 45 year low.
Some people are simply confused right now. They have heard so many mixed messages in the past 18 months that they are unsure if now is a good time to step out and invest… or hold back and minimise their commitments.
If that’s you, don’t stay confused. It’s only when we have the right information that we can make fully informed decisions.
- Keep asking questions
- “Lash out” and have us prepare a Finance Structure & Cash Flow Health Check (there’s no cost anyway)
- Explore your retirement possibilities; not based on what you have done to date but what is possible in the next 7 to 10 years
To have us assist you, click here
Happy Investing,
Nick Lockhart
mrd Customer Care Program… because investing is personal
Prevention is better than cure. A complimentary, no obligation Finance Structure & Cash Flow Health Check may:
- Save you (literally) tens of thousands of dollars
- See the mortgage on your home cleared quicker
- Open up opportunities that would otherwise have passed you by
Yes please!
More…
There are many people involved in building a property, bringing it to market and eventual settlement. Builders, planners, architects, marketing groups, purchasers, finance brokers, banks… and the list goes on. All these people are at the mercy of one person’s opinion.
The Valuer!!!
The term “Valuer” is often misleading. Many people assume, due to the label “Valuer” that this person is going to mathematically compute a recommended retail price for a property. Nothing of the sort! The term “Valuer”, when dealing with a financier, refers to someone who assesses the perceived risk involved in a particular transaction. There are many factors involved that have nothing to do with the property itself. The biggest single factor in any assessment is the opinion of that one person named “Valuer”. It is not uncommon for opinions between valuers to differ by 10% or more on the same property. The property is the same, they both have access to the same documentation and historical data but they come back with two vastly different numbers. The only variable between them is their opinion.
More…
A drivers license and a car are good to have. They offer convenience and choice. But when a person throws caution to the wind, driving becomes hazardous!
- Bad drivers don’t know they are bad drivers
- Pigs don’t know that pigs stink
- And you don’t know what you don’t know about finance structure
The following “Horror Finance Stories” took their victims by as much surprise as the person who had someone pull out in front of their car and cause an accident.
More…
Friday February 13, 2009, 3:27 pm
SYDNEY (AFP) – Australia’s parliament narrowly passed a 42 billion dollar (28 billion US) stimulus package Friday in a bid to stave off recession in the face of the global economic crisis.
The parliamentary approval leaves the government free to immediately implement its spending plans, with Prime Minister Kevin Rudd stressing the need for swift action throughout protracted negotiations during the bill’s passage.
Rudd was jubilant after parliament backed the plan, saying the package was in the national interest and would help Australia’s centre-left Labor government fight the global economic recession.
“The most irresponsible thing to do today, with the worst global economic recession since the 1930s staring us in the face, would be to do nothing,” he told parliament.
The package includes spending of 28.8 billion Australian dollars on schools, housing and roads over four years, tax breaks for small businesses and cash handouts of 12.7 billion dollars to eligible workers, farmers and students.
Rudd said the Treasury estimated the plan would boost economic growth by 0.5 percentage points in 2008-09 and 0.75-1.0 points in 2009-10, supporting up to 90,000 jobs.
“Without parliament’s support for this plan, growth would be slower and unemployment would be higher,” he%2
>>>> Finance, Business and Company News – Yahoo!7.
Over the past 8 years or so speaking with all types of people on the subject of investing in property, many, generally new to investing, ask me the “what if” questions. My broad base of experience has meant my answers have generally put their minds at ease. Two questions, however, that I lacked a good solid answer for were:
- How good will your portfolio be if we have another world war?
- How good will your portfolio be if we have a worldwide recession or depression?
Well, with regards to Q 1, I still have no concrete answer for, and hopefully never will. With respect to Q 2, however, I can now (i.e. only now) say from experience… “It’s all ok”!
More…
In this example we have used Endeavor Gardens at Deception Bay showing how you can lower your holding costs, by capitalising your expenses.
Non Capitalised Example:
Weekly holding cost is $32.
Link to full non-capitalised report: Click Here PDF (24kb)
Capitalised Example:
No weekly cost – positive cashflow, $75 per week.
Link to full capitalised report: Click Here PDF (24kb)
At the peak of the interest rate cycle the standard variable of the big 4 banks was 9.57%. Assuming you took up the offer of a professional package with the banks and qualified for the full 0.7% discount your interest rate would have been 8.87%. For a peak rate, that isn’t too bad considering long term history. I recall buying my first home in 1994 when the rates had come down to a low 10.5%. They then dropped to 9.5% and I was dancing with joy at how much money I was saving and how cheap interest rates were.
How times have changed.
To demonstrate how the changes in interest rates affect your holding costs I will use the properties at Endeavour Gardens as an example…
More…
Next Page »
