Skatduder Posted February 9, 2007 Report Share Posted February 9, 2007 I would be looking for ways that your money would work harder for you. What about 500/k invested in a rental property at home. Say you buy a 4 plex in a decent area and pay it off. After expences you'd clear a min of $3000 a month. You could hire a manager or manage it yourself. Uncle Sam would give you a tax break, you'll have income, and it would keep up with inflation. It is work but in the long run you will be so much farther ahead. You may also get a tax break to fly home to look at your rental property. If you really want growth, leverage the 500/k into an apartment building or commercial building with a triple net lease. Then manage the manager. Link to comment Share on other sites More sharing options...
walletss Posted February 9, 2007 Report Share Posted February 9, 2007 Put $400,000 into blue chips that pay franked dividends. Reinvest your dividends. Don't sell anything. Keep $100,000 in cash. You live off the cash. Your cash with interest, should last you three or 4 years, which is enough to ride through a bad cycle on the stockmarket. If you not relying on the stock market for your immediate needs you have the time factor on your side. If you keep your cool you should be able to grow your $400,000 substantially and acually improve your financial position above the level of inflation Link to comment Share on other sites More sharing options...
junglesoup Posted February 9, 2007 Report Share Posted February 9, 2007 Put $400,000 into blue chips that pay franked dividends. Reinvest your dividends. Don't sell anything. Keep $100,000 in cash. You live off the cash. Your cash with interest, should last you three or 4 years, which is enough to ride through a bad cycle on the stockmarket. If you not relying on the stock market for your immediate needs you have the time factor on your side. If you keep your cool you should be able to grow your $400,000 substantially and acually improve your financial position above the level of inflation This is crazy to put all nearly all your money into one sector. Also 3/4 years isnt long enough to ride a bad market cycle. Many downturns have lasted much longer than this. With capital market liberalisation and trade imbalances, highly driven export markets etc, the frequency of bubble is increasing. If you invested $400 000 in the Nasdaq in 1999 then now in 2007 you still be below the original entry value. Thats 8 years, and your money had made nothing. Forget the dividend if the stock price takes a dive. This is pot luck investment, all based on timing. The whole bias is on buy and hold investment, which is risky amnd time consuming. I think you should do your own research, proper research and dont take advice of board members. Its strange but true, but people invest their life savings with less thought than they buy a car. Take a look at some of the alternative investment arms of the money houses and see some of the returns over the long run of the investors. Example is John W Henry who over the last 20 years has had a 20% compounded return a year. He owns Boston Red Sox. These investors aim for absolute returns and arent aiming just to track the index. Link to comment Share on other sites More sharing options...
Old Hippie Posted February 11, 2007 Report Share Posted February 11, 2007 "...What about 500/k invested in a rental property at home. Say you buy a 4 plex in a decent area and pay it off. After expences you'd clear a min of $3000 a month..." In generel, that might work, but here in SFO, $500,00 gets you a one bed room condo...MAYBE! a quad plex is maybe 1.3 mil++ but could bring in 8K++ a month... Link to comment Share on other sites More sharing options...
Skatduder Posted February 11, 2007 Report Share Posted February 11, 2007 "...What about 500/k invested in a rental property at home. Say you buy a 4 plex in a decent area and pay it off. After expences you'd clear a min of $3000 a month..." In generel, that might work, but here in SFO, $500,00 gets you a one bed room condo...MAYBE! a quad plex is maybe 1.3 mil++ but could bring in 8K++ a month... ------------------------------------------------ Let's see. 1.3/m - 500/k = a note for $800/k @ 8% for 30/yrs = $5872 + T&I. I guess it would take some figuring and it depends on the interest rate, and a little work to figure out. But maybe another way to think about it is this. You want to live in LOS right ?What about buying a 4 plex at an owner occ rate. Maybe even interest only at 6% loan. Maybe you could move in for a month or two :-) A 6% interest only loan is around $4000 plus taxes and insurance. Did you estimate the rents at $8000 ? The balance after expenses maybe enough to live in LOS. Plus you'll have a large tax write off each year. Maybe even write off those trips home to SF to check your property. Talk to your accountant. Maybe you don't want to deal with the bank, then I'd buy in another city. There are many books on the subject. I like Robert Kiyosaki Books. One of the best sellers is Rich Dad - Poor Dad. I buy the CD's and listen to them on the way to work. I'm now listening to Retire Young - Retire Rich. I have noticed most of his books are mostly about money and some realistate. Link to comment Share on other sites More sharing options...
walletss Posted February 11, 2007 Report Share Posted February 11, 2007 "This is crazy to put all nearly all your money into one sector. Also 3/4 years isnt long enough to ride a bad market cycle. Many downturns have lasted much longer than this. With capital market liberalisation and trade imbalances, highly driven export markets etc, the frequency of bubble is increasing. If you invested $400 000 in the Nasdaq in 1999 then now in 2007 you still be below the original entry value. Thats 8 years, and your money had made nothing..." How about reading my post more carefully before making such rash statements? Firstly the original poster is an Australian and our stockmarket is not The Nasdaq. Secondly I specifically said Blue Chip Stocks. Blue Chip Stocks have nothing to do with â??the hot air dotcomsâ?Â, that pervaded the Nasdaq during the time frame you mentioned. If you would have invested your money in Australian Blue Chips in 1999, you would have done extremely well. Simple as that, The ASX was trading at 2899.6 in 1999. It is now double that, and we havenâ??t even included fully franked dividends in the equation. Link to comment Share on other sites More sharing options...
junglesoup Posted February 11, 2007 Report Share Posted February 11, 2007 I just sold my house and retired from my job, at 47 yrs of age. I have about 500k (USD) no debts and no dependents. Next year, i will move to Thailand permanently. I parked the funds in the bank which pays about 6.6% per annum, which gives me more than i can spend. Should i seek out higher returns on my capital, or should i be content to cruise along with the bank interest, bearing in mind that i don't want to be exposed to any risk of losing my money. Yes read the post and it says USD. ANyway being Austrailian doesnt mean you cant invest in the US. With new technology and internet capital flows have increased.There are also many more financial instruments tio get exposure to many world wide markets. For example I can trade the ASX, Oz$ right here from my room with a computer. You never stated the Oz stockmarket, not once. Thats beside the point. Putting all your money into bluechips or one sector which is highly correlated is financial suicide. The principle is the same from what I said. Yes its double from 1999 but now your telling him to buy into a mature market. A crash in OZ is coming also. No market is immune. So you tell him to put all his money into a high correlated market, did you tell him at what point to get out. After he makes 20%,40%? How much drawdown would you tell him to tolerate? Whats the get out plan if things do go tits up? I m sorry wallets, but its not good financial advice for a retiree... He should keep it in Bonds and be happy with that. Its one of the oldest rules that to make more you have to risk more. I dont think this is 100%cent true, but more or less. He should keep it in the highest interest bearing account he can find, and if he wants the chance to increase his gains then put maybe 15% into a higher risk investment. A burgeoning market and not a mature market. Link to comment Share on other sites More sharing options...
walletss Posted February 12, 2007 Report Share Posted February 12, 2007 " Its one of the oldest rules that to make more you have to risk more. I dont think this is 100%cent true, but more or less. He should keep it in the highest interest bearing account he can find, and if he wants the chance to increase his gains then put maybe 15% into a higher risk investment. A burgeoning market and not a mature market. " If the original poster lives for another 40 years, how is going to survive without capital gain? He won't get it from keeping his money in the bank. I understand what you are saying but I would be following my own advice. The guy is too young and needs a stronger capital growth aspect. Residential Property in Australia won't give him enough net income. We average about 5% gross return on rent. By the time you deduct all costs you are left with about 3.5% I am not claiming to be an investment adviser. I am just outlining what I would do in his place. Link to comment Share on other sites More sharing options...
Denarius Posted February 12, 2007 Report Share Posted February 12, 2007 I agree, you have to have capital gains. Interest bearing accounts will hardly cover the real rate of inflation (i.e. not the core rate BS). Stay out of US dollars, will be going down from here. Also stay out of the US stock market for a while, or have tight stop loss at least. I am expecting a major downward correction. Link to comment Share on other sites More sharing options...
cardinalblue Posted February 12, 2007 Report Share Posted February 12, 2007 I will not confuse you with Warren Buffet... With a negative attitude towards the market (a crash is coming vs the thinking of periodic market adjustments), it is best for that person to stay out of the market altogether. They will always blame the market and poor timing of the market for their losses. The market is not about timing and trying to chase upward swings...... CB Link to comment Share on other sites More sharing options...
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