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  1. #11
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    Quote Originally Posted by CMF View Post
    I read an interesting article once that showed figures on how if you put away the same amount of money as mortgage repayments into a term deposit/high interest earning account, you end up soooo much better off!
    Agreed, Example if you had a $450,000 loan over 30 years it would around $3,500 a month in repayments. Say if you paid rent out of that at 1,800 a month you would be $1,700 better off if you placed that in a high interest account then in to a home because your 450k home could become only 400k home so you lose money

  2. #12
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    Default Is home buying the best investment option?

    I think shares are actually the best long term option, rather than property. But property has the advantage you can live in it, and thereby save rent money.

    A term deposit/high interest savings account is ok for a year or two but is not the best option overall.

  3. #13
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    Default Is home buying the best investment option?

    Quote Originally Posted by V8 View Post
    I have a bit of money set aside, one in conventional savings and another with professional gamblers! It's in a syndicate with others so the total pool of funds a proportion is used to lay bets, then winnings are distributed. Not really conventional at all, but they have made me more money in a few short weeks on a lesser outlay than what I would have in conventional savings. One of the syndicate members put in $10,000 and he's so far got $1000+ up on his investment, so it's good for short or long term, minimal risk and some pretty good earning potential. It's a legit business and they are living off the profits themselves.
    Wow. That sounds really interesting!

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    V8  (05-09-2012)

  5. #14
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    Default Is home buying the best investment option?

    Quote Originally Posted by Stretched View Post
    Many years ago (back when property was booming) I read a financial advice book by Paul Clitheroe. I also read a range of other books too, but this one was very 'sensible' and straight forward - plus an Australian author so advice unique to our market.

    He said that if you look at it from a purely mathematical viewpoint, your own home is not the best investment for your money. Eg. if you took the extra money your repayments would be, plus savings for deposit, the money you would typically spend on maintenance, fees etc etc and put it into a high yeild account you would be better off than buying a house (unless it was a boom-time and you got the capital increase from the property). BUT he also pointed out that most of us do not have the discipline to set aside all that money, so a home as an investment is like 'forced' investing and works well for most people.

    I hate the advice that "the worst thing you can do is nothing" (no offence directly to PP, just advice we have had before in general). We sold an investment property and I was happy for our deposit to sit in a high interest account until the market revealed what it was going to do (this was in 2006-2007). But DH felt we couldn't just 'do nothing', we needed to be actively trying to build that money into something bigger and on the advice of a stockbroker friend we invested the bulk of it into a range of shares ... only to have the market dive just months later and halve what we had.

    When deciding what to do with your money, you need to decide what your 'risk profile' is. Also look at if you need something that 'forces' you to save, or if you can be disciplined. Also, if you decide that you want to invest in anything, do lots of your own research to ensure it's an investment that suits the period of time you want to invest over and your risk profile.
    Just wanted to point out that a high interest account / term deposit is doing something with your money.

    Like anything, there is risk in property or shares or any other investment option. You have to know what you're doing, do your research and manage your risk as best as you can.

    Also wanted to point out that there's a difference between a principle place of residence and an investment property. We have an investment property that we paid 300k for (well thats the mortgage, actually only put in 12k of our own money), spent about 80k on renovations including converting the garage to a granny flat (some of that money came from leveraging our residence) and now the rent covers the mortgage. We added at least 50k of value to the property if we were to sell straight away but it's a long term investment as the area it's in is going up in value.

    So if you consider that a chunk of the 80k spent on it is tax deductible and the rent pays the mortgage, our outlay isn't really that much. As rents go up, we'll start making money (slowly but surely!). Obviously the house we live in is a totally different beast as it doesn't provide income.

    So it's important to make that distinction - home or investment - as the strategies are totally different.


 

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