Australian Money Forum

[foxygirl]

I am deciding how to invest my income and am contemplating buying my first home. The Waldorf apartments have some units for sale where I live (2 bedroom 1 bath) which can be rented or owner occupied. I am thinking of owner occupied and taking advantage of the first home owners grant and stamp duty concessions.

But I've been doing some investment reading and a few experts say you're better off investing in shares or managed funds and renting rather than getting a mortgage. what does everyone think?

Any pros and cons or tips would be much appreciated!

thanks!

[Miller]

Hi Foxygirl,

I guess you understand that you should filter and doubt advises on such a matter.

You didn’t say where you were considering buying property.

I think it’s so a common question that probably everyone is looking for the answer. I decided to wait. It’s definitely a good idea to take the advantage of the FHOG but even with FHOG you must be at least careful nowadays.

Even though US RE market (and PI mentality) is totally different from the Australian one, I would still wait to see how badly the US crisis ends up. After all, if there is a recession in the US it will definitely affect all the countries (including China and Australia).

This year is going to be hard and interesting:

New Aussie government
Climax of the US RE crisis
President election in the USA
Olympics in China

I am waiting till the end of the year.

Alternatives? For me, definitely not stocks. Too late, Too risky.
I have 80% of my funds in cash (~7% deposits) and 20% in gold.

Would be interesting to see what others think…

[foxygirl]

Other options I have been considering are real estate investing for positive cash flow, investing in a managed share fund or investing in listed property trusts

does anyone have experiences good or bad with these? and any advice on strategies would be greatly appreciated

thanks

[vilemerchant]

You mean like Centro? LOL!

[wulfgar]

Well Foxygirl, you are starting out at a difficult point of market history.
I had slight perusal of "Waldorf apartments". And it all looks very nice and very expensive.
These sort of city apartments are suffering a huge oversupply. If this is your choice lifestyle option, then I'd be looking at renting. Rather than buying and heading into the dangerous territory of dealing with an expensive mortgage.
I suggest that you could do some bargaining and a get a great reduction on a lease. Save the difference and bide your time.
For the next year or two, with the share market bleeding all over the place. Certain types of property will have some spectacular gains. But this will prove temporary with a long down turn in property after that. Those that are experienced could do a good flip in property, but I'd leave that to the experts.
Unfortunatley I have to say, cash is the safest place at the moment.
Even gold is overpriced at the moment. And although a purchase now, might net you 10% over the next few months. I wouldn't look at gold again until June 2009. At which time it may be the best purchase on the market.
I'd save your money and put it into gold in 2009. It will be getting some magnificent leverage 2010 to 2013!
On the other hand, I might suggest buying a less exclusive unit or house and selling up in 2009. That's if the effort and risk are worth it to you!

[Miller]

I wouldn't look at gold again until June 2009. At which time it may be the best purchase on the market.
I'd save your money and put it into gold in 2009. It will be getting some magnificent leverage 2010 to 2013!

Wulfgar, why do you think so? How did you difine those dates/trands?
If it's not a secret can you share your arguments with us?

[wulfgar]

Wulfgar, why do you think so? Why did you difine those dates/trands?
If it's not a secret can you share your arguments with us?

Miller, I spent a bit of time on the gold monetary question. I regard myself as having an informed opinion!
We do know that since the peak of 1980, gold with some up's and down's. Went no where in regards to currency. Which made gold a pretty useless investment, since currency pays interest!

If gold's natural maket was to apply. Gold would simply have a very steady relative value. The jewelery market is a price driven luxury market. This is the reason gold is so useful as a monetary medium.

As such it is in competition with the mutant value added business of Central Banks. Gold has powerful enemies!

From 1979 to 1995, the Central Banks went long on gold and made it overpriced. In the mid-90's gold was at it's natural market level. Then the Central Banks proceeded to short gold with the 13,500 tons reposit in the NY Fed.
By 2005 this repository gold had been chewed up and gold rose against the general world monetary medium.
However the Centeral Banks took this a step further. And built up a reserve in the Bullion Banks until early 2006. Then gold was overpriced and they had a reserve with which to short it.
But by mid 2007 this reserve had ran out. So the only way for gold is up!
Again they are building a reserve. I expect gold to peak at around 1150 AUD around April or so.
Then they will short gold for as long as they can. But again, the reserve in the bullion banks will be gone next year. And they only way for gold is up.

Eventually the Euro Central Bank will have to do something about it's only real competitor for monetary surpremacy. They will simply buy gold and buy and buy gold. Until they stockpile 50,000 tons or so. Remember the amount of mutant money this takes is no object.
Once they have that stockpile, they can short gold for decades. In effect "fix" the price of gold in Euro's!
Then there will be no point in holding gold in preference to the Euro.
The same thing happened in the 30's when gold was fixed at 35 USD.

And there you go, foxygirl. If you wish to gain monetary leverage and buy all things you want the easy way. Then simply save your dollars and start investing in gold in mid 2009. June is always the low point in the yearly gold cycle and the best time for a value buy!

And Miller, just grab a 70's gold chart and advance the dates by 33 years. And you'll have a good guide to what is happening at the moment!

See, simple Simon!

[geoffmerritt]

I guess the main thing with investing is to do what interests you, and then to actually do it.

In buying the property and living in it and taking advantage of the FHOG you are getting a discount on the purchase of the property, which in turn will increase your equity in the property over the years.

I personally have an interest in shares and property.... but that is what take my interest... therefore my enthusiasms are higher and I am more likely to keep the investing happening.

As it is your money you are spending... and a large commitment please make sure that YOU are happy with the decision.

[David Layton]

Hi Foxygirl,
as i am in the industry i will not try to tell you to go into property or not as that could be construed as advertising.
However i will say that if you decide to invest in property you should look for independant market advice as an example;
http://www.wedgetailproperty.com.au/inv ... s/markets/
or http://www.prdnationwide.com.au/research

this type of independant research is a must for any type of property purchase if you are hoping to make money from it.

[greenback]

independent!!

You PRICK, those are sites run by the RE industry, I hope you starve in the coming crash.

[David Layton]

Yes independant.
and yes they are in the real estate industry as we are talking about real estate i would say they are relevant.
I find your comments both obnoxious and offensive.
think before you comment.
and yes one of those sites was mine it was meant as a demonstration only and i did not try to hide it.
next time use your manners.