There are more property investment articles, commentaries and analyst reports on the Web every week than anyone could read in a month. Each Saturday morning I like to share some of the interesting ones I’ve read during the week.
Enjoy your weekend…and please forward to your friends by clicking a social link buttons on the left.
How much might you earn in a lifetime and how leaky is your bucket?
Thanks to inflation, it’s much more than you might think.
NAB provide a lifetime earnings calculator here. If you type in your age today as 21 and weekly earnings of, say, $17 an hour or $650 per week, you will see that NAB’s tool shows that with a 5% per annum salary increase, your lifetime earnings will be more than $5 million!
So, when people wonder “can anyone be a millionaire?”, it’s not really so much a question of whether you can earn $1 million, it’s rather a case of whether you can keep $1 million.
The trouble in today’s consumer-focussed world, that most of us have personal finances and an investment plan which resembles a hole-filled bucket. By the time the end of the month comes around, most people don’t seem to have enough money left to do anything at all, let alone invest in a portfolio of wealth-producing assets.
If you want to see how productive your investment plan has been to date, first calculate your net worth (all assets minus all debts and liabilities). Then divide that number by the number of years you have been in the workforce. If the number is substantially less than your salary, where did the rest go? Tax would be some. What about the rest?
I’ve read some fascinating case studies where effective investors have used the power of compound growth to earn more money from investment in a few years of retirement than they did from the entire working lifetimes.
An arresting thought!
5 mistakes that made him a millionaire |Pay off your loan or invest first? | Sydney property market update
Another great Real Estate Talk show produced by Kevin Turner. If you don’t already subscribe to this excellent weekly Internet based radio show.
This week’s guests are:
Sam Saggers– successful property entrepreneur
Rolf Schaefer- Metropole Finance
Rob Balanda- legal expert
Louis Christopher– SQM Research CEO
You should definitely subscribe to this weekly audio program. Click Here It’s free and you can listen on the go on your smartphone, iPad etc.
John McGrath’s nine cafe society home buying hotspots in Sydney
Property Observer reports leading Sydney estate John McGrath as saying that the desire for the cafe lifestyle is one the strongest trends attracting buyers.
He quotes statistics which says over-65s are leading the trend towards spending more time in cafes. They have doubled the visits they make to cafes since 2008. Next is the under-25s who have increased their visits by a third.
“Given the strength of this trend, it’s no wonder that properties within walking distance of the local café village are increasingly on buyers’ ‘must have’ lists.
I think this is particularly so among buyers living on their own in smaller properties. Living alone is a growing trend in Australia and the opportunity to stroll up the road to visit their favourite café for a coffee or a meal is particularly important to them.”
He gives a list of nine areas in Sydney sought after by buyers seeking a cafe culture.
- Lane Cove
- Elizabeth Bay/Potts Point
- Mosman/Neutral Bay
- Bondi Beach
- Surry Hills/Redfern
Lender reveals biggest investor mistakes
Property investors typically make a lot of mistakes when financing their portfolios, according to Your Investment Property Magazine which points out four critical errors that investors make:
1: Not getting pre-approved
Being pre-approved gives you an idea of how much you can afford to borrow. Investors are in a much better position to go house hunting when knowing how much they can afford and have financing for.
2: Too much emphasis on interest rates
While lowering the costs associated with financing is crucial, a lower interest rate alone does not always equate to the best loan. Investors should also consider other aspects of the loan such as additional fees associated with commissions and penalties as well as the attractiveness of the loan terms.
3: Not analysing the property enough
Investors who purchase property without factoring in proper reserves for maintenance, capital improvements and vacancies are usually setting themselves up for trouble down the line. The same is true for investors who purchase after overestimating the rental income.
4: Lack of planning
Why you are investing in real estate? How much cash flow do you expect on a monthly basis? How many properties do you need to get you where you want to be?
If you fail to think such questions through you could be tempted to buy anything and everything, only to realise at the end that you are somewhere where you did not intend to be. Upfront planning and an ongoing review of your plan will help you stay focused, save you money and increase your chances of success.
He goes on to say:
Of course, there’s no assurance the good times will roll on uninterrupted. There is no quick fix to the problems in the eurozone which reflect big differences in productivity, saving, debt, work ethic, taxes and social security among the 17 European countries that share the common currency. And the gains from the share market rebounds in 2009, 2010 and early 2012 were given back.
However, prospects for a sustained lift in investor confidence now seem more favourable.
Creative ways to your first million
Many Australians are looking for financial freedom by finding the best investment property – others just want to become a millionaire.
So this article in the Sydney Morning Herald offers creative ways to reach your first million caught my eye.
While I don’t agree with many of them I thought I’d still share them with you…
1. Purge family possessions
Sell anything that you do not need or use, on eBay or Gumtree.
2. Become a market research source
Register with market research companies that pay anything from $25 to $100 per hour to find out you how you feel on certain subjects. The work often comes with free food and drink. Sign up with a range of market research firms because probably none will invite you to more than two sessions a year.
3. Enter competitions
Don’t overlook the various potentially lucrative contests you can enter, which are advertised in shops, online and across the media. You could win anything from a $100 Myer gift card to about $1 million through lotteries like Scratch2Cash and Powerball.
4. Join a paid clinical trial
Sometimes, biotechnology firms, government agencies and pharmaceutical companies need to test new medication or medical procedures on volunteers. Any healthy person may be eligible for a trial, says Tong. Some work also exists for people with particular ailments, he adds.
No experience is required – you just need to be game to play the role of a specimen that is tested, poked and prodded. Usually, patients are obliged to stay onsite for between 1 and 30 sessions. The payment is anything from hundreds to thousands of dollars, depending on factors including the duration of testing and risks.
5. Nail every cent
Regardless of your income, wise up about where your money goes.
6. Drink tap water
In a 2010 report, the environment group Clean Up Australia noted that a litre of bottled water costs twice as much as a litre of petrol. The report also described Australian tap water as “world-standard”. So why bother with the bottled kind that imposes an exorbitant mark-up?
7. Drink plonk
Another consumption tip widely shared in the frugal living community is that, instead of splashing out on fancy wine, you should just get cheap plonk. Research shows that people cannot tell the difference between cheap and expensive varieties. So why not just extract some low-cost wine from its bottle and pour it into a decanter – nobody will know.
8. Have an amateur haircut
Another Spartan tip is that you should skip the salon and cut your own hair. If you are male, a regular no-frills buzz cut must be the easiest cost-cutting option. If you are a woman, you might want to give yourself a simple blunt cut in front of the mirror with a pair of scissors.
9. Forget the gym
Nobody needs a gym membership. So, instead of paying to pump iron, consider bay walking, bush walking or body weight exercises in a park or at home.
10. Skip having kids
Australian parents now treat their children like little emperors, paying for costly toys, technology and lessons. The result: the price of raising a child is extortionate – over $1 million, according to social researcher Mark McCrindle. So you might want to curb any nurturing urges you have and stay child-free – think about that six-figure saving.
Once again I don’t really agree with these “money saving ideas”, but I do know that the only way to become wealthy is to:
- Spend less than you earn
- Invest the difference
- Keep up steps 1 and 2 and reinvest your returns until you build up a substantial asset base
This is the time tested way to grow your wealth
A new way of remembering in the current era
Nicholas Carlson of Business Insider discusses what Google does to our heads. he says:
In 2011, Science published a study called: “Google Effects on Memory: Cognitive Consequences of Having Information at Our Fingertips.”
The study showed that humans who used Google a lot were becoming worse at remembering certain things. To many, the study seemed to suggest that Google was making us stupid.
But what the study actually showed was that humans have simply learned to remember differently – in a way that allows us to actually remember, and use, much more information.
Ars Technica nicely summarized its conclusion: “People are recalling information less, and instead can remember where to find the information they have forgotten.”
Our brains are adapting to a world in which we can store and find information in a centralised brain.
Blogs you may have missed this week:
If you didn’t have a chance to read my daily blog, here’s a list of the blogs you missed this week:
Why is housing so unaffordable – or is it?
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