A property’s rental yield is the amount of gross rental income that it attracts relative to its market value. In Australia, gross residential property rental yields typically fall between 2% and 5% annually. This yield can provide insights into a property’s fundamentals and therefore anticipated investment returns. What drives a property’s rental yield? Two primary…
Many people face two financial planning challenges. Firstly, their projected super balance may not be enough to fund their desired living expenses in retirement. Secondly, they would like to enjoy the flexibility of being able to reduce working hours (or even retire in full) in their 50s. Often, the solution to these two financial planning…
A few weeks ago, I discussed the limitations of using monetary policy – increasing interest rates – to tackle inflation. I highlighted that only 37% of Australians have mortgages, so they are the only ones that are directly affected by higher rates. Conversely, around 30% of Australians without mortgages benefit from higher interest rates as they earn…
In 2007, laws changed to allow SMSFs to borrow for property investments if they met specific compliance rules. This led to a surge in super-funded property investments from 2007 to 2017, totalling around $45 billion. However, major banks withdrew SMSF borrowing products between 2017 and 2018 and super contribution rules were tightened, making this strategy…
The transition away from active funds management towards passive management is gaining more momentum with each year that passes (for the reasons I discussed in this blog). Given that passive investing is becoming increasingly popular, I thought it was timely to provide an update on the advances that have occurred in this marketplace. Active vs passive…
There’s a story that Henry Ford was having problems with a generator in one of his plants so he hired General Electric (GE) to fix the problem. The engineer from GE climbed up on the generator and made a chalk mark and told Ford’s people to replace sixteen windings from the field coil. The job…
An understanding of basic economic principles will set you in good stead to understand financial commentary, and political rhetoric and make your own assessment of economic risks and opportunities. That is not to suggest you need to become an economic expert but understanding some basic principles will go a long way. The foundation of economics……
The recent decision by the RBA to raise interest rates may have surprised some people. While some argue that rates have already increased significantly and coupled with rising living costs, this could eventually control inflation, it is important to recognise the persistent threat that high inflation poses to an economy. Furthermore, central banks aim to…
Property investors should think about the investment returns they can anticipate over the next decade and beyond. This process assists in shaping realistic expectations to make informed financial decisions. It’s most advisable to create these expectations based on evidence and data. The past decade has delivered below-average returns The chart displayed below illustrates the rolling…
This blog’s title is a bit deceptive, because every property you buy is important, for either lifestyle or financial reasons. I contemplated using the title: “why the first property you buy is the most important one”. But the reality is, if you have made a mistake on your first property, you can always start again. The…
