Investopoly

Typically, you need a budget of circa $1.5 million to purchase an investment grade house (investment property) in Melbourne, less in Brisbane, and a lot more than $1.5 million in Sydney. Of course, not everyone can afford this budget, so I wanted to discuss how to buy the highest quality property possible within your budget.  This blog will still be useful even if you do have a budget of $1.5+ mil...

eBook Download: https://www.prosolution.com.au/ebook/ We are all aware that central banks around the world have been hiking interest rates to reduce inflation back to normal levels. The US economy, and particularly the labour market, have been more resilient than most expected. This means the US central bank might have to hike interest rates higher than in other jurisdictions to tame inflation. A...

Ensuring your accountant collaborates with your financial advisor is important, as they will be able to discuss and workshop ideas to improve your financial position. However, in my 20+ years of experience, this collaboration almost never occurs, unless they work in the same firm.  Theoretically, there shouldn’t be any impediments to these two professionals working together. Practically, it doesn’...

It is stating the obvious that private school education is expensive. If you are uncertain whether you would like to send your kids to a private school, I thought it would be interesting to consider some alternatives and put the costs into perspective.  The public versus private school decision is a very personal one influenced by many considerations, including financial. I acknowledge that many f...

It has certainly been a wild ride for property investors over the past 6 years.  In 2017 and 2018, the banking regulator demanded banks reduce the volume of interest only loans, particularly to investors. The media called this the “interest only cliff” and predicted that many borrowers would face financial stress when loan repayments switched to principal and interest resulting is higher arrears a...

It is often debated which is a better investment, property or shares. It is my thesis that property is an okay investment, but not as good as shares. However, when you factor in gearing (the ability to borrow to invest), property becomes a wonderful investment – better than shares.  Property versus shares The main advantages of shares (compared to property) include:  §  You can outsource the manag...

I’m a big advocate of value investing . If you buy high a quality investment for fair price and hold it for the long run, you can’t help but make a lot of money. But if you can buy the same quality asset cheaply (below its intrinsic value), then it’s likely that you will make even more money. This is what value investors attempt to do.   You can adopt a value investing approach with many asset cla...

It has been very well reported that many mortgage holders will soon be paying much higher interest rates when their fixed rate terms expire. It is estimated that $478 billion worth of fixed rate mortgages are due to expire in 2023.  In addition, borrowers may also have to navigate the end of an interest only term, which typically apply to investment loans.  This blog sets out our advice on how to...

It is often suggested that it’s a lot more difficult for people to buy their first property compared to many decades ago. It is true that property is a lot more expensive. However, I would like to suggest that in many respects, buying a property today is easier than it was many decades ago.  I would like to start by highlighting the main advantages that property buyers enjoy today compared to many...

Good cash flow management is by far the most important practice that you must master to be successful at building wealth. I realise that it’s not a particularly popular topic, but bear with me, because it’s an easy thing to master if you know how. It won’t take you much time, and you will feel more empowered and in control as a result.  You can’t expect to build wealth if you spend all your income...

In 1905, George Santayana wrote; “Those who cannot remember the past are condemned to repeat it.” That’s why it is always worthwhile to reflect on the past year to identify any lessons that we can learn. Below I share the investment lessons that I believe last year taught us.   Review of markets in 2022 Firstly, let’s review what returns various asset classes generated in the 2022 calendar year. ...

This was the third most popular podcast episode in 2022. My aim for this topic was to give investors an insight into the strategic process that I follow to develop a holistic, long-term financial plan for my clients. The topic obviously resonated with people. I hope you enjoy it and here’s a link to the blog in case you want to read it (instead of listing to the podcast).  My new book is available...

This was the second most popular podcast episode in 2022. My aim for this topic was to educate investors about the fact that investing a little bit each week, fortnight or month is much better than investing on an ad hoc basis. You may have seen the idea that improving something by 1% each day for one year results in a 37x improvement – small, regular improvements create massive results over the l...

This was the most popular podcast episode in 2022. The idea behind this topic was to share some basic economic principals to help people understand economic commentary, political rhetoric and so on. The topic obviously resonated with people. I hope you enjoy it and here’s a link to the blog in case you want to read it (instead of listing to the podcast).  My new book is available for pre-order now...

As you are aware, the RBA has aggressively hiked rates by 3% p.a. over the past 8 months, so variable home loan rates are now more than 5% p.a. (and investment loans approaching 6% p.a.). Fixed rate borrowers have avoided these higher interest rates. However, a lot of fixed rates will begin expiring next year. As such, many borrowers are facing much higher (40%+) mortgage repayments next year.  Th...

I was interested to watch this YouTube video produced by ETF manager, BetaShares which compared the differing views of Warren Buffett and billionaire fund manager, Ray Dalio.  Both men have been some of the most successful investors over the past 50+ years, yet they have opposing views regarding investing in gold, which I find very interesting.  How well has gold done?  As depicted in the chart be...

The Albanese government’s first Federal Budget last month was a bit of a fizzer in that there wasn’t much in the way of changes that affected investors and superannuants.  However, subsequent murmurs by politicians’ hint at proposed changes that the government may be contemplating. In particular, I wanted to address these potential super changes and how they may impact you.  Higher super contribut...

CoreLogic data indicates that property prices in the 5 largest capital cities have fallen by 7.1% since May, when the RBA started hiking interest rates. Sydney has seen the largest price fall – down by around 10%, and Melbourne has fallen by 6.7%.  But it’s not all bad news. House prices in Brisbane, Adelaide, and Perth are still materially higher than they were a year ago .  I wrote a blog in Mar...

There are many large and powerful institutions that have a vested interest in rising property prices. But all levels of government (i.e., federal, state and local) probably have the most to gain, as I’ll explain in this blog. This leads to two important observations.  Firstly, the government is the main contributor to housing affordability pressures i.e., making housing less affordable.  Secondly,...

I recently appeared as a guest on The Australian newspaper’s Money Café podcast , where we discussed the FIRE moment. The acronym stands for Financially Independent, Retire Early , which involves living as frugally as possible, investing as much as possible so that you can afford to retire as soon as possible.  A listener that works in the mental health sector wrote into the show to say that she w...

A common question I receive is how much should I invest in property? That is, how do you know when you have enough, and should you start investing in other assets?  It’s a good question because it invites people to consider their goals and develop a long-term strategy to achieve them. I set out some of the factors that you should consider below. But ultimately, it really depends on personal circum...

Calendar year to date, the stock and bond markets have produced some of the worst returns on record, which is unusual because bonds and stocks are typically negatively correlated. In fact, this has only happened two times over the past 96 years, as illustrated in this chart . Even gold, commodities and property have lost value this year. It’s really been a horrible market for investment returns. ...

The very first article that I wrote for a magazine was published 19 years ago! No wonder I feel old. The article was called ‘Unlimited finance…’. My thesis was that investing in high yield properties, doesn’t magically extend ones borrowing capacity allowing them to invest a lot more.   Some investors believe targeting high rental yielding investment properties will allow them to borrow a lot more...

Borrowing capacity has probably never been tighter in the 20 years since I started ProSolution! This is delaying investment plans for some clients. However, my expectation is that this is temporary and an easing in borrowing capacity might not be too far away.   How borrowing capacity rules have changed over recent years  In 2019, the banking regulator, APRA told banks to include a ‘serviceability...

One of the most interesting things I do is meet many investors every week (i.e., prospective clients). It is something that I have been doing regularly for almost 20 years, so I’ve literally spoken to thousands of investors.  It is interesting because it provides me with the opportunity to reflect on peoples past investment decisions with the benefit of hindsight. There are some common themes. Peo...