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Noel Whittaker in Making Money Made Simple, gives perfect examples of people choosing not to invest in a home with its ongoing costs , and instead renting their home and reinvesting their money in alternative markets.
The end result over an extended period can be very interesting.
Yes, but once you reach pension age you don't want to be paying rent. That's about secure housing, which is a different topic to the investing.
Super is making much more from investments in the share market and other sources than interest on loans is costing, interest rates are falling and housing values are likely to keep falling until next year, so currently housing is not the best choice.
Super funds were averaging 6.5% to the end of May, which was about 4.5% above inflation, but below the decade average of 9%. The share market rose in June. Meanwhile house prices and mortgage rates are falling. So super is a better investment than housing.
So, we have deferred paying off a mortgage and are leaving the money in super to be invested for us.
And I've just signed the paperwork to increase my income by $14k, so that should carry us through until housing starts rising again.
Downside is my retirement is deferred. Oh well...
depends where you are. apparently my suburb has gone up in price.Quote:
Originally Posted by DiscoMick
Yes, there are variations. Sydney and Melbourne are the worst, Brisbane hasn't dropped as much, but there is a glut of units depressing prices. Investors are holding back unless they get a major bargain. Some developers are unloading sites. We are trying to sell an investment site zoned for 8 storeys at the moment, but it's the wrong time to sell.
Jan's husband works full-time, but they'll have a mortgage into their 70s
New financial year, same financial worries keeping Australians up at night - ABC News (Australian Broadcasting Corporation)
Most people underestimate where they stand in the income stakes. They are richer than they think. Poorer people are more realistic than richer people. Most people underestimate how much inequality there is in Australia.
Our income test showed most people don't know their place
We asked people to guess their place on the income scale. They weren't very good at it - ABC News (Australian Broadcasting Corporation)
Quote:
Originally Posted by DiscoMick
high income and being rich are not the same thing though.
in other news, RBA drops the cash rate. imho, if they wanted to kick start the economy, 0.25 drop isnt enough.
They should have cut interest rates last year, but they were unrealistic about the real situation in the domestic economy. Then they felt unable to cut leading up to the elections to avoid being accused of being political, when actually it was their refusal to cut then which was political.
How many people have lost their jobs as unemployment has risen because of the failure to cut interest rates last year?
The RBA cuts interest rates again. How low will they go?
The RBA cuts interest rates again. How low will they go? | Stephen Koukoulas | Opinion | The Guardian
agreed. too little too late.Quote:
Originally Posted by DiscoMick
Interest rates are virtually zero. Well below inflation. What is needed is to restore investor confidence to get the economy moving. A government with the political guts to get interest rates moving upwards, upwards, upwards until investors are receiving a fair rate for the use of their money. Interest Zero ? Or minus? rates below 2%!!!!!! Just what rate is required to encourage business? Jesus, they are borrowing money for nothing now.
What about the poor home buyers the bleeding hearts will ask. Well, the home buyers need to work and save a decent deposit, 25% to 40% of purchase price. They will then have some equity in their purchase when things go bad. Stop buying flash new cars, overseas trips, renters full of expensive electronics, live and save hard like previous generations had to. A couple with two incomes? Well, save ALL the largest wage and save the other. You will have your houdse deposit in a few short years.
Borrowers are receiving the privilege of using other peoples money and should have to pay a fair price for this privilege.