Any1 investing in index funds or shares here ?

I have found that it is a lot easier to generate income/cashflow than it is to achieve growth.

So my approach is to buy high growth assets (which means they are normally low income and negatively geared if one is leveraged).

Then I can top up the income/cashflow shortfall fairly easy and not necessarily through personal exertion.

I have no idea what I am doing, so please ignore my foolhardy approach.

 

That article makes a lot of assumptions, primarily that negative gearing is a “strategy” in itself, and that the only reason people negatively gear is to realise future capital gains.

Negative gearing is simply a net cashflow position in that financial year. Nothing to prevent a negatively geared investment becoming positive at a later date, either next year or well into the future. Also there are investments that retain earnings and distribute in later years also (not capital gains)

I have both negative and positively geared investments across my portfolio, both in property and equities, I feel his offers better diversification and often reduced correlation, maybe better total returns as well can be achieved this way.

 

Remember depreciation isn't free money, you eventually have to replace the items you depreciate so that depreciation is just offset for future expenses.

Carpet has to be replaced at some point, deck need to be replaced, house need to be repaint etc..

 

No it isn't 'free' money but you are missing out on money if you are not claiming it.

If you don't claim the deprecation the items still depreciate so why not get the advantage of it today?

Further if you claimed $10,000 worth of depreciation you will need to pay this money back when selling however if that is 50 years in the future that $10,000 might be like $50 today...

Negative gear doesn't mean negative investment just the cashflow was negative net profits could be up 20% despite being 5% negative on cashflow.

 

I didn't say you don't claim, what I am saying is it not really free money
it an offset for future expenses you have to wear if for some reason you have to
do repair.

it can work the other way too, a $3000 deck today maybe cost you $7000
10-15 years from now to replace

 

but your giving away money today. its not the same.


that $7000 deck u dont know if you need it, and that $3000 can turn into $30,000 in 10-15 years.

you can afford that $7000 deck.


money in the pocket = win

 

You would have to replace the deck whether you depreciate it or not. Then you are behind.

But since you have to account for depreciation when you sell (in calculating the cost base) then I agree it's not free money. It's more like a negative interest loan.

The other side is that ATO can adjust your cost base by the amount of depreciation you were entitled to claim even if you didn't claim it.

 

I'm a serial stock shorter with CFDs and have just ventured into going long, traditionally. Apparently I need to diversify coming into 40.

Vanguards are all trading bottom of channel and looking good tech and fundamentals (like any high div anything over the next 10-20 years) so will likely pick up VAS/VHY/VEU/VTS using the div reinvesting for extra compounding.