Exit Strategies?

Discussion in 'Investment Strategy' started by mike8t1, 31st Aug, 2015.

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  1. FireDragon

    FireDragon Well-Known Member

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    They will know when they come back from school at around 3 and what should I say when they ask what job I do during the day?
     
  2. Phil82

    Phil82 Well-Known Member

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    Sounds like a great opportunity to teach them the value of investing and being smart with money. Never too young.
     
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  3. mike8t1

    mike8t1 Active Member

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    Sorry to bring this full circle but for me living off rents is the objective. My initial strategy was accumulate and sell down to squash debt and live off rent. As time has gone on, the goal posts moved to enable myself and fiance to have a comfortable life when we start a family. We feel like the rents we have now easily cover our current wages and then some. We would both continue working, but on our terms. The question is:
    • do we take advantage of this low interest environment and start reducing debts by paying them down and being frugal?
    • Do we buy more and sell down in a few years to achieve the same result?
    • Do we engage in riskier potentially higher return projects to create cashflow and reduce debts?
    What do you guys plan on doing to get out?
    Cheers
    Michael
     
  4. Ace in the Hole

    Ace in the Hole Well-Known Member

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    How about something like - you've finished all your work for the day because you put a super hard effort in while they were at school, so that you could have more time to spend with them.
    Seriously though, are you just trying to look like every other working class parent?
    Why not teach them you can do whatever you want to do if you plan and prepare for success?
     
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  5. FireDragon

    FireDragon Well-Known Member

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    Agree... I started to teach my 5 years old one when we play monopoly. :)

    It's probably really too young for my 3 months old one...:p
     
    Last edited: 1st Sep, 2015
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  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Never pay down debt if you can get away with it. There are tax consequences to paying it down and it will get much harder to borrow as time goes on. Just keep storing cash in the offset accounts. Every expense you incur will then have interest on the money deductible.

    Only sell the duds, or to restructure a mistake. And consider selling when the LVRs are very low as the leverage is gone and at that point property is only a so so investment.

    No, you don't want to risk losing it now. If what you are doing is working then why change your system?
     
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  7. FireDragon

    FireDragon Well-Known Member

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    I agree... the problem is I don't think my 5 years old really understand what I am talking about at the moment.... (she only worries about when her Elsa doll will arrive :p) I may try again in a few years time.
     
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  8. Bayview

    Bayview Well-Known Member

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    WTF? o_O

    This should be in the First World Probs thread!! :D

    Just get dressed up as if going to work, then head to the golf course (or insert other hobby, here) all day....come home at knock-off time and say HI!
     
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  9. Bayview

    Bayview Well-Known Member

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    On a serious note though; if your kids are at an age where they can understand some basic money management etc, it might be a great time to use yourself as the example of why they should start to do what you do...don't hide it from them forever; teach them when they are ready to understand.
     
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  10. Bayview

    Bayview Well-Known Member

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    I don't understand this mindset, Terry.

    Even good debt is an impediment to cashflow and future equity - it just has more tax deductability than doodad debt - but less debt is less debt surely?

    I think I would rather forego a few dollars of tax deductability through the saved interest on debt, and have more profit (which can still have deductions but not as many)...the old saying of; "No-one went broke making a profit".

    How does it make it harder to borrow later?

    Surely less debt (more cashflow and more equity) increases your chances of future borrowings with Lenders?

    For example; if I have an IP which has $100k of debt, but I have $100k in an offset account, how is this a better position than having no debt at all on the IP, but an LOC ready to go (from that IP) for further investing, and all the rent free to use (other than the usual expenses associated with holding an IP)?

    Lastly; would not less debt be an extra hedge against life's curve-balls?.
     
    Last edited: 1st Sep, 2015
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes less debt is always better than more debt - even good debt is not so good.

    But with storing in the offset it is almost the same as paying off the loan. But you can still access the money.

    The problem with paying off investment debts is that
    1. You may need the money for something private in the future - to buy a kidney???
    2. As you retire you won't qualify for more loans.

    While you are still working it may not matter too much.
     
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  12. Bayview

    Bayview Well-Known Member

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    Ah! This was the distinction I was looking for.

    Yep; agree - for the majority of folk; an offset set up, and plow money into that is better than actually paying off the debt and then not having access to the money in an emergency.
     
  13. skuzy

    skuzy Well-Known Member

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    nope ! for various reasons missed the boat on this one :(
     
  14. MTR

    MTR Well-Known Member

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    there is always another, stay tuned:)
     
  15. HUGH72

    HUGH72 Well-Known Member

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    Thats not a reason, they don't need to know what your doing when they are young.
    I would just concentrate on teaching them to value money, learn how to save and the value of investing from a young age.
    If you display energy, drive, enthusiasm and a good work ethic they can pick this up not whether you leave at 830am and come home at 5pm. You will still have to spend time managing your investments.
    Spoiling with gifts and too little discipline are what I personally would be more concerned about.
    Nice position to be in though either way:)
     
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  16. Rixter

    Rixter Well-Known Member

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    @mike8t1 This is the method I subscribe to when I exited the rat race.

    Have topped up all LOC's prior to pulling the pin - sufficient to last ~15+ years before fully living of rental income & super tax free.
     
    Last edited: 1st Sep, 2015
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  17. Rixter

    Rixter Well-Known Member

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    Kids at the earliest of ages are like little sponges.

    They absorb everything - good & bad.

    I took my eldest to the bank when he was 5 to deposit his piggy bank savings for the first time. We stood in line and when we got to the tellers window I lifted him up onto the tellers counter so he could hand over his piggy bank and let him get to see what the teller does with his savings.

    After The lady teller counted all the coins ( $7 worth), she asked my son what he was going to do with it. Without any prompting by myself or wife my 5 year old said, and I quote - " Im going to put it in the bank, then take it out , and buy a house , and then people are going to pay me money to live in it".

    Well you should have seen the look on the tellers face. She was gob smacked and couldn't believe what she just heard coming from a 5 year old. Her eyes were like saucers and her jaw was on the floor.

    I silently thought to myself with great pride, Thats my boy!- It was Priceless. [​IMG]
     
  18. Azazel

    Azazel Well-Known Member

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    Plenty of people work from home or run a business from home.
    Ok if you're dressed and 'working' on the computer. But hard to explain if you're sitting on the couch in your undies drinking beer every day ;)
     
  19. Ace in the Hole

    Ace in the Hole Well-Known Member

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    You'd only be setting a bad example to your kids if you were doing something bad.
    Being at home while most other people are working is not bad.
    Anyhow, who would want to stay at home all day, every day when they are retired?
     
  20. FireDragon

    FireDragon Well-Known Member

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    My kids will see see me playing online games..:D
     
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