Having a nicer PPoR now vs having IPs/investments for the future

And that was pretty much the point I was trying to make with my original post - at what point in time (or in your life) does the quality of the life that you're living now become more important than the need to be constantly putting money aside, to invest for the future?

I think it's as much an emotional position/decision as a financial one. It's one thing to run the numbers etc, but it's also another thing to constantly be doing without the things you want now (while you're young enough and healthy enough to enjoy them). I don't see much point in focusing entirely on accumulation through investing now, only to get to the point where you finally get your desired PPoR when you're in your 60's or 70's

 

If you have 5 minutes, I find this "Life as a videogame" video quite accurate especially the 'endgame' part



I think if you're already feeling that you need to reward yourself a bit more than you already are, then the time to start making changes was yesterday. Just keep a level head and the big picture in view.

 

Love it - I'm actually going to use this at work (don't ask........)

 

@KayTea, your OP reminded me of our kids when we were on our IP accumulation journey (we retired 7 years ago).

They used to ask us: "Out of all the properties we own, why do other people live in our good houses and we live in the worst?"

Our reply: "The other people pay to live in our houses and we don't".

 

Did you have a mortgage on your own place at that time, or were the IPs CF+ enough that the rent coming in from them was enough to cover your PPoR repayments, too?

 

What was your answer to the follow-up question: "Why don't we pay to live in a nice house too?"

 

When we finished renovating our 4/2/2 Ip, and our kids had exhausted all contacts trying to find someone else to help them share the rent to live in it, I commented that it is too good for a group of Uni students. Hubby replied that it is too good for tenants. Bloody thing rented at the first open and our little 3/1/2 home looks like it needs another $20K spent on it.

Either that, or the Weathered Look will come back in fashion next year!

 

Great job on getting tenants. The reno must have worked

 

Its good having a nice ppor to come home too but in all serious they are an absolute money bucket if your dead serious about being the richest person in the graveyard buy IPs only.

 

Hi KayTea,

I think it's important to be content with your current situation. If this means upgrading your PPOR then it's probably worthwhile going through your portfolio and working out how you will achieve this.

There have been some good examples of successful investors on this thread who have achieved their financial goals through a range of methods.

Over the past 12 months I have had cause to think about our investments and what we are wanting to achieve. A good friend of mine passed away in her sleep very unexpectedly. She was my age with a daughter exactly the same age as mine. A couple of months later my daughter's friend from school passed away very unexpectedly. She was 13. A couple of months ago a work colleague who retired a couple of years ago died at the age of 69.

We are not here forever. Invest in a way that best resonates with you and enables you to enjoy today as well as tomorrow.

Kind Regards

Jason

 

Have to disagree.

Since we paid off our PPOR approx 25 years ago, we have lived here at a cost of around $11K p.a., just over $200 per week for a house worth over $800K
I.e.
Rates and insurance max $4K p.a.
Major renovations $50K or around $2K p.a.
Minor improvements and repairs, max $5K p.a.

Sometimes it pays to take a long term view.

But there is no denying the first few years are tough. But it's a bit like compound interest, the benefits are slow at first but snowball as the years go on.

And no, I have no desire to be the richest person anywhere. We have more than enough to do whatever we want, so that is plenty good enough for me.
Marg

 

I received my wake up call at the age of 35. A close friend the same age as me, also with three young children the same ages as my three, died of leukaemia. This reality check has had a huge impact of my way of thinking ever since.
Marg

 

I'm sorry about the loss of your friend. And you're right, sometimes these events really force us to re-evaluate our way of looking at things, and way of prioritising.

That's the hard part with investing - without a crystal ball, to tell us how much time we'll be alive for, or what's going to happen with all the various investment markets within that time, we are really just making educated 'guesses' (which can end up being so far away from the reality of what our situation ends up being). My dad's passing taught me that.

It's a case of learn from yesterday, plan for tomorrow, but live for today. The balancing act is exhausting.

 

I just remembered being similarly shunned back in high school... a group of friends were talking about their houses when I mentioned that our driveway goes straight from the road to our house. "What? Your house only has one driveway entrance???"

 

It's hard, isn't it. I know we'll never be one of those households - but to have a fence that has finished being painted, and a garden that doesn't look like scrub land would be a little more 'passable'.

 

No mortgage - PPOR fully paid off.

And our strategy was to buy properties with good capital gain potential (say 7% to 10% growth) which meant they were initially CF- but, over times, individual properties will become CF+. Even today, after 40 years investing in property and 7 years in retirement, our property portfolio is still CF-.

Our approach was quite simple:

1. Buy the most expensive PPOR one can afford, with the largest land content one can afford, in a well sought after area, pay it off as soon as possible and hold for as long as possible. In other words, let growth and compounding weave their magic for as long as possible as PPOR growth is CGT free.

2. Buy as many of the most expensive IPs one can afford, with the largest land content one can afford, in a well sought after area, as quickly as possible, don't pay them off (use interest only with offsets) and don't sell. In other words, let growth and compounding weave their magic and never pay CGT.

3. To fund Strategy 1 and 2, one needs income/cashflow. Our approach was to own our own businesses (we owned 4 in our working life). For a business to be sustainable, employees must 'earn' more than what they are being paid. My rule of thumb was:- each employee must 'earn' the business three times their wage/salary, with one third each for the employee, business on-costs (rent, insurance, etc) and the owners. I would rather own a business of say 10 employees earning me $100,000 each than working in a job being paid $100,000.

Although the above approach is easy to understand, it is not necessarily easy to do. It is not for everyone but it did work for us. Strategy 1 and 2 are still working for us 7 years after we retired.

 

If you can't afford to paint your fence or sort the garden you definitely need to change something. Part of property investing, a very important part, is being able to keep your properties well maintained for a number of reasons.

 

Wow, that's amazing - I can't imagine (psychologically speaking) allowing myself to retire in a CF- position. You guys have clearly been in the game long enough that you've got a system that works for you.

I take my hat off to you - you're clearly meant to be a mentor within the PC realm (and from what I've already read of your PC contributions over many months, you already are ).

 

It's not just money, it's as much about having the available time as anything else. Working full time, and parenting a little person who needs to keep actively involved in a range of activities, doesn't leave a lot of time for a paint brush.

 

Our kids never asked that question.

We believed it was better for our kids to go to a great school and get a great education than live in a nice house. We sent our kids to a private school in 1995 because each child from grade 4 onwards needed to have their own laptop. The kids absolutely loved the school.

So, if they ever asked that question, we would have ask them: "Which would you prefer - staying in our current house/going to your current school OR move to a nicer house/go to a different school?

I know what their answer would have been.