Incorrect Professional Advice That Was Correct With Time

After reading the thread created by @dublin_101, namely:

Purchased at auction.. bank won't finance now. How to cancel?

it raised a question in my mind as to whether I have ever received professional advice that I initally thought was incorrect that, with the passage of time turned out to be right advice for me either due to more experience, increased knowledge, rational analysis, etc. Don't take this as any sort of comment/criticism of what was portrayed in @dublin_101 thread. That thread just raised the question in my mind.

My question raised two recent cases from my life which I thought was worth sharing:

1. When we sold our business a few years ago, we had some spare cash that we thought we would use to buy an additional 4+ investment properties (actual number would be dependent on an LVR that we felt comfortable with) that would increase our property portfolio by 50%+ in one hit. Both our accountant (who is very pro-property) and our financial planner (both totally independent and, in fact, are in two different States) recommended that not do this, as in their view, we already had enough property (we had eight properties and we also looked after one of our daughter's IP). I know this is a Property Forum but please, don't go off telling me to change accountants and financial planners (although I must admit those thoughts did go through my head). I have huge respect for both advisors as they had helped us so much in the preceding 10 years or so. We couldn't believe that advice we were getting. We wanted to go off and buy more properties but we didn't. Five years later, I can say that their advice was spot on.

2. Same accountant and financial planner later, separately and independently, advised us that we did not need our life insurance policies including TPD, Trauma, etc. What!!! My background is in IT and Project Management - Risk Management is one of the 10 element of Project Management. My first job was with an insurance company so I understand the reason/benefit for insurance to address risk. It took my wife and I about 6 months of agony on this one. In the end, we cancel our life insurance policies. Five years later, I can say I still believe we made the right decision.

I am not asking PC members to challenge our decisions as I do not believe you have sufficient information to do that.

I would welcome others sharing their cases so that we can all learn. If you don't want to disclose that a ceratin case is yours, I would still welcome it if you described it as one of your friends/relatives' cases.

PS If I have created this thread in the wrong area, can the moderators move it to the right one ( I am a newbie).

 

I respect your decisions as they are for each person to make. I can't see you doing poorly out of real estate over the last 5 yrs though?

 

I reckon the thread title should more be like...
Professional advice you didn't initially agree with but turn out to be sound?

Stuff like never buy the excess reduction on a car hire... its tempting to buy for the peace of mind in case of an accident but the chances you'll claim are tiny compared to the amount extra you pay. You are better off going without (however... if I was entirely unsure of the foreign city I am in I may get it. But then again I probably wouldn't hire a car there in the first place!)

 

@Gockie a lot of Platinum-ish credit cards will cover your insurance excess if you pay for your car hire with the credit card. We've never paid an excess reduction as the credit card gives us that peace of mind.

 

Good tip! Suppose I should go get myself a platinum credit card since I work for a bank and it would really cost me nothing to own... (you can also get airport lounge access too I believe if you own one of those cards).

Its just a pain to give them all my income info when applying just like when I buy another property...

 

Morgans broker advised us to sell about 10k of BHP shares a few years ago which we did for about $35 per share, this was around the previous purchase price so little or no capital gain with paltry dividends.
Glad we did considering the current share price, although at the time I wanted to hold on to them.
Share market.

 

I agree. We could have achieved lots of capital gain over the last 5 years if we had bought those 4+ properties. Good question and bad question, both at the same time. Maybe, I can answer your inferred question with a hypothetical question (NB the word hypothetical, this is NOT us!!!) namely:

When one dies, is it better to leave an estate valued at $100M or $200M.

Most people would probably answer $200M. But, when one is alive, $200M of assets would typically take twice as much of one's time to supervise/manage as $100M of assets. My wife and I are heading into the sixth decade of our life. With nine properties to manage plus a smsf plus other interests, we (and our advisors) did not want to spend more and more time from our golden years managing/supervising more and more assets (we would rather be travelling around Australia and overseas, doing volunteer work, etc) when we all believe we have more than sufficient to fund a lifestyle that we want to become accustomed too.

I trust this makes sense. On a similar theme, I have been offered a number of jobs that offered attractive remunerations (I am retired) but I have not accepted any of them. I would rather do volunteer work (i.e. no pay).

 

Yep, you are right. If I knew how to change the title, I would.

 

Makes perfect sense to me. Managing properties, property managers and maintenance can be a drag, let's face it. Renovations are fun when you' re not doing them. I'd rather travel around Australia.
Title is interesting - leave it. Some people are overly-critcal and dole out advice on very silly stuff.

 

An incorrect advice to one may be correct to the other & vice versa given an individual's circumstances.

 

Your travel insurance also covers the excess, alternatively if travelling for work, the work policy usually covers it too.

 

I don't think the poster of that thread listed sought any professional advice.

And what did your accountant and fin planner suggest you do with the money?

 

Why were you taking financial advice from a mortgage broker?

 

Stock broker maybe?

 

Go to the casino and have fun!! No, just joking.

They never got the chance to advise. After being told not to buy IPs, we temporarily parked the money in Offsets. We ended up spending the money on quality of life. I better explain.

Over the 20 years, while we were building our business and our property portfolio, we lived a very simple life and had a fairly basic PPOR. So much so, we lived in one of the worst five houses in our street and all of our tenants lived in better accommodation than us. When we sold our business, we always planned to demolish our PPOR (our home of 22 years) and build a new, better one. So, we took the IP-allocated money and put it into our new PPOR to give an even better home.

So, the money went into property, just not investment propertiy as we initially planned. Now, we live in one of the best five houses in our street and we live in better accommodation than all of our tenants!!!

 

You sir, have done great

 

Well done, this is what some may lose sight of, there is no point buying more properties just for the sake of buying them of building more wealth (and increasing risk), I know people who could really be smashing it, but they are happy with what they have and what returns they have and do not want the extra headache as no amount of money is worth the extra headache for them.

This forum often would seem to paint a picture of lot of people with multiple houses all sitting at home in some castle sipping champagne while lording it over the have not's, I can relate to tenants having better conditions than the IP owner, lot of people do well because they sacrifice over a period of time.

 

This is exactly what we did. Our first business was a takeaway food shop. We lived in the flat above the shop. We were opened 12 hours a day (from 9am to 9pm) and 7 days per week (including Christmas Day). My wife ran the shop (with one employee) and I worked in it after hours and on weekends (as I had a fulltime job in IT). No 40 hour week here!!! Our first child was conceived and born during this period. Oops!!!!

It takes a long time to plant/grow 'fruit' trees but, if you love them and nourish them, over time they will bear 'fruit' and it is very sweet.

I call this 'delayed gratification'. Unfortunately, a lot of people in the world want it ALL and they want it NOW, without doing the hard yards. In my experience, it doesn't work that way.

 

I didn't.
www.Morgans.com.au

 

LOL...surprised you both had the energy or time ;-)