Is it too Late?

I would just add to this, that if you invest your money rather than park it in a savings account - 1) not only are you accepting volatility to the principle amount for too short a period, but 2) you are also losing your CGT discount if you sell within 12 months if you do make gains. Not worth it in my opinion, but I am the worlds worst market timer.

 

If you can get on top of your cash flow you are in an unbelievable position! As a couple with no children on high incomes your serviceability will be fantastic.

Jumping on the book/podcast suggestions, I found the content from the Empower Wealth team really helpful in the beginning of my investment journey. Their podcast The Property Couch is a fantastic free resource that I can’t recommend enough. They also have 2 books: The armchair guide to property investing and Make Money Simple Again. Both books are highly relevant for you.

The premise of the armchair guide is describing strategies using property that can help you build up to a 2k per week retirement situation. At the end of the book is realistic scenarios showing how different strategies can work. I’m pretty sure you can get this book for free through the team, you just pay for shipping.

Their other book Make money simple again is about harnessing your cash flow and goes well with their free online budgeting system Money smarts. In a way it’s similar to the barefoot investors bucket system, but more relevant for property investing as it explains the use of an offset account. As a side note, while I agree you should read The Barefoot investor- realise he is pretty conservative regarding property and doesn’t really recommend property investing. His advice is quite similar to the American financial commentator Dave Ramsay but translated to an Australian audience.

Another podcast suggestion is the elephant in the room, oddly titled but all about purchaser mindset in property. It focuses a lot on mistakes buyers make, which is invaluable content as it may save you from also making errors in your future purchases. I think you would particularly enjoy it as the hosts focus mainly on the Sydney market so you will be able to pick up some location relevant gold.

I particularly like this podcast for the information it gives in relation to dealing with real estate agents and the auction vs private sale process. It really helped me in my latest purchase in this hot market.

In regards to PPOR vs IP. To me it sounds like you would fit more of a rentvestor strategy given you like to travel (whenever we are allowed to again). You could always purchase the home you would like to retire in/ settle down in, live in it for a year to get the government benefits and then move renting elsewhere while renting out your property for use later on. CGT wouldn’t really be an issue if not selling the property. But of course consult with experts prior to executing on any strategy to make sure you are on the right track.

Lastly, as the investing journey can be long and difficult at times you would do best figuring out your solid why. With a good enough why, you will fight to figure out the how.

 

How would opening another SAVING account affect your credit score?

 

THE BEST TIME WAS 10 YEARS AGO

SECOND BEST TIME IS NOW

GOOD LUCK

 

The last 3 options are long term investments that should have 5 year plus time frame, min 3 years . Half the funds will be invested for less than 6 months any gains will be subjected to high tax would be lucky to get a few % av after tax return. The risk v rewards are very high There is the sleep at night factor. He said he really wants property so it not a no brainer. If he wants to go for broke or maybe wait 5yrs that is a different scenario that may be suitable for your sentiments.

 

38 is the prime of your life so no way is it too late. You can retrieve a situation that isn't promising at age 50 by following ole mate bare foot investors plan.

Mindset is the biggest issue you will face and that is addressed by introducing new information to challenge your current paradigm, which by your own admission is faulty.

If I was in your situation I would start to educate myself and this is a good starting point and certainly not the end, a good mentor can change the trajectory of your life as well.

 

It always is.

I've said endlessly on this forum, neglect working on your mindset to the great detriment of your success. In anything, not just investing.

 

Yes I agree to that. We have decided that we will just save and sit on cash till we are ready to be in the market.

 

The principles of investing are the same principles to live a decent life.

 

Thanks for taking time out and posting a detailed reply and snapshot of the books you have recommended.
I have finished following books in last month or so

• Getting started in property investing for dummies (Was suggested by a member here)
• The unshakable
• One up on wall street
• The little book of common sense investing
• The richest man in Babylon
• Rich Dad Poor Dad

Currently I am reading "From 0 to 130 properties in 3.5 years". Surprisingly no one talks about this particular book. I am done reading first 100 pages. Its ok till now.

Once I finish the above book, I will definitely pick the 2 books suggested by you. Will start the podcasts right away as they will give me some break from reading as well.

Thank you again for taking time to reply.
I am fine with rentvesting but my wife tired of living in rented places and want something she can call her own place. That is the prime reason we thought about PPOR->Equity + Further Savings -> IP route.

 

I wasn't challenging it. Like I said I am pretty new to all this and didn't realize that saving account should not hamper my credit score.

 

Thanks for responding. I am relieved to hear that. I totally agree with the mentor part. Its like finding a right coach in competitive sports which can impact the outcome greatly.
Again a newbie question. how do I find one? I understand that this is an open ended question but any pointers will be really helpful.

I agree. That is the first thing I should be working on.

 

That book, is quite dated. Of course some of the principals are the same, but from memory it focuses on properties with a 10% or greater yield. Most of what he bought back then was in Gippsland. You can still get great yield there, but it's no longer 10%.

 

How I ended up in the situation I am in? My ordeal with money

Disclaimers -

1. My life experience might not be relevant in Australia as I come from a very different social economic background
2. Long Post and most likely boring and will sound like a sob story
3. Possibly a lot of grammatical errors. English is not my first language

Reasons for this post -

1. No one except my wife knows about all this. I feel that I will feel better after posting this with a wider audience
2. Someone might be able to relate to this or is in a similar situation and this might help to avoid the mistakes I made

My background
I am originally from southeast Asia and come from a middle class family. Now the term middle class has different context in different countries. To give you an idea, I come from a family where both of my parents were working and earned average salaries. We always had mildly nutritious food, roof over our head and got new clothes once every year.
We never went for vacations, eating out etc. I had very few toys as a child and all of them were hand me down toys, mostly broken and had nothing to do with my interest.
My parents are quite educated and they made sure that we have access to best possible education. They never said no for books , stationary or anything related to education.
So basically we were blessed to have all the "necessities" of life. Thank God for that.
We just didn't have access to any "fun" stuff.

My teens and early adulthood
My parents are well educated and from early in my life I understood that in order to have a "normal" life I should complete my education and if possible do something in computers or medicine.

I don't have fond memories of my teens and early adulthood. After studying really hard for competitive exams I got admission in one of the better engineering colleges. I chose computer engineering. Contrary to what they portray in movies, I was struggling in my college because -

• Curriculum was tough. There was no linear progression
• Gentry around me changed drastically. I finished my schooling from a school where most of the kids came from similar financial backgrounds. Now suddenly I was surrounded by kids coming from business families, doctor or engineer parents, basically from top 10% of the society
• I was experiencing things which I was not exposed to before. Sneakers, cologne, motorbikes, personal cars, chauffer services
• I finished my schooling from a boys school so didn't have any interaction with girls. Suddenly I there were girls around me with rosy cheeks, well moisturized skin, smooth legs, smelled like jasmine and their hair color changed every 15 days

I was struggling hard to cope with all these changes. I was still in my teens and didn't have anyone to talk to. Instead of concentrating on my studies and try to make friends, I assumed that no one wants to be my friend because I am poor.

Meanwhile few incidents happened which I never forgot

I had 1 pair of shoes. Black leather dress shoes. I used to wear them to college, football, birthday parties, family get togethers, basically everywhere. I asked my father to get me sneakers and he gave me AUD 2. That was back in 2003. But still AUD 2 won't get you any branded sneakers.
I went on and bought a pair from flee market only to realize that they were a fake pair of Nike. At that time I wasn't even aware that there is brand called Nike. I bought them because they looked like shoes rich kids in my college wore. I went to the college wearing my new shiny fake Nike's and my whole class (41 students) made fun of me. I travelled back home crying all through my bus ride.

My parents got salary hike while I was in college. We lived in an area where public transport was poor and we used to spend a lot of time in commute.

My siblings and I convinced our father that we should buy a car. He agreed!
We went to the showroom dressed in best possible clothes, all happy and excited. We entered the showroom and 3-4 sales person gave us cold stares. No greetings nothing. My father approached a guy and told him that he wants to buy a car. This gentlemen looked at my father top to bottom, then scanned every member of my family and then with a sly smile he said " Cheapest car we have is around AUD 1800, do you still want to know more?"
I felt humiliated. I just wanted to get out the place. We eventually bought the car but whole experience was a nightmare.

After finishing my engineering
My first job was with one of the top 4 IT companies in the world. My first salary was double the combined last drawn salary of my parents!

After 8 months of joining, I was sent to US. I used to get "living allowance" in US and full salary in my home country. Living allowance alone was around USD 3500 post tax. My apartment, car, phone was company paid.

I went crazy. My college memories still fresh in my mind I went on a spree. Competing with kids from my college, I was not in touch with them, I was competing in my head space, in my imaginary world.
I bought 20+ pairs of Nike Air Jordan's. Some of them were rare and costed as much as USD 700 at that time. Branded jeans, jackets, backpacks, my first pair of sunglasses, caps and what not.

After spending few years in US, I moved to middle east. Things started getting worse (I realise this now, at that time I was thrilled)
Nike was replaced by Balenciaga's, levis was replaced by Armani exchange, Samsonite backpack was replaced by Louise Vuitton, Ray Bays by Gucci and Davidoff cool water by Chanel Blu, Johnny walker by finest single malts. I visited more than 28 countries and partied like a rock star. At one point of time I had 2 sports cars, 1 luxury car and 1 sports bike in my garage.
I was engulfed by consumerism. I was spending more than I earned, I was spending the money I didn't have.

I was in my home country to spend time with my parents. We didn't have a car as my father never drove and I was not living in India anymore.
I decided to buy a car for my parents and employ a full time chauffer.
It was a Sunday afternoon I told my parents that we will go out for a walk and they should wear something comfortable. I wore my worst possible shorts, a faded and battered t-shirt and bathroom slippers.
I took my parents to a car showroom, told the salesperson that we want to buy a car. He started walking us towards a small hatchback. My heart was in my mouth, I had played this scene so many times in my head, I waited for that moment for more than 10 years.
I stopped the salesperson and said "No it's ok. One Mercedes E Class, top trim in white please and yeah I will pay in cash"
I still remember the look on the face of the salesperson and my parents.
I was in trance. That was a high like I experienced never before.

I went on and also bought two 3 bedroom "luxury" apartments during the same trip

Summer of 2019
We left middle east in 2019 as my wife felt I was on a suicide mission. To cut the long story short -

• My 9 credit cards were maxed out
• I was defaulting my payments on personal loans
• 5 banks were after me
• 2 of the banks filed a police case against me

We sold one of the apartments in my home country. Cleared all my dues, shook hand with banks, packed my bags and boarded flight to Australia.
By the way my dad payed for our flight tickets and gave us AUD 5K. We were broke to the level where we didn't even have money for tickets and expenses for few initial months.

As of today
I am grateful that both me and my wife have decent jobs, no debt and small savings in our account, a small equity portfolio in the country I was born. Thankfully I have realized that I always had a problematic relationship with money and my attitude was wrong and petty all this while.

I am determined not to commit the mistakes from the past, educate myself on financial matters.

Future Plans
We want to retire by 55
Build a real estate portfolio
Give back to the society

I feel better after sharing this. Looking forward to gain knowledge from this wonderful forum and maybe if I ever get competent enough then help fellow members.

Thank you,
Kind regards.

 

have your views on money actually changed? You went from poor to lottery winner then back to the middle, but have your attitudes actually changed? Is the lack of a long term plan, and money being an uncomfortable thing (whether you have too little or too much) still an issue with you?

lets say you won the lottery tonight. What would you do?

 

Just don't take the credit card option when asked. Every time I open an account they tell me I can get a platinum card with gifts. I said no to it.

 

Sounds like a common Aussie family in the 60s-80s. Those in my neighborhood anyway, but we thought we were quite happy with this provision. Maybe just me...

 

Yes my attitude towards money has changed. I feel I am wise about it, respect it more, not obsessed with it. I still enjoy finer things in life but not crazy about them.

I come from a background where talking about money was a taboo. It was never discussed on the dinner table. I still feel uncomfortable about talking about it. I feel that people judge me and feel I am an inferior human being when I say that I want to accumulate wealth, buy a particular car and do certain things.

If I win a lottery tonight -

• I will Thank God
• Spend rest of the night drinking single malt and smoking cigars
• Invest 25% of winning amount in moderately risky channels like stocks , MF's
• Invest 25% in safe channels
• Will give away 25% to charities in believe in
• Will give away 25% to cousins and extended family who are struggling financially

Even if I win a lottery I will continue to work and save till at least 55 years of age.

 

My childhood was ok. I struggled and at times felt humiliated during my engineering days.
Maybe all in my head but I felt that people didn't attend us in shops because of the way we were dressed or looked, relatives didn't invite us to functions because we will stick out like a sore thumb.