Hi all, I am a 24 and ready to start an investment journey. I have been a lurker for the past few months since reading the Barefoot Investor, which began my curiosity with all things personal finance and investment. My long term partner has recently purchased his first property, after working incredibly hard to save for his deposit. I observed and offered support through this time so I am now more familiar with the asset selection and buying process. Still plenty to learn! Education: My main resources have been this forum, Money magazine, Rich Dad Poor Dad, The Property Couch podcast and book, and Michael Yardney and Onproperty for YouTube content. I am motivated by minimalism concepts with the Minimalist podcast keeping my goals in line with my true values. Values I worked out by following the exercises in The Life Plan by Shannah Kennedy. Next month I will be doing 2 short online courses through Open2study: Financial Literacy and Financial Planning. In terms of educating myself I believe I am on a good trajectory- but any recommendations for resources would be appreciated. Income and saving: I currently work a full time job with opportunity for paid overtime and a part time job on the side to aggressively save for a deposit for my first property purchase. I precisely track my spending and saving and am currently able to live off 11.5-16% of my monthly income by living with family and minimising all purchases. At this rate I am easily saving $3500+ per month, which is accumulating in an ING savings account at 2.8% interest. Debt: No personal debt. HECS debt of $35,000 for bachelor and masters degree. 2018 plan: I will ideally be able to afford my first property in early 2018. As I will be eligible for the first homebuyers stamp duty reduction, I am toying with the idea of purchasing this as a PPOR and leaving it idle/ fixing it up for the first 12 months, as I would be saving in stamp duty what I would get in rent for the first year anyway. I can switch to an investment loan after the first year. Longer term plan: I would ideally like 3 properties in total, based on figures provided in the book the armchair guide to property investing. In my personal life I would like to start a family before 30, with 3 children spaced 2 years apart optimally. So these 2 goals are going to compete for cash flow just looking at my own income and ability to service debt. My partner will have control of his own assets as well during this time. If all goes to plan in this projected future scenario. I have many questions in planning for this stage of life, which I am hoping members of the forum with families will be able to help me with, especially relating to maternity leave, reduction in earnings and how this has effected loan structuring. And how you have worked out finances with your Partner/ Wife/ Husband. tldr: Good position to begin investing in 2018, questions regarding planning for cashflow when planning for a future family vs asset accumulation stage. I look forward to the property chat and property investment journey. Thanks for all the great resources already provided.
Well planned. But keep in mind things never turn out as planned. Generally speaking you would want to try to maximise borrowings before getting a 'spouse' as soon as you do this will greatly effect individual borrowing capacity. Hopefully the future spouse will do the same. Also great to move into a property initially to get access to the main residence exemption and the 6 year rule. Before becoming spouses you could each claim one property as the main residence but after only 1 between you (or half of 2 properties perhaps) Once you individually hit borrowing capacity you could jointly borrow more by having 2 on the loans. Keep in mind that 2 on the loan doesn't mean both of you need to own the property, it could still be owned by one of you. Planning ahead for maternity leave it might be better for you to borrow first before stopping work for potentially a few years. Some people go on maternity leave planning to go back to work, but sometimes they decide not to go back so soon. Think about spousal loan strategies, especially if you will be on a low income for some years. You might want to lend money to your spouse at high interest so that he can invest. This needs planning by keeping finances separate. If planning leave without pay - such as an extended maternity leave, then consider when you should take your paid leave - maybe at the beginning or maybe at the end closer when you return to work will be better.
Wow thanks @Terry_w for taking the time to provide me such a detailed answer. There is a lot in there that I am going to have to ponder and read further on as I hadn't yet considered the finer details of asset accumulation within my supposed timeframes, past the attainment of the first property. Your reply gives me some direction in what to consider. I am under no illusion that my plan is concrete, as it involves factors and individual decisions that are beyond my autonomous control, and perhaps I have taken the liberty of making assumptions of a future based on current trajectories. But having direction and something to aim for really helpful at this stage. Great points about maximising individual borrowing capacities, I am in the process of assessing my current capacity. I will encourage my partner to do the same, once he is settled and proficient at servicing the loan for property 1. Thanks for pointing out about the CGT main residence exemption and the 6 year rule, It is a factor I had overlooked, but seems completely logical in the scenario I have presented for my first purchase. My workplace does provide paid maternity leave, and by that stage I am likely to have a lot of annual leave accumulated. But even with these provisions I picked my career with the knowledge that its flexibility would be beneficial in the childbearing years. Ie 12 hour shift work with self designed rostering in order to cater to individual schedules and optimise work life balance. But nonetheless planning for a reduction in income is important, so that appropriate buffers can be considered. In terms of spousal loan strategies, you mentioned in that paragraph about keeping finances seperate. I've noted in the resources I have currently been reading that It's an assumption that spouses combine income- Ie in the barefoot investor and it has been mentioned a few times on the property couch podcast. Not knowing many married couples, I have found this an uncomfortable but necessary topic to consider, especially post reading the thread "Fear of Relationships over worry about losing everything", and watching MGTOW based content. In light of this stuff it is really important to me that I maintain a reasonable income and am able to contribute in my resulting future scenario. Side question: In terms of living arrangements for PPOR in married couples is it normal for both parties to be on the title of the property, or is it generally the stronger income earner with both parties contributing to the finance for the property? I don't actually know many married couple in order to ask these questions. Anyway, thank you for your previous answers. And thanks for the compliment @Property Twins
I advise a lot on structuring and many want to purchase the main residence joint for a variety of reasons - such as security of the relationship. However many also decide to purchase in one name - after considering all the legal issues. Buying in one name allows for additional strategies such as a spousal sale without stamp duty (NSW) before moving out and renting it. But this can also be done when jointly owned - except no duty exception. Other strategies allow for spousal loans, single names on loans, estate planning, asset protection etc.
