Why do/did you invest?

Discussion in 'Investor Psychology & Mindset' started by THX, 12th Oct, 2015.

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What is your primary motivation for investing in property?

Poll closed 19th Oct, 2015.
  1. Tax benefits (Negative gearing)

    4.2%
  2. Tax benefits (Capital Gains Tax discount)

    0 vote(s)
    0.0%
  3. Short term capital growth

    1.4%
  4. Long term capital growth

    37.5%
  5. Ability to leverage

    5.6%
  6. Passive income

    50.0%
  7. Other

    1.4%
  1. Fargo

    Fargo Well-Known Member

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    There is no one single reason I invest in property. You don't have listed, what I think is the main reason to invest in property, and that is to store wealth. It is a great place to store wealth so you have a safe and solid base to leveridge into more lucrative investments and have more money to invest, due to the compounding of the taxation advantages property has. The funny thing about people who say they are investing for passive income is that they are usually busting their guts working to achieve it. I invest for easy income
     
    Gockie likes this.
  2. MTR

    MTR Well-Known Member

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    Now you have opened a can of worms.
    So if you invest in property, what is easy income????
     
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  3. EN710

    EN710 Well-Known Member

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    Makes sense to bust some guts now and have "passive" income later (in quote as you still need to do some work, just not as intense)

    Share your easy income tips! From my recent experience, property is anything but easy :confused:
     
  4. skater

    skater Well-Known Member

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    Nope! No gut busting here. If the investments pay for themselves there's no need for gut busting. And now that we've retired, it is even easier.:D
     
  5. Jkat

    Jkat Well-Known Member

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    I voted passive income but would have also voted long term CG. I voted passive income because that is the primary reason (CG is one of the processes which contribute to my passive income -- in my mind).
     
  6. Bran

    Bran Well-Known Member

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    Your question doesn't match your poll.

    My main motivation is singular - to have something to give to my kids. My income is sufficient to support us, but without putting away for them, I know I will simply squander it. I've seen all my extended family be successful in their working lives and end up with nothing. I don't care if I live in a shack, but I want them to have the opportunities that sufficient money allows.

    My method is a work in progress. I have a good cashflow and the capacity to highly leverage, so this is what I've done. I am chasing capital growth. I haven't been particularly interested in rental yield/passive income. Sometimes this means I'm negative gearing, but mostly my properties are in my wife's name anyway so there is no real tax benefit.
     
  7. Steven Ryan

    Steven Ryan Well-Known Member

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    CG first, cashflow second.
     
  8. MTR

    MTR Well-Known Member

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    The reality is you need both, cashflow and CG.

    Been discussed forever, but why is one better than the other? If you manage cashflow vs debt and buy in rising markets then you should achieve both. If you believe property markets never crash then you are in for a hard ride.

    MTR:)
     
    Bran likes this.
  9. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    End goal - retiring with passive income from rent. Doesn't mean they're passive income from day one - I prefer a more active approach to investment, and all my properties have started out negative cashflow.
     
  10. D.T.

    D.T. Specialist Property Manager Business Member

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    Really need both growth and cashflow, they provide for each other.
     
  11. THX

    THX Well-Known Member

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    That's a personal reason. Sure finances plays a role in your decision but what was your primary reason for investing in property. You said capital growth, short term or long term?.
     
  12. Ace in the Hole

    Ace in the Hole Well-Known Member

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    The poll results so far show that passive income is the primary motivation for investing in property.
    I'm going to assume that most would take this view while building their portfolio in the early to intermediate stages of their investment life, rather than once accumulation is complete.

    My query is that to generate a substantial amount of passive income, you would have to have accumulated a reasonable sized property portfolio first.
    Those who have already accumulated a large portfolio often look to transfer their resi property into other asset classes for better yields/passive income.
    So, are you really looking for passive income from property, or is it simply the most suitable vehicle for asset/capital accumulation - Capital Growth investors?

    My view is that resi property is a great vehicle which allows almost anybody to accumulate a considerable asset base over time, which would not be possible with many other asset classes.
    So isn't it the relative easy ability to accumulate considerable assets the true key which attracts investors to choose property as their vehicle?
    Doesn't this in turn make leverage the main reason why property is the chosen vehicle?

    However, the title of this thread is asking for your main motivation for investing in property.
    Does motivation lead to reason, in turn leading to accomplishment?
     
  13. DaveM

    DaveM Well-Known Member

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    For me its about growth to pay down non deductible debt. I could now liquidate CG pool IP's and pay off my PPOR if I chose to, so thats stage 1 done.

    Next stage is to pay down the stuff I want to keep as income, which is the development pool, which will be to keep part of the new builds and sell the rest to pay down the debt, so the income pool is newly built properties with low maintenance and high depreciation.
     
  14. DanW

    DanW Well-Known Member

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    Other - simplicity.

    I don't have to watch the market or trade in and out all the time like shares or derivatives.

    Gearing - I never had a margin call on property yet.

    Tax effective - I don't have to sell, and I can depreciate to a high degree.

    In the end, the question should be instead "why not". After the first one, it just gets easier and easier..
     
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  15. barnes

    barnes Well-Known Member

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    I was bored, so I started to invest in property. Now I'm not bored, so I stopped investing in property. Since I'm retired for 10 + years I don't have any impotant end goal at all.
    Probably the only goal is not to get bored again...:)
     
  16. MTR

    MTR Well-Known Member

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    I like this, there is always knitting
     
  17. 2FAST4U

    2FAST4U Well-Known Member

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    To create a passive income!
     
  18. peastman

    peastman Well-Known Member

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    I don't think property is that passive. There are always things you need to do when you have a sizable portfolio. Vacancies, repairs, bills to be paid, blah, blah, blah. The list goes on. While it may not be a full time job, it really is not "passive". But property is very good at accumulating wealth. So is the goal for those investing for passive income to build wealth and then use that wealth in a passive investment?

    It's also interesting the very small number investing for tax purposes. The media would have you believe we are all in it to make a tax loss
     
  19. Ace in the Hole

    Ace in the Hole Well-Known Member

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    I'd guess this is the main goal for most.
    Once you have wealth, you have a lot more options/asset classes open to you to provide the passive income.
     
  20. barnes

    barnes Well-Known Member

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    Once you have wealth your brain stops producing clever investment ideas, because - why bother, you have made it. The important thing is to have wealth, but not to have too much of it.