Why investors with large portfolios aren't as rich as you think they are

Discussion in 'Investment Strategy' started by Zoolander, 7th Sep, 2017.

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  1. Zoolander

    Zoolander Well-Known Member

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  2. bob shovel

    bob shovel Well-Known Member

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    In summary..... Deep pockets, short arms syndrome
     
  3. Sackie

    Sackie Well-Known Member Premium Member

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    Agree its all about LVR and how much equity has been created against the percentage of debt and im what time frame.

    Having said that, personally I view a person with say a 6mil portfolio with an LVR of 90% much 'richer' than a person with zero assets and zero debt.
     
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  4. DowntownBlock

    DowntownBlock Well-Known Member

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    More bloody 'investor bashing' in mainstream media!
     
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  5. Scott No Mates

    Scott No Mates Well-Known Member

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    Are you knocking my build?

    [​IMG]
     
  6. bob shovel

    bob shovel Well-Known Member

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    Are you also a grubby developer?
     
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  7. BKRinvesting

    BKRinvesting Well-Known Member

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    As a Gen Y who has used equity and renovations to generate a starter portfolio, yes, I can comfortably answer those questions to within 99% accuracy,

    I mean, It's just an article on LVR? Debt is not a new phenomenon, not sure why it's news worthy...
     
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  8. Archaon

    Archaon Well-Known Member

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    Most things in the headlines aren't newsworthy, all they are there for is to distract the populace after all.
     
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  9. kierank

    kierank Well-Known Member

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    I hope Bill Shorten and the ALP read the article - it gives good reasons why our politicians should not touch negative gearing and why they should get rid of CGT :).
     
  10. Trainee

    Trainee Well-Known Member

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    This is newsworthy only to non investors. These articles are written for widest appeal, even if the opinions they appeal to are wrong.
     
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  11. sanj

    sanj Well-Known Member

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    Well obviously that would be the case but it's a discussion worth having imo because it's certainly possible to get caught up in the whirlwind of buying more and as many as possible but sometimes the numbers support taking.a different approach. Also worth people who are often envious of someone with say 4 properties learning that actually they aren't rolling in cash
     
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  12. Sackie

    Sackie Well-Known Member Premium Member

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    Agree. I actually think a lot of people who have 3,4,5 properties probably have a very high LVR, though to many people on the street all they hear is "5 million dollars worth of real estate" and think your a multi millionaire.
     
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  13. TMNT

    TMNT Well-Known Member

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    my 2c

    anyone or anyone referring to someone with say $5m in a portfolio with $500k equity as a property millionaire is either deluded or wants to stroke their ego or wants to sell a story

    Id rather $1m in equity rather than $10million property porfolio with zero equity
     
  14. Sackie

    Sackie Well-Known Member Premium Member

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    Or they just don't understand. Most laypeople on the street don't have much financial intelligence when it comes to these topics.

    For me, if I believed that 10mil portfolio was indeed quality assets in quality areas, I would rather the 10mil portfolio with zero equity than the 1 mil equity with no portfolio. That would meet my own risk profile.
     
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  15. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I'd take the low equity but large portfolio. Compounding growth will do a lot more in the long run.

    There is a simple solution though. I simply don't care to tell anyone what I own and what I owe. Happy to share my own investing experiences, but the specifics are nobodies business but my own.
     
  16. TMNT

    TMNT Well-Known Member

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    very true, however personally, I think many/most people underestimate expenses, maintenance, vacancy etc. if you had $500k cash as buffer then it would be fine
     
  17. Ace in the Hole

    Ace in the Hole Well-Known Member

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    There were a lot of mining town investors/speculators with this approach....they are no longer investors.
    Leverage is a double edged sword when things don't go to plan.
     
  18. Plutus

    Plutus Well-Known Member

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    I love how the same company that is notorious for pushing BS articles that just lists # of properties (rather than value, lvr, etc) is now publishing an article about why those numbers are BS.

    We need to go deeper for complete inception, can they do an article next about why a property sales website pays people to write clickbait articles to drive traffic to their site & how we're all being manipulated by marketers? Please? I want to see how self aware they can get before getting fired.
     
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  19. Plutus

    Plutus Well-Known Member

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    Or a lot of harm if prices go backwards and or rates go up... I'm with you with the caveat of having sufficient cash flow/alternate sources of funds to hold on through market changes for a long period of time... But I suspect more than a few of the "built a portfolio worth X million on a low income of only $y/year" types are in for a shock if(when) the RBA starts pushing up rates, or if the east coast sees a west coast style cool off.
     
  20. Eric Wu

    Eric Wu Mortgage Broker

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    @Ace in the Hole "There were a lot of mining town investors/speculators with this approach....they are no longer investors.
    Leverage is a double edged sword when things don't go to plan."

    this is where the asset selection comes into play. I can see the points from both of you. I would like to have a large portfolio (good quality properties) with higher LVR than a large portfolio ( poor quality properties) with lower LVR.