Your Other (non - RE) Investments

Hello all,

I would be keen to learn whether you guys invest just in RE, or do you also invest at the same time in shares, business etc.

I am currently starting the PI journey, however at the same time I invest in shares (around 7k per year). I do this through my company's program which matches my shares every few years and technically I get these matched shares for free (I do pay income tax on them though).

Considering I'm in the acquisition phase of the PI, would it be a better idea if I stop buying shares and invest all my money in property?

 

Our net worth is almost the same amount of our total property holdings built up via developments over the past 12 years.
During that time we also started a business.
The business has produced about 70% of our overall net worth, which is a much more significant return than actively investing in property.

 

Depends on your goals/strategy. There is no one fits all.

Personally though if I had to choose a path for someone starting out and they wanted to build some wealth then I would suggest property/business first and shares perhaps later.

 

Keep hearing this over and over.

Property is a great vehicle for putting money, but not actually making it.

 

With the right strategy it can be a fantastic vehicle to build wealth.

 

Llamas are the flavour of the month.

I'll have mine bbq'd with a light citrussy marinade.

 

Depends. You can manufacture equity by renovating or developing (or both). Later when the market booms, you can sell up and reinvest. Or hold at a higher cashflow.

 

I'm stuck/constrained on serviceability to invest further in property for the time-being. I have a PPOR and have acquired 2 x IPs in the last 18 months.

I have a quite healthy offset account and now a sizeable share portfolio. I'm growing the share portfolio to progressively build a passive but modest income stream outside of property that will help my serviceability long-term.

I'm able to save about 30% of my net income. i.e. I have 30% surplus cashflow and I am tipping a portion of this into the share market on a regular basis.

Eventual goal is to apply the above capital to the equity required to fund a future development.

 

Nice strategy

 

Even taking matched/free shares into account?

Thanks Leo

 

I guess investing in business is higher risk as well.

I think the statistics is something like 80% of new businesses fail.

 

I'll take anything that's free

 

Haha

I might continue than investing in both - property and shares and revise my strategy over time..

 

CIP which is run much like a business, shares and commodities.

Otherwise I **** it all up against the wall

 

I've been active in property but am now looking into shares area as you can buy shares with smaller input (are more volatile though). I have looked into business a number of times but have never taken the step. Business can be great but like anything needs the background work and can go south too. I unfortunately don't have the risk appetite for my own business.

 

Does this mean that all your shares are with the one company - the one you work for?

 

Yes, that is correct

 

Our family has a few business investments that are the cashcow/lynchpin for our overall strategy. Beyond that we use superannuation to great effect but we do not use superannuation for property investments (other than ASX listed property plays like Mirvac etc).

Our direct property investments are funded by the business investments and we have a range of targeted gearing that we will sit with.

So the short answer is that we have a carefully considered (read it took a long time) strategy to generate wealth from our business and our investments. We use a targeted ratio of income to be re-invested and a targted range of funds to be directed to charity. These metrics are tracked quarterly and we have an external accountant (not me) report quarterly to us on our progress (as directed by me). The allocation of property within our overall portfolio also has a targeted range that we are happy with.

My wealthy successful family clients have the same approach that I encourage. Find out what makes you happy, create goals from that and then identify steps needed to allow you to create outcomes for your goals which includes a return on investment for your business and passive investments. The ROI for your business then dictates the strategy of your business and how to achieve that.

If your goals are lofty (charitable funds and school fees for all future offspring) you will need to be creating cashflow so you can invest consistently and with purpose to get better returns. If your goals are simple then a passive yield focussed investment might be better.

It all comes down to what you really want.