Total Wealth Management > Investment
Renting VS Buying

Renting VS Buying, it’s quite simple really!

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To help answer the renting VS buying question, I will never forget the feeling of handing over 7 x $50 notes each week to our real estate agent/landlord back in 1987 when I rented in Gosford. For my partner and I, this was enough to motivate us to get a deposit together to purchase our first home. If you feel the same way then read on!

These days you don’t get the same feeling of ‘giving your money away’ as we did back then as we didn’t have ‘the internet’, now digital banking creates a false impression so that the amount you are paying does not feel like it is that much. Take my word for it, pay your rent with cash and see how much it hurts.

rent vs buy image

albaconsol.com

Renting VS buying largely comes down to convenience and cost. In order to live close to the city or even the suburbs, you have a much greater demand due to the close proximity of everything; therefore the property prices are going to be much higher. The only option that may be left open to you is to move further out. You might think that this is not an option, so I guess you first need to weigh up the costs associated such as fuel/public transport and time. That block 20 kilometers out of town is likely to be half the price of the one in town; that $100K – $200K is a lot of fuel and time, especially considering that your first place is a stepping stone to your ultimate ‘dream home’.

Other then the monthly mortgage, which is often a similar amount to what you are currently paying in rent, there are also many costs associated with acquiring your first place including; Stamp duty, inspection reports, rates and maintenance. If you are considering making the switch, it is essential that you have a plan to ensure you have considered all of the costs involved.

If you stop and truly consider the pros and cons of moving further out, you might be surprised at the benefits of ownership living out of the city and leaving behind the renting VS buying dilemma. I once had a 2 hour commute each way to work! Not much fun at the time but we did see some nice growth in the property we purchased at the time.

These points, of course are the down side of getting your own place, on the other hand the upside is quite appealing. Consider the following points:-

  • A place to call your ‘own’, your own block of dirt & the pride that goes with it
  • An investment that will hopefully grow in value over time
  • A more permanent residence with out leases and continual moving
  • No increases in weekly rent (currently interest rates are low or falling)

Lets face it, the longer you put it off the dearer it will get. History has shown that property values are likely to climb steadily higher, so if you look ahead 5 years, would you rather be renting still or settled into your own place? For me, renting VS buying is an easy decision!

If you would like to compare the options available to you give me a call at TWM Finance for help.

By Chris Howard, Mortgage broker at TWM Finance

financial goals

Financial Goals

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What financial goals will you achieve by 2020?

goals2

dailyfinance.com

Research shows that financially successful people are people who set plans.

A recently conducted survey with the self-made rich found that the more financially successful you are, the greater the likelihood that you’ve set personal financial goals to help you achieve that success.

The data also shows that highly successful entrepreneurs are about three times as likely as ordinary people to write down their goals as a way of motivating themselves to keep achieving.

As the saying goes, “Nothing measured, nothing managed.”

If you don’t set down your financial goals in plain black-and-white, how do you expect to reach them?

Take 10 or 15 minutes to answer these five simple goal-setting questions and you can set a fresh new course for wealth-building in the new year:

  1. “Where do I want to be in 2020?”

Remember 2011? If you’re like me, it seems like just yesterday.

The next 5 years will fly by even faster, so now’s the time to figure out exactly what you want for yourself and your family when you get there.

Whatever net worth goal you choose, staying mindful of that specific number is guaranteed to help you make smarter choices about your partners, customers, and projects in the coming months.

Bet on it.

  1. “What are my annual income goals for the next five years?”

With your net worth goal set for 2020, it’s not so hard to figure out how much money you’ll need to start socking away in the next five years if you really want to get there. Ask yourself what income you’ll need to achieve in each of the next five years to put yourself in position to reach your 2020 financial goals.

On the line below “2020,” write “2019” and so on down to 2016.

Beside each year, write down your target annual income for that year, and your target average monthly income for the year. 

  1. “What are my monthly goals for 2016?”

Now you’ve got your work for the next 12 months.

A set of interim income goals for each month will help you be clear about your priorities right away.

That’s because now you can see, maybe for the first time ever, the direct cause-and-effect relationship between what you choose to do this month and what you’re building toward 5 years from now.

On the next 12 lines down the page, starting with “D” for December, count down the initials of the next twelve months: “D, N, O, S, A, J, J, M, A, M, F, J.” Then put your magic monthly number next to each initial.

4. “Where can I post my goals so I don’t lose sight of them?”

Some of you are lucky enough to attain your dreams without giving much thought to your goals, but most know that the obligations of daily life will always conspire to distract you from the prize.

So if you really want to achieve the 18 important benchmarks you’ve just committed to paper, make sure you don’t put them away, and forget about them.

What do you have posted on the wall at eye level above your workstation?

Whatever it is, even if it’s a picture of your family, move it nine inches to the left, and fill that empty space with your goal sheet! 

  1. “How can I keep raising my game throughout 2016?”

Here’s a New Year’s resolution that might prove to be the most valuable one you’ve ever made.

Resolve to celebrate every great new deal you close this year by redoing this 10-minute exercise.

Every time your business takes a leap forward, every time you find that you’ve exceeded your monthly goal, create a new map of your goals, for next month and the next YEAR.

Write “Resolve, Review, and Revise” at the bottom of your sheet. Each time you write up a new goal sheet, keep lifting your vision of what you can achieve in the coming months. There’s no telling just how happy 2016 will be once you achieve your financial goals!

Article: Biz-e-news

Financial Outlook for 2016

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2015 has seen another long worry list for investors and this poses the question of what the financial outlook for 2016 might be.

financial outlook

kiplinger.com

Some of these – such as terrorist attacks in Paris, the escalating war in Syria, refugee problems in Europe, Greece’s latest tantrum and tensions in the South China Sea – have not had a lasting impact on investment markets. However, worries about deflation, falling commodity prices, fears of an emerging market (EM) crisis led by China and uncertainty around the Fed’s first interest rate hike have had a more lasting impact. In Australia the focus remained on the rebalancing of the economy after the mining boom as well on property bubbles. While it has not been a bad year for investors, overall returns have been constrained.

For Australia, the economic outlook for 2016 is likely to continue to rebalance away from mining. However, in the face of a further fall in mining investment, falling national income, a slowing contribution from housing and upwards pressure on bank mortgage rates from increasing capital requirements, further monetary stimulus in the form of more RBA interest rate cuts and a lower $A are likely to be needed. If this occurs then improving conditions in sectors like consumer spending, tourism, manufacturing and higher education should see GDP growth move up to around 3% by year end.

The main things to keep an eye on for the financial outlook for 2016 are:

  • how aggressively the Fed raises rates – continued low inflation is likely to keep the Fed gradual (as we expect), but a surprise acceleration in inflation would speed it up;
  • whether China continues to avoid a hard landing;
  • whether non-mining investment picks up in Australia – a failure to do so could see more aggressive RBA rate cuts;
  • ongoing geopolitical flare ups, including in the South China Sea; and
  • whether the global economy can finally throw off the worry list and constraints seeing growth perk up.

All in all, the financial outlook for 2016 may well be more of the same …for the whole article please go to the following link from AMP Capital’s Head of Investment Strategy and Chief Economist, Shane Oliver. financial outlook for 2016

Investment information overload

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The technology revolution has made it easier and easier to track our investments, and perhaps suffer from investment information overload. Within this revolution, some of the news is balanced, but a lot of it is not.

investment information overload

Human nature is naturally cautious because our brains evolved at a time when we had to be on the lookout for physical threats. As a result bad news always attracts more interest and so “bad news sells”. Of course, this also applies to financial news. But it also feeds into a common behavioural trait called “myopic loss aversion.” And here lies the threat to our long term financial health as a result of investment information overload.

When the value of an investment falls it makes sense that unless something has fundamentally gone wrong investors should be thinking about increasing their allocation to it to take advantage of it now being cheaper and better value and therefore offering better return prospects. The reality though is that many are motivated to do the opposite as the distaste for loss combines with another well-known behavioural trait called “recency bias” that causes investors to give more weight to recent events than they should so they project recent news of falls in their investment into the future.

The information overload we are now seeing is likely to be reinforcing this because it is increasing our exposure to news about our investments. And this constant feedback is likely adding to “myopic loss aversion”.

By contrast if you only look at how the share market has gone each month and allow for dividends the historical experience tells us you will only get bad news (ie a loss) 35% of the time in Australia and the US. The key I think is to find ways to turn down the volume on financial news because if you are exposed to it less frequently you are less likely to make decisions that are contrary to your long term investment goals.

…for the whole article please go to the following link from AMP Capital’s Head of Investment Strategy and Chief Economist, Shane Oliver.

Investment Information Overload

Investments

Has low investment growth settled in?

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Global investment growth has been sub-par and is likely to remain so for a while yet. The same applies in Australia. This means low inflation, low interest rates, periodic growth scares and potentially a longer economic cycle. For investors, it means ongoing low returns on bank interest and constrained investment returns. But it’s not all bad – if investment growth were stronger we would return to worrying about high inflation and much higher interest rates.

Investment growthSlow and uneven investment growth reflects a whole range of factors:-

While the GFC was seven years ago now, it appears to have had a more lasting effect on confidence

It seems we have been seeing a series of global economic calamities

Rising inequality has been weighing on consumer spending

Slower labour force growth

Weaker growth in emerging countries

The implications are for continuing low interest rates, average returns are likely to be constrained and the economic cycle is likely to be longer then normal. Baring a shock – such as a major geopolitical event – the next major global economic downturn looks like being several years away yet. Which in turn suggests that the cyclical bull market in shares as a way to go before we see stronger investment growth.

When real economic growth is running around low levels and is fragile, periodic growth scares are likely to occur more often as the fear that adverse developments will trigger a return to recession is greater as there is less of a growth buffer. As we have seen since the GFC, these can be triggered by bad weather, military flare ups like in Ukraine, the Middle East, etc. Such growth scares keep investors nervous. So we have seen a sense of ongoing scepticism about the recovery in the global economy and in share markets that has occurred since the GFC. Investors have never quite fully bought the recovery story.

…for the whole article please go to the following link from AMP Capital’s Head of Investment Strategy and Chief Economist, Shane Oliver.

What does low investment growth mean