Robin - client since 1994
I need financial advice because I am not proficient in the financial world.
- Habits of the World's Frugal Billionaires
- How much yield is good when investing in property?
- Dealing with Redundancy and the role that Termination Payments Play
- What's Your Financial Quotient (FQ)?
- How does the aspect (which way a property faces) affect the potential value of an investment property?
The Commonsensical Super Investor
Many people believe that you have to be rich, or receive special training, or be well connected in the financial world to be an expert investor. But that's not true.
In fact, if you are paying off or have paid off your own home, you are probably already an expert investor.
- You scrimped, saved and borrowed in order to scrape up some capital (your deposit)
- You chose the best quality investment you could afford (good area, close to schools, and shops)
- You borrowed money to invest in the form of a mortgage and paid it back over many years
- You never moved - why bother when the kids were happy, the schools were good and the neighbours were friendly - so you probably kept living in that investment for 20?30 years.
Just look at the returns on this investment. If you had bought a terrace in Sydney's Eastern Suburbs 30 years ago for $100K, on a deposit of 20% ($20K) it could be worth $900k today. Even with the cost of repaying the mortgage, rates and maintenance costs, your net capital gain is pretty impressive.
There is only one problem. You did not appreciate what an expert investor you were at the time, so you probably only did it once. If you had done it a few times simultaneously, you would be in a very different financial position today.
The truth is, we all have the potential to become expert investors, so what holds us back? Often we simply don't realise that the opportunities are there. But sometimes we do, and we are just afraid to take them.
Just imagine what would have happened if a clever friend or wise old uncle who knew you well had explained to you that you could have repeated the process two to three times by finding the right house, borrowing the money to buy it, renting it to a tenant to repay the loan and interest, and keeping it for the next 20?30 years?
And imagine if that same wise adviser could also give you expert information on borrowing the money at competitive rates, and paying as little income tax as possible while you were paying off the investment and as little capital gains tax as possible when you eventually sold it. How much less frightened would you have been then? And how much better off would you be now?
The good news is that everybody can have a smart friend who is an investment expert, knows them well and understands their personal circumstances. He or she is called a financial adviser.
What does this homely case history tell us about the rules of successful investment? It tells us that it could be very worthwhile in the long run to do without a few inessentials in order to save the minimum capital required for an investment (unless you already have a house partly paid off, in which case it could bankroll your next investment).
It tells us that you certainly will have to borrow some money to fuel the investment. (You can very rarely pay cash for an investment, just as you could never save up all the money to pay cash for a house). But as long as you invest and borrow wisely, you can still make a good capital gain after the loan and the interest have been repaid.
It tells us to always buy the best investment we can afford - whether it is residential property, shares or rare postage stamps. It is not only the amount you invest, but what you invest it in that matters. And it tells us that long term thinking is an essential ingredient. You have to give the investment enough time to ensure that the capital growth exceeds the amount of the loan and the interest paid on it.
It also tells us that you have a much better chance of getting an investment right over and over again if you have a trusted financial adviser to help you. Someone who understands your financial situation and your goals, and can help you draw up a practical plan to best achieve them.
If you would like to stop being an ?amateur? investment expert who gets it right by accident, and you would like to learn how to do it on purpose, over and over again, we would like to be the friendly financial adviser who guides you.
And our guiding principles are very simple.
We don't care whether you buy shares or property, or a mix of both. It makes no difference, as long as you follow the basic rules. We want to help you ensure that you pay fair value for an investment and are not ripped off, because if you pay fair value time will do the rest. And we want to help you structure your investment to eliminate as many hidden costs and tax surprises as possible. It is the value of your investment after all the costs have been deducted that determines it's worth.
You see, we believe that everyone has choices that could improve their financial wellbeing. We?d just like to help you make good ones.