Looking for any advice when it comes to investing and timing the market.
We are a youngish couple 29,28 and have a reasonable amount of cash on hand as well as kiwisaver (200k). We also have around 20k worth of shares that I purchased a number of years ago (CNU,TLT, NPH).
We have been looking at buying our first home but this market is putting me off. I have recently read a short history of financial euphoria and this market (shares + property) is displaying all the same symptoms as historical bubbles. Some of these include euphoria, short memory of history (2008 for example), association of intelligence with making money and a new financial instrument which in this case is RBNZ LSAP.
We are in relatively recession proof jobs with combined incomes of just under 200k annually. No kids yet.
We are renting a house for super low rent in our area.
My question is what would you do if you were in our position? Just dive in a purchase a 3 bdrm house for 650k+? or wait and see if you could catch the market at a better point.
Also interested in commercial property in the future so if anybody has any books they can point me towards that would be great.
Thanks
Advice for young couple
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30-10-2020, 01:53 PMseantbillAdvice for young couple
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31-10-2020, 03:53 PMSnoopyI am getting mixed messages from your post as to what your objective is.Quote:
Originally Posted by seantbill
I fully understand your tentativeness at buying a house in what may turn out to be a 'bubble' market. I personally have always regarded a house as a 'lifestyle asset', rather than an investment per se. You obviously have the means to buy a house. Assuming it is your first house you could use your kiwisaver to do it. In effect your would be using one 'inflated asset' (assuming you have had a good run in kiwisaver growth assets) to buy 'another inflated' asset (a house). There would be an inherent 'hedging' in such a deal, which might overcome some of your aversion to 'paying too much' for a house.
But then again, if your intent is purely to maximize your capital , then you might be better off staying in your 'really cheap rental' and continuing to reinvest your surplus capital for yourselves. Keeping renting and buying a commercial property to rent out, for example, might be the way to go.
You mention not having any children yet, but the way you say it suggests that at some point you might. At that point owning a house might be more than a financial decision. You would have to think about what school zone you wanted to live in when the child reached school age for example.
It sounds like as a couple you have your head(s) screwed on and have the intelligence and means to move on in whatever way you choose. Perhaps you need to think through clearly whether you want to move down the 'house route' or the the 'investment route'? There is no right or wrong answer as to what route you should take.
SNOOPY -
31-10-2020, 04:15 PMNorwest
Various people have been saying the property market is in some form of a bubble since the early 2000's and to wait for a better deal... in that time I have made millions of dollars investing in property, far more than I have made in the share market.
If I listened to everyone that ever told me something negative about the property market I would have never ever invested. The funny thing is those same people trying to give me this negative "advice" were never much invested into property, and some of them not at all... e.g. like the media giving so much air time to people like Shamubeel Eaqub back in the day when he had never bought a property until recently. It's the same negative narrative repeated over and over.
Is the property market heated right now? You bet.
Can you still find good buys right now? You bet.
Don't be fooled, your PPOR is not an investment, its a home first and foremost.
If you want to read books about commercial property, you can't go past some of the ones from the man himself, the legendary Sir Bob Jones. -
31-10-2020, 07:43 PMartemis
Over the next few years house prices might dip or they might not. Interest rates might rise or fall. Immigration might increase or decrease. All of which is of interest to folk concerned about ROI. Owning one's own home is usually different unless looking at flipping. Over time the mortgage reduces, equity increases, values rise, there is stability for owners who can make their own decisions about housing and choose to paint the walls purple.
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04-11-2020, 03:51 PMSBQWithout a doubt, BUY YOUR HOME and the earlier, the better. The investment time horizon of owning your own home is very long - as much as the investment time period of Kiwi Saver etc. So don't be thwarted when people say there's a real estate bubble etc because trying to time the market is a bad strategy by all means.Quote:
Originally Posted by seantbill
In my other posts in this forum, i've never been a fan of Kiwi Saver due to the inequitable tax treatment among different asset classes. That is NZ real estate gets the tax free / no capital gains tax (and if you look how much Auckland houses has risen in the past 20+ years, you will know it hands down beats any cumulative returns of any Kiwi Saver fund NET OF TAXES!).
The minimum in Kiwi Saver is 3% employer contributions. But I digress that most of that 3% is robbed from fund management fees, FIF taxation (if funds invest abroad such as in US equities ; for which is exposed to the 5% FDR), and transactions costs. Why should it be the middle class get stuck in paying a much higher tax scheme than say the top 1% earners who make their riches from residential properties??? This is a very basic question that Jacinda Ardern doesn't even know what to do.
The most compelling reason why I advocate owning your home is simple. You get to use the BANK'S money to buy the house (which is called leveraging). In fact, I would recommend you buy the MOST expensive house you can afford ; to the point that you scrape by in the early years of mortgage payment... and perhaps raise a family by having children.
You really don't need to read any books. You really don't need to listen to biased NZ financial advisers because they won't tell you to take the Kiwi Saver funds out to buy your 1st home, nor would they clue you into leverage and tax free capital gain ; they don't get to be a financial adviser by making such recommendations.
Buffet gives a rant at such 'fund / pension / actively managed / hedge FUNDS ; or what ever you call it' in his annual meeting many years ago. He is 100% correct that they will not outperform the 'passive' way of investing in an index ETF. But you have dozens of actively managed funds in NZ that say otherwise and they're all crooked to say so as the facts and #s are clear. But neither they, the NZ FMA, nor the NZ gov't would care to show these differences:
https://youtu.be/xp9KUCel778?t=432
If you're really keen, watch the whole video but if not, just watch the main part from the time you click on the link.
In 10 or 20 years time when you have enough equity in the house paid off... if the NZ tax laws have not changed, go out and buy another house. The banks are not stupid and know that they easily do mortgages on house; but go ask the bank to borrow funds to speculate on the share market? They will gladly show you the door if you don't want to risk losing your own house on the line. Again, these are basic observations that you don't have to read some fancy book to understand. Just like all these commercial properties being marketed in NZ claiming +10% pa returns. Ask yourself, why are not the banks lending their $ to them? After all with COVID and low interest rates, the central banks never had it easier to borrow funds from the RBZ. It's because commercial properties are riskier but residential housing is the least.